Grexit may be upon us. At first Greece's exit would be a calamitous event that could take down the entire European Union, then it was something that was just a little bit too costly considering the possibilities of renegotiating their debt and now the costs of Greece leaving are still terrible, but just a little bit less terrible than Greece staying. Even Lawrence Summers has come to accept that, after much ado, Greece and the Eurozone may be finally getting to their divorce:
When, as now appears likely, Greece financially separates from Europe, it will at one level be no one’s fault. The Greek leaders will rightly explain that having imposed more austerity on themselves than any industrial country has suffered since the Depression, they could not do more without light at the end of tunnel in the form of a clear commitment to debt relief. European leaders will rightly explain that they adjusted their positions repeatedly to accommodate the Greeks. They will stress that their publics would not permit Greece to play by different rules than the rest of Europe. And the International Monetary Fund will rightly explain that it would have blessed any plan agreed to by Greece and Europe that added up.
Make no mistake about the consequences of a breakdown. With an end to European support and consequent bank closures and credit problems, austerity will get far worse in Greece than it is today, and Greece will likely become a failed state, to the great detriment of all its people and their leadership. Once Greece fails as a state, Europe will collect far less debt repayment than it would with an orderly restructuring. And a massive northern out-migration of Greeks will strain national budgets throughout Europe, not to mention the challenges that will come as Russia achieves a presence in Greece. The IMF is looking at by far the largest nonpayment by a borrower in its history. True, there are good reasons to think enough foam has been placed on the runway to prevent financial contagion. Yet, this was asserted with respect to Long-Term Capital Management, subprime mortgages and the fall of Lehman Brothers.
To keep things pithy: Greece isn't going to become a failed state. It already is a failed state and has been so for decades. For its own good, Greece is a failed state with no business in being in the same currency area as Germany. The divorce isn't the disaster. Mr. Summers may write of Greece's impending breakdown, but the truth is Greece is already broken. There is simple no way, let alone politically possible way, for Greece to pay back its debts.
The disaster isn't Greece leaving the Euro Zone. The disaster was Greece joining the Eurozone in the first place. Unfortunately, the longer it takes for politicians to admit that, the more unnecessary suffering before the ties are finally cut.
In “The Right Food Fight,” Kenneth Rogoff provides yet another argument that governments should do more to fight the prevalence of obesity in rich societies around the world. Alleviating the problems of obesity, Mr. Rogoff argues “poses much more difficult challenges than the kind of successful public-health interventions of the last century, including near-universal vaccination, fluoridation of drinking water, and motor-vehicle safety rules.” Due to the prevalence of large corporations creating incentives for people to consume ever large quantities of unhealthy and often extremely sugary food, Mr. Rogoff argues that education will not be sufficient to curtail the excessive consumption causing the obesity epidemic.
Praising Michael Bloomberg’s attempt to limit the sale of sugary beverages in the article, Mr. Rogoff calls for public policy to impose measures to counteract the incentives toward consumption created by Big Food. Alas, Mr. Rogoff’s commentary suffers from a misdiagnosis of the problems of obesity from the point of view of public policy. For one thing, obesity isn’t a public-health concern proper, since obesity lacks the externalities characteristic of other public-health concerns, such as ebola and MERS. Furthermore, although obesity may be a problem, it is a problem that comes from the choices of individuals who are fully informed about the consequences of their actions. Like most other paternalists, Mr. Rogoff simply assumes that governments would just in imposing the needed incentives on their citizens and ignore that a presumption of liberty should hold in matters such as what a person decides to eat or drink.
Although it is all too common for commentators and politicians alike to refer to obesity as a public-health issue, obesity really isn’t a public-health concern, properly understood. Language matters, especially when language has been shaped in order to precisely describe an array of phenomena. Technical terms should be respected lest we lose the ability to speak to each other in the light of the disciplines that birthed them. ‘Public’ is one such word. Using it to describe any phenomena we see important to the general welfare, much as people use the adjective ‘social,’ would be to drain the word of its very specific meaning that economics has given it. As a technical term, it tells us that the costs and benefits of an action aren’t restricted to the person who decided to take that action. ‘Public’ signals the existence of externalities and preferably of significant externalities.
After all, there are very few actions that perfectly restrain the costs and benefits to its originator. There does have to be some prudence to the identification of certain externalities as matters of political concern. The wardrobe decisions that Ryan Gosling made any day have certain had external effects to women and fashion commentators the world over, yet it would certainly be curious to refer to those decisions as aa ‘public-wardrobe concern.’
