Mis-remembering Jack Kemp

Jack Kemp’s decades-long message is still being bastardized by partisans on the left. Bob Herbert of the New York Times chose the occasion of Kemp’s untimely death to take a few more whacks at the false piñata of (so-called) “Trickle-down economics.” Here's how he chose to insult Jack's economic message just a few days after Kemp died:

As every scheme imaginable was developed to bolster the fortunes of the rich, ordinary people were left in the humiliating position of waiting for some of the goodies to trickle down to them.

I’m certain of one thing: Bob Herbert is committed to the anti-trickle-down message because of its political effectiveness. And I strongly suspect another thing: Bob Herbert’s commitment to that political message is solidified by financial and entrepreneurial ignorance. (Just an educated guess, though.)

Jack Kemp’s economic message was not only simple, it was unarguable (and always will be):

“People respond to incentives.”

That simple truism is the foundation of supply-side economics. (I wish it had picked up a different name such as incentive economics, growth economics, job-creation economics, or innovation economics—but that’s 20-20 hindsight.) I met with Jack a few times nine years ago, after he had been kind enough to mention my old website in his newspaper column, and that was his message. Simple and unarguable. It was not that “tax cuts are always the solution to every problem.” Nor was it that “tax cuts always pay for themselves,” or “tax cuts will yield greater tax revenue before the next election.” It was simply that “people respond to incentives”: the economy will grow more effectively if we trust the people to make good things happen, given the right incentives.

Nobody could dispute what he really said and really meant, so the left had to put their message-crafters to work. The result was the most successful and formidable redefining of a political opponent’s idea that I have ever witnessed: Jack’s idea, thanks to his crafty opponents, became “trickle-down economics” instead of “people respond to incentives.”

Trickle-down has become the crowd-inflaming piñata the left drags out every election season. Never mind that trickle-down asks us to believe the impossible: that risk-reward happens in reverse order, i.e., that entrepreneurs who’d like to get rich by starting new businesses do it as follows:

(1) they get rich; then...
(2) they start new businesses.

The financially ignorant might fall for that message, but the rest of us understand that entrepreneurs first risk a lot of money (hiring workers, paying suppliers, etc.), with the hope of subsequently attracting enough customers to get rich. The entrepreneur who fails to get rich has paid out all the money to others, and ends up with nothing to keep. The one who succeeds in getting rich (or at least in not failing) is the last to get his or her share of the money success generates. That’s where the phrase “risk-reward” comes from—and they do happen in that order.

But that doesn’t matter to politicians and partisans. Votes do. Almost all voters consider themselves “non-rich,” and their votes accrue handsomely to any politician who can make them feel “trickled upon” by “the rich.” It’s called class warfare rhetoric, it’s employed in every campaign season, and it works far more often than not.

The Trickle-down piñata gets dragged out for every election; that’s no surprise. But when Bob Herbert drags that bastardization out for the occasion of Jack Kemp’s death, it’s a tasteless insult.

Is that kind of insult-journalism one of the reasons the nearly-bankrupt New York Times has lost so many subscribers and advertisers? (I wouldn’t know firsthand; I’m not a subscriber or advertiser.)

I miss Jack Kemp because of his economic ideas, not in spite of them. Growing the economy is overwhelmingly important. Jack knew that, and he knew something else few others, including members of his own party, seem to know: growth doesn’t just happen; growth isn’t an exogenous variable (...as Paul Romer would put it). Growth happens as a result of activities undertaken by people. And people respond to incentives.

Comments

[xich]

Ironically, the Obama administration now subscribes to the same idea, but they have chosen to rename 'incentives' to 'nudges'. (Witness the overwhelming popular book by Richard H Thaler.)

I didn't realize the two ideas were the same until you wrote this, so thanks for pointing it out. I guess the political rebranding of supply side was rather successful.

[Bob]

The old "carrot or stick" isn't it?
I like carrots - sticks, not so much.

Does Nudge have a website and blog? Of course it does and it's now in my bookmarks.

I'm not sure about a nudge, though. It implies a slight push and I'd rather have a pull.

Now the non-TARP GM and Chrysler senior unsubordinated bondholders may call their nudge a 15 pound sledgehammer. Sorry, I had to get that in.

[beancounter]

Well the question is do the American people fall for class warfare? The class warfare in this election was "wall street versus main street"... Obama's numbers surged during the peak of the financial crisis as Florida retirees (your generation Steve, no offense) were terrified of their 401k's and future social security/healthcare benefits. From then on McCain could never recover.

