Social Choice Part II

There is something else I want to append to the ideas described in my previous post. I’d like to expand a little bit on the process society goes through in choosing whether the man lives or dies.

The reason Krugman was reframing the binary choice in such an unrepresentative way is because he believes people are incapable of organizing unless forced to through the violent power of the law. So, he feels that in the libertarian framework, the choice would most likely be that the man dies, whereas having a law would make it so the man would most likely live. However, in thinking about the issue in this way, Krugman is completely ignoring the process it takes to actually create a functional law with the desired result.

Sure, the process of voluntary organization to solve this particular societal problem in a liberty-based system requires the efforts of thousands of people who have no mandatory obligation to actually do their part to organize a solution. It requires the support of millions of people to give such a solution the wings it needs to get off the ground. Sounds difficult, right? And yet passage of a law has nearly identical requirements!

So if Krugman wants to examine the difficulties associated with Society voluntarily and freely developing a solution, then fine, but let’s take the honest approach and compare that to the political battles and sausage-making that it takes to generate a solution through government. If instead he wants to focus on the finished product, then fine, let’s compare the efficiency, sustainability, and effectiveness of the finished products that would come out of the two systems. I’m confident that libertarians can win on both the “generation of solutions” front and the “quality of solutions” front when fought separately.

But to take the finished product of one system and compare it to the struggle to get there of the other system is just plain dishonest. And it’s that aspect of his arguments which leads me to so vehemently despise Paul Krugman.

Krugman and Social Choice

Paul Krugman is at it again (emphasis mine):

CNN’s Wolf Blitzer asked Representative Ron Paul what we should do if a 30-year-old man who chose not to purchase health insurance suddenly found himself in need of six months of intensive care. Mr. Paul replied, “That’s what freedom is all about — taking your own risks.” Mr. Blitzer pressed him again, asking whether “society should just let him die.”

And the crowd erupted with cheers and shouts of “Yeah!”

The incident highlighted something that I don’t think most political commentators have fully absorbed: at this point, American politics is fundamentally about different moral visions.

Now, there are two things you should know about the Blitzer-Paul exchange. The first is that after the crowd weighed in, Mr. Paul basically tried to evade the question, asserting that warm-hearted doctors and charitable individuals would always make sure that people received the care they needed — or at least they would if they hadn’t been corrupted by the welfare state. Sorry, but that’s a fantasy. People who can’t afford essential medical care often fail to get it, and always have — and sometimes they die as a result.

The second is that very few of those who die from lack of medical care look like Mr. Blitzer’s hypothetical individual who could and should have bought insurance. In reality, most uninsured Americans either have low incomes and cannot afford insurance, or are rejected by insurers because they have chronic conditions.

So would people on the right be willing to let those who are uninsured through no fault of their own die from lack of care? The answer, based on recent history, is a resounding “Yeah!”

Think, in particular, of the children.

So Mr. Krugman is right about one thing: At this point, American politics is fundamentally about different moral visions. However, the question of which visions is where Krugman is being deliberately misleading. Krugman frames the issue as a binary choice between two moral visions:

Option 1: Society saves the man.

Option 2: Society lets the man die.

But that doesn’t at all represent the moral question here. Libertarians do not want “Society” to just let the man die. Krugman’s mistake (which he repeats frequently, unashamedly, and deliberately, refusing to be corrected) is his tendency to equate government with “Society.” A more honest representation of the choice would be something like this:

Option 1: Government is responsible for determining whether the man lives or dies.

Option 2: Free individuals are responsible for determining whether the man lives or dies, and may voluntarily choose according to what they believe is right and fair.

Whether “Society” is comprised of government or an association of free individuals does not determine whether or not the man lives or dies. Rather, the choices that people make within each of those moral frameworks makes that determination. So who do you want to be making those sorts of determinations? Free, voluntarily associated individuals? Or the entity that gives us so many wonderful engines of bureaucratic incompetence like the DMV?

Think, in particular, of the children!

Paul Krugman’s solution to our economic woes: SPACE ALIENS

Yes. Space Aliens.

Brilliant! Why didn’t I think of that? All we need is a space alien attack, and suddenly we’re saved! The competition for survival will give the entire human race the incentive it needs to regain productivity, spurring the economy into recovery.

Of course, we could just restore the competitive free market and achieve the same incentives with less destruction and unnecessary waste…but that’s just BORING. Why do something that makes sense when we can fight a TOTALLY AWESOME WAR AGAINST SPACE ALIENS???

And maybe those space aliens will break a few windows while they’re at it.

But seriously, how can Krugman even be considered an economist?  Any introductory course in economics will teach about the Broken Window Fallacy. Perhaps he should take such a course so he can learn about his own field.

Paul Krugman on the Economy

His message: Even after everything we’ve been doing to help the economy over the past 3 years, the economy is still suffering. The recovery isn’t working so well. So, let’s keep doing exactly what we’ve been doing.

In other words, we’re not out of the hole we’ve dug for ourselves yet, so let’s keep digging deeper.

Thus is demonstrated the cognitive disconnect of this so-highly cited economist. Remember this the next time someone cites Krugman in defense of government control over the economy.

Paul Krugman

Nobel-prize winning economist Paul Krugman is popularly known for the New York Times columns he writes, using his economics knowledge to lambast spending cuts and attempts to decrease the government’s share in the economy. As such, his writings have become a favorite tool of authoritarians and statists.

However, as of late, Krugman hasn’t been making many friends in the economics community. The supply-side economists who dominate the field today have long-since abandoned the Keynesian theories that Krugman seeks to resurrect. And they don’t take too kindly to his less-than-intellectual dismissal of empirical arguments as “fraud.”

Perplexed by Krugman’s deviation from empirical economics, I decided to do a little research to try to figure out what, exactly, leads him to adhere so passionately to theoretical arguments that are so maligned by his opponents. Here is what I found:

Paul Krugman won his Nobel Prize in 2008 “for his analysis of trade patterns and location of economic activity,” particularly pertaining to the increasing returns to scale and its effect on trade. Basically, he [re]discovered the idea that countries specialize their industries (exporting one thing and importing everything else) primarily because one big entity can provide a product more efficiently than lots of independent small entities. Essentially, he likes monopolies, because they’re efficient.

Krugman has taken his economic theory and allowed it to shape his entire belief system, favoring the government-monopoly systems that are capable of greater efficiency of production than any free-market system. And he’s entirely correct- government monopolies are capable of far more efficiency than free, decentralized markets. But to say so is like saying a gas is “capable” of localizing all in one corner of the room without any force guiding it. Technically true- but it will never happen.

Like the physicist who disregards entropy, Paul Krugman’s entire belief system ignores the eternally disruptive force of human incentive. You see, monopolies have the potential to be efficient, but never are, because all incentive to do what’s good for the customer is lifted. In market economies, that generally means prices rise as customers cannot turn to competitors for a better deal. In government economies, that means costs rise and economies stagnate, as there is no incentive to improve services. Efficiency is thrown out the window, because, even though it’s achievable, there’s no reason to invest the time and effort into pursuing it on a fundamental level. In government, this means greater corruption, higher debts, and failed services resulting in extensive squalor.

In this context, it really makes sense why Krugman would toss out any empiricism that his opponents try to bring into discussions. The effects of human incentive are inherent in every economics experiment. This is why economists (and the governments that rely on them) are so bad at prediction- you need to know something about human psychology (and have a good feel for it) before you can understand how a market will react to an impulse. This is something which Krugman’s machine-like theories just don’t address.

And that is why Nobel Prize-winning economist Paul Krugman is wrong…again (and again, and again, and again…).