Catallaxy Files

polymathic pontification, bleeding heart economic rationalism and liberal secularist contrarianism

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    Saturday, May 04, 2002
    The Good , The Bad, The Ugly.

    There are some good free-market criticiques of neo-classical economics, some bad ones, and then there are some critiques that are just plain ugly. This article by Jacob Halbrooks I'm going to have to put in the third category.

    Hallbrooks begins:

    "When statists use economics to support government interventions into the free market, they use terms like “efficiency,” “externalities,” and “market failure.” One must first understand how these terms are used in order to see through the statists’ arguments. A general overview of economics, and the difference between good economists and bad economists, is thus needed"

    It sounds like a good idea. Explain some commonly used economic terms and how they can be used and abused. But given the length of the article, I was immediately skeptical about how Hallbrooks proposed to explain all three terms, AND justify one use of these terms over another (good versus bad economics).

    Aside from perhaps himself not fully understanding some economic concepts (like economic profit), I think Hallbrooks main problem is trying to explain too much in too little space. He appears to think that explaining economic jargon to non-economists is simply a matter of presenting the most simplistic interpretation of a concept possible and then asserting that 'good' and 'bad' economists apply these concepts in certain ways.

    As someone who has clocked up a fair number of hours teaching introductory economics to first year university students, I have to say that in fact explaining even simple economic concepts in everyday language can be a lengthy process. As the article by Hallbrooks demonstrates, trying to simplify things too much can get you into trouble.

    "Bad economists view the market as a machine that is supposed to distribute resources in a preapproved manner. When this does not occur, the market has failed, and the government must intervene to set it straight. Good economists, on the other hand, view the economy simply as the realm of human action. Along with the bad economist’s use of a mythical efficient outcome is the idea of externalities in justifying intervention. An externality supposedly occurs when one individual does not pay the full price of an action. If I buy a Slayer album, for example, and this causes Tipper Gore much distress and pain, an externality is said to have occurred. I must be made to pay extra for the album (or at the least suffer from a parental advisory sticker). "

    This has got to be one of the most appalling explanations of the concept of an externality I have ever come across. Not only does it struggle to get across the main idea of an externality, it uses the most contrived example I have seen. For goodness sake, what is wrong with the typical example of air pollution (negative externality) and vaccination (positive externality). And has Hallbrooks considered the possibility that some economists might accept the concept of an externality - but advocate private or market solutions (property rights, bargaining, tradable permits) rather than government solutions.

    In the end Hallbrooks appears to suffer from trying to do too much in too little space, and perhaps without the requisite level of skill for such a task.
    Hope for the Middle East?: A valued correspondent points me in the direction of this intriguing profile of leading Palestinian moderate Sari Nusseibeh. Here's a sample:

    He is no doubt the only one to have worked on a kibbutz or to have written a graduate-school essay at Harvard on Wittgenstein and the role of jokes in philosophical discourse ... On many issues of moment within the Palestinian hierarchy—the morality of suicide bombings, the wisdom of Arafat's rejection of the Israeli offers at Camp David and at Taba, the refugees' demand for the "right of return" to historical Palestine—Nusseibeh disagrees, publicly and in all languages, with the hard men of the P.L.O. and Hamas, and even with Arafat (to the extent that Arafat reveals himself). To him, "martyr operations" are blatantly "immoral," the flat rejection of the Israeli proposals a "major missed opportunity," and the right of return a painful delusion best forgotten.

    Yes, so he's talked the talk but can he walk the walk? Well, I think it counts that he's been given a fair drubbing for his beliefs (and I mean this literally) by members of his own party:

    To call for the elimination of Israel, he argued publicly, was irrational; the Jews, he said, had a deep historical connection to Jerusalem just as the Arabs did. This was not, in all circles, a popular argument. One morning, on the Bir Zeit campus, several masked members of a Jordan-based branch of Fatah jumped Nusseibeh. He was badly beaten and one of his arms was broken.

    Nusseibeh summoned up that day with a wry smile. "I remember it well," he said to me. "I'd just finished delivering a lecture at the university on liberalism and tolerance."

    Now here's the problem. Does he have a snowball's chance in hell of getting his views put into policy? He comes across as a scholarly gentleman who would rather lock himself away and read a book, and many of his admirers on the 'other side' feel the same way:

    For Oren, and for many Israelis left, right, and center, Arafat revealed himself as untrustworthy after he ended the negotiations with the Israelis in 2000 without offering a counter-proposal, insisting, yet again, on the Jews' lack of a historical connection to the Western Wall and on the right of Palestinian refugees abroad to return to Israeli territory. Such a return, Oren said, "is a euphemism for not recognizing Israel's right to exist."

    I mentioned Sari Nusseibeh and his statement, deeply unpopular among his own people, that the Palestinians will have to give up the right of return and recognize Israel's right to a secure existence if there is ever going to be a real peace.

