Posts filed under ‘Classical Liberalism’
The Bright Side of Global Warming
| Peter Klein |
I recall a comment from Gordon Tullock a few years ago at a panel on global warming: If we think that climate is affected by human activity, why aren’t we doing more research on the optimal temperature of the earth? In other words, why is it universally assumed that hotter is worse? Rising temperatures and water levels would be tough for those near the equator and on the coasts, but a few degrees warmer would be a blessing for those near the poles. (Not sure about the net effect on people near the poles and on the coast; sorry Lasse!)
Last Tuesday’s WSJ ran this front-page feature: “For Icy Greenland, Global Warming Has a Bright Side.” Excerpt:
[T]o many of the people who live here in Greenland, the warming trend is a boon, not a threat. . . . Even small increases in temperature can make a big difference in the quality of life for many Greenlanders who scrabble out a living at the whims of the weather. Freezing temperatures are the biggest factor limiting plant growth in Greenland. If the average temperature warms just a degree or two, the number of freezing nights is reduced. Higher temperatures produce stronger, healthier plants and provide farmers larger crop yields.
Of course, identifying beneficiaries does not tell us about net gains. (more…)
A “Commie Austrian”
| Nicolai Foss |
Regular readers may have noticed the comments of a commentator who signs on as “Cliff.” Cliff is in fact a visiting scholar at the Center of Strategic Management and Globalization at Copenhagen Business School. His real name is Zhu Hai Jiu. I mention him here because he embodies what Israel Kirzner has often said that he wished existed: The Socialist Austrian. Cliff is, I believe, a card-carrying member of the Chinese Party -– and an Austrian economist.
Classical Liberal Sociology
| Peter Klein |
At the risk of turning O&M into a sociology blog, let me call your attention to yet another item on the ideological leanings of sociologists. The Summer 2006 issue of The Independent Review, one of my favorite journals, is hot off the press, and it contains an essay by Daniel Klein and Charlotta Stern, “Sociology and Classical Liberalism.” Here is the abstract:
Sociology inspired by classical liberalism isn’t as far fetched as the profession’s current collectivist tilt might suggest. In addition to developing the social insights of Adam Smith, Alexis de Tocqueville, Herbert Spencer, William Graham Sumner, and F. A. Hayek, a classical liberal sociology might take up such topics as the differences between cooperation and coercion; the interrelations between commerce and community; the role of privilege, prestige, status, and power in “rent seeking”; and the social mechanisms that foster and reinforce statism.
O&M readers may also enjoy, from the same issue, “Four Years After Enron: Assessing the Financial-Market Regulatory Cleanup” by Roy C. Smith and Ingo Walter and “Holding ‘Governance’ Accountable: Third-Party Government in a Limited State” (on government outsourcing) by Sheila Suess Kennedy.
More on Sociologists
| Peter Klein |
Regarding the political inclinations of economists and sociologists, my colleague David O’Brien remarks:
As I’m sure you know, the ideological roots of economics come out of “liberal” thought, whereas, as you may not know, the ideological roots of sociological thought emerge from the “romantic conservative reaction” to the French Revolution and Enlightenment thought; hence the inclination of sociologists to define the problem of order in terms of “consensus-building” either in the traditional sociology of Durkheim that focuses on values and norms or the Marxian obsession with “control of the means of production”. . . .
To me, the most intriguing aspect of the paradigmatic biases of economics versus sociology is that the economists’ assumptions are much closer to the long-term “informal” as well as “formal” liberal institutional structure of our society; not only in economics, but in political life as well. Thus, it’s not surprising that ordinary folks, as well as policy makers are more likely to listen to economists than sociologists. Of course, as the previous World-Bank President came to realize, it is difficult to solve development problems solely in terms of the neo-classical economic paradigm. It’s interesting, along these lines, that the concept of “social capital” that has been “embedded” in sociological thought since the 19th century, although in different terms, finally was the idea that made the “breakthrough” in bringing sociological thought into the bankers’ discussions of development; i.e., when a sociological idea could be understood within the language of liberal thought as a factor in capital formation.
