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.
Those were the days in which it was demonstrated that in this world morality depends on the stability of the currency. An ancient truth, which had merely come to be forgotten over the long years in which money, incontestably, had had value.
Joseph Roth, Right and Left (referring to the post-World War I hyper-inflation in Austria and Germany.)
Tom Smith on Obama’s recent comments about business:
Much could be said about how stupid was President { }'s recent comments about business founders not really having built their businesses by themselves, but rather owing them in large part to things others, especially the government, did for them. You drove on a public road to meet your 457th potential angel investor. Your third grade public school teacher taught you always to say please. And so government gets a lot of the credit for the thing you sweated blood to create. Big surprize. If you build anything, you can absolutely bet people will line up for the credit, like Al Gores for the internet. Failure, you can keep the credit for that.
But here's the question to ask — how many more successful businesses, inventions, products, services, toys, tools, insights, and just plain fun would there be, if government did not in the first place make it so ridiculously difficult to start a business and keep it going? I don't see our young president taking credit on behalf of the state for all the failures it help cause, all the ideas that never got off the ground because the regulatory hurdles were so high, or all the established companies that never had to face competition because they had managed to get their rents written into law. This is part of the seen and not seen insight of Bastiat. What you see is a successful business when it manages to survive, and then people run up, the same people who taxed and regulated it nearly to death, and say I helped! I helped! What you don't see are all the businesses that perished or never got started because of the heavy hand of the state. And it's a very heavy hand.
But though they may hate the Pax Americana, the Greens probably can’t live without it. Can’t live without the Ipods, the connectivity, the store-bought food, the cafe-bought lattes — all the ugly things made by private industry. And by paring down the redundancies in the system as wasteful and unsightly; by reducing the energy reserves of the system in favor of such fairy schemes as windmills and carbon trading the Greens have made the system far less robust than it could have been. Because they are never going to need the Design Margin. Ever. Until they do.
Chicagoboyz community member John Wolfsberger, Jr. emails:
I actually feel some sympathy for Elizabeth Warren. She was a law professor, unfairly besieged by the republican War on Women (TM), apparently sitting alone in the faculty lounge. In an effort to meet new people and make some friends, she decided to make herself more interesting by revealing her Native American Ancestry. She really did nothing wrong.
However, the incident has led me to an interesting insight. Ms. Warren tells us she is 1/32 Native American based on her great, great, great grandmother being Cherokee. For simplicity sake, let’s refer to her as the g3 grandmother. It occurred to me that if two of her g4 grandparents had been Cherokee, but parents of different g3 grandparents, Ms. Warren could still be considered 1/32 Native American. Furthermore, if 4 of Ms. Warrens g5 grandparents had been Native American, and parents of different g4 grandparents, Ms. Warren would still be 1/32 Native American. And so on.
That insight led me to a bit of research. Homo ergaster, the forerunner of Homo Sapiens (which is all of us) left Africa between 1.8 and 1.3 million years ago. Taking the nominal value as 1.5 million years, and assuming 20 years per generation, that means my (roughly) g75,000 grandparents were ALL African. True, more recent ancestors lived in Bavaria, the Vorarlberg and Ireland, but they were ALL African as well, by THEIR (roughly) g74,997 grandparents.
Since every single one of my ancestors was African, shouldn’t I be able, a la Ms. Warren, to claim minority status as an African American? And if I can, shouldn’t everyone else in the United States be able to as well, regardless of where their more recent ancestors resided for a time?
This seems eminently reasonable. There is only one issue to resolve: if we all belong to the exact same Victim Group (TM), who’s the oppressor group?
So what next? The best first step is to free up labor markets world wide. Specifically, we need policies that take aim at the unbearable political forces that seek to tighten the regulatory noose on voluntary labor markets.
Unfortunately, the dominant attitude of macroeconomists is to assume that nothing that takes place within the labor market (of which Krugman never speaks) is large enough to influence the large macro trends to which they attribute today’s high employment rates.
The blunt truth is exactly the opposite. The calcification of labor markets is the primary impediment to economic recovery. The direct effects of government regulation of labor can matter far more than the indirect effects of macroeconomic policy, whether Keynesian or austerity-based. Neither austerity nor lavish public expenditures will improve the overall situation, which is why the massive increase in American public debt has not nudged unemployment rates down. The only workable solution has to stress job creation, not by misdirected subsidies, but by dismantling the government obstacles to market exchange.