Market Utopians Don Boudreaux In today's Wall Street Journal, Jeffrey Hart _makes an argument_ (http://online.wsj.com/article/SB113564361018331773.html?mod=opinion_main_commentaries) that I first encountered in _John Gray's work_ (http://www.amazon.com/gp/product/1565845927/qid=1135700461/sr=2-1/ref=pd_bbs_b_2_1/002-9782236-4980013?s=book s&v=glance&n=283155) : At length, the free market triumphed through much of the world, and today there are very few socialists in major university economics departments, an almost total transformation since 1953. But the utopian temptation can turn such free-market thought into a utopianism of its own -- that is, free markets to be effected even while excluding every other value and purpose … … such as Beauty, broadly defined [original elipses]. Such a claim reveals a poor knowledge and understanding of economics. (Among other books that I can recommend to Prof. Hart is Tyler Cowen's _In Praise of Commercial Culture_ (http://www.lfb.com/index.php?deptid=&parentid=&stocknumber=CL8185&page=1&itemsperpage=24) , which clearly explains -- using facts and economic reasoning -- how markets promote rich cultures, graced with much beauty.) I would like Profs. Hart or Gray or anyone else to direct me to any work by any respected free-market economist that portrays free markets as utopian. Perhaps such a work exists. If so, I've yet to encounter it. If any Cafe Hayek reader knows of such a work, please direct me to it. Posted in _Myths and Fallacies_ (http://cafehayek.typepad.com/hayek/myths_and_fallacies/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/market_utopians.html) | _Comments (7)_ (http://cafehayek.typepad.com/hayek/2005/12/market_utopians.html#comments) | _TrackBack (0)_ (http://cafehayek.typepad.com/hayek/2005/12/market_utopians.html#trackback) December 26, 2005 Who You Gonna Call? Don Boudreaux Which places on the Katrina-ravaged gulf coast do you suppose are being cleaned up faster and at lowest cost: those locales that rely principally on the private sector to supply clean-up services, or those locales that rely upon Uncle Sam? Today's New York Times gives _the answer_ (http://www.nytimes.com/2005/12/25/national/nationalspecial/26debris.html?adxnnl=1&emc=eta1&adxnnlx=1135609436-ygh RBRgr/bFqr0TVJH3f6Q) . (Hat tip to fellow Louisiana native Fred Dent.) Posted in _Current Affairs_ (http://cafehayek.typepad.com/hayek/current_affairs/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/who_you_gonna_c.html) | _Comments (8)_ (http://cafehayek.typepad.com/hayek/2005/12/who_you_gonna_c.html#comments) | _TrackBack (0)_ (http://cafehayek.typepad.com/hayek/2005/12/who_you_gonna_c.html#trackback) December 25, 2005 To Want or Not to Want Don Boudreaux Cafe Hayek reader Keith, after reading _this recent post_ (http://cafehayek.typepad.com/hayek/2005/12/the_toll_of_eco.html) on toll-roads, asks me: "Why do you [meaning me, Don Boudreaux] insist on criticizing people's preferences? Haven't we Americans rejected toll roads long enough to convince any fair minded person that we don't want them? You may not like our preference, but at least shouldn't you respect it?" With respect, I respect any preference that reflects a genuine willingness of those with the preference to bear personally all necessary costs to indulge the preference. But I do not respect 'cheap' preferences -- preferences that are merely expressions backed-up with no personal stake in indulging the preferences. Suppose I invent a machine that allows me to transfer to anyone I wish the ill-consequences of my drinking too much wine. I drink goo-gobs of wine in the evenings and just before stumbling off drunk to bed I press a button and, voila!, the hangover that I would have awakened with in the morning will now be suffered by my neighbor, who has no earthly idea what's happening to him. Likewise for the calories and any detriments to health and career caused by overdrinking. I enjoy all the benefits of boozing but I off-load the costs onto someone else who has no say in the matter. My machine is quite reliable. Everytime I drink, I press my machine's button and I keep the benefits of boozing but my unwitting neighbor suffers the costs. What do you expect will happen to my pattern of drinking? Let me assure you that I'd drink a lot more than I drink now. I love wine and, I don't mind saying, I love also the intoxication that wine induces. I limit my drinking because I understand that overdoing it has significant personal costs to me and my family. Now suppose in this fantasy world with this machine I tell you that I want to be able to drink every night without limit. Would you believe me? You'd have reason to do so, for in a way I really do want to drink every night without limit. If I really had that machine (and I really did not have the decency that keeps me from shifting such a cost to someone else), I'd shift the costs of drinking onto my neighbor and guzzle nightly. But if in the real world -- the world without any such machine -- I