Thursday, September 29, 2005

Low Brow Logic

This post is for my brother Raj, who often laments the "egg-headedness" of this blog and others like it. I'm hoping that every now and then I can highlight pages such as this which may be fun enough that even he will go out and learn something new ;-)

Hat tip: Gus Van Horn

Wednesday, September 28, 2005

Funding of the Arts

In a colloquium at the Julliard School discussing the role of government funding of the arts, Supreme Court Justice Scalia made the following statements:
"The First Amendment has not repealed the ancient rule of life, that he who pays the piper calls the tune."

"I can truly understand the discomfort with government making artistic choices, but the only remedy is to get government out of funding"
I think that he named the essential issue in those two sentences, even though the latter comment was probably sarcastic, i.e aimed at having the listener resign himself to allowing the government to decide what to fund, given that the alternative of private funding is inconceivable to most people. Nonetheless I think he does us all a favor by clearly naming the alternatives.

And of course, the same argument holds true in deciding what to teach in schools, or any other economic activity where the government has been put in the role of deciding what's in the "public's interest".

Tuesday, September 27, 2005

University Presidents

The WSJ features a truly excellent piece by Victor Davis Hanson on the state of today's universities. The article highlights the actions of four university presidents as representative of "the hypocrisy, faddishness, arrogance and intellectual cowardice {that} are among the ailments of the American university today". I highly recommend the article to everyone (make sure to read it in the next seven days after which it may no longer be available).

Note also that though the article is aimed at describing the situation in the universities as it currently exists, the only fair remedy to the problem is complete privatization of education. This would allow those who wish to spend their hard-earned dollars subsidizing the lovers of their university presidents, or supporting venom spewers such as Ward Churchill, to do so, while the rest of us would be free to use our money to further our values.

Sunday, September 25, 2005

Chinese Censorship

This is another reason to doubt that China will become the economic force that so many predict. From the article:
Only "healthy and civilized news and information that is beneficial to the improvement of the quality of the nation, beneficial to its economic development and conducive to social progress" will be allowed, Xinhua said.

Friday, September 23, 2005

On Libertarianism

Since this is a relatively new blog, I think I have to make an obligatory post on libertarianism lest anyone misconstrue my view on economics as supportive of the libertarian political platform. I wish I had some revolutionary new insight into the substantive issues explaining why Libertarianism is such a dangerous and false view -- but since I don’t, I’ll simply refer any interested reader to the best resource on the subject: Peter Schwartz’s article, Libertarianism – The Perversion of Liberty. As a follow-up, I highly recommend Don Watkins’ debating and chewing of the issue seemingly anywhere it comes up on the internet. (I don’t know which I admire more, Don’s intellectual ability or his boundless energy!)

Nor do I have much to say on David Kelley’s “Anything Goes-ism” (including his hijacking the term Objectivism to temporarily attract an audience he could never get on his own merits). On this topic, the best theoretical resource is Dr. Leonard Peikoff’s Fact and Value, to which Diana Hsieh’s False Objectivism page serves as a valuable adjunct by examining many specific issues that help concretize Dr. Peikoff’s points. (As an aside, when reading Diana’s page, I find it fascinating to note just how much of what has since transpired in Kelley’s organization was predicted in principle by Dr. Peikoff from the very outset.)

With those references given, I do however wish to say something about the claim that criticisms of Libertarianism amount to a straw-man argument (I again refer you to the “all comments” section of Diana’s blog for repeated examples of this claim). The basis of this charge is that since libertarianism is not a single cohesive doctrine, no single (i.e. essentialized) criticism of it can be valid.

Now, in my opinion, it is not the fault of the critics of Libertarianism that the doctrine itself is so anti-system, anti-structure and anti-hierarchy, that it is difficult to define. In a way that is one of its defining characteristics, both in method and in results, and much of Schwartz’s criticism is aimed at this very point. Yet despite their approach, there is one clear message coming out of the Libertarian camp, and that is that any government is bad, and by extension anarchy is the ideal to be fought for. Contrary to some libertarian’s protests, this is not a fringe viewpoint, but the core of the mainstream movement. As an illustration of this, note that the president of the Mises Institute, which is one of the leading, if not the leading, libertarian organizations, proudly presents as their new catch phrase: “Government is the negation of liberty”. (In thinking about this, consider that Lebanon and Somalia would fit their view of a free society, but that 19th century America would not. Or, if analogies help, imagine your response to a man, who on seeing some water escaping through a crack in a dam, advocates knocking down the dam to eliminate the leak!)

