The Sumptuary Manifesto

"Sumptuary" - Regulating or otherwise limiting consumption

This particular JSOTR piece was a brief satire aimed at dismantling the ridiculous and arbitrary nature of laws that regulate consumption, termed sumptuary laws. The piece was short and pithy, a very easy read. Essentially it was a description of different hypothetical laws that limited various types of consumption, from housing sizes to liquor to facial hair, with the justification being the mutual benefit of society. At the beginning and end, in a nice symmetry, the "Peerless Leader" remarked upon the outdated, misguided view of liberty held by the enemy party of libertarians and the like.

I personally enjoyed reading the piece. It conveyed a simple insight into the arbitrary and often ridiculous nature of attempts to regulate consumption, using exaggerated examples to drive the point across. In our society, there are certainly people who believe that there is too much consumption and wish we could do something to deal with it. Many point to a consumption tax as the solution. Perhaps this would work, perhaps it wouldn't, but is there really an issue of over-consumption? Efficiency should be lauded, and some people certainly do lead extravagant lifestyles, but who are we to tell them what they can and can't do, based on our subjective and vague perception of what is "too much" consumption"? The exception to this rule is when there are externalities to the consumption that directly affect others. However, given that every dollar spent has an opportunity cost of whatever else it could have been spent on, is it moral to give money spent on excess and re-direct it to those who are more needy and would use it to buy food, water, or other necessities? This is the mentality behind wealth re-distribution and social safety nets. The economic argument would be that the dollar to a person who is poor has a greater marginal utility than a person who has much money and spends at least some of it on excesses such as super nice cars or extravagantly large houses. Now, I personally try to live within my means, and would be happy without a nice car, but is it necessarily moral for me to turn to someone else who makes more and say "because you have too much money, you should give some away?" In my opinion, this is an immoral mentality. However, assuming that the money is spent well, and used towards infrastructure and social programs, is it a necessary moral casualty to help those in need? This is an open question and one I am personally still debating.

Golf at Bethpage Grey

This article dealt with the overwhelming demand for tee times at a newly renovated golf course in NYC, one of the most population dense areas in the world, and the legal black market which developed as a way to get people tee times. In the end, the demand created a sort of lottery system: the second tee times were open to buy, people would desperately call in, and the lucky few who got through would purchase a chance to play on the US Open quality golf course, while the others would just get the beeping of a busy signal and be forced to try again. The author detailed his own experience with the system and those of others who have also had difficulty in getting a reservation. Though overseers have attempted to regulate the NY Golf Shuttle company, which constitutes the black market, they have largely failed. Each attempt at shackling it only causes more issues, often to the detriment of unintended customers. How can this situation be fixed, or at the very least improved?

I have one response, which is that the golf course should raise its prices. This is the best way to remove the scalping issue. Though people will cry foul and say that this is biased towards the more wealthy citizens, which it is, it is a logical solution. The scalping business is an example of a de facto "black market" caused by the excess of demand relative to supply, and the forced inability of the market to equilibrate by raising prices. Despite well-intentioned attempts at regulation and keeping the price of the golf course the same, the black market seems to defy all attempts to regulate it. Though the price for a tee time is $120, it seems the only way to actually get a tee time is to use this booking and shuttle service, which for the author of the piece cost $850 and was inconsistent with times. Raising the price would solve this problem, decreasing quantity demanded and letting people realistically plan with the golf course, rather than using a middle-man service that blitzes the phone system and scalps tee times. As Rizzo said, there is money left on the table here for people to earn by exploiting the disequilibrium of the market, and the NY Golf Shuttle is certainly taking advantage.

The Duke Room Draw

I will give the administration the benefit of the doubt here, and assume that though they may not have taken specific issue with the dorm trade that is cited in the post, they did not want to encourage a market centered around buying and selling assigned rooms. The administration's main argument would likely center around the idea of fairness and the worry that money would become an overly coercive factor.

Is this argument valid?