tell you "I want to drink every night without limit," what would I mean? If I didn't have personally to bear the costs of drinking heavily I would indeed "want" to do so. But because I do have personally to bear the costs of drinking heavily, in fact I don't want to do so. My saying, in these real-world circumstances, that "I want to drink every night without limit" is nothing more than a loose, slang use of the verb "to want." After all, if I really wanted to drink much more heavily than I now do, I could easily do so. But I never do -- because I am unwilling to bear the awful costs of suffering hangovers and severe risks to my health and career. The point, in short, is that we use the verb "to want" in very different ways. Some "wants" are worthy and ought to be respected; other "wants" are irresponsible and cavalier -- indeed, not really wants at all. I want you to read also _this essay_ (http://www.fee.org/publications/the-freeman/article.asp?aid=4978) that I wrote on the confusing usage of the verb "to want." Posted in _Myths and Fallacies_ (http://cafehayek.typepad.com/hayek/myths_and_fallacies/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/to_want_or_not_.html) | _Comments (8)_ (http://cafehayek.typepad.com/hayek/2005/12/to_want_or_not_.html#comments) | _TrackBack (2)_ (http://cafehayek.typepad.com/hayek/2005/12/to_want_or_not_.html#trackback) The Beauty and Power of Undesigned Order Don Boudreaux I love _this blog-pos_ (http://hnn.us/blogs/entries/19793.html) _t_ (http://hnn.us/blogs/entries/19793.html) entitled "Of Social Snowflakes..." by Steve Horwitz. It's inspired by _this photograph_ (http://www.marginalrevolution.com/marginalrevolution/2005/12/merry_christmas_1.html) of a real snowflake. Here's Steve's concluding paragraph: My fervent wish for the 21st century is that more smart and caring people can begin to see and appreciate "social snowflakes." People who are so willing to accept the existence and beauty (and benevolence!) of undesigned order in the natural world should be more willing to open themselves to the possibility that there are processes of undesigned order at work in the social world too. These people know that no one can make a snowflake, but seem blind to the fact that much of the innocent blood that was spilled in the last century was because too many people thought they could intelligently design the social world. Not repeating those mistakes will require a renewed aesthetic appreciation of, and deep desire to understand, the awesome beauty and complexity of the undesigned order of "social snowflakes."
Steve's point goes nicely, by the way, with _this post_ (http://www.marginalrevolution.com/marginalrevolution/2005/12/why_people_dont.html) from Tyler Cowen. Posted in _Complexity and Emergence_ (http://cafehayek.typepad.com/hayek/complexity_and_emergence/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/the_beauty_and_.html) | _Comments (0)_ (http://cafehayek.typepad.com/hayek/2005/12/the_beauty_and_.html#comments) | _TrackBack (0)_ (http://cafehayek.typepad.com/hayek/2005/12/the_beauty_and_.html#trackback) It Takes a Tough Man to Make a Tender Chicken Don Boudreaux Soon after the Berlin wall crashed down on November 9, 1989, Pepsi Cola ran a television ad celebrating the wall's fall -- an ad, I believe, showing celebrants at the wall drinking Pepsi. I recall that some American pundits were horrified, asking -- rhetorically, in their minds -- if eastern Europeans wanted freedom merely to drink Pepsi. (I can find no link to this ad, but _this interview_ (http://www.stayfreemagazine.org/archives/14/leslie-savan.html) mentions it.) My reaction to this question was and remains "Well, yes, in large part. People want freedom not just to do great and momentous things. Mostly, they want freedom to pursue their everyday pleasures and dreams and interests as they wish without interference from others. Access to more and better soft-drinks, in itself, is a small thing -- but it's certainly part of the reason why people want to be free. And celebrating these quotidian freedoms, even in a Pepsi commercial, is appropriate." For some reason I recalled that Pepsi-commericial brouhaha today when I read in today's New York Times Magazine _this interesting recollection_ (http://www.nytimes.com/2005/12/25/magazine/25perduehoffman-1.html?adxnnl=1&adxnnlx=11355 48836-8ynZ2osG1l78l9xJ7bSW2g) of Frank Perdue, the Marylander who became wealthy growing, slaughtering, and selling chickens. Too many people -- such as those who were offended by Pepsi-Cola, Inc., associating freedom with joyously drinking soft-drinks -- disdain everyday freedoms as well as everyday commercial and industrial activities made possible by these freedoms and that, in turn, make these freedoms more valuable to each of us. I hope I'm wrong (I really do), but I fear that too many people who read the following about Frank Perdue will regard such efforts as contemptible, low, mean, almost comical, unworthy of being ranked as great. In fact, such