When did it start?

Human civilization, coordination and cooperation that is. Check out these new findings:

To Schmidt and others, these new findings suggest a novel theory of civilization. Scholars have long believed that only after people learned to farm and live in settled communities did they have the time, organization and resources to construct temples and support complicated social structures. But Schmidt argues it was the other way around: the extensive, coordinated effort to build the monoliths literally laid the groundwork for the development of complex societies.

Make use of what you’ve already got

At a very rudimentary level I think that efforts like this to make a more productive use out of the energy already being used and released through ordinary foot travel is in one sense brilliant yet in another sense obvious.
I think about this whenever (admittedly on rare occasions) go to the gym and see rows of people peddling and treading but the energy going nowhere. If we could harness it into something substantial that would be cool.
In the same vein, many people like to point to inmates as an idle body of labor going un-utilized.
Food for thought. Happy Monday.

Interview on Fox8

I was just interviewed for local news Fox8 about the economic recession and its effect on current effects with the local retail market. It’s supposed to air after major league baseball tonight around 10pm in the New Orleans area. Video cameras are intimidating devices.

The NYT on California prison system

How difficult it is for state planners to fully recognize the scope of costs and unintended consequences behind criminal justice policies. I’d bet dollars to donuts increases in the parole system were at one time sited as a release valve for prison populations. The technique proves ineffective without credible commitment and thus ends up being more costly than less. An interesting piece regardless.

The Political Economy of Looking Forward

Unfortunately there is an inevitable bias against many of the insights that sound political economy has to offer. For example, when working on the Katrina project with The Mercatus Center I was often frustrated with how dissatisfied many policy workers were with the basic recommendations of pure economics. Pure economics does little more than to point out that many of the consequences of Katrina could have been avoided or less catastrophic had it not been for certain policies. Because of the national flood insurance program people were encouraged to live below sea level, they were un-inclined to privately invest in flood insurance, and they were never encouraged to innovate private flood remedies, so on and so forth…
The motivated policy activist is unsatisfied with this sort of analysis. Just saying “don’t pay people to live at the bottom of a soup bowl,” does not tell us what to do – here and now. Right now (at the time of Katrina) people are dieing, drowning, starving, lacking goods and services. Cannot economics help us with anything?
My first response (which I think is the right first response) was to calmly repeat the original insights with more clarity and to emphasize the more subtle implication of the backward-looking pure economics. What do we do now? Well we certainly avoid doing more of the same, so we don’t end up here again. This is good advice even if it’s hard to swallow. But it also has a future looking component even if it’s hard to recognize. Pure economic reasoning tells us that central planning inevitably faces knowledge and incentive problems. No matter what we plan to do in the future, we should be aware that government planning may not know how to solve the problem nor provide the necessary incentives to solve the problem. Pure economics forces us to be skeptical of policies that promise the moon in their effects. With timely and progressive solutions we may be invoking unintended and undesirable consequences.
The motivated policy activist is still unsatisfied and perhaps more frustrated at this point. But still what do we do now? In the Katrina context I was admittedly low on ammunition at this point. “Doing” is really about emergency response; it’s a logistical challenge. How do we rescue people, how do we re-direct flood waters, how do we distribute goods and services, how do we rebuild? Again we repeat the basic insights with a little more specificity. Don’t restrict free entry, let the private helpers past the coast guard line. Recognize that helicopters in Iraq are helicopters not in Louisiana. I’m no EMT nor coast guard expert. I’m an economist, at some level I have to admit I don’t know what to do, but I still recommend policies (or lack thereof) that promote incentives, information and innovation rather than inhibit them.
This was not meant to be a post about Katrina but instead another post about the current financial crises. This past weekend at The Wirth Conference “What is so Austrian about Austrian Economics,” participants had a brief round table discussion about the current financial crises. This discussion paralleled the same argumentative structure as these old Katrina discussions. “What do we do here and now? Complete laissez faire may not be politically viable, we are looking for the policy that does the least harm,” – were the common refrain.
Several comments were recommended around the room. Again I believe the pure economics is worth reiterating. This problem is the result of bad policies, we should at least avoid doing them again in the future. But as we are seeing unfold, many free market economists and supposed libertarians are making compromising suggestions regarding the bailout and other admittedly temporary fixes. I’m less confident in such proposals for both economic and libertarian reasons. I’m often unconvinced they will do more good than harm and I’m also skeptical that anyone should have the legitimate authority to make such decisions over the lives and well-beings of others.
After thinking more and more, I’ve settled on what I think I can be most comfortable with as a suggestion to the proactive – free – market policy activist. In short my suggestion is to deregulate labor markets. If I take as given that capital market regulation is a political inevitability – laissez faire capital markets are out of the question, then I argue for deregulated labor markets.
In terms of the possible recession we are concerned with the real levels of production and output in the economy. We are concerned with the real quality of living for those people enduring the hard times. We don’t want depression style unemployment, shortages, or wandering. But remember there are always two ways to skin a cat. For any tangible good or service there are capital intensive methods of production and labor intensive methods of production. What used to be accomplished by workers through time consuming processes is now done by machines and computers. With a capital crunch we can expect less roundabout investment in labor saving machines and computers. In order to avoid the harsh effects of lower consumption rates and lower living standards that fall out of lower production rates we should allow labor to substitute for capital on the margin.
Admittedly these margins may be few and far between. Relatively speaking labor markets in the US for one are very free. But this is an international recession and we should think in terms of what policies can generally allow for and accommodate the free mobility of labor and promote the free exchange of labor services where ever they are being suppressed. Whether this means liberalizing border policies, eliminating minimum wages or relaxing licensing policies I am not sure, but am confident that the effect will on net be positive more so than I am comfortable signing on for liquidations, bailouts, or monetary injections. If you insist that I advise something for the future, I recommend open labor markets.

