Are you smarter than an economics professor?

After reading an article in the Wall Street Journal yesterday ("Are You Smarter Than a Fifth Grader?" by Daniel B. Klein), I was bothered enough to put down the paper in disgust. This was such a pathetic editorial that I was shocked to read that "Mr. Klein is a professor of economics at George Mason University." I sure hope this piece is not representative of the quality of work he does for the University.

Over at 538 I was very happy to find a response to this piece of work. Nate Silver does a good job of pointing to the problems with this editorial, but the true depth of depravity it represents is not really expressed.

The premise of the article is that a Zogby internet poll provides some evidence that "The left flunks Econ 101". Instead, the professor himself flunks basic logic. Each of the survey questions is flawed, and even the "researchers" themselves are aware that they are not engaged in inquiry here - it's a political hit job from the start.

So what is the problem? Well, the problem is that the questions are part of a broader narrative by the right wing to paint liberals as "unenlightened" on economic issues, when in fact the basic problem is that the right fails to understand nuance. According to the studies' authors, the left is unreasonable to question their conservative orthodoxy - and this is the sole basis for their slur against the left.

So, taking the questions one by one (answers = strongly agree/agree/disagree/strongly disagree/not sure):

1) Restrictions on housing development make housing less affordable.

Of course, the author, citing "basic economics", believes that by definition this is true. But it's not. There are many examples of restrictions on housing development that make housing more affordable - especially provisions that require affordable units within larger developments, restrict the size of lots, and provide for higher density development. The pavlovian response offered by conservatives and libertarians is agreement - the more accurate response is to disagree because it's about the nature of the restrictions. Not all restrictions make housing less affordable.

2) Mandatory licensing of professional services increases the prices of those services.

Again, Dr. Klein believes that this is necessarily true, but in many cases, it simply isn't. Even setting aside the obvious benefits of professional licensing, there is not any empirical evidence that licensing adds to the price of the services offered. In fact, there are many factors that influence the prices of professional services - and licensing is not among them. Moreover, the way the question is worded, even one exception to this "rule" would be enough to justify a "disagree" answer. In other words, the pavlovian response is again ranked as enlightened, despite being wholly at odds with reality.

3) Overall, the standard of living is higher today than it was 30 years ago.

Here we have an interesting question - because the "standard of living" is left undefined, this question is an ink blot test of sorts. The reality is, with wage stagnation and increasing costs of living, many people are not enjoying a higher standard of living than 30 years ago - but that pesky term "overall" makes things even muddier. However, depending on how one defines the standard of living, there are good arguments on both sides. But despite the ambiguity of the question, Dr. Klein is confident that the "enlightened" response is to agree, even though debate on the subject could fill volumes.

4) Rent control leads to housing shortages.

This one is pretty easy to agree to as a basic principle - but even here the professor has elected to ignore possible techniques to ameliorate such shortages. While rent control may lead to housing shortages, and probably does in many cases, there is no reason that rent control cannot be combined with other efforts in a way that does not lead to housing shortages. This connection is not a direct cause and effect - and therefore it can be altered. Again - the pavlovian, simplistic response is preferred to the nuanced treatment.

5) A company with the largest market share is a monopoly.

This question might simply be worded poorly - but the poor wording introduces ambiguity, and this is the source of contention. While not all companies with the largest market share in their industries are monopolies, a company with a monopoly is by definition a company with the largest market share. In fact there are many companies with the largest market share that are monopolies - so it is not at all odd to agree that a company with the largest market share is a monopoly, because this is in fact true in many instances. A company with the largest market share often is a monopoly.

6) Third World workers working for American companies overseas are being exploited.

Here is where Dr. Klein finally set me off. Clearly, millions of Third World workers overseas are being exploited. In fact, that is the basic reason American companies have moved so much production overseas - they wish to exploit the lower cost labor that can be extracted from the Third World. To claim that the "enlightened" response to this statement is to disagree flies in the face of reason, common sense and decency. Clearly one would have to be living in a fantasy world to pretend that there are no workers being exploited overseas by American companies. Yet the Wall Street Journal and apparently the right wing in general cannot accept that there is exploitation involved. I believe this is called "jumping the shark".

7) Free trade leads to unemployment.

Seems pretty clear to me that free trade does lead to unemployment, but Dr. Klein would of course assert that "basic economics" could demonstrate otherwise. Free trade has certainly led to some unemployment where I live, as manufacturing plants have moved overseas. But that's not in keeping with the neocon narrative that free trade is somehow a miracle cure for economic woe.

8) Minimum wage laws raise unemployment.

