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[VIDEO] Deirdre McCloskey: What are the Biggest Misunderstandings about Capitalism? 

What are the biggest misunderstandings about capitalism? Deirdre McCloskey, professor at the University of Illinois at Chicago, argues that contrary to common belief, it’s not the amount of capital that has been amassed which sets the last two centuries apart, but rather the explosion of innovation—which in turn has made the capital investment worth it.

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Capitalism is the Great Anti-Pollutant

Climate science today is a veritable cornucopia of unanswered questions. Photo: Corbis

Contrary to popular myth, the environment over the past 200 years has become less polluted and toxic for humans.

In July 1924, Calvin Coolidge Jr., the Presdient’s 16-year-old son, died of an infection from a toe blister he got playing tennis on the White House lawn. The bacteria that took young Calvin’s life is staphylococcus aureus, known as “staph.” …

Were health-care products such as antibiotics, antibacterial ointments, and inexpensive clean and disposable bandages available 92 years ago, Calvin Coolidge Jr., would have escaped the bacterial pollution that killed him. Factories and vehicles used to produce and distribute these items use energy, and dispense waste. But capitalist production and consumption are not destroying a pristine Eden. Instead, capitalist production and consumption are replacing more immediate and more lethal forms of environmental pollution for less immediate and less lethal forms.

We denizens of modern market economies are today largely free not only of the filth of lethal staph infections, but also of other up-close and dangerous pollutants that our ancestors routinely endured, or died of. We sleep, in sturdy buildings, on beds that rest on hard floors beneath hard roofs. Our pre-industrial ancestors did not. Save for the tiny fraction of people in the nobility and clergy, nearly everyone slept in flimsy huts on dirt floors beneath thatched roofs. (Sometimes these dirt floors would be strewn with hay, thresh, to make them less unpleasant.)

Not only were thresh-strewn dirt floors obvious sources of regular up-close pollution of a sort that is unknown to a typical first-world person today, thatched roof themselves were ferments of filth. They kept out rain and cold less effectively than our modern dwellings. Worse, they were home to rats, mice, birds, spiders, hornets, and other animals, which would drop their own wastes onto the huts’ inhabitants. They were also highly flammable.

Of course these pre-industrial huts contained no running water or indoor plumbing. Daily bathing and other routines of personal hygiene that we moderns take for granted were largely unknown to most before the industrial revolution.

For heat in the winter families would bring farm animals into the huts, especially at night. To shield themselves from the droppings of these farm animals, each of these families would cut a trench in the floor across the width their hut. They’d sleep on the side of the trench opposite where the animals slept. Unfortunately, the trench did little to protect the family from whatever insects the animals brought into the huts with them. Read the rest of this entry »


Rick Lowry: The Pope’s Climate Bull Ignores a Secular Miracle

Nov. 15, 2014 - Vaticano - 1099818 : (Donatella Giagnori / EIDON),  2014-11-15 Vaticano - Pope Francis holds an audience with members of the Association of Italian Catholic Doctors - Pope Francis greets members of the Association of Italian Catholic Doctors at Paul VI Hall on November 15, 2014 at Vatican (Credit Image: © Donatella Giagnori/Eidon Press/ZUMA Wire)

A quasi-religious movement now has a genuinely religious leader

Rick LowryRich-Lowry writes: The pope’s encyclical on the environment is being hailed for its embrace of science, although it is about as scientific as the Catholic hymnal.

Pope Francis writes that Sister Earth “now cries out because of the harm we have inflicted on her by our irresponsible use and abuse of the goods with which God has endowed her.” Really? Is that what the United Nations’ Intergovernmental Panel on Climate Change says?

“The average person in the world of 1800 was no better off than the average person of 100,000 B.C. …Life expectancy was no higher in 1800 than for hunter-gatherers: 30 to 35 years. Stature, a measure both of the quality of diet and of children’s exposure to disease, was higher in the Stone Age than in 1800.”

— Gregory Clark, author of A Farewell to Alms: A Brief Economic History of the World

The Catholic Church brings comfort and meaning to the lives of countless millions. That doesn’t mean that climate science, economic policy and cost-benefit analysis are its core competencies.

