Thy neck is as a tower of ivory

If only we could write the right rules, everybody would play fair?

In what may be an impish spirit of fun, economist Don Boudreaux argues the case for insider trading (and quotes Henry Manne, a law colleague at his university, on the subject). The article is published by "Chinese" Rupert Murdoch's WSJ (motto: "Making the world safe for men on yachts").

But what if you see your objective as, not fair play, but winning?

Alas, sporting teams are not composed of referees.

(Picture: An ivory tower, as symbol of Mary, in a "Hunt of the Unicorn Annunciation" (ca. 1500) from a Netherlands book of hours.)

A glimpse from the rich man's coach

Here is a letter to the NYT from the insouciant Don Boudreaux. Unfortunately the comments to this piece on Cafe Hayek are closed - I wonder why? So I'll have to note here that it stirred a memory...

‘Now, you know,’ said Mr. Bounderby, taking some sherry, ‘we have never had any difficulty with you, and you have never been one of the unreasonable ones. You don’t expect to be set up in a coach and six, and to be fed on turtle soup and venison, with a gold spoon, as a good many of ’em do!’

Hard Times, by Charles Dickens

And another, from Shaw's Pygmalion:

I ask you, what am I? I'm one of the undeserving poor: that's what I am. Think of what that means to a man. It means that he's up agen middle class morality all the time. If there's anything going, and I put in for a bit of it, it's always the same story: 'You're undeserving; so you can't have it.' But my needs is as great as the most deserving widow's that ever got money out of six different charities in one week for the death of the same husband. I don't need less than a deserving man: I need more. I don't eat less hearty than him; and I drink a lot more. I want a bit of amusement, cause I'm a thinking man. I want cheerfulness and a song and a band when I feel low. Well, they charge me just the same for everything as they charge the deserving. What is middle class morality? Just an excuse for never giving me anything.

The American Declaration of Independence states "all men are created equal", and of course it was obvious even then that they are not so, whether by birth, upbringing, education or natural talent. Not, in those senses; but the bold defiance of Nature and Society represented by the libertarian revolution of America, and of revolutionary France, is that they have, they should be given, equal dignity, as of right.

And unless a tenured economics professor who boasts of not voting, in a colony that rebelled on the principle of "no taxation without representation", wishes to see the poor squashed while the rich loot the country without fear of retribution, he will need to develop his thesis somewhat.

I do not see how a country can be composed exclusively of the well-off, nor can I imagine how, given all their disadvantages, the poor may rise up as one and join the middle class. There will always be inequality, so our debate should be about setting a minimum standard for the poorest, while motivating them to better themselves if they possibly can. That's certainly a circle that will take some squaring, and a benefit-trap-riddled Britain can scarcely present itself as a model answer.

But I don't see how air conditioning and two cars (what? all poor families?) quite make up for the miseries of ill-health, disability and a shorter lifespan. And it's not entirely down to consciously-made bad choices, in quite the way Mr Boudreaux implies. The ideal-world notion of rational choice has to take into acount real-world limited intelligence, inadequate information, poorer education and in many cases disharmonious emotional constitutions produced by poor parenting, lousy neighbours, failing schools and fear of crime and destitution.

Dives should not look down upon Lazarus.

Are trade deficits a good thing?

This is from a professional academic economist in America. Is he correct? Should we cheer up?

Here's a letter that I sent recently to the Washington Times:

In "Other economic numbers need attention" (Oct. 16), William Hawkins assumes that every dollar increase in America's trade deficit is a dollar increase in Americans’ debt. Not so. If Mr. Hawkins pays for a new car with $20,000 cash and then observes the car dealer stuffing that cash into a mattress, Mr. Hawkins's trade deficit with that dealer rises by $20,000 while his debt to that dealer rises by exactly $0.

More fundamentally, the trade deficit means that foreigners invest in the U.S. rather than spend all of their dollars on U.S. exports. If Mr. Hawkins mistakenly thinks such investments to be undesirable, I have good news for him: as Uncle Sam meddles much more aggressively in capital markets, foreign investors will be scared away. America will then be much more likely to run trade surpluses - just as it did for nine out of ten years of the greatly depressed 1930s.

Sincerely,

Donald J. Boudreaux

The return of the gods

I perceive a theme in public opinion these days, regarding democracy. Taki has a piece in the Spectator this week, saying that even in ancient Greece it was empire and aristocracy. Highly intelligent professionals like Don Boudreaux boast of their refusal to vote. It seems that people think the system will continue to run more or less for our benefit, even if we take no part in it; just as your local shop will always be there, even though you very rarely patronise it.

Yes, rule us as you wish, as long as our kettles and TVs work, as long as there is petrol for our cars and the trains run on time. What we want is broth for our bellies, now, like Esau.

We may have to re-learn our lessons the hard way, as Kipling warned... and Cavafy:

Without consideration, without pity, without shame
they have built big and high walls around me.

And now I sit here despairing.
I think of nothing else: this fate gnaws at my mind;

for I had many things to do outside.
Ah, why didn’t I observe them when they were building the walls?

But I never heard the noise or the sound of the builders.
Imperceptibly they shut me out of the world.

The sky is dark, wings are flapping

Some, like Don Boudreaux of Cafe Hayek, call the doomsters Chicken Little. Well, many Chicken Littles make a Chicken Big, and she's coming home to roost. Or maybe the pessimists are all wrong, and everybody will live happily ever after. At least, everyone who matters.

Karl Denninger notes that in both the US and Japan, there are moves to force full disclosure of the banks' poor-grade assets; Jim in San Marcos reprises some observations of what happens when mutual funds (collective investments) are told by worried investors to "switch to cash" or simply pay out.

Look out for a hole in the henhouse roof, and a cloud of feathers.

Bust - or false boom and mega-bust?

Ron Paul and others discuss the state of the American economy here. Don Boudreaux (the economist who writes the Cafe Hayek blog) agrees with Ron Paul that the central bank should stop "doing something".

This also chimes with what Marc Faber said last year: the crisis should be allowed to burn through and take out some of the players. Of course, those who are in a position to "allow", are part of the club that includes the players, and there's the rub.

Chirpy

Don Boudreaux is an economist, yet although an expert in the "dismal science", he is an optimist, which makes a very nice change. He claims it's because he's a professional in the field.

Here he says that America's freedom and creativity will overcome present problems, as they have in the past; here he says the housing market can't be too bad if workers are unwilling to sell their houses in a falling market; and here he claims to love America's trade deficit.

Is he right? Or just seeing affairs from the point of view of a man who's had a good dinner and is assured that, in his case, good dinners will never stop coming? I've often thought that war movies should end prematurely and at different points for a random selection among, say, 20% of the audience, to remove the Olympian perspective.

But it is nice to read someone who thinks it's not all gloom and doom.

On the bright side

Time to count our blessings. Here's an essay by Don Boudreaux of the "Cafe Hayek" blog, showing how much wealthier we are than we used to be. And that was 7 years ago.