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Russ Roberts contemplates apocalypse.
On my exercise bike at the gym the other day, I caught a snippet of the Stuart Varney Show. Three guests were discussing the European crisis. John Stossel argued for letting market forces work–if I remember correctly, he wanted those banks that had lent money to Greece and Italy and Spain to bear costs, possibly severe costs like losing their money. One of the guests (I don’t know who it was) strongly disagreed. His argument was that Stossel’s solution would lead to the apocalypse. That was his argument. We risked the end of civilization–banks could go broke leading to a depression and then we’d all be worse off. Varney agreed. Stossel’s idea of market discipline was simply too dangerous.
Stossel gave a good answer. He said but what if we get the apocalypse anyway? Maybe all we’re doing is kicking the can down the road and making the reckoning even worse than it otherwise would be. His answer is made more powerful by recent history. In 2008, we rescued the creditors relentlessly that helped pave the way for this crisis. What will the next one look like?
I have a different problem with the apocalypse argument. How do you know if it’s true? Where’s the evidence that letting banks lose some, or most or even all of the money they unwisely lent or invested in bonds is going to lead to a disaster? Where are the data that make this claim credible other than a bald assertion?
But I have an even bigger problem with the apocalypse argument. If the threat of banks taking a haircut risks the apocalypse then we may as well admit the game is over. Just give the banks our wallets and checkbooks and go home. It’s the end of capitalism and the end of democracy. I’d prefer an apocalypse.
Writing in Commentary, Kevin Williamson profiles Thomas Sowell.
Thomas Sowell? is that rarest of things among serious academics: plainspoken. This characteristic, a by-product of both his innate temperament and the intellectual courage for which nature does not deserve the credit, surely has been bad for his career. (Intellectual courage tends to impede the career path of an intellectual.) If he were the obfuscating sort, he might have made Harvard don; if he were the cheaply poetical sort, he might have made U.S. president. His plain speaking also makes him dangerous, and that danger is intensified by the fact that Sowell is black. And not just black, but unassailably black: He’s Southern-born, Harlem-raised, brought up poor, and the first of his family to be educated beyond the sixth grade.
If a mad scientist were to repair to his laboratory to design a machine that would make white liberals uncomfortable, that machine would be Thomas Sowell, whose input is data and whose output is socioeconomic criticism in several grades, ranging from bemused observation to thorough debunking to high-test scorn—all of which are represented in The Thomas Sowell Reader (Basic Books, 404 pages).
Now 81 years old, Sowell is known as a libertarian-leaning conservative, which he is, and he has a thriving sideline in debunking racial platitudes. But he is first an economist, which means he is first an observer and reporter of facts, and if those facts take him to uncomfortable places, so be it. No, the prevalence of black men in the NBA doesn’t mean that the NBA is racist, it means that reality is racist. Yes, Barack Obama and congressional Democrats really do practice the same kind of ethnic politics that resulted in the Rwandan genocide and the Sri Lankan civil war, even if they do not practice them to the same extent. Yes, affirmative action is naked racism. No, rent-control laws don’t control rent. No, gun-control laws don’t control guns. No, standardized exams are not culturally biased—but, yes, life is culturally biased.
Because he is black, his opinions about race are controversial. If he were white, they probably would be unpublishable. This is a rare case in which we are all beneficiaries of American racial hypocrisy. That he works in the special bubble of permissiveness extended by the liberal establishment to some conservatives who are black (in exchange for their being regarded as inauthentic, self-loathing, soulless race traitors) must be maddening to Sowell, even more so than it is for other notable black conservatives. It is plain that the core of his identity, his heart of hearts, is not that of a man who is black. It is that of a man who knows a whole lot more about things than you do and is intent on setting you straight, at length if necessary, if you’d only listen. Take a look at those glasses, that awkward grin, those sweater-vests, and consider his deep interest in Albert Einstein and other geniuses: Thomas Sowell is less an African American than a Nerd American.