Is trading in this case unfair? The author of the blog makes the case that the administration is being ridiculous, and I would tend to agree, though he is a little too abrasive and sarcastic. Why would the administration complain about fairness? The fear would probably stem from a situation where the richer students offered overly coercive sums of money to buy the rooms that they wanted, which would likely be the highest quality rooms. Those who couldn't afford to buy a room would be relegated to the left-overs. Freshman who didn't know any better may also sell their room due to the offer of money and then later regret it, another issue the administration probably feared. An interesting question arises: are there situations where trade is immoral? Though the temptation is to say yes, I would argue that in this case and in most room trades, there has been nothing immoral. Take the example that large sums of money overly-coercive and therefore immoral in room trading. If I was the student selling the room, I would love the extra money, especially if I did not have too much preference for which room I was in. The money could be spent on books, food, and other needs. It would be great! Ironically, the more money I get, which is to my benefit, the stronger the argument gets that the money traded is overly coercive. I would not complain if somebody tomorrow offered me $15,000 for my room. It's a lot of money, and like most college students, I could certainly use it! On the side of the supplier, is it immoral for them to offer it? No. If the student with the room does not want to sell their room, they may say no. A room, in my opinion, is not such a key good as to validate the overly-coercive argument. Even in extreme examples where massive sums were offered, I can see no reason why that would be to the detriment of the seller. Surely one college dorm cannot be that different from the next.

And here is the kicker. The only way one college dorm can be that different in value from another is if one group truly values it highly or really does not like where they are at currently. In this example, the frat in the quiet part of campus would have a strong interest in moving. And here is where markets succeed. By offering money, the frat would be able to acquire a better place to live, and the seller would be compensated for the inconvenience of moving their room. Everybody benefits: the frat has the location they want, and the seller has more money. If money wasn't offered formally, a black market would likely develop anyway, since the frat would have a large incentive to acquire a different dorm. Side payments would inevitably be made and then hidden. An even worse outcome could also be overly coercive, and could come in the form of bullying, harassing, or using other means to virtually force people out of their room. A money currency is certainly more desirable.

If they do not object to a voluntary trade system, there is no valid reason why the Duke administration should prevent money from playing a part.

Posters and Propaganda

Each of these posters deals with the rationing that occurred to World War II. At the time, supplies for the average domestic citizen were very limited, as much was sent overseas for the soldiers. To encourage the citizenry and boost morale, the government attempted to portray frugality as a sign of patriotism. Conserving resources made one patriotic, since it helped keep demand down and increased supply, and consuming resources in excess was unpatriotic, as it increased demand and limited the supply available for other citizens and the soldiers who were fighting for liberty. By simply shifting the connotation of rationalization, associating it with patriotism and glory rather than limitation, the government's stream of propaganda sought to encourage thrift and discourage waste during the national supply crisis that was World War II.

Due to the limited supplies and need to conserve resources, this seems like a viable marketing campaign. In most cases, self-sufficiency is the road to poverty, but due to the short term nature of the crisis, conserving the readily available resources was a necessary step. In the long-term, more resources may be discovered, but until then, the US had to work with what it had. In terms of supply and demand, the lesson here is simple: diminished supply with a constant demand leads to rationing. This is the raison d'être of economics. What this did to the market is probably more interesting. Prices were probably very high, due  to the disparity between demand and supply. Market inefficiencies were probably huge, as nobody was well-off enough to predict into the future. People had to live by the moment and had much less expendable income. Trade likely became much less frequent, which would have depressed the economy. Generally, the posters were right in the need to conserve, but the effects of rationing were certainly not a sign of increased economic growth.

