Reading/viewing for 2.15

Hi Folks,

Here is another Stossel (Update: link fixed) for this week from Coleman on the subject of education reform.

Also check out this article, which apparently comes from a very different perspective. Despite the apparently radically different values and views of each side, can you spot the many ways in which the basic idea is similar? How does framing bias distort the apparent differences while minimizing the many similarities?

Tax policy, greed, self-interest

Just to even the score a bit, I thought I'd start posting weekly reactions to our reading/viewing materials as well, to give you a sense of different ways you can approach your blogging. 

After class today I had a few more thoughts about some of the precise difficulties in pinning down this notion of greed. 

It may be a bit odd to describe someone as "greedy for knowledge" (we usually speak of a "hunger" or "thirst" for knowledge) but it certainly sounds less strange to talk of someone being greedy for money. In the video for today, Bill Gates and Warren Buffet were offered as examples of people who created things of use and value out of selfish greed. However, over time both have given more money to charity. So if they were motivated all along by a desire to give away money to charity eventually, were their actions still then instances of greed? Furthermore, charity itself is now more like business. The Gates foundation has been remarkable for applying a sort of cold, calculating logic to charity, which in turn has made it all the more effective in helping people. The line between business and charity has begun to blur; it may one day disappear, which would possibly be a good thing. Some have even spoken of charity as a type of venture capital. (Maybe the Gates Foundation could invest in helping out the workers in their supposedly cooler, nicer rival's factories). Does applying ideas that Stossel associates with greed--efficiency, maximizing returns, etc.--to charity make it greedy too? 

My main reservation about describing all economic self-interest as "greedy" is that this opens the door to bad policy. It is no doubt good for the economy to have businesses seeking to maximize their profits. As long as they are operating within the bounds of legal and ethical strictures, such activity will help to make for a more efficient and prosperous country as they seek to find ways to cut costs while making better products. However, it seems to me that part of the goal behind extolling "greed" rather than self-interest is to lump together helpful practices with potentially harmful practices. Perhaps greed motivates some business people to pursue profits. But if we then conclude from this that greed is good, what is wrong with lobbying the government to pass regulations that favor one business over its competitor? Stossel may argue that this is a use of the government to increase wealth. OK, that's fair enough, but let's consider a similar example that works through the opposite mechanism. If a company lobbies the government to relax regulations that prevent them from dumping harmful waste or polluting the environment while simultaneously limiting the ability of those harmed by the pollution to sue for damages, then the company is eliminating government control. It can then reduce its environmental compliance costs without breaking any laws. Why does this violate Stossel's claim that any greed that does not employ the power of the state is somehow good? The response would probably be that it seeks to make money by causing harm to others. But then we are reduced to taking things on a case by case basis. Why not just reserve the word "greed" for such instances of harmful selfishness rather than trying to distinguish a good greed from a bad greed?

On some level I think that the purpose of Stossel's argument is precisely to make it impossible to come to any reasonable standard of what constitutes economic fair play. That way it becomes possible to argue that the particular type of greed under consideration is good when it benefits you but to argue that it is bad when it does not benefit you. As an example: aarguably Stossel was harassing that wrestler and impugning the reputation of his employer, so it was with a type of good greed that he reacted when hit him--violence was necessary to disprove the point that Stossel was making, and thus was not intended to hurt him, just to look out for his interests. Why do I get the feeling that Stossel would not agree with this (he sued the WWF; they settled out of court for a six figure sum)? If there is no reasonable standard for separating greed from enlightened self-interest, then people start to develop a negative opinion of markets and will be more skeptical of any policy that engages them, even if they seek to generate outcomes that benefit society as a whole. Right now the distrust of markets is leading people to advocate soak-the-rich taxation policy because people see such wealth as having stemmed from greed. The problem with this is that some policies that might actually allow rich people to lower their tax burden by investing or donating to charity would discourage them from spending their wealth on luxury items for personal consumption. Lowering taxes on the wealthy might actually encourage more charity and more investment. If all economic activity is just greed, then no one will consider such policies because they won't expect the rich to serve any useful function in the first place.  

Essay #2

We'll be meeting in the library this Friday in room 041, to prepare for the next essay, which will be due Monday, February 27th (bring rough draft on Friday the 17th and Friday the 24th).


Our eventual goal in the class is to produce a term paper that offers a detailed policy analysis of a particular topic of interest to you and which is informed by the classical economists we have read.