Environm

“But at least when everyone died at a much earlier age, we weren’t engaging in the ravages of the planet that so exercise Francis.”

No one has ever said: Yes, but what did Gregory VII do to fight the onset of the Medieval Warm Period?41PJ8r7zYVL._SL250_

All that matters to the media, though, is that Pope Francis has taken an apocalyptic climate alarmism and given it the imprimatur of the Vatican.

[Check out Gregory Clark’s book “A Farewell to Alms: A Brief Economic History of the World” at Amazon.com]

The same people who dismiss the pope on more central moral matters, like the dignity of life, are now attributing to him an authority that might have made Pope Innocent III, who challenged kings, blush.

The document could have benefited from an editor cutting out the bizarre ramblings. The pope writes of “harmful habits of consumption,” including “the increasing use and power of air conditioning.” He argues that “an outsider looking at our world would be amazed at such behavior.”

That’s assuming the outsider lives in a very cool climate, or doesn’t mind sweating. Anyone not so lucky probably thinks the inventor of air conditioning should be canonized.

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“This sinful assault on the Earth, by the way, largely consisted in taking otherwise completely useless glop from the ground and using it to power economic and technical advances that enriched average people beyond anyone’s imagining. This is obviously a secular miracle of the highest order.”

While the pope pays lip service to technological advances, he doesn’t truly appreciate their wonders. The Industrial Revolution was a great boon to humankind.

Consider the unrelieved misery — the disease, the poverty, the illiteracy — before around 1800, when if you weren’t an aristocrat, a general or a bishop, your life was probably nasty, brutish and short.

[Read the full text here, at New York Post]

“The average person in the world of 1800 was no better off than the average person of 100,000 B.C.,” Gregory Clark writes in his book “A Farewell to Alms: A Brief Economic History of the World.” Read the rest of this entry »


Stop Obsessing About Inequality. It’s Actually Decreasing Around the World

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Many Americans point to globalization as a bogeyman, robbing our country of good jobs and resources. But really, the phenomenon has ushered a period of unprecedented prosperity in many poor countries.

imrs.phpMarian L. Tupy writes: Is inequality increasing or decreasing? The answer depends on our point of reference.

In America, the income gap between the top 1 percent and the rest has grown. But if we look not at America, but the world, inequality is shrinking. We are witnessing, in the words of the World Bank’s Branko Milanovic, “the first decline in global inequality between world citizens since the Industrial Revolution.”

For most of human history, incomes were more equal, but terribly low. Two thousand years ago, GDP per person in the most advanced parts of the world hovered around $3.50 per day. That was the global average 1,800 years later.

Ask AP

But by the early 19th century, a pronounced income gap emerged between the West and the rest. Take the United States. In 1820, the U.S. was 1.9 times richer than the global average. The income gap grew to 4.1 in 1960 and reached its maximum level of 4.8 in 1999. By 2010, it had shrunk by 19 percent to 3.9.

That narrowing is not a function of declining Western incomes. During the Great Recession, for example, U.S. GDP per capita decreased by 4.8 percent between 2007 and 2009. It rebounded by 5.7 percent over the next 4 years and stands at an all-time high today. Rather, the narrowing of the income gap is a result of growing incomes in the rest of the world.

Consider the spectacular rise of Asia. In 1960, the U.S. was 11 times richer than Asia. Today, America is only 4.8 times richer than Asia.

mao-propaganda

To understand why, let’s look at China.

Between 1958 and 1961, Mao Zedong attempted to transform China’s largely agricultural economy into an industrial one through the “Great Leap Forward.” His stated goal was to overtake UK’s industrial production in 15 years. Industrialization, which included building of factories at home as well as large-scale purchases of machinery abroad, was to be paid for by food produced on collective farms. Read the rest of this entry »


The Man Behind the Hong Kong Miracle

freeman-HK

Some of us just write about libertarian ideas. This guy actually made them public policy for millions.

[Also see our EXCLUSIVE companion article “UNDERNEATH the “Hong Kong Miracle”]

For The FreemanLawrence W. Reed writes: Three cheers for Hong Kong, that tiny chunk of Southeast Asian rock. For the twentieth consecutive year, the Index of Economic Freedom—compiled by The Wall Street Journal and the Heritage Foundation—ranks Hong Kong (HK) as the freest economy in the world.