Of course, there is a lot of silliness in sociology that reinforces the notion that the discipline is far removed from “practical problem solving.” I think that many sociologists often tend to be their own worst enemies by eschewing incremental — i.e., “liberal” policy alternatives — and to focus on utopian dreams.
Why Do Sociologists Lean Left — Really Left?
| Peter Klein |
It’s no secret that academic intellectuals tend to favor socialism and interventionism over the free market, agnosticism and warm-and-fuzzy universalism over orthodox Christianity, cultural relativism over tradition and authority, and so on. Indeed, studies of US professors’ political affiliations consistently find a strong leftward bias. Hayek ascribed the hostility of the intellectual classes toward capitalism to selection bias. Schumpeter noted the intellectual’s “absence of direct responsibility for practical affairs,” emphasizing “the intellectual’s situation as an onlooker — in most cases, also an outsider — [and] the fact that his main chance of asserting himself lies in his actual or potential nuisance value” (Capitalism, Socialism, and Democracy, 3rd ed., p. 147).
Now comes a new study of academics’ political affiliations using voter-registration records for tenure-track faculty at 11 California universities. The study, by Christopher F. Cardiff and Daniel B. Klein, finds an average Democrat:Republican ratio of 5:1, ranging from 9:1 at Berkeley to 1:1 at Pepperdine. The humanities average 10:1, while business schools are at only 1.3:1. (Needless to say, even at the heartless, dog-eat-dog, sycophant-of-the-bourgeoisie business schools the ratio doesn’t dip below 1:1.)
Here’s the most interesting finding. What department has the highest average D:R ratio? You guessed it: sociology, at 44:1. Perhaps some of our readers of the sociological persuasion could tell us why, and what this means. (more…)
Nickels, Dimes, and Wal-Mart
| Peter Klein |
Like many US universities, my school has a summer reading program, in which incoming freshman are assigned a book to read over the summer, for small-group discussions during the fall. A couple of years ago I volunteered to lead one of these discussions. You can imagine my disappointment when I learned that the assigned reading was Barbara Ehrenreich’s extremely silly Nickel and Dimed, a polemic against the low-wage retailing and hospitality sector. (My main complaint against the book was not that I disagreed with nearly all its substantive points, but that it consists of little more than left-wing bromides and platitudes, supported by anecdotal evidence and written in an annoyingly cutesy style. I don’t care if the book is liberal, conservative, libertarian, Green, brown, or purple, but please make it well-reasoned, balanced, and thorough. Why expose these poor freshmen to mush?)
Hence I was glad to see Ehrenreich taken to the cleaners by Jason Furman in this Slate dialog, “Is Wal-Mart Good for the American Working Class?” Furman actually has arguments and evidence for his position, a refreshing addition to the typical Wal-Mart debate. (HT: Fred Tung)
Incidentally, some of the best empirical work on Wal-Mart has been done by my colleague Emek Basker.
Update: Bob V. summarizes the Slate debate this way: “Dr. Furman is an economist. . . . He sees the world as systems and asks the question: how should our systems be designed to make the world a better place? Ms. Ehrenreich, on the other hand, asks: how can I get more stuff?”
Patently Silly
| Peter Klein |
It’s a bit unfair to interrupt our serious discussion of intellectual property by taking cheap shots at the US Patent Office, but I can’t resist plugging Patently Silly by Daniel Wright and Alex Eben Meyer. You’d be surprised what the USPTO considers unique, useful, and non-obvious.
(NB: When I worked at the CEA a few years ago, I once asked a USPTO official for his perspective on the marginal benefits and costs of various patent characteristics (length, breadth, etc.), including the pros and cons of having a patent system at all. He literally could not understand what I was talking about. When I brought up the possibility that a patent examiner could make a mistake, and grant legal protection for an invention that was not unique or useful, he stated flatly: “We don’t make those mistakes.”)