The threats to public health are those contagious diseases that can spread between people. Someone afflicted with such a disease can spread it with interaction with other people. We only need to look at the outbreak of MERS in South Korea or the devastating Ebola epidemic in West Africa to recognize the danger that contagious diseases can pose. When people live together in as close proximity as they do in modern urban environments, conditions can be perfect for contagious disease. Without an organized effort, such diseases can kill thousands before they finally burn themselves out. That the government is concerned with the containment of MERS and ebola makes sense due to the nature of those diseases.
However, it doesn’t make sense in the case of obesity. No one will get fat by sitting next to an obese person. Nor will sitting in the theatre next to someone indulging in an extravagantly large slurp. Thankfully, the only person in control of whether any capable adult gets fat is the person in question. In the case of children, that responsibility is shifted to their parents. Although the responsibility is shifted it retains its private form. Yes, children may be all too willing to eat whatever junk food is available to them; nevertheless, their primary diet will be determined by their parents’ choices.
“But food is so addictive, and the environment so skewed toward unhealthy outcomes, that it is time to think about broader government intervention.” At first it was alcohol and heroin, now it’s root beer. Why is the government concerned with one person’s gluttony and not another’s addiction to pornography or addiction to video games? Surely those addictions are both widespread and have hurt people’s lives. Maybe they haven’t had as much of an impact in mortality figures, but man does’t live on bread, or for that matter Big Macs, alone.
Yet if a person isn’t allowed to eat the bread of their own choosing, why should they be confident that they can live their lives as they see fit? Although the helicopter paternalists may hide behind the thin veil of science, in truth they are making decisions about virtue and vice, even if they are unwilling to use such a moral language. The phenomena in question aren’t a matter of individual choice, but of deterministic relations. Instead, of discussing each person’s decision to diet and exercise, Mr. Rogoff hides behind about unsettled science: “The causes of obesity are complex, the science of understanding human behavior is embryonic…”
Really, though, the causes of obesity aren’t all that unsettled nor are new scientific discoveries needed for people to live healthier lives. The age-old wisdom of eating well and exercising would alleviate the problem for the vast majority. The simple practice of cutting out refined sugar from one’s diet and to exercise a couple hours already has sufficient corroboration. We don’t need cutting-edge science to figure that out. The thing is, though, is such practices are a matter of choice and the fact is a good fraction of the population doesn’t want to give up soda or to commit themselves to an exercise regimen, especially when their lives are already as busy as it is.
Just like so much else in human society, the obesity epidemic can’t be separated from the individual-level choices that have made it possible. To understand the causes of the epidemic, we have to understand it in terms of the choices that people make. For policy, that makes a difference, since it makes us understand the causes of obesity in terms of what people do rather than what is done to them. Mr. Rogoff argues against the critics of Michael Bloomberg’s bad on large sugary drinks: “Many commentators, even those sympathetic to Bloomberg’s goal, argued that it was wrong to try to legislate consumer behavior so bluntly. Yet, when one considers other successful efforts to improve public health over the last five decades – for example, smoking bans, seat-belt laws, and speed limits – one finds that legislation typically supplemented education.”
At the center of the helicopter paternalists’ case against sugar drinks is a vision of human life. Obesity itself is a neutral fact of the world. It’s only obesity’s interaction with human flourishing that makes it good or bad, but morality is no where to be found in their case. Instead, people are treated as pieces on a chess board that move according to how the external world moves them. A moral language reveals that the nudgers are just paternalists who had abrogated for themselves a position to tell others to live as the nudgers see it.
People do make informed decisions, it's just that their decisions just aren’t what the helicopter paternalists want them to be. So instead of accepting this difference in lifestyle, they blame Big Food and a consumeristic society, as if Big Food is shoving unhealthy food down unwilling throats. But if one goes to a 7-Eleven, one sees people willingly filling up a Big Gulp with soda and if one goes to a McDonald’s, one sees people willingly waiting in line for the food offered there. Even if Mr. Rogoff and the other paternalists may not understand such a desire, the evidence is that people really do think what 7-Eleven and McDonald’s offers them improves their lives.
The paternalists then talk about addiction, but when we cut to the heart of the matter, anything that’s enjoyable is addictive. That’s just how the human mind operates. People will develop inordinate habits around all of the pleasures of life, whether it be food, sex, partying or video games. Given the fact that, in the case of food, those decisions primarily affect the person who makes them, the government should leave those questions alone and leave each person alone. The obesity epidemic simply isn’t a threat to somebody who has a good diet and exercise regimen. Rather than treating people as particles to be moved this way and that, governments should trust their citizens as the people who know best how to achieve their own welfare.