So, ironically it is the generation that most believes in conservative values, earning your keep, paying your own way, lower taxes, which handed Obama the Presidency. The youth voted for Obama not because they bought the "trickle down" theory but because he was inspirational and the right leader at the right time. My point is people from all sides of the political spectrum fall for "trickle down" not just leftists, and largely stems from not enough life experience/education or hypocracy. Leftists often have the least life experience and conservatives are often the most hypocritical. I am not sure what you prefer but I'll take wide-eyed leftist at least he has an open mind and can be taught (education is a leftist's raison d'etre) while a conservative is far more difficult to educate you never know when his hand's going to reach under a bathroom stall or he'll decry high taxes while simultaneously desiring great benefits.

[Optimist123]

bc:

The American people fell for a skillfully-crafted political message from the left that went unchallenged by the center, who should have known better. The message was that the dividing line between victims and perpetrators is the income level of $250,000. Never mind that the dividing line is in reality at a 90-degree angle to that (it's the line between honest vs dishonest people); the former message resonates far more effectively, and is much easier for the typical voter to measure. Well-timed class-warfare rhetoric, adusted properly for the audience-of-the-hour, wins elections; if there were any lingering doubts about that, the 2008 election should put them to rest for good.

I am from the generation that believes in investing in the future (...and if that's a "conservative" value that is now obsolete, your generation is in for a world of hurt, my friend). Obama's budget mentions the word "investment" 140 times in 142 pages; like most voters, I like that word a lot. Like most voters, I know that good investments yield future benefits, even though they might not pay for themselves immediately (...Jack Kemp knew that, too).

But *unlike* most voters, I know how to track and measure so-called investments, to help determine whether they are good ones or bad ones. I know that the left makes the intentional mistake of calling every program an "investment" just because it sells better; I know that the right makes the unintentional green-eyeshade mistake of thinking that "returns" on investment must come down to dollars and cents (i.e., that intangibles don't count).

I know that the Obama budget proposal is now on the record, I know it proposes unprecedented levels of "investment" by the federal government... but I *also* know the growth rates it projects as a result of its so-called investments. It won't take long for me to see whether those "investments" are producing the promised returns. If they do, then we'll be learning something valuable; if they don't -- but the majority of voters continue to fall for slick class-warfare talk during elections as they did in 2008 -- then your generation is most definitely in for a world of hurt.

In either case, rest assured that I will be writing about what I'm detecting. I'll be pulling for all those "investments" to pay off as promised. But I will *not* be pulling any punches.

[beancounter]

Seems to me knowing the growth rates the Obama transition team projected then declaring it a failure if the economy does not grow greater than or equal to the growth rate ignores variables. It's good to call Obama out as a liar, but not so good for gaging success/failure since that is relative. In general 1 million jobs is 1% economic growth, so if Obama manages to save or create a modest 4 million jobs you have the 4% greater than what would've happened with no stimulus. And if the economy grows by 1.5% instead of the promised 3% but government spending as a percentage of GDP remains the same, well mission accomplished. I hope when analyzing the success/failure of Obama's policies down the years you take into account what would have happened if his policies had not been implemented.

I am not a leftist or liberal, but I spend the time to understand their argument. Days of the communists on campus protesting with riot police are gone, replaced with leftists that mostly care about human rights and less wars (hence opposition to Iraq war and favor of healthcare). Their argument if I understand it is the American family had "lines of defense" since the 70's that have been breached by "trickle down" policy, mostly because tax cuts favored corporations and those who don't have to worry about any of the below. They are:

1. Primary wage earner working two jobs to maintain standard of living.
2. Secondary (wife) being "forced" to work to maintain standard of living.
3. House mortgaged to maintain standard of living.
4. Revolving credit maxed to maintain same standard of living.
5. Children working to maintain standard of living*

*According to leftists armageddon will follow if this happens nevermind college is a massive waste of money for most majors and most people.

Now you and I can poke holes in that bigger than a cadalliac for example increasing women's rights has a price, two jobs is a sign of a more sophisticated economy and so on. But the above is the leftist argument from a human rights perspective. They simply do not care about economic growth, because they believe a government's job to safeguard "family values" is more important than the maximum possible GDP growth (yes, it would shock you how many "conservative" values leftists have adopted). Unfortunately I do not believe you will convince any leftists of anything even if the economy does not grow, although you might tickle the moderates (and unfortunately it appears "libertarian" passes as moderate and they will hate any increase in deficit or spending as a matter of principle no matter the economic growth they will simply declare it as fraudlent to collapse later in a bubble).

