Technology and Public Goods

As a wise man once taught me in a public choice class, excludability depends on the state of technology. Example:1 the Pay & Sit park bench.

Design student Fabian Brunsing has devised a fiendish device that makes pay toilets seem positively munificent: Dubbed “Pay & Sit: The Private Bench,” it consists of a bench covered with retractable metal spikes and a coin slot. If you want to sit down on the bench without an array of spikes jamming you in the keister, you’ve got to pay €0.50 (about 70 cents US).

As seen below, this causes the spikes to retract so you can sit on the bench, and also activates a timer. Shortly before the timer expires, you’re warned by a buzzer to get up; then, the spikes shoot back up. Beware!

Spikes, it seems, provide strong incentives.

Hat tip: Anthony Martin.

1. Jumper Colon!

Reasonable Homunculi Can Disagree: The Impossibility of Welfare Economics

I’ve just uploaded a new working paper, which is a slightly edited version of a chapter from my thesis, to SSRN. Here’s the abstract:

This paper draws on the “preference reversal” literature in psychology and behavioural economics to argue for the impossibility of welfare economics. The effect of normatively-irrelevant contextual factors shows that humans do not have a coherent preference function which pre-exists and informs choice. Every choice is a constructive act which forces us to choose among incommensurable values: choice creates preference. This rules out the possibility of a value-free welfare economics and forces social scientists wishing to make normative conclusions to engage in indeterminate moral reasoning.

Analytical Anarchism

I’ve been remiss in not plugging this excellent collection of writing on the positive analysis of anarchism created by Michael Wiebe. There’s a list of published papers and books, and some working papers (including one by Eric and I).

Here’s how Michael introduces the site:

The purpose of Analytical Anarchism is to create an open forum for the academic community to promote and discuss research in analytical anarchism.

What is analytical anarchism? As the subtitle says, it is the positive political economy of anarchism, or simply, anarchism from the economic point of view. Anarchism here simply means the absence of government. Peter Boettke divides anarchist thought into three categories:

1. Utopian — following in the tradition of William Godwin’s An Enquiry Concerning Political Justice (1793).
2. Revolutionary — following in the tradition of Mikhail Bakunin and the First International, 1864-76.
3. Analytical — in the tradition of Murray Rothbard’s For a New Liberty (1973) and David Friedman’s The Machinery of Freedom (1973).

The analytical anarchism research program has developed out of this last tradition, and is currently being pursued by economists such as Pete LeesonEd Stringham, and Chris Coyne.

Why anarchy? Research in anarchism has a fundamental theoretical importance for understanding the mystery of cooperation among strangers, which forms the basis of modern social order. Understanding anarchy also has a critical practical importance for transition economies, Third World development, and post-war reconstruction. Economic analysis of these problems cannot assume a functioning state.

For an introduction to the subject, see Boettke’s “Anarchism as a Progressive Research Program in Political Economy.”

Scholars and students working in this field are invited to submit working papers and posts discussing the literature, general issues, potential research topics, etc.

Behind the Moral Curtain

I’m slow in posting this video of Elise Parham presenting her monograph Behind the Moral Curtain: The Politics of a Charter of Rights. The paper and video are both well worth checking out. Astute viewers may even be able to spot the back of my head in the video.

Elise’s argument is that bills of rights are fundamentally political, rather than legal, documents. This is true in the sense that rights will be interpreted and enforced based on political expediency and prevailing ideologies, as Robert Higgs and others have argued. Elise’s argument is that the writing of a bill of rights is also political. Once a government decides to draft a charter, many competing interests will compete to have their preferences reflected and the end result is unlikely to be a liberal document. Rather, we’ll end up with a whole lot of illiberal, and constitutionally protected, positive rights.

The Key Speech

John Key’s speech to parliament today hardly signalled the commitment to reform he has been talking up. Summaries of the speech here and here, with commentary with which I largely agree here.

There’s unlikely to be much in the way of tax reform.  With only the possibility of a 2.5% increase in GST, probably some minor tinkering with depreciation rules, and no indication of spending cuts, there could only be very minor reductions to income and corporate tax rates.  The rejection of the introduction of new taxes, notably on land, is good, though for public choice rather than public finance reasons. There was some empty rhetoric about welfare reform, but major changes to the god-awful Working for Families were ruled out.

One thing really pissed me off though: the suggestion of unspecified reforms to liquor licensing rules to address the Problem of Binge Drinking. This means that beer is likely to get more expensive and less conveniently available so the government seems like they’re doing something. Not cool, John.

Alan Bollard Doesn’t Understand Economics

Alan Bollard repeats the common claim that the difference in economic performance between Australia and New Zealand is due to Australia’s abundance of natural resources:

Speaking on TVNZ’s Q+A programme yesterday, Alan Bollard said Australia had been “blessed by God sprinkling minerals” and had handled its economy well. He said New Zealand would do better to make the most of the “crumbs that come off the Australian table”.

He said it was up to the Government what its own goals were, but he did not believe catching up with Australia was possible.

I haven’t watched the show, but I’m assuming Bollard is arguing that changes in commodity prices favourable to Australia explains the fact that living standards across the ditch are around a third higher. This is just not true. The 2025 Taskforce (led by Don Brash, who does understand economics) does a good job of summarizing the evidence.

While movements in terms of trade have made Australians richer in recent years, most of its improved performance came well before any significant and sustained changes in commodity prices. Further, New Zealand has fallen in income relative to other OECD countries which should have been hurt by changing commodity prices.

Bollard seems to be stuck in a materialist mindset when it comes to economic performance. While resource endowments do matter, assuming that New Zealand’s relative lack of minerals destines those living here to a permanently lower level of income than Australians is absurd. As the Taksforce points out, many high performing countries such as Taiwan and Ireland are extremely resource-poor. Many extremely poor African countries are also very rich in minerals. People become richer when the institutional environment allows them to cooperate for mutual advantage, not when there are lots of shiny things to take out of the ground.

New Zealand’s economic stagnation has nothing to do with resource endowments or commodity prices and everything to do with poor institutions. Australia’s economic reforms since the 1980s have been much more constant and thoroughgoing than ours, and have not produced the same destructive regime uncertainty.

Fear the Boom and Bust

Hayek versus Keynes rap battle.

Many hat tips; most recently Daniel Aguilar via email, which gave me the impetus to post.

I hope Russ Roberts and the econstories crew will consider a rap video of Tullock explaining why government performs poorly. I imagine a hype-man (Charles Rowley?) yelling “Trapzoid, motherfuckers!” somewhere in the chorus.

Follow

Get every new post delivered to your Inbox.