Interpreting Statistics

by Gene Callahan

There is always a temptation to think of a statistic as a simple, straight-forward fact: Numbers don’t lie. Consider this statement from Newsweek from an article on structural unemployment in the US:

‘Another theory is that Americans are less willing to move to take jobs. The McKinsey study reports that, in the 1950s, one in five Americans moved every year; now it’s one in 10. “Work is more mobile than workers,” says Camden.’

What could be clearer? Workers are less willing to move. Just look at the numbers!

But let me suggest that things are not so simple as they appear.

The Attack on Dignity and Moral Autonomy: The Case of Cigarettes

by Mario Rizzo

The latest in the paternalistic actions of the federal government are a kind of reductio ad absurdum.  At least this is how it might have seemed ten or fifteen years ago if someone would have said that cigarette-pack health warnings would become graphic pictures designed to horrify the public into not smoking. 

Freeing Marriage from Church and State

by Mario Rizzo

The passage of a same-sex marriage bill in New York State is to be welcomed by all those who advocate freedom of contract. But now further steps must be taken on the road to free marriage from state interference.

The content of the commitment that people make to each other under the rubric of marriage should be up to individual choice, although I have no object to a standard-form contract for those who may find choices confusing. And secondly the existence or non-existence of a marriage should not be a condition for tax or any kind of welfare-state privileges.

Policy Makers and Irrational Exuberance

by Chidem Kurdas

Robert Shiller says the speculative bubble in real estate was driven by “a contagion of optimism” that pushed up prices and expectations in a feed-back loop. This epidemic apparently engulfed regulators as well.  “Government policy makers breathed in the same optimism, which no doubt encouraged them to be lax on regulatory restraint,” he writes in a NYT column.

This is a plausible explanation of the psychological mechanism that operates in any bubble. It eventually collapsed and led to the property slump that underpins the current economic malaise And Professor Shiller is right that public officials are not immune. But federal entities breathing in heady fumes is different from anybody else breathing in the same.

We should pay more attention to Radley Balko

by Roger Koppl

On June 14th, Radley Balko posted an article on Huffington Post entitled “Private Crime Labs Could Prevent Errors, Analyst Bias: Report.”  He explains some of the problems of forensic science in the US.  He suggests that “rivalrous redundancy” could improve the system and links to my 2007 Reason Foundation Report explaining how rivalrous redundancy works. 

For years, Radley has documented shocking problems in the American criminal justice system from no-knock warrants, to the snitch system, to forensic science.  He contributed to the July 2011 special issue of Reason magazine on “Criminal Injustice.”  The criminal justice system is the great fulcrum point where the power of the state meets the people.  We need to be more conscious of the problems of our criminal justice system and the risks to our liberties created by those problems.  And liberty loving scholars need to think harder about the nature of the problem and what to do about it.

We Told You So

by Mario Rizzo  

In recent months – or has it been years? – Paul Krugman and Brad DeLong have been saying, in effect, “We told you so – the stimulus was not enough. Look at the sluggish economy and high unemployment rate.”

They are arguing that the problem with the fiscal stimulus is that it was not enough. The idea was right but the quantity was wrong.

Let it pass that at ThinkMarkets it was predicted that this is what the stimulus advocates would say in the event that the economy did not improve as much as they wanted.   

The basic problem with the quantitative claim is that it skirts some real problems in the analysis.

1. What was supposed to happen when the lines of spending actualized by the stimulus were exhausted?
2. How was the stimulus supposed to jump start private spending? Even the advocates of fiscal stimulus were not saying that the government stimulus had to be permanent .

How to Teach the History of Economic Thought

by Gene Callahan

I was recently asked about a good textbook to use in teaching the history of economic thought. Well, last year I had used William Barber’s book, and found it wholly adequate. But as I was teaching the course, I became somewhat uneasy about the textbook approach. I started to feel I was giving what Michael Oakeshott referred to as a “museum tour” of that history: “Over there, on your left, is Aristotle… he held exchange should take place when values exchanged are equal. There, on the right, is Adam Smith. Do you see the extensive division of labor in his diorama? Just past him is David Ricardo…”

Too Much Aid Will Hobble Arab Spring

by Mario Rizzo

For those who have access to the Financial Times, a must-read is the opinion piece by Saifedean Ammous. Saif attended our NYU colloquium regularly during his last year as a graduate student at Columbia University. Congratulations.  See the FT online here.

Great New Blog

by Bill Butos

Friends of ours, including Richard Ebeling, Steve Horwitz, Gerry O’Driscoll, George Selgin, and Larry White, and others, are contributors to a new blog on “Free Banking”.

Quoting its credo, 

“The Free Banking blog is a venue for leading free banking advocates to share their insights with the world. This illustrious cast includes academics, public policy experts, government officials, and rabble rousers. Guest bloggers will feature financial gurus, entrepreneurs, historians, celebrities, and many other different perspectives.
We hope that making these ideas and conversations more accessible will help educate the lay public, amateur economists, and influential intellectuals. Most importantly we aspire to promote and facilitate the transition to free banking in both developed and developing countries.”

Japan Reveals Regulatory Trap

by Chidem Kurdas

Once upon a time, people tried to explain the post-war “Japanese Miracle” of rapid growth. Then in the current century, the puzzle shifted to Japanese stagnation since 1990. The lesson from these two distinct phases of Japanese history is germane for current American policy.

Chalmers Johnson’s influential book, MITI and the Japanese Miracle (1982), examined how the powerful Ministry of International Trade and Industry had guided and regulated the economy.  MITI implemented industrial policy in what Mr. Johnson called a defining characteristic ofJapan, namely close collaboration between politicians, economic bureaucrats and big business.

MITI’s successor, the Ministry of Economy, Trade and Industry, promoted the use of nuclear power. The ongoing problems at Fukushima Daiichi nuclear plant threw new light on METI. The plant’s operator, Tokyo Electric Power Co., is a monopoly fostered by regulators. The government announced that the Nuclear and Industrial Safety Agency will now be separated from the Ministry, to give it greater independence.