On this note, Keynesians like to say that war spending boosted GDP. A large portion of the population stood in lines waiting for food and other needs, due to high backlogs and limited quantities. Imagine all the cumulative time spent in lines. What else could the time have been used for? Imagine how much of it was spent idle in line, rather than producing, or at the very least doing something. How it could be argued that this boosts economic activity is beyond me. High unemployment, rationed supplies, soldiers fighting and dying overseas, where is the prosperity? Where is the greater economic activity? Any production that went into GDP was likely formed from the concessions of the citizenry, as these posters clearly illuminate. Arguing that WWII ended the Great Depression by boosting the economy is one of the most heinous of all applications of the broken-window fallacy. These posters clearly show the damage to the wealth of each and every citizen, who were forced to make sacrifices for the greater good. May these posters serve as a reminder of that which is not seen.

The Theory of the Leisure Class

As the title would suggest, this article is an exploration of the culture of the leisure class. In the first excerpt, the author examines how the existence of a leisure class affects working attitudes. In the second excerpt, the author theorizes on how the members of the leisure class distinguish themselves through their dietary preferences. And finally, the third excerpt the author dissects the relationship between classes and employment. 

First, does the existence of a leisure class encourage effort in the lower classes? If the first excerpt is to be trusted, that answer is yes. However, the author is quick to qualify that the incentive only applies to the lower half of the middle class, since this is how they acquire status and move up The upper half actually absorbs more of the attitudes of leisure, and as a result is incentivized to work less, for to work is to associate with inferiority. This victimization of work especially impacts the "dirty jobs", as Mike Rowe explored in his Ted Talk. To do these jobs is repugnant, for the enlightened do not deal with that which is unclean or "unenlightened. Therefore, the dichotomy created by the leisure class is both beneficial and detrimental. Some are inspired to work more, others to work less. I agree with the author's assessment in this case. There is little to dispute.

Moving on to the second excerpt, a new question arises: How do the leisure class distinguish themselves through their dietary choices? The author's hypothesis here was that in the base classes, women are more likely to prepare, and men more likely to consume. Even states like drunkenness have become associated with being "manly" and indicative of class, since it shows that the drunk person has the ability to afford alcohol. Women, on the other hand, are more likely to show restraint in these areas. Personally, I think this a valid hypothesis, but am skeptical of how influential class is on consumption. I suspect it is less than what the author would suppose. There are probably other factors, primarily those that are biological, evolutionary, or cultural imbedded by elements other than wealth. Proving causation here would be extraordinarily difficult. Freudian theories about consumption are hard to assess without objective data, and the author does not offer any. 

Now, does the existence of a leisure class lead to the victimization of blue-collar labor? This is the truest of the author's hypotheses.  Our American culture is a prime example of this. Watching the Mike Rowe talk on this exact topic made it clear that we have shifted towards a culture of idealism and dreaming rather than what is practical. Instead of being instructed to "make a living", kids are told to follow the vague, amorphous concept that is their "dreams". This is admirable, but often is mis-interpreted, especially if the dream becomes unattainable. At this point, people often refuse to fall back to Earth and find pleasure in more simple living. Instead of approaching work with a top-down approach of dreams first, employment later, we should approach it with the mentality that through hard-work we should create our dreams. In short, we should let our means build our end, rather than our end build our means.

Markets in Prison

This article explored the spontaneous formation of a market within a criminal system, in the absence of any planning. A new money system evolved, centered around cigarettes.

Are We In a "War against Work"?

For my analysis this week, I have decided to comment on the three media pieces Rizzo offered. The first video is the Mike Rowe discussing of how we belittle necessary jobs, the second is on the inherent injustice of tariffs, and the third is actually a brief audio clip describing how old-time Cigar makers were actually better educated and informed than the general population due to the hiring of "lectors", men or women who were hired to read newspapers or political pieces to the workers. The general theme is how our prideful American attitudes toward work unfairly victimize necessary but unglamorous occupations. Underlying themes are how American arrogance increases unemployment, and how bureaucrats try to control jobs they know nothing about, preaching their "moral superiority" onto the uncivilized masses.