Libertarian Professors in Denmark
| Nicolai Foss |
Here is a list of libertarian professors, mainly in the US. However, there is also a listing of libertarian professors outside of US. I have the distinct honour of being the only Danish libertarian professor.
However, I am not sure if I am a libertarian (new? neo? paleo? left? vulgar? right?). I guess I am more of your ordinary Jacksonian, paleo-con, semi-Straussian, culturally conservative kind of person. Moreover, there are actually quite a number of libertarian/conservative professors in Denmark. The best known is surely Peter Kurrild-Klitgaard who is a political science professor at Copenhagen University. Peter is an incredible energetic person with a large scholarly output and a massive production of popular writings in newspapers. He is the European editor of Public Choice. Other prominent Danish professors with a libertarian/conservation orientation are David Gress (history of ideas), Jesper Lau Hansen (Law), Henrik Lando (economics), and Christian Bjørnkjær (economics).
To Boldly Go, Where No State Has Gone Before
| Peter Klein |
The better works in science fiction challenge us to explore and reflect upon strange and interesting forms of social and political organization, such as the anarcho-capitalism of Robert Heinlein’s Luna or the (shockingly) rigid social hierarchy of Mary Doria Russell’s Rakhat. The political economy of the Star Trek universe, by contrast, is remarkably dull and familiar. As Tim Cavanaugh reminds us in the new issue of Reason:
[T]he society of the Federation is the kind of thing that might spring fully grown from the hernia scar of Lyndon Baines Johnson — a galacticized Great Society. A vaguely militarized government makes all decisions. Any time the Enterprise crew encounters a private entrepreneur or contractor, that person will almost certainly turn out to be a thief, a swindler, a coward, or all three. (Roger C. Carmel’s mincing, scheming Harry Mudd is Star Trek’s idea of a businessman.) . . . Despite frequent references to a “noninterference” directive in contacting alien civilizations, Star Trek eerily predicts the era of total interventionism, as James T. Kirk, an interstellar Gen. Tommy Franks, routinely smashes planetary autocracies, promising (sometimes) that others will come along later to do the nation building.
Cavanaugh borrows here from Paul Cantor, one of my favorite scholars, about whom I will blog soon.
Remind Me, Who Are the Commies?
| Peter Klein |
From the June Harper’s Index:
Price for which China will rent out Beijing’s Great Hall of the People: $12,000
Percentage of Chinese who say the free market is “the best system on which to base the future of the world”: 74
Percentage of the French who say this: 36
(HT: LRC blog)
Addendum: Joe Carter misses the real commies. E.g.:
Remember when the perfect dis was to call someone a pinko? “You don’t eat meat? What, are you . . . communist?” For some reason, “You don’t eat at McDonalds? Are you some kind of anti-globalist?” just doesn’t have the same bite.
Intellectual Property: The New Backlash
| Peter Klein |
In the “new economy” or “knowledge economy” literature it is taken for granted that strong intellectual-property protection is not only efficient, but also just and fair. Without the temporary monopoly protection granted by copyrights and patents, who would have sufficient incentive to innovate? And don’t innovators deserve to reap the benefits of their creations?
There have always been doubters, and lately the critics have become more vocal. Stephan Kinsella makes a strong normative case, based on libertarian principles, against legal protection for intangibles. (See also his bibliography and blog.) For the utilitarian case against IP see Michele Boldrin and David Levine’s Against Intellectual Monopoly (and their blog). And for a summary of arguments against using patent counts to measure innovative activity see this article by Pierre Desrochers.
The Birth of Big Business in the US
| Peter Klein |
David L. Mason reviews David O. Whitten and Bessie E. Whitten’s The Birth of Big Business in the United States, 1860-1914: Commercial, Extractive and Industrial Enterprise (Praeger, 2005), in the latest EH.Net book review. It sounds like a valuable overview of an extremely important period:
The roughly fifty-year period between the end of the Civil War and the start of World War I was one of the most dynamic periods in American economic history, in no small part because of the rise of big business. _The Birth of Big Business in the United States_, an introductory work intended for students and the general reader, chronicles the developments and processes that led to the rise of large-scale firms in both well-known industries like oil and steel, as well as in the extractive industries like mining and forestry. Throughout the concisely written narrative, the authors highlight the role of government in both encouraging and restraining the expansion of big business. This work succeeds in placing industrialization in the broader context of American history, an important consideration for first-time students of business history.