efforts are precisely the sort that makes our prosperity so vast and deep. But what was its [a Perdue chicken's] unique selling proposition? To hear Perdue himself tell it, his chickens were just plain better than anybody else's. His son, Jim, says that when his father decided in the late 1960's to cut out the middleman and sell his chickens directly to grocery stores, he spent six months on the road, talking to butchers about what qualities they liked to see in their chickens. "He identified 25 items on a chicken that they cared about," Jim Perdue said. They wanted yellow chickens, so Frank Perdue fed his poultry grain that gave the meat a golden hue. They didn't like little hairs left over on the wings after plucking, so Perdue had his engineers develop a torch that would singe the hairs off. They wanted more white meat, so he mated a meaty-breasted Cornish male with a White Plymouth Rock female to create the Perdue pedigree. They didn't want bruised meat, so Perdue set strict protocols for handling live chickens. He was obsessive about knowing everything there was to know about chickens - and about maintaining what heviewed as the superior quality of Perdue Farms' birds. Looking at a reel of old Perdue ads, this obsession is striking. In the earliest commercial, he talks about how well his chickens are fed - including "pure well water to drink." In another, he complains that his competitors freeze their meat. To drive the point home, he hammers a nail into a piece of wood with a frozen chicken. He talks about how he had to develop his own breed because no other chicken in the world was good enough for Perdue Farms. And he constantly needles the federal government, claiming he inspects chickens better than it does. Ain't it great that someone -- someone who is a stranger to almost all of America's chicken eaters -- spent his valuable time traveling around asking butchers what features make a good chicken? Ain't it great that Frank Perdue cared about the water his chickens drank? Ain't it great that he bred a new breed of chicken? Sure, he did all this to make money for himself. But so what? His means of making money inspired him to care deeply about what the typical chicken eater likes and dislikes about chicken. Why is it that so many people admire the likes of FDR and LBJ who uttered fine phrases but whose ideas of helping people never went beyond stealing from some, showering part of the booty on others, and bureaucratically regulating everyone? Frank Perdue alone has contributed more to our quality of life than has any politician you care to name. This claim of mine will strike many as over the top. But I mean it literally. Perdue persuaded people to buy his chickens. Politicians force people to do their bidding. Those in the force business are inherently less likely to care deeply about people -- about real, flesh-and-blood people in all of our diversity -- than are those, like Frank Perdue, whose success depends critically upon persuading millions of people to buy, and keep buying, their products. Update: Muck and Mystery _gently plucks my feathers_ (http://www.garyjones.org/mt/archives/000236.html) by arguing that (1) there's nothing really special about Frank Perdue, for the production and distribution practices that Perdue followed are standard practice in the poultry industry, so (2) Perdue's real genius lay in advertising to promote himself and his firm, and (3) that insofar as Perdue and other poultry producers do contribute to our well-being, it's the system that encourages such wealth-creating efforts. I'm happy, although not suprised, to learn that Perdue's best-practices are industry standard. My point was not so much to praise Frank Perdue personally (although I do regard him as praiseworthy). My point was to celebrate the fact that we have an economic system that prompts Perdue, and Tyson's, and you-name-the-entrepreneur each to spend enormous amounts of creativity and effort doing things that we consumers never become consciously aware of -- but things that we nevertheless value and benefit from. So, indeed, the system is of paramount importance -- but this fact doesn't mean that we can't admire the many instances of creative human productive efforts that it unleashes. On the merits of advertising, I'll just recommend _one of my favorite books on the topic_ (http://www.amazon.com/gp/product/0936488212/qid=1135597581/sr=1-9/ref=sr_1_9/002-9782236-4980013?s=books&v=glance&n=283155) . Posted in _Standard of Living_ (http://cafehayek.typepad.com/hayek/standard_of_living/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/it_takes_a_toug.html) | _Comments (4)_ (http://cafehayek.typepad.com/hayek/2005/12/it_takes_a_toug.html#comments) | _TrackBack (1)_ (http://cafehayek.typepad.com/hayek/2005/12/it_takes_a_toug.html#trackback) December 23, 2005 Adam Smith: Yokel Don Boudreaux _In today's New York Times_ (http://select.nytimes.com/2005/12/23/opinion/23krugman.html) , Paul Krugman calls _supply-side economics_ (http://www.econlib.org/library/Enc/SupplySideEconomics.html) -- by which _Krugman means_ (http://www.pkarchive.org/economy/TaxCutCon.html) the idea that tax cuts can generate higher tax revenue for government-- as "hokum for the yokels." _Krugman has long ridiculed_ (http://www.pkarchive.org/economy/TaxCutCon.html) the idea that for thirty years now in the U.S. has been known as "the Laffer curve." Indeed, as his "hokum for the yokels" remark makes clear, Krugman sneers at _the Laffer curve_ (http://www.heritage.org/Research/Taxes/bg1765.cfm) . My first reaction, whenever I read Krugman's (or anyone else's) dismissal of the Laffer curve as illogical hooey, is to wonder if Krugman ever studied the concept of _own-price elasticity of demand_ (http://www.uri.edu/artsci/ecn/mead/INT1/Mic/Overview/Over.elast.html) . For the non-economists among you, this concept is taught in Economics 101, and explains that firms that raise their prices do not always earn higher sales revenue; their revenue can and often does fall. (To see the point clearly: ask youself what would happen if, say, Starbucks raised the price it charges for a tall latte to $1,000.) Likewise, firms can often increase their sales revenue by cutting their prices. But Cafe Hayek's Russ Roberts has a different thought: he knows that the Laffer-curve idea didn't originate in the United States during the 1970s. Russ knows that it expresses a truth so fundamental that thoughtful thinkers from even long ago understood it -- thoughtful thinkers such as _Adam Smith_ (http://www.econlib.org/library/Enc/bios/Smith.html) . _Here's_ (http://www.econlib.org/library/Smith/smWN21.html#B.V,%20Ch.2,%20Of%20the%20Sources%20of%20the%20General%20or%20Public%20Revenue%20of%20the%20Socie ty) the great Scot writing in Book V, Chapter 2 of The Wealth of Nations: The high duties which have been imposed upon the importation of many different sorts of foreign goods, in order to discourage their consumption in Great Britain, have in many cases served only to encourage smuggling, and in all cases have reduced the revenue of the customs below what more moderate duties would have afforded. The saying of Dr. Swift, that in the arithmetic of the customs two and two, instead of making four, make sometimes only one, holds perfectly true with regard to such heavy duties which never could have been imposed had not the mercantile system taught us, in many cases, to employ taxation as an instrument, not of revenue, but of monopoly. Does the above sound like hokum for yokels -- or hokum from a yokel? Posted in _History_ (http://cafehayek.typepad.com/hayek/history/index.html) , _Prices_ (http://cafehayek.typepad.com/hayek/prices/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/adam_smith_yoke.html) | _Comments (21)_ (http://cafehayek.typepad.com/hayek/2005/12/adam_smith_yoke.html#comments) | _TrackBack (3)_ (http://cafehayek.typepad.com/hayek/2005/12/adam_smith_yoke.html#trackback) December 22, 2005 The Byrd is at least wounded Russell Roberts The Washington Post (rr) _reports_ (http://www.washingtonpost.com/wp-dyn/content/article/2005/12/21/AR2005122102074.html) that the Senate has voted to kill the Byrd Amendment: The Senate action, which came as part of a broader budget bill that passed with Vice President Cheney's tie-breaking vote, would phase out the Byrd amendment, a five-year-old measure especially popular with lawmakers from industrial states heavily affected by foreign competition. The House has already voted to repeal the amendment, named for Sen. Robert C. Byrd (D-W.Va.), in nearly identical legislation. Yes, it would be especially popular with lawmakers from industrial states: According to the Byrd amendment, whenever the government finds U.S. companies to be disadvantaged by the dumping of imported goods at unfairly low prices, the duties collected on those goods can go to the companies rather than to the Treasury. Don't you love that phrase, "disadvantaged by the dumping of imported goods at unfairly low prices"? Of course if you're a domestic producer, all low prices charged by foreign competitors are unfairly low. And of course all low prices put domestic producers at a disadvantage. The problem with anti-dumping low is the definition of "unfair." The way that it is actually defined is comically arbitrary and creates endless opportunities for domestic firms to enter the anti-dumping lottery in hopes of forcing higher prices on competitors. What the Byrd amendment does is doubly reward that lottery effort. Not only does anti-dumping law force foreign prices higher but it channels the fines to the domestic firms. You can't have everything: The repeal would be delayed for two years, giving some U.S. lumber firms and other companies the chance to continue receiving substantial sums under the amendment. That compromise was necessary to secure yesterday's vote. Taking time to phase something in is generally a good idea to allow people time to react to the new rules. But I wonder if this repeal will