| Tuesday, Septermber
10, 2002
Well, tomorrow it will be all 911 all the time. And watch out for
stobor.
The DSL scene: Megapath finds what my readers in the
phone company and elsewhere find, that there will be a fiber relay put in
this neighborhood in January 2004 and until then there is no DSL here.
However, Megapath does offer iDSL 144K both ways, for $90 a month. This is
3 times as fast as the dialup 56K and for about 3 times the price. It
gives me a fixed IP address.
I am thinking seriously of taking them up on it: it will let me install
a mail server here that can run serious filtration on my and Roberta's
mail. She really hates these offers of "triple incest" and other
such stuff, and while I have configured her Rules to get rid of most of
it, I can't have it read for content on her slow machine; her Rules have
to operate on headers only.
I have mail from readers who have had a good experience with Megapath.
We'll see. Oh -- and they offer me a T1 line at $589 a month. That, I
fear, is a bit beyond the budget. I would need about 30 new subscribers
a month. That's 360 on the year, and while getting 30 in the next few
days may well happen, I won't get enough to justify a year's contract. Nor
do I really expect that. A T1 line is really more than I need. Of course
if I do get one, I'll put up a separate web site hosted from here for
subscribers only.
I am seriously contemplating the iDSL. The 144K rate is about half the
satellite rate. I'll wait for reader advice.
In my high level discussion group one economist
said in effect that anyone who has anything good to say about protective
tariff is anti-scientific and not interested in science.
This of course assumes that economics is a science, and I wrote a
fairly blistering bit of sarcasm:
Now THAT is a reductionism, no? In
other words, anyone who thinks protection of jobs for the citizens and
some limits on globalism is of necessity anti-scientific, and probably a
fool as well.
Oh, thou wise one! Thou who knowest all.
Economics is of course such a wonderful exact science. That is why there
are no longer any economic problems. If only politicians followed economic
advice. And there are no political consequences to following good economic
advice, or the political implications won't somehow come back to bite
those who followed the good scientific economic advice.
Wow. I had not known how wonderful economics
is: and if you don't believe in economics, and indeed in the brand of it
that says protectionism is always and in all cases wrong, then you aren't
fit to be a scientist ever, because economic is a science and its
conclusions are universal.
Wow
Which produced the reply:
Jerry, your sarcasm was amusing ;)
I think most economists agree that protectionism is
a suboptimal policy, when optimality is defined in terms of "maximum
consumer satisfaction" or "maximum growth in mean GDP". It
allows uncompetitive businesses to survive and sabotages the natural
division of labor that would arise in the absence of tariffs (e.g. by the
comparative advantage principle).
There may be cases in which protectionism has some
theoretical justification, but I'm unaware of them. I'm not an economist,
so if anyone knows of such cases I'd be interested in hearing about them.
I'm thinking of an analog to externality theory's theoretical criterion
for when regulation is justified.
So far none of this is important and I wouldn't normally include it,
but it did cause me to write this reply:
Protectionism is sub optimal if your goal is maximum economic
production. It is not if you need to factor in key industries for time of
war, nor is it necessarily optimum if your goal is social stability or
even, horrors, social justice.
National control of means of production - I don't mean ownership - may
be important in the sense that overseas and international corporations do
NOT have the same interests as any one country. What's good for General
Motors may be good for the US but not if General Motors is owned by people
in Brussels or Paris.
In operations research we used to worry a lot about solving for
suboptimal goals, because sometimes a policy that maximized a particular
criterion would in fact produce a disaster in the overall system. In
economic trade the obvious one is making yourself dependent on some
overseas supplier who is then the victim of a hostile takeover by someone
who isn't economically rational. The assumptions under which full blown
free trade is the optimal policy include the assumption that your
competitors are economically rational. They may not be. They may just hate
your guts.
I don't know what "theoretical justification" means in this
context. I can jigger up a theory to justify anything. Whether that theory
has any value is another story. Since most economic theory is testable
only by other theories and through scenarios and supposes and thought
experiments, I find it interesting that anyone who doesn't buy the
conclusions of the sect of this economics cult that has won today is
considered beyond the pale and unable to appreciate the benefits of
science.
As to externalities, that was my point: economics is mostly governed by
externalities. Not only immigration but the need to keep people employed
and feeling useful may be far more important for the health of a republic
than lowering the price of Jockey shorts, and raising the salary of the
CEO. Indeed, I have repeatedly asked for economic models that take account
of externalities. I never get them.
Let me give you one: people are put out of work by economic
adjustments. Welfare bureaucracies are created to take care of them.