This one is the holy grail for the conservatives. Their entire project is to convince the general population to drink the free market fundie kool-aid, so that basic worker protections like a 40 hour week, the minimum wage, the right to organize, and other protections can be stripped away. If they can convince the frightened masses that minimum wage laws are the reason for their unemployment, they will succeed in getting the underclass to self-destruct, paving the way for a free market orgy the likes of which the world has never had to suffer. I hope we won't have to.

Dr. Klein goes on to denigrate the left, while acknowledging obliquely the ideological basis for his conclusion ("To be sure, none of the eight questions specifically challenge the political sensibilities of conservatives and libertarians.") He claims that "the left has trouble squaring economic thinking with their political psychology, morals and aesthetics"

Perhaps that's a good thing, since Dr. Klein seems capable of abandoning morals, aesthetics and economic thinking in favor of promoting his pet political psychology, even in the guise of an academic.

I do agree with his closing statement: "Realizing that many of our leaders and their constituents are economically unenlightened sheds light on the troubles that surround us." but I think we intend it to be taken in different ways.

Capitalist Fundamentalism

Financial markets make no allowance for human compassion, they are incapable of making moral or ethical judgments. They are designed for a different purpose and when we assume that they can do that for which they were not designed we guarantee failure. This is the reason that our health care system costs us twice what those of countries with clearer vision do, and why it delivers us a shorter lifespan.

Fundamentalism is a bad thing, it is ignoring the facts in favor of doctrine. If there is an inherently evil concept in human history, this is it. It has been uniformly destructive in every instance of it's use and I see no rational by which it can ever be expected to be otherwise.

RAmen.

Re: Strangers to Dissent, Liberals Try to Stifle It

"You're either with us or against us in the fight against terror." - George W Bush

The author's agenda is showing. Liberals are not strangers to dissent - we invented and perfected it. That's the problem. There is a time and a place for dissent, and there is a right and a wrong way to dissent.

The current dissent represents spectacularly the 'wrong way', and Obama is just speaking truth to stupid.

Original article by By Michael Barone

Health Care Limbo

So this summer the dance craze is the "Health Care Limbo" - let's see how low we can set the bar for health reform. Obama has been on the record as supportive of a public option for all, rather than the current "senior-centric" system. Given the upcoming bump in boomers drawing on public programs, this is the right time to make big changes. But as the summer has dragged on there has been a lot of debate about the various possible means to accomplish the basic goals of health reform.

For the record:

The Administration believes that comprehensive health reform should:

Reduce long-term growth of health care costs for businesses and government
Protect families from bankruptcy or debt because of health care costs
Guarantee choice of doctors and health plans
Invest in prevention and wellness
Improve patient safety and quality of care
Assure affordable, quality health coverage for all Americans
Maintain coverage when you change or lose your job
End barriers to coverage for people with pre-existing medical conditions

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I happen to agree with Obama on these points, and I can see how there are many potential paths to achieving these goals.

What is perplexing is that the GOP has any traction fighting against these basic principles. The issue has been approached blindly and the media has been a big part of exacerbating the problem. Most businesses would gladly give up the expense and chore of dealing with health care, and the simplest and most effective way to do this would be a single payer system. The evidence in the world at large is rather overwhelming.

Single payer has achieved the goals outlined by the President. Supplemented by additional or optional private coverage, it is the best of both worlds for all of us.

Absent a "public option" it becomes much more difficult to achieve these goals. Private companies need an incentive to improve their products, and the public plan would provide a backstop for the millions of unemployed and working people who are without coverage. Private insurance companies have perverse incentives that lead to the denial of needed care, bankruptcy for the sick, and insecurity for all.

Until the final bill comes to a vote, I will refrain from a specific critique, but it seems to me that the government must not abandon a hand in achieving the goals set out above. The private market has proven to be more expensive, and less healthy.

Torture Photos: Obama's Pragmatism

The impending release of photos of US detainee torture, after the ACLU's successful lawsuit under the FOIA, have led Obama to indicate that the government will launch further appeals. This seemed to be a reversal of his expected response, and was very frustrating for those on the left who were pushing for transparency.

I have a slightly different perspective. I think Obama has made a very wise and calculated move in appealing the ruling. He has defused a great deal of criticism from those on the right by agreeing to proceed with an appeal, while at the same time the outcome will most likely remain unchanged in the end. Obama gets to have it both ways - he can act like the GOP wants him to now, and defuse their criticism, and after the appeals, the photos can be released anyway, mollifying the ACLU crowd.

This is a win-win for Obama, and a great example of how a brilliant politician can turn the tables when you least expect it. Pragmatism at its best.