But back to the issue at hand. In the same article, the Mises Institute’s president gives a longer explanation of freedom. Pay particular attention to the first two sentences, and note that because they have no method, libertarians are comfortable with a definition in the form of a negation, as well as with overt circularity (government is negation of liberty, liberty is the absence of government):
The definition of freedom is not complicated. Freedom means that which the government does not control. You are free when the government cannot steal your income, when it cannot tell you what to say or with whom you may or may not associate. You are free when the government cannot take your kids and send them to far-flung wars to kill and be killed. You are free when you control your life, your property, your church, your business, and your future. You are free when the government cannot inflate away your savings, tax away your profits, lay waste to your dividends by regimenting corporate life, or controlling how much of what you buy and sell and from where.
This quote appears in a column entitled the Definition and Defense of Freedom, which reads much like a fund raising letter for the institute. As such it does not seek to sneak in an agenda unbeknownst to the majority of the movement’s supporters. On the contrary, it is a document which presents the essence of the program the Institute will implement on the subscribers’ behalf. And it is a message re-iterated throughout the writings on their site. Thus I maintain that the criticisms leveled by Mr. Schwartz do address the heart of the libertarian program and cannot be dismissed out of hand as some libertarians claim.

Thursday, September 22, 2005

Dr. Andrew Bernstein on MSNBC today

Dr. Andrew Bernstein, long-time speaker for the Ayn Rand Institute, will be interviewed on The Abrams Report on MSNBC-TV today.

The show starts at 6:00 p.m. Eastern Time, and the segment with Dr. Bernstein is scheduled to start at about 6:15 p.m.

The topic of the show will be "price gouging" in the aftermath of hurricane Katrina.

Tuesday, September 20, 2005

Armchair Intellectual

Gideon Reich over at the Armchair Intellectual has a nice post on the recent developments in Gaza/Israel. And I agree with him that the lawsuits in Britain are particularly worrisome.

Free Spending Republicans

I'm starting to get the impression that the sentiments expressed in this WSJ editorial (captioned "Republicans have abandoned small government. Why shouldn't voters abandon them?") are representative of those held by many non-religious conservatives. Hopefully it will send a message to the Republicans' leaders, though somehow I doubt it.
What we're seeing in the wake of Katrina is that despite all the winks and assurances to the contrary as they passed the energy and transportation bills, Republicans in Congress don't know how to control spending and are at a loss as to why they even should. That's one way to govern. But if Republicans no longer believe in smaller government, why not put the Democrats back in charge?

Thursday, September 15, 2005

Tort Reform in Mississippi

The WSJ has an interesting piece on tort reform today. I'm not very familiar with the subject, but what they report seems encouraging:
Prior to the legislation, Mississippi was known as the "jackpot justice capital of America." The American Tort Reform Association had labeled certain jurisdictions "judicial hellholes." A survey of more than 1,200 senior in-house counsels for the U.S. Chamber Commerce ranked Mississippi 50th in virtually every category of judicial system nationwide. Insurance companies were fleeing the state. Others were refusing to write new policies. The medical field was particularly strained: Liability insurance was in many cases unaffordable, and in some cases unavailable.

One year later, the story is very different. Mass Mutual Insurance Group, St. Paul Travelers, World Insurance Co. and Equitable Life Insurance Co. are returning to Mississippi. State Farm Insurance eased its growth restrictions for homeowners' insurance and lowered its rates on property insurance.

The Medical Assurance Company of Mississippi, which writes 60% of the medical malpractice coverage for doctors in the state, had raised its rates 20% the year prior to the tort reform legislation. After its passage, MACM did not raise its rates at all. "Those people who said tort reform would not work and actively fought any civil justice reform," Mississippi Insurance Commissioner George Dale said. "I think this indicates they were wrong." MACM also recently announced an end to its moratorium on new business; it also just declared it will cut its rates for 2006.

Wednesday, September 07, 2005

The Problem of Capitalization-Weighted Indices

I often recommend to friends who don't have time to research stocks or mutual funds, but want to build an investment portfolio, that they engage in dollar-cost averaging using well known stock indices. After reading a truly excellent frontlinethoughts letter, I now understand that the index used should not be capitalization weighted.

Here is a summary of the reasoning as quoted from the May 13th Mauldin letter, all based on the work of Rob Arnott:
(Assume that) every asset is trading above or below true fair value. We can't know what true fair value is. But we can know that every stock, every asset, every bond is going to be trading above or below what its ultimate true fair value is. Even the most ardent fans of the efficient markets hypothesis would say, "That's reasonable. That's reality."

