Some Chicago Boyz know each other from student days at the University of Chicago. Others are Chicago boys in spirit. The blog name is also intended as a good-humored gesture of admiration for distinguished Chicago School economists and fellow travelers.
Mitch Townsend Former Marines Owen West and his father Bing West pen a detailed article in Popular Mechanics about the tactical lessons learned in Iraq.
Now seems like a good time also to recall an earlier post about the good work that Popular Mechanics did in debunking 9/11 conspiracy theories.
[Cross-posted at Between Worlds]
A little less than a week ago, the Boston Globe featured a rather naive article entitled In Praise of High Gas Prices. The author argued that ultimately higher energy costs were a good thing, since they would drive consumers to more frugal habits (a Prius rather than an Escalade, for example) and spur investment in “alternative” sources of energy. He is conflating several issues. First, there is a straightforward assertion of the law of substitute goods, which states, in effect, that an increase in the price of Coca Cola will lead to an increase in demand for Pepsi. That’s fine, as far as it goes, but he also assumes that an increase in the price of the cost of production is a good and beneficial thing, if it in fact causes the subsitution. This is a political value judgment having nothing to do with economics. He makes this assumption because the alternatives are thought to be more desirable than the original. Wind power and shale oil are mentioned (more on these later).
Today, without reference to the earlier article, the Globe notices that at least one of the substitutes is maybe not such a good thing. In the San Joaquin Valley of California, it looks like the substitution of firewood for heating oil and natural gas will cause the region to fail its air pollution remediation plan. While unintended, this outcome is by no means unexpected. The same thing happened during the Carter administration, when parts of the Northeast were enveloped by a thick haze of smog from wood-burning stoves. The article doesn’t even touch on the worst aspect of the substitution, which is the loss of life from fires.
On the other hand, higher fuel prices seem to have led to innovation, in some cases representing a definite improvement over some of the previous technology.
1940’s
With wages frozen by government edict, employers begin offering non-taxable health insurance to attract and retain scarce employees. The next sixty-odd years will feature numerous proposed government solutions to this unintended secondary effect of the original government solution.
1950’s
President Eisenhower successfully resists Democratic pressure to reduce the income tax rates originally put in place to finance WWII and the Korean War. The top tax rate on individuals was 90%. The modern tax shelter industry is born.
1960’s
The Interest Equalization Tax of 1963 and the Foreign Credit and Exchange Act of 1965 result in the birth and rapid growth of the Eurodollar trading system in London. With the currency market permanently placed outside of government control, the US was soon forced to abandon the gold standard (1971) and the Bretton Woods system.
1970’s
Following the collapse of the Bretton Woods arrangement, the Nixon administration tries to control inflation by imposing wage and price controls, while Arthur Burns at the Federal Reserve simultaneously cuts interest rates. The Federal funds rate went from 3.2% to over 10% within two years, and stagflation was invented.
1980’s
Automobile companies improve the anti-theft features of their products. As cars become more difficult to hot-wire, thieves increasingly turn to carjacking. The US Department of Justice begins keeping survey statistics for this crime in 1987.
1990’s
CAFE fuel economy requirements cause carmakers to build smaller, lighter vehicles. Consumers react to the space shortage and crash dangers by buying SUV’s.
2000’s
It ain’t over ’til it’s over.
I started to respond to one of the comments in Ralf’s entry, but it got out of hand. Besides, that savage Anglo-Saxon capitalism has me working my flabby butt off and I haven’t been posting.
There is no reason to doubt that the Muslims will successfully integrate, given the chance. The US had its own “unassimilable” religious minority; poor, ignorant, violent, and superstitious; resistant to the civilizing norms of society; an alien culture that could never be compatible with ours. I am speaking, of course, of the Irish Catholics who arrived in great numbers after the famines of the 1840’s. Their gangs and their riots inspired widespread fear. They were suspected, with some reason, of forming a potential fifth column. In reaction, a nativist political party gained power in several states and cities, which is more than Le Pen has been able to do. Among others, there was a Know-Nothing mayor of Chicago, Levi Boone.
Americans have a bad habit of lecturing the rest of the world on the virtues of assimilation. In doing this, we are demonstrating the blessings of pragmatism and a short memory. We learned to assimilate because we had to, and have forgotten that it ever was otherwise. Now it seems perfectly unremarkable, at least as far as past successes are concerned (there are several incomplete projects, of course). My own ancestors got here some 300 years later than the Pilgrim Fathers, but they are my Pilgrim Fathers now, too. Sooner or later, France will have to raise a generation of French Muslims who will speak without irony of “nos ancêtres les Gaulois.”
… and he knows that sweating a joint is not just something you do when the police think there is marijuana in your pocket. Britain is one of the Western countries in the EU welcoming Eastern Europeans. To the surprise of no one on this side of the Atlantic, they are finding that the immigrants are eager to work and to blend into their new home. More on the Polish Plumber.