In the case of obesity, there is no grave threat to the general interest that overcomes the presumption of liberty that should inform public policy. Paternalists have no business hovering about people like helicopter parents. If somebody wants to eat a sugary donut, the Leviathan really have no good reason to interfere with that decision.
Although I address race in this post, I’m not going to write about the recent act of terrorism in Charleston. To discuss it would require discussing it at length and I don’t have that length in this post. I can only hope readers can understand that my chosen task here is something different entirely. With that aside, in “Blurred Lines” at Democracy in America, Will Wilkinson yesterday commented on the recent scandal (I don’t really know if the word fits but I’ll use it anyways) that after Rachel Dolezal was exposed for identifying as black. In doing so, Mr. Wilkinson draws a direct parallel between with Ms. Dolezal’s identification as black with Bruce Jenner’s identification as a woman:
It seems to me that Smith's brand-new willingness to accept transgendered students is a measure of progress in the struggle for gender equality. It tells us that the gap between the lived experience of women and men has narrowed enough that today's students at women's colleges do not see the experience of someone who is biologically male, and who was once culturally identified as male, as so different that she cannot be accepted as a woman among women. Likewise, the breadth and intensity of resistance to the idea of whites identifying as blacks is a measure of how far we still have to go in the struggle for real racial equality. The gap between the lived experience of black and white Americans remains so wide, and so unjust, that the attempt of whites to cross the racial divide, and to live as blacks do, seems impossible. It is offensive for a white American to represent herself as black, for now, because it diminishes the enormity of that gap by implying that it has, in fact, been crossed.
Rachel Dolezal knew she needed to lie to be accepted as black. That's not something we ought to be happy about. When the day comes that future Rachel Dolezals can tell the truth about their European ancestry and find themselves nevertheless embraced as black by the black community, it will mean that the experience of being black in America has changed immensely, for the better, and that America has finally begun to make good on a promise of equality which, from its inception up to today, has never yet been kept.
Mr. Wilkinson’s parallel between Bruce Jenner and Rachel Dolezal is troubling. There was an actual border for Bruce Jenner to cross over. That border is certainly not a strict bifurcation, even in a biological sense, and there is certainly a strong cultural component to the particular border that Mr. Jenner crossed over. Where that border will exactly fall will be different for different people across different cultures. However, our nature as a mammalian species does mean that there will be a border to cross over and that it will require a good amount of resources and medical, both pharmaceutical and surgical, knowledge to cross over.
With race, there are no boundaries to cross over. At least no lines that exist outside of man's imagination. The pigmentation of human skin isn't discrete, but already blurred across a spectrum. What is already blurred can’t be blurred. Speaking about race as something to be crossed over is to breath life in the antiquated notion that races are discrete entities. Unlike the notion of sex, race is biologically bunk, so if Ms. Dolezal was crossing over anything, it wasn’t racial boundaries in the sense that Mr. Jenner crossed over the boundaries of sex.
How not to think about race.
The boundaries that Ms. Dolezal crossed over had to do with culture alone. Let’s not delude ourselves into thinking that culture is artificial and therefore plastic to human desires. Cultural identities do matter and there is a tangible reality to them. Much like the boundaries of sex, it can be costly to cross over cultural identities, which corroborates the existence of such boundaries. Someone identifying as culturally French without living at length in France and learning to speak French fluently is mockable. Similarly, if one is to identify as culturally black in the United States comes having to deal and generally have first-hand experience with racism. Cultural borders exist. Race does not. The problem that Mr. Wilkinson addresses is, therefore, not a problem with Ms. Dolezal changing her race, but changing her culture.
It’s a very similar problem as someone changing her accent. Learning that someone is faking their accent does often feel like the person is lying about their identity, yet learning an accent can be part of becoming part of a cultural group, as many Britons of old, like Margaret Thatcher, can attest to with their learned posh accents. Are they lying about who they are by using a learned accent? No, at least if they actually live out the cultural identify associated with that accent. Whether Ms. Dolezal crossed over to the cultural group that she led others to believe she was apart of isn’t something either I nor Mr. Wilkinson know. All we know is that there is a cultural boundary between black America and the rest of the country.
For instance, an expression of that the boundary is the question: Is Juneteenth for everyone? Can everyone really celebrate with real joy the end of slavery in the United States? I’m not so sure. Myself, I shall wish those who celebrate today with joy the best jubilee, but I will admit that the day doesn’t touch my soul as it would touch the soul of somebody who day-in, day-out deals with the lingering effects of slavery. My knowledge of racism is, really, pure book-learning. I wouldn’t want to cheapen an anniversary as surely important as Juneteenth is to many people by pretending that I’m overjoyed to see ‘June 19’ on the calendar today.