Now if every asset is trading above or below its true fair value, then any index that is capitalization-weighted, (price-weighted or valuation-weighted) is automatically going to have us overexposed to every single asset that's trading above its true fair value and underexposed to every single asset that's trading below its true fair value.
BTW, if you don't like the term "fair value", substitute "future value", and the logic remains the same.

Monday, September 05, 2005

New Orleans

Gus Van Horn has several interesting posts on the disaster, its causes and fallout. You can find them here, here, here and here. Noodlefood also has a couple of worthwhile posts, one on poverty and one linking to to an essay on "tribes".

Moderate Muslims Look Inward

This appears to be a positive development. Moderate Muslims are actually seeking to rein in the fundamentalists and jihadists within their midst, rather than simply diverting attention and conducting PR campaigns to convince non-Muslims that Islam is a religion of peace:
So this year at the Islamic Society's annual convention, which starts Friday in Chicago and is expected to draw 40,000 people, organizers will mount a new campaign against terrorism and extremism, with posters and pamphlets designed for use in mosques and Islamic schools.

The materials, Dr. Syeed said, will provide a theological rebuttal to Muslim extremists who cite the Koran and Islamic texts to justify violence. "It has become very critical that these things need to be spelled out thoroughly and become part of our day-to-day discussion," he said.

A fatwa, or religious edict, against extremism and terrorism released by a group of North American Muslim scholars in July has been signed by representatives of more than 250 mosques and Islamic centers. The Council on American-Islamic Affairs is running public affairs spots on television and radio with the slogan "Not in the Name of Islam." One chapter says it put up a billboard next to the Florida Turnpike saying, "Islam Condemns Terrorism."

The slogans themselves are not new. Within a few hours of the attacks on the Pentagon and the World Trade Center, 10 American Muslim groups released statements decrying the attacks, and many groups have routinely denounced subsequent attacks around the world.

What has changed is the intended audience. Before, Muslim leaders said they had wanted to reach non-Muslims with the message that terrorism was un-Islamic. They still do, but now they say the more urgent need is to reach other Muslims.

Friday, September 02, 2005

Capitalist Evidence

Objectivists often state that certain false ideas are so obviously false, that no honest man can hold them. In my opinion, a basic rejection of capitalism is one of those ideas. These two paragraphs, exerpted from Andrew Bernstein's book, capture what to me is the almost perceptual level evidence that one must evade if one is to reject capitalism -- and I just can't see how one can do so honestly:
"Capitalism, the system of individual rights, has brought increased freedom to men all over the world. In Europe, capitalism ended feudalism, the dictatorship of the aristocracy. In America, the principle of individual rights impelled the British colonists to throw off the rule of the monarchy and establish history's freest nation – and the logic of the country's founding principles led, in less than a century, to the abolition of slavery, a practice that existed everywhere in the world through all of history, and one still practiced widely today throughout the non-capitalist world. In post-World War II Japan, under America's influence, a semicapitalist, vastly freer society replaced the military dictatorship that preceded it. In Hong Kong, Taiwan and South Korea, the freedom of their capitalist or semi-capitalist systems enabled those countries (or colonies) to become havens for millions of refugees fleeing Communist oppression.

More broadly, it is to the capitalist nations across the globe that immigrants come, millions of them, both historically and currently, often fleeing political and/or religious persecution in their homelands. They come on rafts to the United States from Cuba. By the millions and for 15 years, the Vietnamese "boat people" fled for their lives from Communism – and today, more than 1.6 million of them have found freedom, mostly in the West. Muslims seeking religious and political freedom flee to the Western capitalist nations from all over the Islamic world. And, of course, for more than 150 years, America has been the hope and the chosen destination of persecuted peoples from around the globe, including from Ireland, Jews from Eastern Europe, Sicilians suppressed by the 19th century remnants of aristocratic rule, and Chinese and Koreans oppressed by the Communists."
(As an aside, one could amplify this second paragraph by noting that the flow of people was, and continues to be, strictly uni-directional, i.e. one never hears of American Marxists or leftists saying: "That's it, I've had it with the semi-capitalist West, I'm emigrating to North Korea".)

Please also note that the quotes above are taken from a much longer excerpt published at Capitalism Magazine, and based on it, I've added Andrew's book to my reading list.