“Maybe this is why socialists don’t like to talk about Hong Kong: It’s not only the freest economy, it’s also one of the richest.”

Though part of mainland China since the British ceded it in 1997, HK is governed locally on a daily basis. So far, the Chinese have remained reasonably faithful to their promise to leave the HK economy alone. What makes it so free is music to the ears of everyone who loves liberty:  Relatively little corruption. An efficient and independent judiciary. Respect for the rule of law and property rights. An uncomplicated tax system with low rates on both individuals and business and an overall tax burden that’s a mere 14 percent of GDP (half the U.S. rate). No taxes on capital gains or interest income or even on earnings from outside of HK. No sales tax or VAT either. A very light regulatory touch. No government budget deficit and almost nonexistent public debt. Oh, and don’t forget its average tariff rate of near zero. That’s right—zero!

“Over a wide field of our economy it is still the better course to rely on the nineteenth century’s ‘hidden hand’ than to thrust clumsy bureaucratic fingers into its sensitive mechanism.”

— Sir John James Cowperthwaite, 1962

This latest ranking in the WSJ/Heritage report confirms what Canada’s Fraser Institute found in its latest Economic Freedom of the World Index, which also ranked HK as the world’s freest. The World Bank rates the “ease of doing business” in HK as just about the best on the planet. Read the rest of this entry »


Cuba: The Lost World, Part II

Yellow building Trinidad

This is the second in a two-part series about Cuba beyond HavanaClick here for Part I.

Michael J. Totten writes:  Most of Cuba is flat with low rolling hills, but after leaving Cienfuegos and heading toward Trinidad, I saw the Escambray Mountains—home of the anti-communist insurgency known as the Escambray Rebellion—off in the distance.

The island finally had a skyline.

Those mountains might be a nice place to camp or go hiking (you would not want to camp or hike in the sweltering lowlands), but the overwhelming majority of Cubans have no way to get there. They aren’t prohibited from traveling to or in the mountains, but hardly anyone owns a car. Salaries are capped at twenty dollars a month. Driving to the mountains for a day hike from Havana would cost more than a months’ salary just for the gas. A bus ticket likewise costs more than a month’s salary.

Animal and Car Trinidad

Then it hit me, ton-of-bricks style. Most Cubans have never seen those mountains. Nor have they seen Trinidad, one of the oldest Spanish colonial cities in the hemisphere which lies on a narrow coastal plane between the Escambray and the Caribbean.

Read the rest of this entry »


Rickets Making a Comeback in the U.K., Doctors Say

300px-Rickets_USNLMMaria Cheng reports:  (LONDON) — Rickets, the childhood disease that once caused an epidemic of bowed legs and curved spines during the Victorian era, is making a shocking comeback in 21st-century Britain.

Rickets results from a severe deficiency of vitamin D, which helps the body absorb calcium. Rickets was historically considered to be a disease of poverty among children who toiled in factories during the Industrial Revolution, and some experts have hypothesized it afflicted literary characters like Tiny Tim in Charles Dickens‘ “A Christmas Carol.”

Last month, Britain’s chief medical officer, Dr. Sally Davies, described the return of rickets as “appalling.” She proposed the country give free vitamins to all children under 5 and asked the country’s independent health watchdog to study if that would be worthwhile.

More… TIME.com


Gartner’s dark vision for tech, jobs

In a world where smart machines do most of the work, expect high unemployment, unrest and tumult

ROBOTS_B_400ORLANDO — Patrick Thibodeau writes: Science fiction writers have long told of great upheaval as machines replace people. Now, so is research firm Gartner. The difference is that Gartner, which provides technology advice to many of the world’s largest companies, is putting in dates and recommending immediate courses of action.

The job impacts from innovation are arriving rapidly, according to Gartner. Unemployment, now at about 8%, will get worse. Occupy Wall Street-type protests will arrive as early as next year as machines increasingly replace middle-class workers in high cost, specialized jobs. In businesses, CIOs in particular, will face quandaries as they confront the social impact of their actions.

Machines have been replacing people since the agricultural revolution, so what’s new here?