First, the Rowe Ted Talk on his experience working on a pig farm.  I think he is absolutely correct about how our sense of pride and focus on "living the dream" inhibits us from taking jobs that need to be done. Pursuing our passions is a noble endeavor, but it keeps us from taking hard-labor jobs that we see ourselves as above. Worse is when cultural values are portrayed as superior to another, and forced upon the "morally inferior", as in the case of the pig farmers who were told by PETA and the other environmental groups which informed Rowe about the "humanitarian way" to castrate the pigs. This well-intentioned guideline is actually more painful for the pigs. And this is the problem with bureaucratically defined morality.

In a way, this talk is a cut on Higher Education, but I think the issue at hand is more cultural and reflects the increasing urbanization of the United States population. Perhaps it is because Urbanites tend to think of themselves as culturally savvy cosmopolitans and our stereotypes of more rural folk portray them as less classy, less educated, and less intellectual. Think of the archetypal "hick". The city parallel would probably be closer to a "hipster". Now, I could never, ever imagine a "hipster" going anywhere near a farm. And I think this is what Mike Rowe is trying to illustrate about the problems with our attitudes. The plumber stereotype Rowe describes is dead-on accurate. So perhaps Higher Education is over-rated, but I do not think this is the main reason behind "enlightened" attitudes towards manual labor. People with a college degree are much more likely to find work, and that is why so many pursue degrees beyond high school. The other problem is simply geographical. Most of the jobs Rowe describes are rural, and people who are born in the city often like to stay there. But yes, we are in a "war against work".

The second video is much less complex. It reminded me of an article in "The Economist" I read a few months ago discussing over-regulation of the dairy industry (http://www.economist.com/node/18712862). The idea of this video was that tariffs force decisions on customers and sellers and are orthogonal to our pursuit of liberty. Tariffs hurt our nation and restrict our ability to choose, yet the government uses them as political and economical leverage. This is both economically damaging to both parties and inherently unjust. Yet out-moded Mercantilist models of trade continue to influence economic models. The government should not be able to restrict choice in this way and promote certain goods while demonizing others. Free-markets should be free.

NPR's audio clip and quick blurb about the Cigar makers illustrated that we unfairly portray the working class as under-educated and victimize their jobs in the pursuit of "enlightenment". It's true, most parents would shudder if they were told their child would grow up to be a cigar roller. Same idea as the Mike Rowe talk.

Overall, I find one issue at the heart of this mentality, which I think each of these talks overlooked. Manual labor jobs are less exclusive. More people are able to do them. Therefore, the pursuit of higher education and higher-level jobs is the pursuit of distinction, and with it job security. There is nothing wrong with this attitude. The dissonance here is actually more subtle. It is not a problem with the pursuit of one's passion, it is a problem with the inability to adapt to failure and let go of the idealistic self-image. What we need to remove is our reluctance to perform manual labor, rather than our inclination to seek white-collar jobs.

Individualism and Altruism

This collection of excerpts from Hayek's "Fatal Conceit" combined with Rizzo's notes on the subject discusses the contradictions of philosophy in the views of those who believe "from each according to his ability, to each according to his need". Forced altruism should be the enemy of any individual who values their liberty, and Rizzo makes the case that it is the opposite of individualism. Giving is not an immoral action, but forcing others to give is. All philanthropy should be voluntary. Now, individualists are not against giving. They just recognize that even when they are charitable, it is generally in self-interest. For instance, helping a friend may seem charitable, but in truth one may just value the friendship over the monetary cost of helping them out. This is an individualistic rather than altruistic form of charity, and is the correct form of charity. Individualists are not selfish. Rizzo goes on to explain how moral intimidation is not a sustainable incentive and can derail a society, and that altruism is not a morally sound belief, though it appeals greatly to our human sense of empathy. In small societies and actions, altruism functions vibrantly, but on a broad-scale it can not and should be implemented.