    Oren smiled indulgently, as so many Israelis and Palestinians do at the mention of Nusseibeh's name. "Sari is a wonderful guy," he said, "but how many divisions does he have?"

    The profile closes with Nussibeh expressing dismay at the 'Hamas-isation' of one of his Fatah comrades:

    One afternoon, I stopped in to see Nusseibeh again, and I mentioned to him that Abu Ala, a deputy of Arafat's who had done much of the negotiating for the Oslo agreement, had told Joshua Hammer, of Newsweek, that "there are a hundred thousand Palestinians willing to become kamikazes."

    Nusseibeh was once again smoking and working his worry beads. He seemed genuinely cast down by the comment; this was Arafat's ally, Abu Ala, not the head of Hamas.

    Any chance that Nusseibeh will ever lead his people? Not if you believe Hayek's famous dictum that in politics, 'the worst get to the top'.

    Friday, May 03, 2002
    Irony of ironies: I've decided I simply don't have the patience to plough through the patent idiocies of Fukuyama so instead I'll point out a delicious irony. Could anyone be more reactionary than Francis Fukuyama at the moment? This is a man, whose views, as Virginia Postrel cogently argues should logically lead to the following absurd conclusion:

    Under the rhetorical cover of preventing child abuse, his policies would require what amounts to child neglect. They would force parents to accept a worse-than-necessary fate for their children. As Fukuyama says, no child asks to be born deaf, but he's arguing that we should deny parents accesss to technologies that might avoid that condition—that, indeed, we should avoid even the knowledge of how such technologies might be developed. To avoid voluntary, decentralized eugenics, Fukuyama wants to mandate involuntary, centralized dysgenics

    Well guess what, Fukuyama is being condemned as a 'teacher of evil'. Not for the pro-death tenour of his views, mind you. No, he's being condemned as a 'teacher' of evil apparently because his views really endorse posthumanism and for not being reactionary enough, since he endorses findings from evolutionary biology (!) according to a Peter Lawler writing in Modern Age (a journal apparently by people not comfortable with or happy about the modern age) - the article is reproduced here on Free Republic. Guess there's no pleasing everyone.
    Fukyama and libertarian schisms: Does Francis Fukuyama's hysterical anti-libertarian screed merit a long reply? Perhaps, if I find some time this weekend. In the meantime see the links on my left - Virginia Postrel, Brink Lindsey and Glenn Reynolds hammer him sufficiently well. Does Fukyama have a point? Only if he is referring to the loony Lew Rockwellites and Raimondo. Actually I'm far more pissed off by the likes of Raimondo who argues that Virginia., et al are 'kowtowing' to the conservatives on foreign policy just to get accepted into the conservative moment. Believe it or not, Raimondo, it's not immediately obvious to the sane and reasonable individual why thoughtless pacificism is the most optimal foreign policy. Believe it or not, Raimondo, some of us do passionately believe in bombing the hell out of anyone who bombs us, it's not a matter of 'sucking up'. And it is not obvious except to the likes of Rockwell who features on his site today the ravings of Lapham on 'media conglomerates' why foreign policy isolationism is more important than free trade, freedom of research and inquiry, privatisation and such like. I only wish the likes of Rockwell who is willing to ally himself with any big business-hater, anti-WTO scumbag, nationalist, Southern redneck, ex-Rhodesian fighters for Ian Smith and Christian fundamentalist nutters as long as they're isolationist on foreign policy would stop calling themselves libertarians. At times, the Lew Rockwell site resembles IndyMedia.

    Sunday, April 28, 2002
    Jenin: Massacre or Miscalculation?

    I don't normally comment on the Israel-Palestine conflict as I don't consider myself sufficiently well read on the politics of the conflict. But this article in the Washington Post offers such an interesting perspective on the incident at Jenin, that I think it is well worth giving some thought to. Please bear with me, as this is somewhat more lengthy than my usual post.

    The article suggests that the disaster of the Jenin attack may have been the consequence of a significant miscalculation on the part of the Israeli military. It is based around interviews with two Israeli army sergeants who were at Jenin. In the interview,

    "The soldiers described a lack of preparation by Israeli reservists. They were hastily mustered from civilian life less than two weeks before, and were told to expect a Palestinian surrender within three days, the sergeants said. They spent barely a day rehearsing the operation."

    Without knowing more about the general level of training of the units used, it is hard to know if two weeks was enough to bring them up to operational standard. Meanwhile the opposition forces appear to have shown a much better appreciation of their tactical situation.

    The two Israeli soldiers interviewed:

    " expressed grudging admiration for a mostly unseen enemy that had meticulously planned for the assault, stockpiling ammunition, food and medical supplies as well as crude but effective bombs made from metal canisters filled with phosphate and acetone.".

    Having gotten themselves into a bad tactical situation, it was perhaps inevitable that someone in the Israeli command was going to say 'to hell with the political consequences' and make a decision based purely on extricating themselves from the bad tactical situation.