In previous technological leaps, workers could train for a better job and achieve an improvement in their standard of living. But the “Digital Industrial Revolution,” as the analyst firm terms it, is attacking jobs at all levels, not just the lower rung. Smart machines, for example, can automate tasks to the point where they become self-learning systems.

Read the rest of this entry »


The Marines Secret Weapon: Coffee

By MICHAEL HAFT AND HARRISON SUAREZ

 

Every American knows the story of the Boston Tea Party and its implications on the Revolutionary War. Lesser known, but perhaps of greater relevance to a nation recognized more for coffee breaks than tea time, is the fact that America’s taste for coffee is inextricably linked to the history of its military.

We weren’t aware of it until just recently. But in hindsight, it made perfect sense that we would become obsessed with coffee when we joined the Marines. As we later discovered, we were part of a long line of men whose enthusiasm for the drink was closely tied to their experiences in the service.

The Marines Secret Weapon: Coffee - NYTimes.com

As Capt. Robert K. Beecham wrote in his book, “Gettysburg: The Pivotal Battle of the Civil War”: “The power of the soldiers to endure the fatigue of the march and keep their places in the ranks was greatly enhanced by an opportunity to brew a cup of coffee by the wayside.”

Coffee’s popularity grew in the years following Reconstruction. But it didn’t become a household staple until the confluence of the Industrial Revolution, the rise of the advertising age and the cultural mixing that occurred during World War I. As William Ukers explained in The Tea and Coffee Trade Journal, “the 2,000,000 soldiers who went overseas and there had their coffee three times a day…since returning to civilian life are using it more than ever before.”

The Marines Secret Weapon: Coffee - NYTimes.com

By the time of World War II, American servicemen were consuming 32.5 pounds of coffee per capita, per year, with the Army Quartermaster Corps going so far as to roast, grind, vacuum pack and ship its own beans overseas. Meanwhile, legend has it that when soldiers in Italy encountered espresso, they watered it down to make a concoction similar to the coffee they drank at home. There are many competing accounts, but some people surmise that these were the humble beginnings of the drink we now know as an “Americano.”

Read the rest of this entry »


Was America’s Economic Prosperity Just a Historical Accident?

The Blip

What if everything we’ve come to think of as American is predicated on a freak coincidence of economic history? And what if that coincidence has run its course?

By Benjamin Wallace-Wells

Illustration by Mario Hugo

Picture this, arranged along a time line.

For all of measurable human history up until the year 1750, nothing happened that mattered. This isn’t to say history was stagnant, or that life was only grim and blank, but the well-being of average people did not perceptibly improve. All of the wars, literature, love affairs, and religious schisms, the schemes for empire-making and ocean-crossing and simple profit and freedom, the entire human theater of ambition and deceit and redemption took place on a scale too small to register, too minor to much improve the lot of ordinary human beings. In England before the middle of the eighteenth century, where industrialization first began, the pace of progress was so slow that it took 350 years for a family to double its standard of living. In Sweden, during a similar 200-year period, there was essentially no improvement at all. By the middle of the eighteenth century, the state of technology and the luxury and quality of life afforded the average individual were little better than they had been two millennia earlier, in ancient Rome.

Then two things happened that did matter, and they were so grand that they dwarfed everything that had come before and encompassed most everything that has come since: the first industrial revolution, beginning in 1750 or so in the north of England, and the second industrial revolution, beginning around 1870 and created mostly in this country. That the second industrial revolution happened just as the first had begun to dissipate was an incredible stroke of good luck. It meant that during the whole modern era from 1750 onward—which contains, not coincidentally, the full life span of the United States—human well-being accelerated at a rate that could barely have been contemplated before. Instead of permanent stagnation, growth became so rapid and so seemingly automatic that by the fifties and sixties the average American would roughly double his or her parents’ standard of living. In the space of a single generation, for most everybody, life was getting twice as good.

At some point in the late sixties or early seventies, this great acceleration began to taper off. The shift was modest at first, and it was concealed in the hectic up-and-down of yearly data. But if you examine the growth data since the early seventies, and if you are mathematically astute enough to fit a curve to it, you can see a clear trend: The rate at which life is improving here, on the frontier of human well-being, has slowed.

If you are like most economists—until a couple of years ago, it was virtually all economists—you are not greatly troubled by this story, which is, with some variation, the consensus long-arc view of economic history. The machinery of innovation, after all, is now more organized and sophisticated than it has ever been, human intelligence is more efficiently marshaled by spreading education and expanding global connectedness, and the examples of the Internet, and perhaps artificial intelligence, suggest that progress continues to be rapid.

But if you are prone to a more radical sense of what is possible, you might begin to follow a different line of thought. If nothing like the first and second industrial revolutions had ever happened before, what is to say that anything similar will happen again? Then, perhaps, the global economic slump that we have endured since 2008 might not merely be the consequence of the burst housing bubble, or financial entanglement and overreach, or the coming generational trauma of the retiring baby boomers, but instead a glimpse at a far broader change, the slow expiration of a historically singular event. Perhaps our fitful post-crisis recovery is no aberration. This line of thinking would make you an acolyte of a 72-year-old economist at Northwestern named Robert Gordon, and you would probably share his view that it would be crazy to expect something on the scale of the second industrial revolution to ever take place again.

“Some things,” Gordon says, and he says it often enough that it has become both a battle cry and a mantra, “can happen only once.”

Read the rest of this entry »


Karl Marx Was a Tea Partier

By Zombie

If you think of yourself as a Marxist or a progressive, you need to read this. (Tea Partiers may want to steer clear.)

Marxist theory can be summarized in two distinct ways.

The first view (held mostly by its detractors) is that Marxism is little more than the politics of resentment — a philosophical justification for the hatred of success by those who failed to achieve it. The politics of resentment offers three different methods for bringing its program of economic jealousy to fruition: Under socialism, the unsuccessful use the power of government to forcibly extract wealth and possessions from the successful, bit by bit until there is nothing left; under the more extreme communism, the very notion of wealth or success is eliminated entirely, and anyone who seeks individual achievement is punished or eliminated; and finally under anarchy, freelance predators would be allowed to steal or destroy any existing wealth or possessions with no interference from the state. Marx himself saw pure communism as the ultimate goal, with socialism as a necessary precursor, and perhaps just an occasional dash of anarchy to ignite the revolutionary fires.

But there is another, more intriguing and less noxious, view of Marxist thought that gets less attention these days because its anachronistic roots in the Industrial Revolution seemingly render it somewhat irrelevant to modern economics. Marx posited that factory workers should own the factory themselves and profit from its output, since they’e the ones actually doing the work — and the wealthy fat cat “capitalists” should be booted out of the director’s office since they don’t really do anything except profit from other people’s labor. Marx generalized this notion to “The workers should control the means of production,” and then extended it further to a national scale by declaring that the overall government itself should be “a dictatorship of the proletariat,” with “proletariat” defined in this context as “someone who actually works for a living.” The problem with this theory in the 21st century is that very few people actually work in factories anymore due to exponential improvements in automation and efficiency, and fewer still produce handicrafts, and the vast majority of American “workers” these days don’t actually create anything tangible. Even so, there is an attractive populist rationality to this aspect of Marxism that appeals to everyone’s sense of fairness — even to those who staunchly reject the rest of communist theory. Those who do the work should reap the benefits and control the system; hard to argue with that.

Although the “factory” is no longer the basic building block of the American economy, Marx’s notion that “The workers should control the means of production” can be rescued and made freshly relevant if it is re-interpreted in a contemporary American context.

Visualize the entire United States as one vast “company,” with citizens as employees and politicians and bureaucrats as managers. Everybody, in theory, works together to make the company successful. But there are two realities which shatter this idealized theory: first, only about half the employees actually ever do any work, while the rest seem to be on permanent vacation or sick leave; and second, our bureaucratic “managers” — just like the wealthy fat cats in Marx’s vision — simply benefit from the labor of others without ever producing anything of value themselves.

Now, this “company” known as the USA doesn’t operate in the way traditional companies operate. In our system, we create only a single product every year, a gigantic pile of money we call the “Federal Budget.” Each “employee” is free to engage in any profitable activity or profession of his choice, just so long as at the end of the year he (or she, obviously) adds his earnings to the collective pile, setting aside a certain amount for living expenses. The “managers” then decide how this gigantic pile of money is spent, presumably to keep the company healthy and strong.

Read the rest of this entry »