I think Rizzo and Hayek have it right. People generally only think of altruism in terms of money. This is where all the confusion begins. If someone gives money, they are altruistic. If they don't, they are selfish.  But what is neglected is the non-monetary value being traded. As in Rizzo's friend example, what is being valued and traded is friendship against money, not money for money. So Rizzo's decision to bail out his friend is a selfish transaction, pure and simple. He values the friendship over the money. This is a truly hopeful concept. Yet, ironically enough, altruists see this as unselfish because all they follow is the money, regardless of more subtle values. Altruism is also indiscriminate in giving, deeming any selectivity in charity as morally depraved. This is a flaw ideology. If I only have a certain amount of money to give, and give it to anybody and everybody who asks for it, I am being inexcusably lazy. Instead, I should determine who could do the most with it, or I believe I could truly help. Which would be the best investment? If I gave all my money away to scoundrels, and then came across someone who deserved the money, I would be at a loss. In a nutshell, the money you give to toxic investments is money taken away from good investments. Instead of saving the virtuous, you are sacrificing them over the altar of the non-virtuous. This is where individualists have it right and altruists trip up.

That all being said, I think that there are some failures of individualism in explaining people's charity. Just because something can be explained in terms of self-interest does not mean that it is in self-interest. Today I saw Bill Clinton speak, and he talked about his charity work in Haiti rebuilding after the terrible destruction. I could explain this in terms of selfish investment, but I do not think that argument would hit the mark. There is some charitable impulse which drives non-selfish actions, like stopping to help someone pick up books they've dropped or holding the door for someone. Often there is little to gain from these actions, yet good samaritans still exist and lend a hand on a regular basis. How would individualism explain these exceptions?

Main Ideas:
1. Altruism is not an inherently sound moral philosophy.
2. Individualism is not inherently selfish
3. When examining altruistic actions, look for "soft" values being exchanged. Then determine if the action is altruistic.

The Story of Seguira

This week's reading assignment relays the story of Seguira, the newly appointed rector of a South American university. Upon inheriting his new office, Seguira surprised the locals by quickly turning into a serious reformer. Through the institution of a merit system, Seguira allows for competition between Professors and Graduate Students at the university. Yet in this system are a few kinks, which Seguira addresses with new regulations. Yet again, even in this new system, there are some kinks. So again, he institutes new regulations and new sets of rules. This back and forth game continues until the entire system falls apart.

To be honest, I am not quite sure what to make of this story. At first, I thought it was a specific instance of a free-market failure. The free-market system is not universally beneficial, especially in arenas which do not have the proper institutions. Rizzo explained this in class this week, citing the fact that Russia is poorer today than 30 years ago, despite the introduction of a market system. This could be an illustration of that point. Universities should focus on teaching, rather than competition, and are therefore not conducive to a market system. Forcing one on them is destined to lead to failure. So, as Pinzio warned, most solutions to the dilemma of higher education would have disastrous consequences. 

However, then I realized that Seguira was playing the role of a central planner. Therefore this was not a true market system. In addition, the consistent shifting of rules is an indication of the importance of the "Rule of Law" in allowing for economic growth. And there is the "Law of Unintended Consequences". Each regulation Seguira instituted was well-intentioned, but failed due to unintended consequences. Excuse the quick term binge, but the three of these came to mind after I re-thought the story. So perhaps calling this a "free-market" is a misnomer. The problem is that it was a forced market, not one that developed naturally due to the proper conditions. In my opinion, this is the correct interpretation. Looking at it this way, everything makes more sense. 

Main Ideas:

1. The free-market system does not work in any situation. There must be proper conditions.

2. A free-market cannot be forced.

3. Every decision has unintended consequences.

4. There must be a consistent and non-discriminatory "Rule of Law" for economic growth. 

Questions:

1. What were the unique conditions that doomed the University's merit system?
2. What incentives could improve the fact that universities are "run in reverse"?
3. What is the meaning of the end, where Seguira leaves after receiving an offer from another university?  Is there an indictment in the relaying of this action?

The Most Unusual Day

How can government incentives change the natural cycle of births?