[Bob]

"'ll take wide-eyed leftist at least he has an open mind and can be taught "

BC:

Not to pile on but I had to chuckle at that statement. I have never met a liberal that can be taught anything other than liberalism. I'll concede that an idealistic youth may become more, er, conservative after they take on real world responsibilities (provided they can handle responsibility at all) though I know many liberals of the boomer generation that still live in a fantasy.

Somehow I think they are wired that way.

BTW, I'll contend that Obama won in part because McCain ran a completely inept campaign. Still, if the meltdown would have happened after the election, it could have been a lot closer.

[Optimist123]

bc:

The growth rates in the budget are commitments made with full knowledge that there were and always will be unknown variables. And (as usual) they didn't come with +/- tolerances; if they had, it would have been +0 -3.2 -- and it would have initiated some "what ifs" that would not have been a pleasant conversation. ("What would you cut if...").

Growth isn't everything; it just *pays* for everything we want the government to do for us. To ignore it is to starve the goose that lays the golden eggs. It will be ironic if the party that ridicules the strategy of some on the right to "starve the beast" ends up doing it to themselves.

If the left's message were about helping the poor, it would be more credible, and would gain a wider audience. But hurting the rich is not the same as helping the poor. It's not a zero-sum game. Wouldn't it be nice if more people understood that? It would make class-warfare slick talk much harder to sell.

[jcm]

the saying I always liked, which is basically this same message:

---
If you tax it, you get less of it and if you subsidize it you get more of it.
---

So we need to stop subsidizing the behaviors we don't want.

[Seth]

I'm not sure that "the left" really had it in for Jack Kemp to quite the degree you suggest. There was perhaps some confusion of his ideas with other, dumber ones -- but if so the confusion infected the Republican party pretty thoroughly, so perhaps outsiders could be forgiven for not keeping their conservative doctrines straight.

Kemp generally got a good deal of credit for good intentions. His enterprise zones concept was creative and his willingness to serve as Secretary at HUD -- definitely not a glamorous post to folks on the right -- demonstrated that he was willing to put his political "money" where his rhetorical "mouth" was.

But the Republican party decided that conservatism = "tax cuts fix any problem under any and all circumstances", so Mr. Kemp-Roth Tax Cut got reduced to a founding father of the High Church of "Not Gonna Pay No Taxes Never."

The idea that people respond to incentives is a lot older than Mr. Kemp. Older even than Adam Smith. You don't get much policy out of it until you finish arguing about what you want to incentivize people to *do* and what incentives are compatible with constitutional liberty.

[tttar]

I agree that economic growth should be our biggest priority, but I'm always puzzled to hear people advocate some type of mixed economy as a means of achieving this.

I agree with a radical Ayn Rand follower I met about 20 years ago, who may have been nutty in a few other ways, but also fumed that "we'd be in spaceships by now."

Maybe I'm oversimplifying, but isn't saying that the government should invest in this or that saying that the private sector is less efficient than the public?

I just don't see a reason for the government doing anything else besides defending the country and enforcing contracts.

If we would keep it that simple, wouldn't we have all the growth we could want?

[tttar]

Is there a chart on the site showing historical values for The Best Debt Clock in the USA?

It would also be useful to compare these to the "official" figures, those the supposed doomsday prophets use, and the underlying calculations for each, keyed to verifiable economic statistics.

(All of which I expect you to do for us for free, in your spare time, if it's not too much to ask. ;-) )

[Optimist123]

STS:

"The idea that people respond to incentives is a lot older than Mr. Kemp."

Yes. It's the short definition of "microeconomics." The controversial idea is that all economics is microeconomics: macro outcome is simply the aggregation of micro decisions.

Kemp was good at explaining it, and at translating it into policy proposals (eg, enterprise zones). It was all about investing -- but the right ineptly forgot that government invests, too, while left skillfully played to the public's fear of deficits of any size. As always, financial ignorance and power politics are two formidable obstacles to growth.

[Optimist123]

ttar:

You're right, some of us think the government should only spend on defense and justice. But others of us think the government should "invest" in many additional things. For the time being, and for several reasons, the latter group has won the debate, and the election.