Public employee unions are formed. We have to live with the consequences.
Is all that cheaper than it would have been to protect the jobs with
tariff or even direct subsidy? Possibly, but possibly not; no one does
that analysis.
I can agree that high protective tariff leads to unacceptable
inefficiency; but I am not at all convinced that zero tariff is the
optimum point. Taxes on imports are a legitimate source of revenue for the
government. Why shouldn't they be? They are easier to collect than sales
taxes on everything.
But these questions are never asked. Instead the "experts"
merely say that anyone who asks such questions is clearly some kind of
ignorant clod unable to appreciate science.
There was one more exchange, and I wrote
My argument for some employment stability goes well beyond the
demonstrable economic benefit of protection to get an industry started.
Anyone who doesn't understand that particular argument just doesn't bother
to read history, and I take it that even those who say that you are
unscientific if you don't swallow economic theory whole will find some
theoretical justification for that. The Framers did. (Theory always trumps
evidence and data, of course. At least in economics.)
But my argument is that too much instability in the lives of the middle
class will destroy a republic. Aristotle said that democracy is at bottom
the rule of the middle class and the middle class are those who possess
the goods of fortune in moderation. That's not bad as an observation, and
it looks to have been tested and found true over a long period of time.
Cato the Elder, when arguing against the slave based plantation system
that was destroying the old Roman peasantry said "no more peasants,
no more Legions." Of course he was wrong: they hired their legions
after a while. And soon enough the legions hired an emperor.
A republic needs a stable middle class. We want to co-opt into that
middle class the skilled workers and even as many of the unskilled as we
can. Economic policies that beggar those people have political
consequences. Sometimes those political consequences will have effects on
the economy. Most economists I know are so enamoured of their scientific
theory that they pay no attention to all that.
By an odd coincidence, just as I wrote this, John
Dvorak called about something else, and we had a discussion of the issue;
and he agrees with me rather completely. Which doesn't mean everything but
it does mean something.
Shortly after, as part of a much longer disquisition, John
McCarthy said:
Economics is somewhat of a science, and it
has well established that the highest average income occurs when there are
no tariffs.
However, the highest average income is not
the only consideration, and the economists know that and say it from time
to time. ....
When a group faces loss of
employment from technology or from imports, it seeks protection. Permanent
protection is a bad idea, but mitigating the effects is reasonable. The
amount and nature of the mitigation is subject to bargaining. .... The
solution to loss of jobs from competition, whether technological or
foreign, is to make the transition slowly and to buy out the jobs that are
lost. A generation is more than enough time. I
couldn't agree more, except that I don't agree that zero tariff is the
best policy of a nation just starting industries; nor did the Framers.
When you are trying to build an industry you need either subsidies or
tariffs to allow the critical mass to develop. After that the tariff
lowers highest average income. Oh
-- and I am not at all convinced that a nation with a higher average
income but really gross differences between bottom, middle, and top, is
better off than a nation with lower average income but also lower spread
so that all the citizens feel useful. It
may be true that huge discrepancies in incomes are a good thing, but I
think it needs demonstrating. I am not sure I believe it. Obviously the
average has to be high enough to support a decent standard of living in
either case. But consider a country in which a small number make a lot of
money owning diamond mines, and everyone else grubs in the dirt mining
them at very low wages: the average may well be higher than a neighbor who
has no diamonds but most of the population are self sufficient herders.
Which is more stable?
And the quote of the day to be
remembered tomorrow:
"Of all the enemies to public liberty
war is, perhaps, the most to be dreaded because it comprises and develops
the germ of every other. War is the parent of armies; from these proceed
debts and taxes. And armies, and debts, and taxes are the known
instruments for bringing the many under the domination of the few. In war,
too, the discretionary power of the Executive is extended. Its influence
in dealing out offices, honors, and emoluments is multiplied; and all the
means of seducing the minds, are added to those of subduing the force of
the people. The same malignant aspect in republicanism may be traced in
the inequality of fortunes, and the opportunities of fraud, growing out of
a state of war . . . and in the degeneracy of manners and morals,
engendered by both. No nation could preserve its freedom in the midst of
continual warfare." James Madison, April 20, 1795
"If Tyranny and Oppression come to this
land, it will be in the guise of fighting a foreign enemy." James
Madison, while a United States Congressman
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I may
pretend to know everything for a living, but I do know I am not
infallible. I have for years said "causus belli" and I ought to
have known better, but apparently that corruption crept in since my high
school Latin days. It's casus belli, and I have corrected it where I used
it above, and my thanks to Bob Thompson who pointed it out.