Posts tagged ‘Matt Ridley’

Public Choice, System D, Black Markets

The growth of federal regulations over the past six decades has cut U.S. economic growth by an average of 2 percentage points per year, according to a new study in the Journal of Economic Growth. As a result, the average American household receives about $277,000 less annually than it would have gotten in the absence of six decades of accumulated regulations—a median household income of $330,000 instead of the $53,000 we get now.
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So if the effects of regulation are so deleterious to economic growth and the prosperity of citizens, why do countries enact so much of it? Dawson and Seater’s paper mentions three theories: Arthur Pigou’s notion that governments enact regulations to improve social welfare by correcting market failures, George Stigler’s more cynical view that industries capture regulatory agencies in order exclude competitors and increase their profits, and Fred McChesney’s argument that regulations are chiefly aimed at benefiting politicians and regulators. I asked if their results fit most closely with McChesney’s. Dawson replied: “This could be the conclusion that one reaches based on our empirical results (since they show a net cost of regulation over time), but again we did not set out to prove or disprove any particular theory.” Seater added that their research does not address the question of “why society allows excessive regulation….It’s an important [issue], but it is one for the public choice people to study, not for macroeconomists like me and my coauthor.”

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Everyone knows how we build automobiles. Trade

Everyone knows how we build automobiles. To grow automobiles, we first grow the raw material from which they are made – wheat. We put the wheat on ships and send the ships out into the Pacific. They come back with Hondas on them.

Quotation of the Day

You didn’t build that!


The Rational Optimist, by Matt Ridley

[T]here was a dramatic change in the obsidian objects at Urkesh around the time of the collapse. Before, the objects came from six different sources in Anatolia, implying that Urkesh was a cosmopolitan city visited by traders from different places. Afterward, the objects came from just two of the nearer sites.

Moreover, using a new magnetic technique, Drs. Frahm and Feinberg can identify which quarries at the two sites were used, and they find that, after the collapse, different quarries were being used from before. The obsidian thus confirms the suggestion from pottery evidence that there was some sudden disruption at this time and that trade atrophied.

Why? For many years the Akkadian collapse has been explained according to the academic fashion of the time. The first culprit was thought to be unsustainable agricultural practices, leading to the exhaustion of the soil and the displacement of farmers by shepherds. More recently, climate change has been blamed. A megadrought supposedly resulted from global cooling, caused by either a large volcanic eruption or a big meteorite strike elsewhere on the planet. But the evidence for a global climate event around this time is shaky.

A regional rainfall failure does seem to have happened, as evidenced near Tell Mozan by changes in crops, river flow and the disappearance of forests. Yet Karl Butzer of the University of Texas at Austin argues in a new paper that pollen records and an increase in contemporary canal building further downstream in the lower Euphrates valley (implying an increase in available water) mean “it is implausible that the Akkadian heartland collapsed because of a megadrought.”

Instead, Dr. Butzer argues that Sargon’s conquest itself caused the collapse of trade by destroying cities and disrupting what had till then been “an inter-networked world-economy, once extending from the Aegean to the Indus Valley.” In other words, as with the end of the Roman empire, the collapse of trade caused the collapse of civilization more than the other way around.

The collapse of the Akkadian empire laid bare by isotopes



Unfortunately, it seems that the future Aldous Huxley predicted in 1932, in Brave New World, is arriving early. Mockery, truculence, and minimalist living are best, then enjoy the decline. However, we do need a Revolving Door Tax (RDT), learn what Members of Congress pay in taxes, and prosecute politicians and staff and their “family and friends” who profit from insider trading.

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