We will debate forever where to draw the line. What we can improve is how well we measure whether that choice is working.

The Wealth of Nations helped shape my own judgment about where to draw the line. Here's an article from a while back in which I summarized it ("Pork Schmork"):
http://tinyurl.com/r4nwh9

[Optimist123]

ttar:

Regarding the debt clock...

The US Treasury lays down the history, so I don't try to duplicate it. The last time I charted it was almost five years ago, with this chart of our debt history (going all the way back):
http://tinyurl.com/opvcrp

Although the debt/GDP ratio is the most widely used gauge of debt load, nobody can define how much is too much. That's why in the last few years I've gravitated towards a measure I think is not only more to the point, but also a better signal of danger or safety. Actually there are two ways to do it: net interest on the debt as a percent of federal tax receipts, or same thing as a percent of federal spending. I like the latter one a little better, but they both work better than debt/GDP as indicators of safe vs dangerous levels of non-inflationary leverage.

[beancounter]

@ttar:

An uncomfortable question limited government advocates must face is what if certain types of undesirable government achieve certain goals better. I do not believe there'd be space colonies with an unregulated economy because the evidence points to governments and only governments achieving true spaceflight (yes I am aware of private suborbitals but that was done by NASA in the 60's). There is simply *no profit* in space now. And a totalitarian government, the Soviet Union, nearly beat the USA to the moon. Now I'm not saying we emulate a communist government (the USA won after all) but these are the questions to ask; there *are* tradeoffs with extremely limited government.

And I believe these tradeoffs are more than superficial, but fundamental to a free market. Every quarter that a company does not show a profit is a psychological shock to investors. I do not underestimate human psychology. For the same reason that ever decreasing amounts of money cannot work in a gold standard, a true libertarian utopia could never finish certain projects because the private sector doesn't have the stomach to wait 20, 30, 50, 100 years for the investment to pay off. It's not a question of the private sector is less efficient if you believe this. It's the fact that the private sector won't do it at all because human beings don't live very long and expect the private sector to make fast profit.

Certain capital projects necessary for growth take years or decades to show a tangible profit. What corporation would stomach decades of losses to build say, a chain of nuclear power plants, with no government subsidy? It becomes worse with space travel and space colonization, perhaps a century or centuries of loss. Your Ayn Rand follower was wrong; certain situations, certain projects require massive debt turnover, sometimes so massive that the private sector will not invest.

This is why people support a mixed economy because they understand human nature, not because they believe in large government.

[tttar]

The "spaceships" quote had solely to do with the idea that he/we believed that we've missed out on what could have been several decades of astronomical (no pun intended) growth, in the belief that we can instead vote ourselves (and trust that Congress will provide us with) a higher growth rate than can be achieved by just taking our own risks and reaping our own rewards. That's the only argument I'm really making.

"Spaceships for all" was his point, albeit surely still a hyperbolical one. The entire Soviet empire managing to put a few vehicles into orbit doesn't compare to what it could have accomplished as a free society.

I'm aware of and might concede a few specific examples both of you made, but I still don't see an argument that generally justifies 90% or so of the government spending that takes place.

It seems you're advocating tinkering a little with the mixed economy we have today, instead of starting with the premise that most government spending is illegitimate, save for the prevention of force and fraud, plus maybe a few more "natural monopoly" -type exceptions for roads and such. I do read everything here with interest, and I'll try to get back to a few other points made.

[beancounter]

If I believed most government spending was illegitmate it would lead to the conclusion most citizens are too stupid to elect their own representatives, and that is a conclusion I completely reject. I am not a populist and I understand tyranny of the majority, but massive spending does not violate any sort of natural rights. If you want a philosophical argument that justifies most government spending, it is that votes in Western nations are not coerced and those who are unhappy with the majority decision are free to abdicate their citizenship and move to a different country (or stateless nation) so there is little coersion. They are even free to keep their bank accounts in foreign denominations so as to be immune to what they see as political tampering of the base currency. If you want an argument of hard numbers, you can look at the arguments of new age liberals who point to double or triple healthcare costs compared to nations which offer total coverage for all their citizens, or Steve's favourite the GI bill.

But again I believe in the will of the people and I simply cannot accept that most government spending is "illegitimate" without questioning the legitimacy of the government itself. I don't know how you can do it without some massive double think.