be repealed two years from now. Posted in _Trade_ (http://cafehayek.typepad.com/hayek/trade/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/the_byrd_is_at_.html) | _Comments (3)_ (http://cafehayek.typepad.com/hayek/2005/12/the_byrd_is_at_.html#comments) | _TrackBack (1)_ (http://cafehayek.typepad.com/hayek/2005/12/the_byrd_is_at_.html#trackback) Americans are Wealthy (and Getting Wealthier) Don Boudreaux In a famous (or infamous, depending on your perspective) article on growing income-inequality in America - _an article_ (http://www.pkarchive.org/economy/ForRicher.html) that appeared in the October 20, 2002 issue of the New York Times Magazine - Paul Krugman wrote the following: Although America has higher per capita income than other advanced countries, it turns out that that's mainly because our rich are much richer. And here's a radical thought: if the rich get more, that leaves less for everyone else. That statement -- which is simply a matter of arithmetic.... This reasoning, despite its coating of cockiness, is terribly, inexcusably wrong. The simplest way to see why it's wrong is to recall a principle that _Krugman once wrote about_ (http://web.mit.edu/krugman/www/ricardo.htm) so eloquently: David Ricardo's _principle of comparative advantage_ (http://internationalecon.com/v1.0/ch40/40c000.html) . This is not the place to do more with that principle beyond relating its conclusion: as people specialize in those productive tasks for which they enjoy a comparative advantage, and then exchange their output with others who also specialize according to their comparative advantages, all parties to this process of specialization and exchange are made wealthier. Total wealth grows. Indeed, if you understand the principle of comparative advantage, you understand that "it's simply a matter of arithmetic" that when two or more people specialize according to their comparative advantages, more wealth is produced. A very different way to challenge the claim that the rich get rich at the expense of the poor (or, more specifically, that America's middle-class is disappearing, or that the typical American has suffered stagnation in his living standards since the mid-1970s) is to look seriously at the data. A recent serious look at the data appears in _this superb article_ (http://online.wsj.com/article/SB113513427028228173-email.html) from yesterday's Wall Street Journal. It's written by Stephen Moore and Lincoln Anderson. (Unfortunately, access to the WSJ requires a paid subscription.) Here are some key lines from the Moore-Anderson article: What the [Census Bureau and Fed] reports tell us is that the vast majority of Americans have not bumped into income glass-ceilings, but rather are experiencing an astonishing pace of upward income mobility. The Census data from 1967 to 2004 provides the percentage of families that fall within various income ranges, starting at $0 to $5,000, $5,000 to $10,000, and so on, up to over $100,000 (all numbers here are adjusted for inflation). These data show, for example, that in 1967 only one in 25 families earned an income of $100,000 or more in real income, whereas now, one in six do. The percentage of families that have an income of more than $75,000 a year has tripled from 9% to 27%. But it's not just the rich that are getting richer. Virtually every income group has been lifted by the tide of growth in recent decades. The percentage of families with real incomes between $5,000 and $50,000 has been falling as more families move into higher income categories -- the figure has dropped by 19 percentage points since 1967. This huge move out of lower incomes and into middle- and higher-income categories shows that upward mobility is the rule, not the exception, in America today. ...... Turning from income to wealth, data from the Fed provide further confirmation of family economic gains for the middle class. The total net worth of Americans rose to just shy of $50 trillion in 2004. The Fed has not yet calculated the median household wealth for 2004, but we estimated that number by taking the average ratio of mean wealth to median family wealth over the past 10 years. This yields an estimate of $105,000 in 2004. This is almost double the median family-wealth level of 1983 and nearly triple the level of 1962. Until very recently, for a family to attain six figures of wealth was considered quite rich. Despite all of the groans about the over-indebtedness of American households, the new Federal Reserve Board data suggest that the family balance sheet is not highly levered. The ratio of debt to assets is only 18.3%. Data, of course, can always be challenged. But look around you at the cars on the road (they're safer and break down much less frequently than in the past), the mobile telephony that nearly everyone today possesses, the variety of items available in a typical supermarket, and I think you'll find that everyday observations square with Moore's and Anderson's account. Posted in _Standard of Living_ (http://cafehayek.typepad.com/hayek/standard_of_living/index.html) , _The Economy_ (http://cafehayek.typepad.com/hayek/the_economy/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/americans_are_w.html) | _Comments (30)_ (http://cafehayek.typepad.com/hayek/2005/12/americans_are_w.html#comments) | _TrackBack (5)_ (http://cafehayek.typepad.com/hayek/2005/12/americans_are_w.html#trackback) December 21, 2005 Twelve Myths Don Boudreaux Will Rogers is said to have said that “It isn’t what we don’t know that gives us trouble, it’s what we know that ain’t so.” So I offer here my own unscientifically compiled list of the dozen most pernicious economic myths held by non-economists (and, sadly, in some cases by economists). I determine the degree of perniciousness by a combination of what I sense to be the myths’ prevalence, the stubbornness with which people cling to them, and their consequences for public policy. 12. A trade deficit is debt. 11. A trade deficit is bad. 10. Imports are the cost we suffer in order to enjoy the benefit of exporting. 9. Corporate managers are driven by stock-market pressures to run their firms so that profits are maximized in the short-run, at the expense of the long-term productive capacities of the companies. 8. Prices and wages are arbitrarily set by businesses. 7. To oppose regulation by government is to oppose regulation; it is to desire that businesses are unconstrained in their industrial and commercial actions. 6. To insist that government do nothing more than stick to protecting citizens against the initiation of violence is to insist either that each person is an asocial, atomistic loner motivated only by narrow selfishness, or that each person should be an asocial, atomistic loner motivated only by narrow selfishness. 5. More people necessarily means a level of per-capita well-being that is lower than it would otherwise be. 4. _The chief cause of modern prosperity is technology_ (http://www.pittsburghlive.com/x/tribune-review/opinion/columnists/boudreaux/s_376496.html) . 3. Democratically chosen government officials generally act with the intention of promoting the public interest, and they are uniquely positioned and qualified to determine what the details of the public interest are and to know best how to promote that interest. 2. The collective is just like an individual; it has feelings, desires, likes, and dislikes; it chooses and it acts. 1. All law is created by, and enforced by, the state. Posted in _Myths and Fallacies_ (http://cafehayek.typepad.com/hayek/myths_and_fallacies/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/twelve_myths.html) | _Comments (30)_ (http://cafehayek.typepad.com/hayek/2005/12/twelve_myths.html#comments) | _TrackBack (10)_ (http://cafehayek.typepad.com/hayek/2005/12/twelve_myths.html#trackback) December 20, 2005 The Intangible Wealth of Nations Don Boudreaux Judging from _this post_ (http://econlog.econlib.org/archives/2005/12/intangible_weal_1.html) by Arnold Kling, and _this summary_ (http://www.reason.com/rb/rb121605.shtml) by Ron Bailey, _this new book_ (http://siteresources.worldbank.org/INTEEI/214578-1110886258964/20748034/All.pdf) from the World Bank makes a point that's vital and all but completely overlooked, even by the very best economists. (The point is very much a Julian Simon one.) Capital is mostly a process; not a stock of stuff. Capital largely is a process of peaceful cooperation; a division of labor ever-deepened by market signals that contain more information than noise; an openness to economic dynamism; a culture of surpressing envy and applauding (or at least tolerating) honest success; a widespread acceptance of the difference between mine and thine, and an abhorence of those who refuse to accept this distinction; an acceptance, at least in practical affairs, of science, logic, and reason and a rejection in these affairs of faith, mysticism, and tradition-for-the-sake-of-tradition. These intangibles go way beyond inventories, machines, and even precise bits of technical know-how. They are the bedrock of civilization and prosperity. Posted in _Standard of Living_ (http://cafehayek.typepad.com/hayek/standard_of_living/index.html) | _Permalink_ (http://cafehayek.typepad.com/hayek/2005/12/the_intangible_.html) | _Comments (6)_ (http://cafehayek.typepad.com/hayek/2005/12/the_intangible_.html#comments) | _TrackBack (1)_ (http://cafehayek.typepad.com/hayek/2005/12/the_intangible_.html#trackback) [Non-text portions of this message have been removed] ------------------------ Yahoo! Groups Sponsor --------------------~--> 1.2 million kids a year are victims of human trafficking. Stop slavery. http://us.click.yahoo.com/U6CDDD/izNLAA/cUmLAA/KlSolB/TM --------------------------------------------------------------------~-> ForumWebSiteAt http://groups.yahoo.com/group/Libertarian Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/Libertarian/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! 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