A proof of the Law of Incentives and Unintended Consequences, this casual exploration shows how the most basic monetary incentive can alter even the biologically fundamental cycle of birth. In what may have been regarded as a failure of foresight, on May 11th the Australian government introduced a new policy of consolidating different maternal payments into one lump sum of $3000, to begin on July 1st, 2011. Now, this policy was certainly well-intentioned. But as any good economist will quickly point out to you, intentions are no indication of results. Knowing this, the economist who wrote this piece immediately did two things: first, his wife pregnant, he double-checked his baby's due date, and second, he formulated a hypothesis. In hindsight, it seems rather obvious. The hypothesis was that no babies would be born on June 31st. Now, this is an exaggeration of course, but the general idea was that, relatively, many more babies would be born on July 1st, and many less in the days close before it. And he was correct! July 1st and the few days after saw a spike in birth rates. The disturbing element was that the natural birth rate remained constant, while the number of C-sections and induced births jumped. People weren't forging birth certificates, they were actually altering the delivery date. So he was right!

Before I begin my analysis, I have one question. Wouldn't the cost of a C-section, induced labor, or other artificial birth cost more than the $3000 payment? At least for a C-section, this would seem to be the case. Maybe it is because insurance covers the birth.

Moving on, I think the lesson here is simple. People respond to incentives. When it comes to incentives, almost no behavior is sacred. If money can convince people to artificially change the birth date of their baby, there is no doubt it has a strong influence over the actions in a society. Furthermore, this brief article illustrates the "Law of Unintended Consequences". The law was well-intentioned, did benefit families, and was well-thought out in almost every aspect. But because of one logical mistake, there was an unintended and perverse incentive to manipulate birth dates. This is the "Law of Unintended Consequences".

Main Ideas:
1. Incentives, incentives, incentives
2. Even the most well-intentioned laws can have unintended consequences.
3. No behavior is sacred.

Subsidizing the Fine Arts

In his essay, "That Which is Seen and That Which is Not Seen", Bastiat in part argues against the subsidizing of the fine arts. Using a classic "broken window" fallacy argument, he states that the government is not "creating" any weath by holding the arts intact. True, the industry may need the subsidies, but at best the government is re-locating capital that could have been spent elsewhere. The government cannot, in his opinion, create. It can only shift. Now, is this shifting ethical? Advocates of subsidies argue that the fine arts deserve subsidies because they are at least as good as other professions, and contribute equally to society. Yet to give them a subsidy requires taking money from a different private industry. Does this not mean inherently that the arts are being placed in a standing not equal to, but above, the other industries which it receives from?

The novel insight from this piece is that an argument for the abolishment of subsidies is actually a more humanistic argument than an argument for the continuation of subsidies. The first is predicated on the belief that human nature will determine the best way to keep theater and the fine arts alive, and will do so accordingly with no need for government intervention. The second is founded on the idea that the fine arts is an eternally sick patient, constantly needing life support from the government to survive since no private venture may survive in that particular field. Is this not an immediate admission that it cannot be a profitable investment? Worse, this belief relies on a distrust of human faculty, which it believes will never support the arts. This is fundamentally cynical, and even if true, who is to say that the arts deserve artificial support if the public are disinterested? Are they a better industry than others, or should we just save all of them indiscriminately? The failures of logic in the minds of Bastiat's adversaries are large, and so central that their weakness tears down the very fabric of their argument.

Even if the arts do eventually dry out, it is because we have, extremely unfortunately in my opinion, decided that they are not worth it, In this case there would be little point trying to keep the sector afloat. This does not mean that they are forever lost, but it would certainly be a great tragedy. However, this is a subjective opinion, and as such I recognize that I cannot force my values on others. Because of this, and it is a painful decision, I side with Bastiat's opinion that the arts should no longer be subsidized.

Key Points:
1. Being against subsidies does not mean being against the sector being subsidized. In Bastiat's opinion, it instead implies a fundamental belief in the industry and humanity.

