Archive for the 'Slippery Slope' Category

Interests are More Powerful than Ideas?

December 9, 2012
THE BIG STORY OF SPENDING

THE BIG STORY OF SPENDING

by Mario Rizzo

There is an interesting interview with Ed Feulner, the outgoing president of the Heritage Foundation, in the weekend (Dec. 8-9) Wall Street Journal. The interview got me thinking about the progress made in the pro-economic-liberty cause, not only over the years of Heritage, but since, say, 1960. Read the rest of this entry »

Healthcare as Social Planning

July 21, 2011

by Mario Rizzo

Although I am an advocate of voluntary birth control, I am not happy about (1) the equation of this choice with healthcare – even preventative healthcare (as if pregnancy were a disease); and (2) the government mandating that health insurers must cover these expenses, without even a copayment. Read the rest of this entry »

Libya and the Rule of Law

March 27, 2011

by Mario Rizzo  

Frank H. Knight had an important insight about economics. Howsoever we may seek to narrow it, the basic human interests that make the subject important lie at the intersection of ethics, the theory of knowledge, and psychology (at least in a broad sense).  Friedrich Hayek was also right to think that the insights of law and the insights of economics can be mutually beneficial.  

Classical liberalism, however, is not simply economics even in a broadened sense. It is a philosophy about the limits to state power and action even when the goals are alleged to be good or holy. Classical liberalism, as Hayek taught us, is about appropriate means and not simply about the desirability of ends.  

ThinkMarkets is vitally concerned with economics, it is true, but also more generally with classical liberalism and it application to real-world problems. Accordingly, one of the main concerns of this blog has been the rule of law (albeit applied mostly to issues of economic policy).  Another important concern has been the slippery slope processes that get policy-makers and, more importantly, the public into situations that are unforeseen and undesirable.  

This brings me to the Libya question. Read the rest of this entry »

Easy Money, Emerging Market Miracles and the Revival of Industrial Policies

March 9, 2011

by Andreas Hoffmann and Gunther Schnabl

While most advanced economies continue to suffer from high unemployment and record debt levels, monetary expansions in the advanced economies feed a tsunami of carry trades, hiking asset and raw material prices and accelerating growth rates in emerging markets from Brazil over the Middle East to China. While capital inflows drive miraculous catch-ups in many corners of the world – having learnt the lesson for the recent mega-crisis – the monetary authorities in the emerging markets are aware of the risk of financial market exuberance. They aim to prevent inflation and bubbles by absorbing surplus liquidity and tightening credit growth.

Yet by doing so, they cause distortions in the real sectors of their economies, which are not on the radar screen of the now ballooning financial supervision bodies. Read the rest of this entry »

Could Sarah Palin Be Right?!

December 30, 2010

by Mario Rizzo  

In an editorial the Wall Street Journal criticizes Sarah Palin for criticizing Michelle Obama’s anti-obesity campaign. The point seems to be that such talk from the Ms. Bully Pulpit is innocuous or benign. The writer makes an analogy with Nancy Reagan’s “Just Say No” anti-drug campaign. 

Now if Michelle Obama were just a Chicago-based community activist who was organizing a nation-wide propaganda campaign to urge people to eat healthily I would have no objection.   Read the rest of this entry »

Pragmatic Road to Bankruptcy

September 16, 2010

by Mario Rizzo

In the September 15th Wall Street Journal there is a chart that gives a quick view of the “pragmatic” expansion of entitlement programs that has led to where we are now. Who could have predicted the long-term consequences of case-by-case pragmatic problem solving?  I suggest Herbert Spencer, Ludwig von Mises, and Friedrich Hayek. Read the rest of this entry »

Lament for Conservatism

September 14, 2010

by Mario Rizzo  

In today’s New York Times David Brooks argues that conservatives need to plan for “the day after tomorrow.” Tomorrow there will be the revolt against out-of-control government and that is good. But the day after America must return to its traditional non-ideological pragmatism about government. We need to solve problems as we find them. Government used in wise ways can be very helpful.   

But what are these pragmatic government policies? Was it not one “fix” after another with little thought to the kind of society being created that has produced what we have today. I have no objection to “pragmatism” if it is a far-seeing pragmatism that looks to consequences – both indirect and complex.  

The conservative reaction against “ideology” is a total misconception. A “good” ideology is a philosophy that focuses our attention on the long-run, Bastiat’s “unseen,” and the fundamental values of a free society. Most of all, however, it helps us focus on those rules that act to resist the special interests who would undermine the structure of a free society, one issue at a time.  

This ideology is classical liberalism. If we truly understand how things went wrong in the over the past many decades, we would see that non-ideological pragmatism does not inspire confidence.

When Nudging Isn’t Enough

July 16, 2010

by Glen Whitman

In a New York Times op-ed, George Loewenstein and Peter Ubel argue that policymakers are relying too heavily on behavioral economics, when traditional — that is, rational choice — economics would often serve them better.

On cursory reading, you might think this op-ed repudiates the facile use of behavioral economics to guide policy. But in fact, the authors encourage us to go further down that road. They do so by questioning the efficacy of behavioral policies while implicitly accepting behavioral welfare analysis. Read the rest of this entry »

The Cost of Making Exceptions

June 6, 2010

by Mario Rizzo  

As a political and legal culture, we do not know how to deal with slippery-slope tendencies. The recent discussion (here and here, and many other places) of the public-accommodations provision of the Civil Rights Act of 1964 has made me more conscious of this issue.  

I am willing to agree for purposes of this post that the law forbidding private storeowners, hotels, and other merchants to discriminate on the basis of race was morally justified under the institutional conditions of the day.  

The problem, from my perspective, is that the cost of making exceptions to general principles is not sufficiently appreciated. Benefits may exceed costs in a particular case, but if these costs are not fully recognized, the course of action taken may lead to bad decisions down the road.  Read the rest of this entry »

New Paternalism, Regulation and Cass Sunstein

May 17, 2010

by Mario Rizzo

The New York Times magazine has an interesting, if somewhat uncritical, article on Cass Sunstein, the Obama regulation czar. The “best” part is the section about me:

Some scholars dislike the strong, if subtle, governmental hand that is embedded in this last proposal. It seems more forceful than a nudge. “Once you get to a point where you have automatic enrollment, you raise the question, What kind of fund?” Mario Rizzo, a professor of economics at New York University, says. “The problem is that if you were enrolled automatically, you could complain later that you’d been put into either a too-risky or a too-conservative fund. So then you micromanage that and you say you have to have a balanced fund. But pretty soon you’re on a slippery slope, where you’re dictating people’s retirement choices.” Rizzo told me about an academic study of gift-giving that found that most people would value cash more highly than the gifts they get for holidays; if even your friends and family can’t figure out what you want, he asked, how can a distant bureaucrat? “Sunstein is very taken with the need for experts,” Rizzo says. “But it turns out experts are subject to these cognitive quirks, too.” Read the rest of this entry »

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