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Do you know of a study that has examined both (the difference) between the market value of the global assets at risk over the next 100 years from rising sea levels and increasing storm intensity versus the replacement value of the global assets at risk over the next 100 years from rising sea levels and increasing storm intensity? Do we believe these numbers are close? Are they farther apart in wealthier countries or poorer countries? How are coastal insurance policies written? Have real estate insurance premiums in “at risk” locations changed over the last 30 years? Should we use the VSL to evaluate the potential health and mortality risks to people around the world, why not also think about a colder utilitarian calculation?

May Day Remembrance

On this much celebrated day around the world, I repost my mourning for the hundreds of millions that have been brutally tortured, maimed, and murdered in the name of “the social good” and “brotherhood.” Shame on them. And shame on us for not keeping these lesson at the fore. Of course, the trash I get in response to this is, “capitalism killed millions too.”

Mourning on May Day

May 1st, 2008 by wintercow20

It is criminal and immoral to celebrate, on this day, the social and economic achievements of the Labor Movement. How can one be proud of the fact that those societies that pursued equality were forced to create a new class of individuals to “enforce it” leading to mass murder on a scale that has never been replicated in human history? In honor of the hundreds of millions who suffered under the crippling, despotic, oppressive regimes known as Communism, National Socialism, or Fascism, and to protect the liberties of all people who walk the earth today, the horror of the socialist regimes must not be forgotten.

Over 169 million human beings were killed at the hands of repressive governments in the 20th century.

I reprint here in full a review of Communism,  A History, by Richard Pipes.

Richard Pipes is arguably the world’s foremost experts on the history of the Soviet Union. An Emeritus Professor of History and the former director of the Russian Research Center at Harvard University, Prof. Pipes served as an advisor to President Reagan’s National Security Council in 1981 and 1982.  He is the author or co-author of roughly three dozen books. He describes his latest work, Communism, A History, as “an introduction to Communism, and, at the same time its obituary.” That this slim volume succeeds in doing full justice to its vast subject is the product of, and a tribute to, a lifetime of insightful scholarship.

The Ideal

In western thought, the notion of a “Golden Age” of complete social and economic equality is at least as old as Ancient Greece. In the supposed Golden Age, there was great abundance but no violence or conflict, because all property belonged to everyone. It is sometimes asserted that there was such a Golden Age at some point in the distant past. However, as  Prof. Pipes observes:

“… the ideal of a propertyless Golden Age is a myth-the fruit of longing rather than memory-because historians, archaeologists, and anthropologists concur that there never was a time or place when all productive assets were collectively owned. All living creatures, from the most primitive to the most advanced, in order to survive must enjoy access to food and, to secure such access, claim ownership of territory.”  During the aeons before humans settled down to pursue agriculture, when they lived primarily by hunting and gathering, kinship groups asserted exclusive access to their area, expelling or killing trespassers. Property claims intensified after transition to agriculture…because cultivation is arduous work and its fruits take time to mature.”

More importantly for the present discussion, such a condition of peace and contentment has been held out as an alluring prospect, whether as restoration of the lost and distant past, or as newly constructed perfection. Various philosophers and radical thinkers has toyed with the notion not only of abolishing private property but also that human beings are  malleable-that proper instruction and legislation could not only enable but compel people to be virtuous. However,  according to Professor Pipes, “Prior to the middle of the 19th Century, the ideal of equality was an aspiration that occasionally produced social violence, but lacked both a theory and a strategy.

The Program

What Karl Marx and his friend, supporter, and confidant Friedrich Engels offered was, according to the author, “a theory that purported to show why the kingdom of equality was not only desirable and feasible, but also inevitable. To advance this claim, they resorted to methods borrowed from the natural sciences, which had gained immense prestige in the 19th Century.”

We will not here indulge in an explication of Marxist “theory” in mind-numbing detail. Suffice it to say that Marx claimed that contests for “ownership of the means of production” was the determining force of history, that industrialization had created a new and dominant class conflict (between “capitalists” and “workers”), that competition between workers and the unemployed would drive down wages, and that competition among capitalists would drive down profits, leading to ever more severe crises of production and consumption.

Relations between employer and employee did become more tenuous and remote when people moved to urban areas to take up industrial pursuits. When most laborers worked the land, the landlords and their tenants had been essentially neighbors and long-term partners. This fact gave some resonance to Marx’s notions among actual workers and their advocates, which the earlier radical pronouncements of philosophers had never be able to find outside intellectual salons.

Marx and Engles’s theories were the basis of the program of the International Workingman’s Association, “The First International,” which they founded in 1864, and such theories remained a staple of Socialist political parties for the next hundred years or so, even as they were overtaken by events.

Few things predicted by Marxism proved to be correct.  For example, even well before Marx died, it was evident that, far from decreasing, the wages and living standards of workers were generally rising. That trend has continued up to the present. There were recurrent crises (business cycle contractions), but none brought a collapse leading to revolution.  Where there were revolutions, it was not in the most advanced, urban, industrial societies, but in very backward nations where a large majority remained on the land. These developments were explained away: they hadn’t happened yet, “Imperialism” enabled “capitalism” to extend it life,  etc.

However it was World War I, that produced the first incontrovertible evidence that Marxists had little understanding of human nature: they were ecstatic when the war broke out, because they believed that “workers” would everywhere refuse to become cannon fodder and unite to overthrow their “oppressors.”  Instead, urban workers  flocked  to the recruiting stations and elected socialist politicians were the most ardent supporters of tax levies and bond issues in support of their countries’ war efforts. Ever since, it has been manifestly apparent that the traditional affinities of language, religion, race, and nationality easily trump any feelings of “international worker solidarity.”

The Regime

Professor Pipes recounts the story of how the monstrous state purportedly founded on the ideals and programs of Marxism came to be. Moving within the relatively marginal and squabbling radical left-wing factions of the time, the Russian exile Lenin (born Vladimir Ulianov) developed his own idiosyncratic variants of Marxist theorizing. He concluded that a revolution spontaneously initiated by “workers” was an  impossiblity. Instead, he called for a tightly organized group to bring it about. Lenin implicitly concluded that they, in Professor Pipes’ words,  “of necessity had to be intellectuals…Indeed,” Pipes wryly observes, “only one solitary worker ever sat on the executive board of Lenin’s party, and he turned out to be a police spy.”

There was, in fact, no distinction between Socialism and Communism as political movements until Lenin reached this conclusion, rejecting democratic procedures in favor of the establishment of a “dictatorship of the proletariat.” Marx had believed that full communism would be preceded by a transitional phase, during which the old inequalites would be broken down. It was Lenin who labeled this  transition period as foreseen by Marx “socialism.” At about the same time, he changed the name of his party to “Communist” from “Social Democratic.”

The rapid sequence of events that brought Lenin to power has been often recounted and Prof. Pipes very ably does so again, stressing how Lenin’s ruthless single mindedness of purpose carried the day against his confused and hapless opponents. Summarizing, he notes:

“Viewing the Bolsheviks’ power seizure from the perspective of history, one can only marvel at their audacity… They saw in the overwhelming majority of Russia’s citizens-the bourgeoisie and the landowners as a matter of principle and most of the peasantry and intelligentsia as a matter of fact-class enemies of the industrial workers, whom they claimed to represent. These workers constituted a small proportion of Russia’s population‑at best 1 or 2 percent…This meant that the new regime had no alternative but to turn into a dictatorship-a dictatorship not of the proletariat but over the proletariat and all the other classes. The dictatorship, which in time evolved into a totalitarian regime, was thus necessitated by the very nature of the Bolshevik takeover. As long as they wanted to stay in power, the Communists had to rule despotically and violently; they could never afford to relax their authority The principle held true of every Communist regime that followed.

“Lenin realized this and felt no qualms about imposing a ruthless despotism. He defined “dictatorship” of any kind, including that of the “proletariat,” as “power that is limited by nothing, by no laws, that is restrained by absolutely no rules, that rests directly on coercion.”‘ He was quite prepared to resort to unlimited terror to destroy his opponents and cow the rest of the population… Violence total and merciless (one of his favorite adjectives) had to clear the ground for the new order.”

Professor Pipes continues with a concise narrative of Communist regimes in Russia and many other countries. Everywhere, violence and terror were essential to keeping all power firmly within the Communists’ grasp. However, the author concludes, “In advocating a regime resting on coercion, Lenin ignored [the fact that] the abstraction called “state” is made up of individuals who, whatever their historical mission, attend also to their private interests.”

So it was that violence and terror, which were designed to change human nature as well as preserve the regimes, were sometimes turned against the “new class” itself. Stalin’s  “show trials” in the 1930s, Mao’s “cultural revoultuon,” Pol Pot’s wholesale “cleansing” of the urban and educated population of Cambodia, and any number of other murderous campaigns and purges in Communist societies all failed to resolve this fundamental contradiction. In the final analysis, the author observes:

…Communism failed and is bound to fail for at least two reasons: one, that to enforce equality, its principal objective, it is necessary to create a coercive apparatus that demands privileges and thereby negates equality; and two, that ethnic and territorial loyalties, when in conflict with class allegiances, everywhere and at all times overwhelm them, dissolving Communism into nationalism…

Professor Pipe’s Communism is a very satisfying read. What it lacks is a discussion of why Communism retained its attraction in intellectual circles for so long, especially after it became manifest as perhaps the most despotic system in history and incapable of providing the material benefits it promised. That would be another story well worth recounting.

Blast from the Past

HT to AT


Well worth your time to read.

As readers can tell, I’m basically withdrawn from my online presence, and hope to slowly extract myself entirely one day. We’ll see.

In the meantime, I want to write something about Earth Hour. Yes, as you all know I find this to be silly symbolism, and it probably directly makes the environment a tiny bit dirtier. But I don’t want those silly criticisms by me to be misconstrued as thinking the idea is bad on that there are not lots of sincere people who are just trying to do a tiny little but for the environment. I actually don’t know if in the long run these sorts of things do much good, nor do I know that they do anything bad. Maybe it’s no different than lots of people choosing to take a walk on some prearranged time. Would people be posting about that passionately, even in favor, or opposed? I think not. So that’s sort of what I am thinking about Earth Hour for now.

We all need to take a freakin’ chill pill.

THE highlight, among many:

when Bill Gates talks about taxing robots, does he mean  taxing the Microsoft software that is doing things that a lot of people used to do?

Well, I can’t talk about it. But let me suggest one or two things to keep in mind.

  1. I feel like some part of the campus conservative movement is, itself, to blame for this. I know, I sound like blaming the victim, but my sense is that they are inviting controversial speakers to campus not to learn anything, but to actually be controversial. Now, I do not happen to think Murray is a good example of this, but the thingy at Cal a few weeks ago seems to be what I have in mind. But if the “right” were seeking my advice – it would be to engage ideas directly and begin a conversation with a series of questions about why people hold various ideas, and to understand why there are people who disagree and what fears and hopes people have. I am not sure that a good way to start the conversations is to put an “in your face” event on the table …
  2. As for the intellectual climate on campus – without going detail by detail, there is no doubt something going on. Just examine the reaction of the students, protesters and the campuses themselves. There is, as far as I can tell, embarrassment (perhaps) that media attention to the disruptions makes them look bad and less open to free speech. But think a little bit about this – there seems to be utterly no engagement with the ideas in any way, shape or form. I think the protesters see opportunities like Murray coming to campus to “expose” how horrible he and his ideas are – and the fact that things got out of hand never really gave them a chance to do that. But is that now what we call intellectual freedom, diversity and liberal arts learning? So, people with different “opinions” are welcome, just as a sort of token nod to diversity, and are welcomed because it makes for an easy target to demonstrate how right and morally superior the rest of the university is? Seriously, read the articles about these incidents – I am not sure I have ever seen a single person reflect for a moment on why people hold particular ideas, in what circumstances they may be right, and what the implications would be. For example, I myself am very much in favor of opening our borders completely. Suppose my school brought a person here to talk about restricting immigration and labor market mobility. I would not want to have them here just show to everyone how ignorant they are, and how erudite and moral my open borders view are (they are!), but rather maybe I can learn more both about my own position and the complexities of the policy areas here by listening carefully to the other person’s arguments and understanding WHY they hold them. I find it just intellectually lazy, dangerous, and in fact, awful, if the default position of people would be, “well, the only possible reason someone can be opposed to open borders is because they hate human beings.” But, that’s what the intellectual climate has become.

There’s so much more to say, but I’m going to retreat back to writing my micro exam.

Well, is that fair?

In our measures of welfare in economics, we pay careful attention to the impacts an exchange has not just on those parties who are involved in the exchange, but also to third parties who may be receiving benefits or incurring costs as a result of Person A exchanging with Person B.

What economics tends to not do is to consider the preferences of Person C, who is not impacted by the transaction, in our measures of welfare. This is not to say that most of policy ignores Person C, in fact it is my belief that a good chunk of policy considers the feelings of Person C almost to the exclusion of A and B. Consider kidney markets. Again, I do not wish to get into the details here, just an illustration. By allowing the sale of kidneys, we will impact the well-being of potential donors of kidneys and potential recipients of kidneys. But there are tens of millions of people whose lives will not in any material way be impacted by the sale of kidneys outside of their objecting to living in a world where kidneys are handled in any way other than making people wait in line for them. Whatever their arguments are, good or bad, I do not care. What I care about is the obvious fact that those arguments receive weighting in our “society’s” welfare functional and in fact kidney law is predicated on satisfying those preferences.

And when you see some criticisms of market transactions or efficiency measures of economists, we inevitably come across an appeal to, or an appeal from, third parties who do not have standing in the transaction (remember, we already model out externalities, so my focus here is on people beyond that scope). Perhaps a way to incorporate these preferences legitimately into welfare analysis is to argue that the policies we enact today may impact the values and costs that non-participants may receive in the future – but then this can be very generalized to any situation.

What I find interesting is that the voices and opinions and preferences of only SOME portion of Persons C tend to be included when we are deciding thinks like legalizing drugs, or relaxing zoning restrictions, or expanding school choice and such. While it seems like the argument, “I just can’t imagine living in a world where the government does not provide “free” quality schooling to every boy and girl” actually gets considered, how often does the opposite sentiment get considered and used to enact policy? For example, some non-affected third parties may absolutely delight to be alive in a world where zoning restrictions were relaxed, they may have extremely strong moral feelings in favor of legalizing kidney compensation, and  so on. Not only is it socially uncouth to express positive preferences for these sorts of things, serious discussions of these and other policies rarely, if ever, openly consider that there are millions of people who share those preferences. It’s the morally opposed that are more “vocal” than the “morally supportive” … I wonder why. Perhaps it’s a case of the status quo bias, but I suspect something else is going on.

When I Was 30

When my dad was 30, it was the year I was born, he was having the 5th of his 6th kids, and he was completing his 10th year of full-time work (he put himself through college while working).  He had been married for 9 years.

When I was 30, I was just finishing my PhD in Economics, and had only recently been married, no kids, but a bunch of pets.

Chetty is comparing income at age 30 for a cohort born after WW2, and a cohort born just after me, so not unlike my dad and me. And maybe this is part of Cowen’s complacency story, but my dad had no choice but to earn as much as possible. I’ve clearly chosen not to.


I encourage you all to go to this (I’ll sadly be tied up, but this is a super program):


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