Archive for the 'Bad Reasoning' Category

Krugman versus Krugman

Published
by
Steve Landsburg
on March 7, 2010
in Bad Reasoning, Economics and Outrage
. 34 Comments

I don’t usually post on Sundays, but this letter to the New York Times from the indispensable Don Boudreaux is too priceless to pass up.

Edited to add: I don’t always read Krugman’s column, but since Don’s link sent me there today, I can’t resist noting one more outrage: Krugman thinks that extending estate tax relief to the top .25% of estates is a policy “on behalf of” that .25% of the population, as opposed to a policy on behalf of everyone who benefits from capital accumulation, higher wages and economic growth.

Or more precisesly, he doesn’t think that. But he says it.

Click here to comment or read others’ comments.

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Getting Serious

Published
by
Steve Landsburg
on February 4, 2010
in Bad Reasoning and Policy
. 48 Comments

leswaasCongressman Donald Schwerbitz, who represented South Dakota back in the 1960s and 70s, was a visionary environmentalist who sponsored the first legislation designed to reduce our national carbon footprint. It was Congressman Schwerbitz who recognized that carbon emissions are caused primarily by breathing, and he proposed to cut those emissions in half by requiring every American to wear a device that plugs up one nostril.

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Debt and Taxes

Published
by
Steve Landsburg
on February 1, 2010
in Bad Reasoning, Policy and Politics
. 56 Comments

deb
When I teach economics, I try to drive home the lesson that words are supposed to mean something coherent. If you want to be rewarded for stringing together a bunch of empty phrases, you should go take an English class.

I was therefore maximally sympathetic to the poor XM radio host (I think it was Pete Dominick but I’m not sure) who was stuck interviewing a man named John Sakowicz last Friday. Sakowicz, who hosts his own radio show in northern California, was there to warn about the dangers inherent in our growing national debt. He was very clear about this much: the debt and its associated dangers are massive, explosive, perhaps even apocalyptic. He was entire unclear, however, about exactly what those dangers are.

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A Quick Economics Lesson

Published
by
Steve Landsburg
on January 27, 2010
in Bad Reasoning, Economics and Policy
. 93 Comments

I am opposed to all taxes on interest, dividends and other forms of capital income. Supporters of these taxes keep making the same fallacious argument. The purpose of this post is to shame those people out of ever making that argument again. (They are, of course, free to make other arguments.)

The fallacy I have in mind goes like this: First, economics teaches us that everything should be taxed at the same rate to avoid unnecessary distortions. Second, QED.

With appropriate caveats, the first part is true. The problem is with getting from there to the second part.

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n Guilty Men

Published
by
Steve Landsburg
on January 20, 2010
in Bad Reasoning and Policy
. 29 Comments

jury

Whenever I ask about the reasoning underlying some legal principle or another, my friend the law professor is always quick to remind me that “there is no such thing as legal reasoning”. So it is with William Blackstone’s famous doctrine that it’s better for ten guilty men to escape than for one innocent to suffer. Why ten? Because that’s the first number that happened to enter Blackstone’s head; that’s why.

Writing 200 years after Blackstone, Emory Law School professor Alexander Volokh surveyed the history of alternatives to “ten” in a charming essay called n Guilty Men. The bottom line is that a great many alternatives have been offered, almost never with anything approaching a justification.

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Wind Production

Published
by
Steve Landsburg
on January 11, 2010
in Bad Reasoning and Economics
. 34 Comments

Once upon a time in America, whenever an administration spokesman spouted economic nonsense, you could rely on Paul Krugman for a sneer, a blast of outrage, and frequently an imputation of the basest motives. That time ended on approximately January 20, 2009. Today Krugman sleeps at the wheel while administration press spokesman Robert Gibbs spews forth the following:

I think it’s safe to say that for quite some time, when it came to building the solar panels and the wind towers and the wind turbines and a lot of the manufactured equipment for clean energy, we had a number of foreign countries that were doing much better in addressing that demand than we were. And as the President has said often, the type of demand for these components in manufacturing is only going to increase as we seek solutions to our energy problems.

And we have to ask ourselves as a country, are we going to create those jobs and create those components, or are we going to import those components from overseas? The President believes that we have an opportunity to lead the world in this type of manufacturing.

Nobody in the Bush administration ever displayed more economic ignorance, but Krugman was all over those guys every time they came close. Now he lets it slide. So let me do his job for him:

When the domestic demand for a product increases, the law of comparative advantage tells you to import more of it, not less. If it is in fact true that “the type of demand for these components is only going to increase” then American manufacturers might want to start producing them, but American consumers will certainly want to import more of them, and any attempt to circumvent that is a good way to make Americans poorer.

(For those following along in their economics textbooks: The world supply and demand for, say, wind turbines, must be more elastic than the domestic supply and demand, so a demand shift has a smaller effect on the world price than the autarkic domestic price and so must increase the foreign comparative advantage—or decrease the domestic comparative advantage, if any.)

For goodness’s sake—if Barack Obama or Robert Gibbs discovers that he really likes bananas on his Cheerios, is his first thought that he’d better start growing bananas, or is his first thought that he’d better figure out where to buy them? That’s the kind of question Paul Krugman used to ask. I miss him.

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What Went Wrong

Published
by
Steve Landsburg
on January 5, 2010
in Bad Reasoning, Economics and Policy
. 29 Comments

At Big Think, a consortium of bloggers (including me) have been invited to submit questions for use in video interviews with major players in the financial crisis. I posed a question to Mark Zandi, the chief economist at Moody’s, who had recently said this:

“It’s no coincidence that the great recession ended just as the stimulus package began providing its maximum economic benefit.”

My question was:

How do you know?

Here, from the video, is Mr. Zandi’s answer:

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Of Jerks and Bullies

Published
by
Steve Landsburg
on December 18, 2009
in Bad Reasoning, Book, Economics and Policy
. 18 Comments

Over at National Review Online, John Derbyshire starts off with some kind words about The Big Questions, and then goes off on an ill-considered screed about immigration. First, by all means let’s quote the kind words:

Steven’s new book, The Big Questions, has a lot of good things in it, as one would expect from an author who proudly declares himself a math geek. His explanation of Heisenberg’s uncertainty principle (pages 135–141) is a model of clarity in the popularization of science. His geometrical illustration of a Talmudic rule on the division of an estate (pages 205–213) shows the mathematical imagination at its best.

Landsburg is an economist by profession — a professor of economics, in fact — and has the economist’s insight that many matters commonly discussed in terms of morality can be reduced to cold arithmetic: “When things are priced correctly, there’s no need to moralize about them.” He gives some illuminating examples.

But then things take a darker turn:

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