2. Subsidies do not create wealth or boost the economy.

3. No industry can be given a standing above any other.

4. Sympathies should not equal subsidies.

5. Ignorance of those who pay for the subsidy does not negate their existence.

Questions:
1. Would the arts survive without subsidies? Bastiat is right to argue that the arts should not receive subsidies, but it is a different argument whether or not they would survive.

2. How can subjective value be turned into objective value? What if the subsidy is low cost, but the cultural value added to society is high?

3. Can a non-material benefit to society be accurately quantified? Should it be?

The Economics of Happiness

Summing up each side is a disgrace to the argument but I will try to be succinct. In a nutshell, Justin Wolfers argument is that people in wealthier countries are consistently happier in almost every recordable way. They experience more love, less pain, more satisfaction, etc... Additionally, there is no cut off point of wealth beyond which someone is not happier. Robert Frank argues the same point, but disagrees mainly on more micro-focused data. Similar to quantum physics, where natural laws fall apart as smaller molecules are observed, happiness caused by economic growth falls short when measured within societies. His argument is not that the free market is bad or that money does not buy happiness, but that instead there are some inefficiencies which could be streamlined through incentives to unilaterally improve happiness.

I agree fully with Justin Wolfers. So fully that I feel I barely need to go into it. Literally, everything he said was rational, well-justified, and insightful. Let me move on instead to Mr. Frank, with whom I have a few quarrels. Firstly, using an animal parallel to explain the inefficiency of outcome in a free market is understandable, and provides a simple demonstration of the point he is making. But why does it have to be animals? For some reason, this was something that bothered me. It is an overly simplistic metaphor, which lacks any real supporting evidence and is instead only theoretically enticing.  Metaphors seem to always lose something in translation. In addition, his proposal of a "consumption tax" is unfathomable. Spending would be de-incentivized across the board, which would negatively impact the economy. Innovation would be stifled, since people would be less likely to take risks. Enjoyable activities would become victimized hallmarks of guilt and "wasted" income. Mr. Frank makes the mistake of assuming inherent value, a fundamental slip-up! It is essentially social communism. I wish I were lying. The benefits to society in terms of material gains, including better infrastructure, would be far outweighed by the loss of happiness. It is an astoundingly poor argument, almost to the point where I wonder if I am simply misunderstanding his argument. 

Questions:

1. How can we merge niches into one competitive field where the best of the best compete? Should we?

2. At what point will smaller problems such as higher stress and less sleep become destructive, even with net benefits across the board? For instance, even though we are getting happier overall, can smaller externalities such as stress eventually overpower the net benefit?

3. How can we identify and improve inefficiencies in the market?

4. Can we effectively steer markets?

Main Ideas:

1. Wealthier societies = Happier societies

2. People would rather be poor in a rich country than rich in a poor country. Absolute > Relative (according to Wolfers, who I personally agree with)

3. The Easterlin Paradox as an argument for ending economic growth is absolutely untrue.

The Worldly Philosophers and The Economic Revolution

Explaining the rise to capitalism as a change in social attitudes is an argument I am entirely unfamiliar with.  Reading this chapter revealed my total ignorance to the context of capitalism's birth. The fact that wealth has for most of history been derided and propriety has been defined by the modesty of destitution is one of those important facts that needs to learned by any scholar looking to understand the history of economics. It truly was a backward system, yet back then the idea of the "market system" was entirely novel. Even today there are those who criticize the existence of a free market, calling it heartless and exploitative. Given this new context, an argument could be made that these are outmoded mindsets influenced by the pull of tradition. The concept that medieval society could not understand capital, land, and labor as philosophical entities defining an abstract market perfectly captured the ignorance of the period, even though today we take this concept for granted.

