Category: Economics

23-VIEW-master675Under the feudalistic societies of old, status was organized through state-enforced hierarchies, leaving little room for the levels of status anxiety we see today.

For us, however, status competition ranges wide and free, leading to multiple manifestations and a whole heap of status signaling.

Such signaling is as old as the free society itself, of course. Whether sending their children to fancy classes and fencing lessons, accumulating ever-expensive luxury goods, or boasting in the labels of their fair trade coffee and the nobility of non-profit activism, aristocrats have always found ways to signal their superiority.

Yet these preferences have shifted over time, the present form of which is carving out its own unique space. In a recent report from the Adam Smith Institute, Prof. Ryan Murphy explores the situation, noting that while past generations were more concerned with “conspicuous consumption” and “keeping up with the Joneses” – chasing faster cars and bigger diamonds – the current pursuit of status has adapted toward “conspicuous authenticity.”

We are now seeing a “new status signaling,” Murphy observes, where society has “moved beyond associating ostentatious displays of wealth with high status,” opting instead for behavior that signifies we are above and beyond such base behavior. (more…)

single-payerA plurality of Americans support “Medicare for All”, legislation endorsed by Bernie Sanders and other Democrats that would establish a universal single-payer health care system in the U.S. At least they do until they find out what “single-payer” really means.

A recent AP poll found that 39 percent support and 33 oppose replacing the current private health insurance system in the U.S. with a single government-run and taxpayer-funded plan like Medicare for all Americans that would cover medical, dental, vision, and long-term care services. (Another 26 percent neither support nor oppose the change.)

But the same percentage (39 percent) opposed single-payer when it was found that it would cause their own taxes to increase or they’d need to give up other coverage, like health insurance provided by their employers. In both cases, about 4 out of 10 flipped to opposition when they discovered that caveat.

Even higher numbers opposed the plan if it would lead to longer wait-times for non-emergency medical services (47 percent) or if it took longer for new drugs and treatments to become available (51 percent).

“People say they believe in a principle, but when you describe the policy, it often loses support because they don’t like that there are side effects,” said Robert Blendon, a professor who tracks public opinion on health care at the Harvard T.H. Chan School of Public Health.

So what exactly would an American version of single-payer plan look like?

720x405-AP_846250441282Every election season politicians are asked how they will fix our ever-growing budget crisis. And every season at least one politician gives the same trite answer: By cutting “fraud, waste, and abuse.”

Politicians love the answer because it doesn’t offend any specific constituency. After all, there are no groups lobbying for more fraud, waste, and abuse (at least not directly). And voters love the answer because it fits with both the conservative perception that government is mostly wasteful and should be fixed and the liberal perception that government is mostly efficient and can be made even more so.
Neither the politicians nor the voters are completely wrong. Fraud, waste, and abuse is indeed a perennial problem, which is why the government has thousands of auditors, evaluators, and inspectors constantly trying to root it out. But would eliminating all fraud, waste, and abuse truly save the taxpayers that much money?

Donald Trump seems to think so. In the latest Republican presidential debate he claimed that he could fix the current budget deficit simply by cutting out the “waste, fraud, and abuse”:

BLITZER: Mr. Trump — Mr. Trump. If you eliminate completely the Department of Education, as you have proposed, that’s about $68 billion. If you eliminate the Environmental Protection Agency, that’s about $8 billion. That’s about $76 billion for those two agencies.

The current deficit this year is $544 billion. Where are you going to come up with the money?

TRUMP: Waste, fraud and abuse all over the place. Waste, fraud and abuse.

You look at what’s happening with Social Security, you look — look at what’s happening with every agency — waste, fraud and abuse. We will cut so much, your head will spin.

Let’s take Mr. Trump at his word and consider how much we’d need to cut to “make our head spin.”

Blog author: jcarter
Friday, February 26, 2016

Why are some countries rich and others poor?

The answer to that question is complex – and hotly debated. But economist Alex Tabbarok outlines several key ingredients to consistent economic growth -productivity, incentives, institutions – and explains how they are combined with factors such as a country’s history, ideas, culture, geography, and even a little luck.

oceanwaterProtectionism, the practice of shielding a country’s domestic industries from foreign competition by taxing imports, has a strong appeal for Americans because it seems so obvious. If the globalized economy is a zero-sum game, then a “win” for China in the form of increased manufacturing jobs is likely to be a “loss” for America. The solution would therefore be to prevent China from taking “our jobs.”

But sometimes what seems like an obvious solution can exasperate the underlying problem. Imagine that you are stranded in the Atlantic Ocean and dying of dehydration. The “obvious” solution would be to drink the water that is all around you — the water from the ocean. But if you drink the salt water, you’ll merely be increasing the level of salinity in your body, causing you to die even sooner.

The same is true for protectionism. As I wrote on Tuesday, America’s adoption of protectionism makes us poorer, not richer. But the fallacy of protectionism tends to persist because it is associated with other economic fallacies and misunderstandings.

A prime example is a recent comment to my article on Facebook. I don’t want to pick on or publicly embarrasses the person who wrote it, but I think it provides a helpful example of some of the faulty thinking that makes protectionism appealing.

Here is the comment with my attempt to clear up some of the misconceptions:

Gty_pope_sanders_mm_150922_16x9_992Since the mid-1800s every pontiff—from Pius IX to Benedict XVI—has forthrightly condemned socialism. But could that trend be broken with Pope Francis? Could he be a closet socialist?

Bernie Sanders seems to think so. In a recent interview Sanders was asked whether he thought Francis shared the senator’s socialist views:

“Well, what it means to be a socialist, in the sense of what the pope is talking about, what I’m talking about, is to say that we have got to do our best and live our lives in a way that alleviates human suffering, that does not accelerate the disparities of income and wealth,” Sanders tells Rosica, head of the Canadian Catholic network Salt and Light, in an interview that will be broadcast Tuesday.

We are living in a world where greed has become, for the wealthiest people, their own religion, Sanders said.

“When [Pope Francis] talks about wealth being used to serve people, not as an end in itself, I agree with that,” Sanders said.


Sanders noted the pope’s critique of trickle-down economics.

“[H]e believes that in democratic societies, government itself should play a very strong role in protecting the most vulnerable people amongst us,” Sanders said. “That is a direct critique of conservative politics, and of course he’s going to be attacked for that.”

Sanders isn’t the first to make this claim. After the pontiff’s trip last summer to Latin America, Bolivia’s president Evo Morales told the Associated Press after the visit that he thought that the Pope’s “emphasis on a world without exclusion amounts to socialism”:

Yesterday, in my post about how Donald Trump and Bernie Sanders plan to raise taxes on the poor and working class, I promised to explain why it is not possible to “bring jobs back to America.”

I realize today that explaining why jobs are lost to overseas competition is even more difficult than I had imagined. Instead of giving reasons why those jobs likely won’t be coming back I’ve decided to argue why a frequently proposed solution — protectionism — is even more harmful to American than the job losses.

Let me start by defining a few key terms that are relevant to my argument:

Protectionism is the practice of shielding a country’s domestic industries from foreign competition by taxing imports. A protectionist is a person who advocates for protectionism.

Free trade is when international trade is left to its natural course without tariffs, quotas, or other restrictions. A free trader is a person who advocates free exchange of goods and services between nations without regulatory barriers such as tariffs or quotas. By definition, a (consistent) free trader opposes protectionism.

Consumption is the use of goods and services by households.

That last one is particularly significant. The importance of consumption to human flourishing is the primary reason many economists argue that, though both groups are essential, consumers should take priority over producers. As Adam Smith wrote in his book, The Wealth of Nations: