Does econ make you conservative?

Harvard University’s economics Professor Greg Mankiw is known for his popularity, especially as he seems to actually enjoy teaching introductory economics courses (while most of his peers tend to favor spending time with advanced, post-graduate students). He even runs a blogsite so that he can keep in touch with his students, now dispersed worldwide.

One student posed a question on that site recently that’s actually quite central to the kind of ideological divide we see in Finnish politics today: does the study of economics make people more conservative (or more classically liberal, in academic terms)?

I believe the answer is, to some degree, yes. My experience is that many students find that their views become somewhat more conservative after studying economics. There are at least three, related reasons.

First, in some cases, students start off with utopian views of public policy, where a benevolent government can fix all problems. One of the first lessons of economics is that life is full of tradeoffs. That insight, completely absorbed, makes many utopian visions less attractive. Once you recognize, for example, that there is a tradeoff between equality and efficiency, as economist Arthur Okun famously noted, many public policy decisions become harder.

Second, some of the striking insights of economics make one more respectful of the market as a mechanism for coordinating a society. Because market participants are motivated by self-interest, a person might naturally be suspect of market-based societies. But after learning about the gains from trade, the invisible hand, and the efficiency of market equilibrium, one starts to approach the market with a degree of admiration and, indeed, awe.

Third, the study of actual public policy makes students recognize that political reality often deviates from their idealistic hopes. Much income redistribution, for example, is aimed not toward the needy but toward those with political clout.

These are lessons certainly lost on Finland, where entrenched socialist ideology sees any challenge to its moral precepts as a threat. In fact, most of Finnish counter-arguments focus on the demonization of any contending models to the welfare-state, even to the extent of employing state-sponsored bigotry to ensure the status quo.

Zero Tuomioja and the Tobin Tax

One of the preoccupations of Finland’s foreign minister “Zero” (as Chirac allegedly called him) Tuomioja, has been the implementation of the CTT, or Tobin Tax, especially in relations to ATTAC, where he is a member. Though Tuomioja’s rationale sounds benign enough, there are more considerations behind this folly than initially meets the eye.

Consider whom such a Currency Transaction Tax would affect. Far from dissuading currency speculators (as it was initially intended to do), a CTT is designed to collect taxes from two willing international trading partners and forwarding those tax monies to other countries who have no role at all in that particular trade. Thus, for example, if an American company wires money to a factory in China to produce some goods for America, a country like Bolivia, - which has introduced socialist policies designed to dissuade international trade – would benefit from that kind of international transaction taking place. In other words, Bolivia would enjoy a freeride at the expense of the other two countries, without ever needing to revise its own trade-stifling policies.

Obviously, Zero Tuomioja also enjoys the other aspect of such a tax: it would collect the most money from the one nation that thrives on international trade: the United States. As the cost of such a transaction would eventually be transferred to the American consumer, making goods more expensive as a whole, it becomes quite clear that this tax is just another manifestation of European anti-American bigotry. And, when we consider that it is the American consumer that has done the most when it comes to lifting third world nations out of poverty, the CTT can be seen as quite counterproductive to its poverty-fighting ideals.

In other words, it is folly, though it'll certainly never be comprehended as such by Zero Tuomioja.

Election Day, 2006

So I voted the other day. It was quite easy this time, as there were no waiting lines, as had been during the presidential elections in 2004. The polling was conducted in public schools here in New York City (all school kids have the day off on Election Day, though that might vary from state to state). The voting booths were set up in the school’s gymnasium, and staffed mostly with retired folks, who took visible pride in conducting their duly-sworn, civic duties. The old African-American lady who verified my registration must have been about 80 years old. It was obvious that the other ladies gave her that honorific little job to do, though they stood by to assist. In a sentimental way, that little gesture kind of moved me.

I counted 10 different political parties with candidates in the fray. They were:

Republican
Democrat
Independence
Conservative
Working Families
Green
Libertarian
Rent Is Too High
Socialist Workers
Socialist Equality

The voting was done in these quite antiquated, mechanical lever devices which had a heavy curtain draping the voter in front of the lever board, displaying all the 30-70 or so candidates . Although voter fraud cases in New York City have rarely been reported (and I have a feeling no one wants to mess with the ladies in charge with electoral conduct), I’ve always wondered how long a state like New York will rely on these mechanical hulks. It seems there are so many ways where fraud is possible, - and if it’s possible, maybe probable - if New York ever becomes a state where key national voting decisions are made. It’s a worry, for anyone, of any party, who cares about democracy.

Later, in my busy day, I was surprised to find that almost all of the people I dealt with had taken the trouble to vote (though admittedly, I deal with a lot of hard-working, thinking people. My favorite bartendress, though, said she wasn’t going to vote, simply because she has no idea what the issues really are. Fair enough.) It’ll be interesting to see how this mid-term election compares in tally with other mid-terms in the past.

A Terse Assessment on Iraq

If you're willing to look past the ongoing distortions in Main Stream Media, things are going rather well in Iraq. Significant oil revenues are now flowing into the coffers of the Iraqi government, surpassing pre-war levels. That could not be happening under wartime conditions. And most of that oil is not going to the US, but India. Additionally, China is now interested in investing over $1billion in developing Iraqi oil reserves. It's obvious that they've a different assessment of the situation on the ground than what we hear from MSM.

Mostly the fighting is of a low-level, criminal kind of gang/clan warfare (not counting the foreign terrorists). It would be nice to let these folks kill each other off, but the danger is that - unless they're repressed by some impartial force from the government - they could (and probably would) develop in organization, thus providing a threat to the central government which, for all its faults, is working rather well. Unfortunately, the only force impartial enough for this task are US soldiers, at the moment.

The foreign terrorists are, of course, being dispatched rather efficiently, if Al Qaeda's own internal memos are to be believed. And that was one of the better arguments for creating a warzone in that part of the world.

In either case, what the militants don't realize is that their continuing activity only provides more of an excuse for an American military presence. Even if all patrols would finally be conducted by Iraqi police and military units, the threat posed by the militants will be used to justify the long-term entrenchment of US bases in Iraq for some time to come.

Which is not that bad at all, for the US, as long as the area is of strategic concern.

Don't You Just Love America?

Commuter to detonate DC bridge Monday night
Mon Aug 28, 2:37 PM ET
WASHINGTON (Reuters) - A detested bridge that has plagued generations of Washingtonians will be blown up by a long-suffering commuter on Monday night.
[…]
The Wilson bridge has long been one of the worst traffic bottlenecks in a region notorious for gridlock. Backups can stretch for miles when the drawbridge is raised 270 times per year to let boats through.
[…]
A local man who has crossed the bridge for 30 years as part of his two-hour commute won a contest to detonate a half-mile section. Dan Ruefly of Accokeek, Maryland, had his hip crushed in an accident on the bridge in 1999. He leaves his home at 5 a.m. each week day to avoid the worst of the traffic.

The Foibles of the State

An amusing gallery of public works.

Terror Averted, Thanks to Torture?

It was a little news item at first, the one where it was revealed that the whole recent international terror plot was foiled due to the initial arrest of a jihadist in Pakistan. The Pakistanis were quick to take the credit for it, of course.

Yet there is no way a jihadist would spill the beans on such a plot just like that. Was that man tortured by the Pakistani authorities? It's a guess, but it wouldn't be a surprise. If so, do thousands of westerners owe their lives to one man being tortured?

It's becoming quite amusing seeing how AP, Reuters, and AFP are tippy-toeing around that main question. They're now trying to bury the significance of that initial arrest with all sorts of facts about the subsequent arrests in Pakistan, in the hopes that no one will ask the most significant question of all.

UPDATE: More information is now available about the initial Pakistani arrest, via AFP:

In Pakistan, two senior officials told AFP that Britain's intelligence services had asked their Pakistan counterparts to trail Rauf after he entered the country. He was arrested on August 4 in the eastern city of Bahawalpur.

[…]

"When they interrogated Rauf, he broke. He told them what we believe was not even in the knowledge of the US and the British -- that they were actually planning to blow up airliners," one of the officials said.

Now, why are none of these journalists asking the obvious question at this time: did Britain’s intelligence services tip the Pakistanis off, knowing that the Pakistani security services would be able to “break” Rauf? It seems journalists only ask the tough questions when their political interests are served.