For many, the sense that we don’t all share the same holidays is perturbing. Instead, I think that’s something that we should understand as part of living in an open society: Not all cultures will have the same cultural focal points. For some, Juneteenth will be an anniversary of something that touches their lives, for others it won’t.
Today in 1858, Charles Darwin received a manuscript in the mail from the naturalist Alfred Russel Wallace, who was at that time exploring the Malay Archipelago, outlining a theory of evolution. Titled "On the Tendency of Varieties to Depart Indefinitely From the Original Type," but widely known as the Ternate essay for the island Wallace wrote the piece on, the essay was certainly a startle to Darwin, who had been carefully accumulating evidence for a large work on evolution.
In the essay, Wallace describes evolution as the progress, always checked by external circumstances, from an original type:
We believe we have now shown that there is a tendency in nature to the continued progression of certain classes of varieties further and further from the original type--a progression to which there appears no reason to assign any definite limits--and that the same principle which produces this result in a state of nature will also explain why domestic varieties have a tendency to revert to the original type. This progression, by minute steps, in various directions, but always checked and balanced by the necessary conditions, subject to which alone existence can be preserved, may, it is believed, be followed out so as to agree with all the phenomena presented by organized beings, their extinction and succession in past ages, and all the extraordinary modifications of form, instinct, and habits which they exhibit.
Of note in the Ternate essay is Wallace's discussion of the struggle for existence:
The life of wild animals is a struggle for existence. The full exertion of all their faculties and all their energies is required to preserve their own existence and provide for that of their infant offspring. The possibility of procuring food during the least favourable seasons, and of escaping the attacks of their most dangerous enemies, are the primary conditions which determine the existence both of individuals and of entire species. These conditions will also determine the population of a species; and by a careful consideration of all the circumstances we may be enabled to comprehend, and in some degree to explain, what at first sight appears so inexplicable--the excessive abundance of some species, while others closely allied to them are very rare.
I don't know whether Charles Darwin adopted Wallace's language or whether he came to it independently, but Darwin puts great emphasis on the struggle for existence in The Origin of Species, dedicating an entire chapter to the topic. Like Darwin, Wallace correctly emphasizes that the struggle for existence is strongest between similar organisms in similar niches in an ecosystem.
Where the two drastically disagree is in the relationship of domestic animals to the theory of evolution. Whereas Wallace rejects the existence of an analogy between the varieties of domestic animals and the varieties of animals in a state of nature, Darwin cleverly exploits that analogy in the first couple of chapters in The Origin of Species. Indeed, Darwin opens the book with a elucidation of the principles of artificial selection. Only after establishing those principles does he move onto establishing that the struggle for existence can produce similar selective pressures on animals in a state of nature.
The shadow of September, 2008 looms large on the economics profession. Whatever we think of the crisis itself, it has been an opportunity for the critics of the economics profession to criticize and to argue for their own approach to the problems of economics. In the Spring/Summer edition of the Cato Journal, the ever-worthwhile Axel Leijonhufvud has done just that, adding to his previous commentary, with “Monetary Muddles.” There are two themes that particularly interest me. I’ll comment on them below.
The first theme is the question of whether the market economy is stable and how we should approach that question. What I like, quite a bit, about Leijonhufvud’s approach is that coordination is in the forefront. In exploring the question of stability, the Swede treats the economy not as a machine existing apart from the action of individuals, but as a network of contracts that emerges from that action:
On any given day, the functioning of a market economy is governed by an intricate web of contracts and less formal promises and understandings. Errors occur. Some promises are broken. For the system as a whole to work reliably, it must isolate those cases and deal with them in more or less short order. But in some circumstances, one default will trigger another. Under normal conditions, such chains of default will be short. (Ibid: 186)
Whether the market is stable is a matter of coordination. If the intricate web that Leijonhufvud writes of is perfectly coordinated with the future intentions of its entities and with the future circumstances of the world they are surrounded by, then the market economy will remain stable. As long as it is perfectly coordinated, then there is nothing that can upset that coordination. As long as the entrepreneurs involved can perfectly foresee the future state of the world, whether its whether a creditor of theirs will go bankrupt or whether there will be a bad harvest in three years, error is impossible. The ex post has been collapsed into the ex ante, equilibrium is established and so there isn’t any logical space for an event that can disrupt the coordination between entrepreneurs constituting the economy.