Good to see the role of government highlighted. As an aside, many economists and management scholars seem surprisingly uninformed about the role of the state in the emergence of modern business enterprise. As a young lad I was strongly influenced by the Kolko thesis, at least as interpreted by Murray Rothbard and his students (1, 2). Today, while the better strategy and managerial economics texts include some modern political economy, fields like organizational behavior, labor economics, industrial organization, and some others appear stuck with the naive, high-school-civics-class view of government as benevolent and efficient protector of the common man against the rapacious capitalist.
Incidentally, let me take this opportunity to plug one of the best, and underappreciated, recent books in this area: Butler Shaffer’s In Restraint of Trade: The Business Campaign Against Competition, 1918-1938 (Bucknell University Press, 1997).
Uncle Milton Nostalgia
| Nicolai Foss |
Here is what Andrew Sullivan calls “intellectual porn for classical liberals and conservatives of doubt” — a 30 mins. interview with Milton Friedman. Delightful. And in black&white.
HT to Peter Kurrild-Klitgaard at Punditokraterne.
Government Did Invent the Internet, Sort Of
| Peter Klein |
Here is a short general-interest piece on the history and significance of government involvement with the internet. The article is based on a talk I gave over ten years ago, and I have to admit the basic argument has held up rather well. As Hal Varian says in the preface to Information Rules, "technology changes, economic laws do not."
Ken Lay, Local Boy
| Peter Klein |
Today’s edition of my local paper, the Columbia (Missouri) Daily Tribune, adds a little local color to the Enron story with this item on Ken Lay, a Missouri minister’s son who attended the University of Missouri in the 1960s and earned BA and MA degrees in economics. Lay was a protégé of economics professor Pinkney Walker, who brought Lay to Washington when Walker was appointed by Richard Nixon to head the Federal Power Commission (now FERC). That, for better or worse, is where Lay learned about the energy industry.
A 1991 profile of Lay in the Houston Chronicle goes further in crediting — certain people would say “blaming” — Lay’s economics training for his later accomplishments. “His sophomore year at the University of Missouri, in professor Pinkney Walker’s introductory economics class, the small-town boy who had never been outside the Missouri state line became hooked on the world of money, from Wall Street horse-trading to monetary policy and international trade. ‘It all became so clear, so logical,’ Lay says. ‘I could see how markets worked, how firms worked. All of it just sort of fit together.’ ”
Of course, Lay understood markets well, but was no friend of free ones. (more…)
A Fruity Response
| Peter Klein |
Much of the resistance to markets and “market-like” mechanisms within firms seems to flow from a belief that market exchange is somehow crass, profane, and uninspiring, at least compared to communal or family relationships. An example is the horrified reaction of many bioethicists to economists’ proposals to allow markets for cadaveric organs, particularly kidneys.
I’ve avoided commenting on the organ-market controversy, though I’ve been using it as an example in my introductory courses for years. I have little to add to the excellent discussions by Kaserman and Barnett, Epstein, Mankiw, Becker, etc. (not to mention this observation from Robin Hanson). But I can’t resist pointing to a letter in today’s Wall Street Journal by one Charles Fruit, chairman of the National Kidney Foundation. Responding to Richard Epstein’s earlier op-ed in favor of markets, Mr. Fruit declares himself “among the millions of other ‘high-minded moralists’ who oppose treating life-saving organs as commodities.” Closing his letter with a presumed coup-de-grâce, Fruit adds: “We moralists can only pray that [Epstein’s] proposed market mechanism for the transaction of hearts, lungs, kidneys and other life-saving human organs would work a little better than it does for the nation’s consumers of gasoline.”
