DAY 1: The Good Old Days
When I look to the future I get very nervous, but when I look to the past I feel pretty good. —James Buchanan (Buchanan)
I’m generally not one for reminiscing, but the other day I found myself in the throes of a sentimental moment. A friend forwarded me an email titled To Those of Us Born 1925 –1970, and man did it ever take me back. Back to my childhood, to a simpler time, to a time when kids could entertain themselves for hours on end—without the luxuries of video games or cable television. I literally got goose bumps as I was reminded of how my pals and I would pile into the backs of our parents’ pickups after little league games. But now that I think about it, I’m not entirely sure whether my goose bumps were inspired by nostalgia or by my memories of how friggin’ cold it was riding in the back of a truck.
Ah, the good old days, when the future seemed so bright! You know, like during the Great Depression, WWII, Korea, Vietnam, the Cuban missile crisis, Kennedy’s assassination, Nixon’s resignation, the Arab oil embargo (remember those gas lines?), the Cold War, 19 percent mortgage rates, the junk bond scandal, the savings and loan crisis, the Mexican and Asian currency crises, the 1987 crash, the tech bubble, September 11, 2001, the real estate bubble, and the myriad events between all those I just listed? Seriously, if you were born between 1925 and 1970, or from 1970 on for that matter, how often were you truly looking to the future with optimism?
In the words of economist James Buchanan, “When I look to the future I get very nervous, but when I look to the past I feel pretty good.”
Now in spite of my calamitous chronology of the past eighty-five years, I believe those of us born in the heart of the twentieth century indeed have much to be thankful for. Life was blissfully less complicated back when the notion of paying even a nickel (let alone a buck-fifty) for a bottle of water, as we drank from garden hoses, would have seemed utterly absurd. Yet while we will forever romanticize our past, we nonetheless strive mightily to make life more comfortable for ourselves and for our posterity. And clearly we have succeeded beyond our wildest expectations.
Pessimists consider themselves realists, and they call optimists idealists. But like Buchanan, when I look to the past and consider how far we’ve come, I’m thinking the optimists had it right.
Of course we have issues. We’ve always had issues, and of course we always will. You may indeed be pessimistic, you indeed have reason to be, and you’ll indeed be proven right every now and again. Or you may be an optimist; you indeed have reason to be, and you’ll indeed be proven right every now and again as well.
I’ve often wondered if we even have a choice, in terms of our tendency toward one or the other. Perhaps it’s a chemical thing, or maybe it’s environmental. Speaking for myself, particularly when we’re talking public policy, as you’ll read, I concede to both. But again; when I look at the world in retrospect, when my thinking transcends the headlines of the day, I can’t help, in the long-run, but be optimistic.
If you’ve been a lifelong realist (if you’ve been mostly wrong that is), no offense—I did not intend here to criticize you. For as the buyer needs the seller, you are every bit as essential to the market’s function as the optimist.
Or, for that matter, if you’re an optimist (if you’ve been mostly right that is), I did not intend here to inflate your ego. For you are the pessimist’s pawn. When Gloomy Gus gets it right, there has to be some bleary-eyed buyer to sell to.
DAY 2: Repeat Pizza
The economy is best served in the hands of the private sector.
My idea of a good time is immersing myself in the kind of stuff that would cure most insomniacs; specifically, economic history and theory.
As I travel back through the days of Milton Friedman, F.A. Hayek, J. Maynard Keynes, Karl Marx, David Ricardo, and Adam Smith, I realize that when it comes to economics, there are two distinct schools of thought. One advances the notion that the economy cannot effectively function without the helping hand of government, and the other says the economy is best served by the private sector, leaving the individual free to pursue his or her own separate interests.
Would you agree that the latter, whether or not you view it as the path to macroeconomic success, is simply human nature—that whether we’re pizza chefs or politicians, each of us, in our own way, will always pursue our own objectives? Truly, is it not in the pizza purveyor’s self-interest to provide his customer with absolutely the best pie he can profitably produce? It is if he hopes for repeat business. And is not the pizza purveyor’s profitability in the self-interest of the pizza lover? It is if he hopes for repeat pizza.
Or, to quote Adam Smith from An Inquiry into the Nature and Causes of the Wealth of Nations (Smith, 1786): “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens.”
DAY 21: A Very Short List of Government-Related Perverse Incentives
And thus a new industry, rat farming, was born.
In the early 1960s, Europe (attempting to bolster its poultry industry) tariffed US chickens. President Johnson retaliated with a tariff on Europe-made commercial vans. Both tariffs are still on the books. Today, there’s a Ford plant in Turkey that affixes rear-side windows and back seats to what would have been commercial vans (i.e., transforming them into consumer, duty free vehicles). They’re then shipped to America, where they’re stripped of their rear-side windows and back seats (the materials shredded and sent for recycling) and viola!, become commercial vans. Apparently the above waste costs less than the utterly idiotic tax.
When teachers are rewarded for their students increased test scores; do we get more effective teachers and better-educated kids? Or more effective test-teachers and better test-takers?
When teachers are rewarded for student evaluation scores, do we get better teachers? Or easier courses and inflated grades?
Government can indeed create industry. For example, in Hanoi, under French colonial rule, they had a rat problem. Therefore, in its infinite wisdom, the government instituted a program where folks were paid bounties for rat pelts. And thus a new industry, rat farming, was born.
Would a farmer who comes across a chartreuse-spotted salamander immediately contact the Fish and Wildlife Service? Or would he engage in “preemptive habitat destruction” (with a shovel) over fear he’d lose the use of his land due to the Endangered Species Act?
Ask yourself, honestly, if unemployment benefits ended at twenty-six weeks, like they used to, would the long-term unemployed be unemployed so long-term?
When government mandates mileage standards for new automobiles, thus you get more miles per gallon; will you be nearly as odometerphobic? In other words, as driving gets cheaper, would traffic get denser (more drivers, more traffic jams, more roads, more cars, more pollution)?