Montesquie responds to Tabarrok

Alex Tabarrok has said that increased police on the streets serve as a good solution for temporary crime spikes.
Here’s Montesque’s concern on the matter:
12. Of the Power of Punishments. Experience shows that in countries remarkable for the lenity of their laws the spirit of the inhabitants is as much affected by slight penalties as in other countries by severer punishments.
If an inconvenience or abuse arises in the state, a violent government endeavours suddenly to redress it; and instead of putting the old laws in execution, it establishes some cruel punishment, which instantly puts a stop to the evil. But the spring of government hereby loses its elasticity; the imagination grows accustomed to the severe as well as the milder punishment; and as the fear of the latter diminishes, they are soon obliged in every case to have recourse to the former. Robberies on the highway became common in some countries; in order to remedy this evil, they invented the punishment of breaking upon the wheel, the terror of which put a stop for a while to this mischievous practice. But soon after robberies on the highways became as common as ever.
Desertion in our days has grown to a very great height; in consequence of which it was judged proper to punish those delinquents with death; and yet their number did not diminish. The reason is very natural; a soldier, accustomed to venture his life, despises, or affects to despise, the danger of losing it. He is habituated to the fear of shame; it would have been therefore much better to have continued a punishment30 which branded him with infamy for life; the penalty was pretended to be increased, while it really diminished.
Mankind must not be governed with too much severity; we ought to make a prudent use of the means which nature has given us to conduct them. If we inquire into the cause of all human corruptions, we shall find that they proceed from the impunity of criminals, and not from the moderation of punishments.
Let us follow nature, who has given shame to man for his scourge; and let the heaviest part of the punishment be the infamy attending it.
But if there be some countries where shame is not a consequence of punishment, this must be owing to tyranny, which has inflicted the same penalties on villains and honest men.
And if there are others where men are deterred only by cruel punishments, we may be sure that this must, in a great measure, arise from the violence of the government which has used such penalties for slight transgressions.
It often happens that a legislator, desirous of remedying an abuse, thinks of nothing else; his eyes are open only to this object, and shut to its inconveniences. When the abuse is redressed, you see only the severity of the legislator; yet there remains an evil in the state that has sprung from this severity; the minds of the people are corrupted, and become habituated to despotism.
Lysander31 having obtained a victory over the Athenians, the prisoners were ordered to be tried, in consequence of an accusation brought against that nation of having thrown all the captives of two galleys down a precipice, and of having resolved in full assembly to cut off the hands of those whom they should chance to make prisoners. The Athenians were therefore all massacred, except Adymantes, who had opposed this decree. Lysander reproached Phylocles, before he was put to death, with having depraved the people’s minds, and given lessons of cruelty to all Greece.
“The Argives,” says Plutarch,32 “having put fifteen hundred of their citizens to death, the Athenians ordered sacrifices of expiation, that it might please the gods to turn the hearts of the Athenians from so cruel a thought.”
There are two sorts of corruptions — one when the people do not observe the laws; the other when they are corrupted by the laws: an incurable evil, because it is in the very remedy itself.

Radio interview this morning

Doubt many people caught it but I was interviewed on talk radio this morning. Robinette’s “Think Tank,” gave me a call to discuss the economic platforms of McCain and Obama. To sum up my points were:
1) There is little to no differences between the economic effects of either candidates proposals. Both have thrown markets under the bus as of lately.
2) Presidents do not save economies. Economic effects are often delayed responses to previous administrations good or bad efforts.
3) Free markets help make life easier with lower prices and higher quality goods and services. Tough times are usually the result of messing up the price system from doing its job.