Cute. But how exactly should gasoline be allocated to consumers? (more…)
Natural and Artificial States, and Firms
| Peter Klein |
Among the last published papers of the libertarian polymath Murray N. Rothbard — one of my intellectual heroes — is his 1994 article “Nations by Consent: Decomposing the Nation-State.” Here Rothbard distinguishes sharply between the state, as a political entity, and the nation, a “complex and varying constellation of different forms of communities, languages, ethnic groups, or religions.” He goes on to develop a theory of appropriate national boundaries, based on the principle of volunary association and the empirical claim that people tend to associate with particular familial, linguistic, cultural, and religious groups. “One goal for libertarians should be to transform existing nation-states into national entities whose boundaries could be called just, in the same sense that private property boundaries are just; that is, to decompose existing coercive nation-states into genuine nations, or nations by consent.”
A March 2006 working paper by Alberto Alesina, William Easterly, and Janina Matuszeski, “Artificial States,” proposes several measures of the degree to which state boundaries are “natural” — corresponding roughly to Rothbard’s nations — or “artificial.” One measure identifies state borders that split ethnic groups into separate states, while another uses fractal geometry to characterize borders as straight or squiggly, assuming that straight borders are more likely to be articifially drawn and not corresponding to natural geographic or ethnic boundaries. The authors show that their measures are closely correlated with the usual measures of national economic performance (the more natural, the better).
What does all this have to do with organizations? The capabilities literature distinguishes between firm boundaries that are “natural,” or organic, and those that are artificially constructed. (more…)
Those Right-Wing Economists
| Peter Klein |
Several posts below allude to arguments by Jeffrey Pfeffer, Sumantra Ghoshal, and others that economic models and concepts (agency problems, transaction costs, opportunism, and the like) are taking management theory in the wrong direction and are harmful to management practice. A subtext of these arguments is that economists are ideologically biased toward the free market, against community and informal social ties, and toward cynical, atomistic, and even “reactionary” views of human nature. (Even if we’re not actually dismal.)
Surveys of economists’ political preferences reveal a more complex picture, however. A forthcoming article in Public Choice by Daniel Klein and Charlotta Stern analyzes a 2003 American Economic Association member survey:
The responses show that most economists are supporters of safety regulations, gun control, redistribution, public schooling, and anti-discrimination laws. They are evenly mixed on personal choice issues, military action, and the minimum wage. Most economists oppose tighter immigration controls, government ownership of enterprise and tariffs. In voting, the Democratic:Republican ratio is 2.5:1.
A Democratic-to-Republican ratio of only 2.5 to 1 may seem shockingly low to our colleagues in sociology or cultural studies, but hardly seems to indicate pervasive “right-wing” bias.
Scots, Wha Hae
| Peter Klein |
Today's Wall Street Journal features a front-page profile of a Carnegie-Mellon student majoring in bagpipes, thought to be the only such student in the US. This prompts a confession I've long wanted to make: I'm half Scottish. My mother was born and raised in Freuchie, a tiny village of just north of Edinburgh. While Scottish eccentricities are ripe for satire (ask Monty Python or Mike Myers), we also deserve credit for the steam engine, penicillin, pneumatic tires, the telephone, and the Scottish Enlightenment.
Speaking of the latter, though no one doubts the importance of Smith, Hume, Hutcheson, Ferguson, Steuart, Kames, and the rest, the Scots have been getting a bad rap lately. Murray Rothbard famously and controversially called Adam Smith overrated, describing the late Spanish Scholastics, Cantillon, Turgot, and the Physiocrats as better economists. Gertrude Himmelfarb's recent book The Roads to Modernity distinguishes sharply between Scottish and British achievements. (Hat tip to Nicolai.) Even Hayek, whose interpretation of Scottish thought is extremely influential, takes a drubbing in a recent paper arguing that Polanyi had the better grasp of "spontaneous order." (This paper disagrees.)
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