Due to my lack of historical knowledge on this subject, it is hard to disagree with the conclusions the author reaches. However, through analysis, it does seem to make sense. The Earth is assumed as a constant; over the thousands of years of recorded history, it has been largely similar. So humans are the main variable. Now, what could have changed in us to cause the Industrial Revolution? Well, it could have been a few things. First is an increase in intelligence that allowed for innovation. This makes sense, but brilliant inventors had been around for centuries before the IR. Think of Leonardo da Vinci, the Ancient Romans and their Aqueducts, Alexander the Great, Archimedes. Intelligence was not unique to the 20th century. So an argument that we were just smarter is probably off-base. The other most common argument is that things just happened to come together then, due to years of unseen progress which culminated in the Industrial Revolution. Why at that moment in history though? Nothing had changed for hundreds of years. We were poor before, and poor at the time of the IR. By process of elimination, since the other reasons don't hold up to scrutiny, I would argue that the driving factor behind the Revolution was certainly a change in mindset, counter-intuitive as it may seem. So I agree with the author's analysis.

Professor Rizzo said that one of the most important reasons for studying economics was the sense of wonder it provides. This was a reading that proved his point.

Questions:

1. How was the rise of the free-market system an inevitability?

2. What system comes after the free-market system? If a book is written like this hundreds of years in the future, how will they look back on our capitalist society?

3. Was the change in attitude towards wealth a revelation of theory or a revealing of human nature?

Main Ideas:

1. People haven't always sought wealth. The idea of gain is a relatively new one, and for most of history has been reviled.

2. The rise of capitalism was influenced heavily by a change in social attitude towards economic growth. This allowed for the material gains and material inventions that defined the Industrial Revolution.

3. Economics is a new field.

4. Human unpredictability makes for a society based on astoundingly fragile foundations, which can collapse if not treated carefully. A fear of this collapse creates the need for economics.

"I, Pencil" Notes

My Response: The simplicity of the metaphor expressed in this piece makes for a refreshingly easy read. Yet the author is able to define and elaborate on the concept of the "Invisible Hand" with no loss of clarity. It makes the piece accessibly enlightening to even beginning economists. So the format of the piece was excellent. Now onto the content. I struggle to find many flaws with his logic. The "Invisible Hand" certainly exists, it is miraculous, and it is important that we do not take it for granted. I caught one potential "plot hole": the "invisible hand" may not need a "master mind" to function, yet someone has to begin the cycle. Therefore, the hand does not have the ability to magically meet human demand without one person or persons to come up with the original product and means of production. The "magic hand" fuels production, but it cannot create innovation. That is left to individuals. Through education funding and federal funding to private and public research ventures, the government can help advance "invisible hand" production lines. This concurs with Read's point, but may conflict with his implied anti-government position. One other potential oversight would be that this metaphor applies mainly to product engineering. Today's finance world and economy is centered in part around entities that move currency around through investment and capital management, rather than creating product. Finding an "invisible hand" in these workings would be more complex than tying together a string of individual actions, since the process and end product are not nearly as simple. Structures on Wall St. do need a master mind. Not everybody understands the stock exchange, derivative and securities market, or the idea of buying debt through government bonds. Though making a pencil is a complicated process, each step seems simple and able to be quickly learned. This does not hold true for all professions or products.

Implied in the reading strongly is the belief that government should stay out of industry, that regulation is inhibitory and hurts rather than protects the consumer. Fair point, but how do you reconcile this opinion with deceptive marketing techniques and corrupt forms of predatory capitalism. The "magic hand" fuels production, but it cannot create innovation. That is left to individuals. Through education funding and federal funding to private and public research ventures, the government can help advance "invisible hand" production lines. This concurs with Read's point, but may conflict with his anti-interference position.What I took away most from this reading was the wonder that even the most simple product should command admiration and respect.

Discussion Questions:
1. What are positive incentives to prevent corruption, or are negative incentives the better option?
2. When is it appropriate for a government to attempt to streamline the market?
3. What happens when the private sector fails or stifles competition, as in a monopoly?

Main Ideas:
1. If left uninhibited, human ingenuity has the ability to meet human demand with astonishing ability.
2. Simplicity of product does not mean simplicity of production. Even the most everyday object will have an astoundingly elaborate family tree that deserves respect.
3. Government is not more effective than the "invisible hand". Regulation is inhibitory and only gets in the way.