    "Palestinian gunmen, firing from sandbags hidden behind curtained windows, had pinned down advancing Israeli troops on the camp's western edge. Two Israelis had already died…

    To a young Israeli army sergeant watching from a nearby rise known as Antennae Hill, perhaps 400 yards above the camp, it was clear that his commanders had been wrong when they had confidently predicted a few days earlier that the Palestinians would surrender at the first sight of approaching tanks.

    That's when he heard the orders to open fire.

    "The orders were to shoot at each house," recalled the sergeant, a member of a heavy weapons company in the Yoav regiment of the army's Fifth Brigade, a reserve unit that did the bulk of the fighting in Jenin. "The words on the radio were to 'Put a bullet in each window.' "

    They pounded a group of cinder-block homes -- the apparent source of Palestinian sniper fire -- with .50-caliber machine guns, M-24 sniper rifles, Barrett sniper rifles and Mod3 grenade launchers."

    We should keep in mind the nature of urban warfare. It is a dirty, dangerous and confusing business. It is the sort of environment where collateral damage (and the risk of non-combatant casualties) is likely to be high. Putting 'a bullet in each window' might be the way to turn the tide of battle, but if there are non-combatants in the area then such an approach is probably going to lead to higher civilian casualties.

    Best placed to appreciate this, as always, are the soldiers faced with putting such order into action.

    "It's not true there was a massacre, because guys did not shoot at civilians just like this," the sergeant recalled. "However -- and this is terrible -- it is true that we shot at houses, and God knows how many innocent people got killed."

    And there, I think, is the problem of Jenin summed up neatly. The Israeli military might not have deliberately shot civilians, but I believe serious questions are going to be asked of commanders in the field around the appropriateness of these orders. It is also the reason why I believe that any 'fact finding' team to Jenin must include some military component, preferably soldiers experienced in this type of combat. By including such soldiers in their investigation, the investigators will be better placed to determine whether the civilian deaths in Jenin were inevitable, the result of reckless disregard for civilian casualties.. or if indeed the deaths were deliberate.

    And as a p.s. There is still the question of why a reservist unit was used. Did the military really think the operation could be conducted with relative ease in 3 days? Or, perhaps more disturbingly, is the regular Army preparing itself for something else?
    Corporate Welfare: Undermining the Free-Market Cause

    As Jason points out below, the Howard government has again decided to engage in a bit of corporate welfare by handing Mitsubishi $AU 35 million! As the extract pasted by Jason (27 Apr 02) highlights, this comes at the same time as they have suspended an assistance program for small business innovation.

    What is even more ironic, is that this announcement comes amid another attempt to reduce social welfare spending. The government is currently running a series of television commercials advising welfare recipients to inform Centrelink (the government welfare agency) of any change in their living circumstances, lest they be paid too much in welfare benefits.

    This sort of double standard is damaging not just to the Howard government, but also to the libertarian and free-market cause. Howard's handout to Mistsubishi once again reinforces the public perception that free-market economics is actually anti-worker/pro-business corporatism. Selling the idea of free-markets to 'Joe and Josephine Citizen' is made infinitely more difficult when the conservative Right muddy the waters by handing out buckets of money to multinational corporations at the same time they are asking individual welfare recipients to pay back a few hundred dollars because they were tardy in telling Centrelink they had moved in with their girlfriend or boyfriend.
    Anti-gay hysteria gets airing: In a sure sign that the supposed scourge of political correctness is not what it used to be, the SMH seems to have gone to the other extreme of airing the ravings of France Arena in its Saturday papers. The excerpt from her autobiography describes how she decided to commit suicide after she found out that her sons were gay.

    What on earth was the SMH thinking? I'm not querying the paper's right to publish this junk but their judgement. Franca Arena is essentially the female version of the notoriously hysterical homophobe Bill Heffernan - there is almost no difference between the two with regard to this issue - except Arena is in the Labor Party. This is a woman who has been making false allegations, found in court to be without substance, about John Marsen and rent boys, and even crazier allegations about a satanic conspiracy of judges. Does the fact that she is in the Labor party make her homophobia and conspiracy-theory mongering more acceptable? Is this what it's about? We get gems from her writings like these ones that could have just as easily come out of Dr Laura Schlesinger:

    I simply don't like the gay "scene" because so many people in it seem obsessed with sex. And there was the constant fear that because the boys were gay, they were at a higher risk of contracting AIDS than their heterosexual counterparts ...

    I learned months later that they had gone to the gay counselling service at Sydney Hospital, next to Parliament House, but it was a really militant gay counselling service, staffed by people who would not have helped our sons in understanding the way we felt. On the contrary, the information that the two sons of a member of parliament were gay was spread instantly and in no time at all the whole gay community knew. So much for the supposed confidentiality of counselling services!




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