When thinking about the stability of the market economy, I cannot help but to think about ecological collapse as a theoretical parallel. When an ecosystem collapses, an ecosystem suffers a dramatic reduction in the population of animal species it can support. That cataclysm generally reveals itself as a discontinuity when we chart out the population level over time. A paradigmatic example of ecological collapse is the collapse of the Atlantic cod population off the coast of Newfoundland in 1992. After decades of intense fishing, the population suddenly collapsed. The decline wasn’t gradual or expected, but sudden, taking the entire fishing industry by surprise.
In the article, Leijonhufvud finds a beautiful way of describing this temporal asymmetry by quoting The Sun Also Rises: “In Hemingway’s The Sun Also Rises, one of the protagonists asks his friend: ‘How did you go bankrupt?’ ‘Two ways,’ went the answer, ‘gradually, then suddenly’” (Ibid: 181). Although the causes leading up to the event were decades in the making, the collapse of the Atlantic cod population, much like the value of sub-prime loans, was sudden. Per Bak’s phenomenon of self-organized criticality is also quite interesting here, but I lack the time to provide the lengthy description Bak’s theory deserves.
In discussing the recent crisis, Leijonhufvud’s argument is a curious synthesis of an Austrian view that the crisis was a product of an over investment boom with the view that the financial regulation was made possible by deregulation. It isn’t all that surprising that Leijonhufvud would argue such a position. Both of those views share his concern with coordination and the interconnectedness of the market economy. He champions the Austrian business cycle approach: “The period leading gradually to the recent sudden crisis has the hallmarks of an ‘Austrian’ boom”(Ibid: 181). In discussing the recovery from the crisis, much like Austrian theorists, he using the metaphor of recalculation: “A financial crisis reveals a large, collective miscalculation of economic values. The incidence of the losses resulting from such miscalculations has to be worked out before the economy can begin to function normally again” (Ibid: 187).
Once the boom has taken its course and interfered with the calculation of value so as to create error in the ways that entrepreneurs coordinate with one another, crisis is unavoidable. To suppress the crisis would be to prevent the process of the correction of those wrong values interfering the correct coordination of entrepreneurs within the economy. Yet before we take Leijonhufvud to be arguing for laissez-faire, let’s not forget that he wrote of the critical role of government right after: “Because the process of a crash is unstable, it cannot be left for the markets and bankruptcy courts to work out the eventual incidence. If we had done so this time, it would have led us into another Great Depression” (Ibid). For Leijonhufvud, economic crises are political, requiring governments to do something about them—the second theme of note in “Monetary Muddles.”
In the course of an economic crisis, there will always be winners and losers. Politics can’t be avoided in that determination. Leijonhufvud criticizes current governments’ reliance on monetary policy in making decisions about who wins and who loses. Indeed, he even goes as far as to argue that the independence of central banks is incompatible with a democratic society: “Once it is realized that monetary policy can have all sorts of distributional effects, the independence doctrine becomes impossible to defend in a democratic society” (Ibid: 192). Here, I am very pessimistic since the power to make monetary policy through legislation would attract a whole lot of lobbying and would probably still be skewed to the advantage of those with the access to the halls of power. Nevertheless, Leijonhufvud is spot on in asserting that the economics profession has skirted the political questions that must accompany an economic crisis.
Overall, “Monetary Muddles,” much like the vast majority of Leijonhufvud’s corpus, is very much worth reading carefully. Coordination is always on the forefront in the way that he tackles the questions of economics. Moreover, he is always willing to grab political questions with both hands. Both are qualities that make Axel Leijonhufvud a theorist to admire.
"You are bidding for a piece of Magic the Gathering history," the item's description reads. The owner and seller, Pascal Maynard, drew the card in the recent Grand Prix Las Vegas event, which took place last month. "I opened this Foil Modern Masters 2015 Tarmogoyf Grand Prix Vegas Stamped in the Top 8 and it created a huge story in the community, which you can probably find on the internet via #GoyfGate #FoilGoyf #MakeMagicHistory."
His decision to choose Tarmogoyf sparked some debate and controversy within the Magic community, as the hashtags above imply.
As interesting as the story may be, it's the card that snatches my interest. One of the reasons why Magic: the Gathering has been such a successful game is that it's cards are so imaginative. Although each new set of cards certainly deserves not for introducing new mechanics and factors into the game, each also brings along with it new art work and new flavor brief texts, all enmeshed together. Just those those factors can make a fantasy world open up to a day-dreaming mind. Behold the Tarmogoyf:
Gorgeous. That flavor text alone wants me to immediately go out and buy a new Magic deck, just to see what new fantastical worlds Wizards of the Coast has thought up.