The Fallacy That May Never Die…

From this Sunday’s Boston Globe “Ideas” section: Natural Disasters Help

“Natural disasters can give a boost to the countries where they occur – and sometimes, the more the better”

“…When something is destroyed you don’t necessarily rebuild the same thing that you had. You might use updated technology, you might do things more efficiently. It bumps you up,” says Mark Skidmore, an economics professor at Michigan State University. “Disasters help people think about things differently.”

The Broken Window Fallacy: 1st Century Edition

In the 2001 Polish film Quo Vadis, Nero’s minions secretly set fire to Rome to give Nero inspiration for his lousy poetry.

When the Roman citizens, who have lost everything, riot, Petronius, the Roman writer and wit, and also Nero’s courtier, delivers a little speech to the crowd:

“Citizens, the city shall be rebuilt. The gardens or Lucullis, Maecenas, Caesar and Agrippina will be opened.Tomorrow, we shall start distributing wheat, wine, and olives so that each of you fills his belly

(Applause)

Insatiable Government

There are many aspects of government. The one least considered is what may be called the biological aspect, in which government is like an organism with such an instinct for growth and self-expression that if let alone it is bound to destroy human freedom — not that it might wish to do so but that it could not in nature do less. No government ever wants less government — that is, less of itself. No government ever surrenders power, even its emergency powers — not really.

Inflation Deflation Red-flation Blue-flation

A debate has been raging for some time among those in the finance industry about whether the United States is currently experiencing inflation, deflation, stagflation, reflation, hyperinflation, or maybe even some other sort of “-flation” that only Dr. Seuss could imagine. Given the confusion, this article will add some color to the debate by offering usable definitions of the terms inflation and deflation and then attempt to show what is occurring in today’s economy.

Mariana Fights Inflation, 1605

Men from past centuries have warned us: men from the Old World, men steeped in theology and ethics who studied how man interacted with man in the market. One of these men was Father Juan de Mariana, S.J., and through a recent English translation of one of his works he now speaks to the New World too. Mariana wrote with the hope that the king and his court would be dissuaded from further debasing the realm’s money.

WALL-E: Economic Ignorance and the War on Modernity

The Disney-Pixar film WALL-E is an assault on modern civilization, borne of deep economic and historical ignorance. First, it makes the Marxian assumption that it would be possible for a single corporation to subsume the entire world. Then the movie shows humanity seeking salvation in abandoning a sustainable automatic food production system - which had apparently worked without fail for seven centuries - and suddenly resorting to traditional agriculture. The creators of WALL-E, sitting in their comfortable Hollywood studios, do a tremendous disservice to the civilization that made their work and high standards of living possible.

A Nudge in the Wrong Direction

In Nudge, Thaler and Sunstein try to combine libertarianism and paternalism by arguing that a “nudge” from the state can benefit those nudged, while staying consistent with liberty because it does not force anyone to do anything. Nudge’s argument is far from airtight. But even more devastating is its reliance on a false premise. The “market failure” examples it promises to improve are actually government failures.
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