One of the great and brilliant things about Thomas Sowell is that he, like most nerds, appears to be simply immune to certain social conventions. This is a critical thing about him—because the social conventions of modern intellectual life demand that certain things go studiously unnoticed, that certain subjects not be breached, or breached only in narrow ways approved by the proper authorities. Sowell does not seem to me to be so much a man who intentionally violates intellectual social conventions as a man who does not notice them, because he cannot be bothered to notice them, because he is in hot pursuit of data about one of the many subjects that fascinate his remarkable brain.
Sowell is a writer with many interests: international development, child development, language, law, restitution, rednecks, Marx, manners, markets, Marines, mascots, the process of growing old, and, because he is an American conservative, baseball. That comes under the heading of “Social Issues” in the Reader, and the essay is “‘Dead Ball’ Versus ‘Lively Ball’.” Baseballologists will be familiar with the debate: Relatively few home runs were hit before 1920, after which the number grew very quickly. Legend has it that the Powers That Be in MLB introduced a so-called lively ball in 1920, hoping to produce a crop of exciting new home-run hitters to distract the public from the recent scandal of the Chicago “Black Sox,” who had fixed the 1919 World Series. “Denials by baseball officials that the ball had been changed have been dismissed out of hand,” Sowell writes, “in view of the dramatic and apparently otherwise inexplicable changes in the number of home runs hit in the 1920s and thereafter.”
Sowell, as is his habit, does not accept the orthodoxy, in baseball or in politics. …
… Even his gratitude is unsentimental. Consider his account of the happy coincidences that contributed to his success and how they have shaped his views:
“I happened to come along right after the worst of the old discrimination was no longer there to impede me and just before racial quotas made the achievements of blacks look suspect. That kind of luck cannot be planned.
Crucial pieces of good fortune like these would have made it ridiculous for me to have offered other blacks the kind of advice which the media so often accused me of offering—to follow in my footsteps and pull themselves up by their bootstraps. The addiction of the intelligentsia to catchwords like “bootstraps” has made it all but impossible to have even a rational discussion of many issues. As for following in my footsteps, many of the paths I took had since been destroyed by misguided social policy, so that the same quality of education was no longer available to most ghetto youngsters, though there was never a time in history when education was more important.” …
Speaking of education, Neal McCluskey writes about the failed policies of the administration.
Want to do exactly the wrong things to fix US higher education? You can’t do much better than the recent offerings from Education Secretary Arne Duncan. To a system blackout-drunk on taxpayer money, the Obama administration would deliver even more booze while only whispering about tough love.
Speaking at a Nov. 29 Las Vegas gathering of financial-aid administrators, Duncan addressed exploding college costs, a problem highlighted by Occupy Wall Street protesters angry over rising student debt. He lauded loan forgiveness and repayment reduction, and exhorted colleges to do, well, something to become more efficient.
While trumpeting the bogus claim that the average college graduate will earn $1 million more over his lifetime than someone with just a high-school diploma, he didn’t even hint that taxpayer-funded student aid (including easily forgiven loans) enables schools to blithely raise their prices.
In short, Duncan said all the wrong things. …
Virginia Postrel has more on mistaken education policies.
The public is in a foul mood over increasing college costs and student debt burdens. Talk of a “higher education bubble” is common on the contrarian right, while the Occupy Wall Street crowd is calling for a strike in which in which ex-students refuse to pay off their loans.
This week, President Barack Obama held a summit with a dozen higher-education leaders “to discuss rising college costs and strategies to reduce these costs while improving quality.” The administration plans to introduce some policy proposals in the run-up to the presidential campaign.
Any serious policy reform has to start by considering a heretical idea: Federal subsidies intended to make college more affordable may have encouraged rapidly rising tuitions.
It’s not as crazy as it might sound.
As veteran education-policy consultant Arthur M. Hauptman notes in a recent essay: “There is a strong correlation over time between student and parent loan availability and rapidly rising tuitions. Common sense suggests that growing availability of student loans at reasonable rates has made it easier for many institutions to raise their prices, just as the mortgage interest deduction contributes to higher housing prices.”
It’s a phenomenon familiar to economists. If you offer people a subsidy to pursue some activity requiring an input that’s in more-or-less fixed supply, the price of that input goes up. Much of the value of the subsidy will go not to the intended recipients but to whoever owns the input. The classic example is farm subsidies, which increase the price of farmland. …