In preparation for this, our next paper will aim at producing an analytical summary of a particular policy issue. For this assignment, I want you to design an argumentative paper that explains and informs a general reader about your particular policy. Do not list disjointed pieces of information about the subject, but rather make an informative argument about what people often misunderstand about your issue, how it is possible to clear up those misperceptions, and what is most important to know about your issue in order to understand it most accurately. In other words, you want to explore the argumentative potential of informational modes of discourse, rather than just list facts. 

Do not feel that you are stuck with whatever topic you choose. In fact, I want us to use this assignment as an opportunity for teaching each other about various different policies. After we turn in this paper, I want us to briefly share our findings with the class through short, informal, 5-10 minute presentations. Just prepare a small handout that distills your findings and then present it to the class. Hopefully, this will serve as a kind of "topics fair" that allows the class to explore a wide variety of different subjects that might be of interest to them.

For this paper, I'll ask that you include at least one academic source (books, journal articles) and two other sources (can be academic or from substantive newspapers or periodicals). You can of course use the blogs we have been reading or other similar websites, but avoid using online encyclopedias or informational websites (about.com, for example) as a source. You can read these for background information, but don't cite them as sources. The paper should be in the neighborhood of 4-5 pages double spaced, in 12 point Times New Roman Font, with one inch margins all around. 

Finally, remember that the more specific you can be, the better. Medicare is a better topic than health insurance in general; the Medicare Independent Payment Advisory Board (IPAB) is a better topic than Medicare in general; and comparisons of two specific cost-reduction schemes associated with IPAB is a better topic than IPAB in general.

TBA clip/reading for 2.8

Hey folks,

For Wednesday check out this link to a John Stossel video. It's a good example of a modern Mandevillean perspective (how exactly would this differ from a modern Smithian perspective?)

If you have time, also check out the runner up topic for this week, the article on monetary policy regimes. It's short and will probably be of interest for many, and it will also help understand some of what we have talked about and will talk about.

One last thing: this coming Friday we'll be meeting with Libby in the library for some instruction related to the next assignment and to the library more generally.

TBA reading 2.1

Here's the link to the reading for Wednesday.

Update: For those of you interested in the Gold Standard and the operation of the Federal Reserve, you might check out the podcasts available here and here. The show is called "Breakdown" and basically explains issues in contemporary policy. It's no longer producing more episodes, but the host, Chris Hayes, has a cable show now on MSNBC. The podcast comes from _The Nation_ so it's definitely left leaning, but he is very fair and quite friendly with conservative policy wonks like Reihan Salam, Kevin Williamson, and Tim Carney, frequently inviting them on his new TV program.

Is the Venus Project just a name for "the direction the economy is already heading"?

Right after class I found this article from one of the more interesting bloggers out there. He's a libertarian who wants to reform our monetary system (the dollar would be backed by futures contracts rather than gold) but who also favors heavy redistribution ("on utilitarian grounds" as he puts it, meaning money is more useful to the poor than to the rich)  and thinks the Scandinavian countries are among the most free-market around.

The fascinating thing about this is that he basically is saying a version of the same thing as the Venus Project, but just recasting it in purely descriptive language: basically, the economy is headed almost by necessity toward something that looks like the Venus project. It is the inevitable outcome of capitalist prosperity.

Marx, of course, also said that capitalism would inevitably lead to communism--he just was more focused on the negative aspects, namely, that people would rise up against a system in which such a tiny minority owned the majority of wealth. As automation proceeds, the owners of capital thereby own an increasing share of the wealth even as aggregate wealth is increasing, which would necessitate redistribution. Of course, this is what this blogger is saying too--he's just casting redistribution as something done voluntarily (which I suppose does not exclude the Marxist claim at all that the capitalist is just doing this out of a fear that if he does not people will just take it from him anyway).

So three apparently radically different philosophies--Marxism, a version of libertarianism, and whatever the Venus project is--are all basically saying the same thing. The way questions are framed can make an enormous difference.

TBA reading 1.25

Here's a link to the Venus Project's "Aims and Proposals" section. Check out the website more generally and we can talk a bit about what they seem to be advocating.

Also check out the following podcast. It's nice and short and pretty interesting, and it describes another example of an idealistic-utopian proposal for economic reform: "participatory economics."

Essay 1 and MLA