[gabriel]

bc:

What's wrong with questioning the legitimacy of government decisions? Can't even a benevolent, well-meaning government make bad decisions that it then can't take back because 51% of the populace begins to rely on those decisions? Many big government decisions are one-way streets.

Also, regarding the argument of hard numbers, I must point out that it appears you haven't been paying attention to one of our ole optimist's best-loved axioms: we can't talk meaningfully about *costs* without talking about what we or they *get for those costs!*

[Bob]

Mox-nix on the talk about low taxes.

Is there any reader of this blog that believes taxes will not increase? If so, why that belief?

Perhaps we can grow our way out of servicing what is now a massive, indeed gargantuan, debt. However, what will cause that growth? If all eggs are in the Singularity basket then what is Plan B if that event proves to be fleeting?

If we are to rely on the government and this administration to adopt pro-growth policies what are the indications thus far that we will see such policies emerge?

[beancounter]

There's nothing wrong with questioning the legitimacy of government decisions but when you start with the premise that all government spending is illegitimate then must be proven you disregard the meaning of representative democracy. As long as there's no violation of natural rights all an advocate of public healthcare (or any other liberal policy) needs to do is point to the overwhelming majority of Americans desiring healthcare reform, social security, and so on. Meanwhile libertarians keep acting as if natural rights are being violated without bothering to make a coherent counter-argument: no wonder they are the fringe of the fringe, stuck on the Internet with a single champion in Congress. Nobody except libertarians are convinced that deficits and spending are violations of natural rights like habeus corpus, right to bear arms, freedom of the press and so on (and I am not convinced either.)

I bothered to look up the accusation that "transfer payments make up 60% of the American budget" made by someone in another thread and it is simply false. Social security is called a transfer payment technically because it's unearned income, but take away the bull and it's a pay-as-you-go system which does not have to draw on general tax revenue. Maybe it will in 2017, but maybe it won't even exist by then and that's then not now. Seems as if every single benefit from scholarships to medical care for children to any service provided under the sun is a transfer payment. Might as well call defense a transfer payment since the wealthy could hire private armies and communal defense is a service too. I hate definition drift: a true transfer payment is redistribution of *income* from one party to another, welfare, money. Government taking money then providing services for all is not a transfer payment: that does not make government seizure of money legitimate but does expose a glaring fault in those who believe most government spending is illegitimate. Meanwhile there is a very simple rebuttal someone from the left (not one I would make) can say to libertarians who say transfer payments violate natural rights: they can point to Nordic or socialist countries and say *everyone* qualifies for certain services so income and wealth is not being redistributed at all. I'm sure that would reduce the majority of libertarian, natural rights arguments to shreds because they simply haven't bothered examining their own argument.

In sum perhaps libertarians should assume government spending is legitimate then go on to prove it is illegitimate with hard numbers as Steve is planning to do with Obama's stimulus if it doesn't work, rather than hark about how the burden of proof is on the liberals/conservatives/whoever to prove their spending programs are legitimate when they won the election.

[Optimist123]

Bob:

"Is there any reader of this blog that believes taxes will not increase?"

The more I see Obamanomics unfold, the less optimistic I get. If this trend continues, you might need to help me think of a new name for this blog.

Nonetheless, I think tax rate increases are off the table. The "solutions" (of which only one is a real solution) are (1) sufficient growth to keep inflation off the table, or (2) enough inflation to screw the debt holders who mistakenly trusted the government but will learn their lesson the hard way. [If Obamanomics does not prevent the first, the second will be virtually inevitable, and bc's generation will enter a long-term world of hurt, as I mentioned previously.]

Anyway, to track which of those two directions we're heading in, I'm working on a weekly and a monthly tracker comparing the Obamanomics budget projections against actual results. Should be ready soon. [First disappointment: Their nominal GDP projections are posted in two different tables, and they don't tie; a bad omen already.]

[Bob]

Steve:

Venture over to Mankiw's blog and find that he does not buy in that Obamanomics can be measured. Meanwhile Pimco's Gross in his May letter sees slow growth ahead.

Perhaps tax rates won't go up soon but the tax rates set to expire next year most certainly will, IMO.

For me the scenario is simple.

1.The environmentalists have politically hijacked any form of energy policy (an oxymoron since we don't' have a policy). Energy will do bc in long before the boomer's do.

2. I can't envision a viable exit strategy for the government with Chrysler and GM. I'll be watching it closely but the way this has gone down is bizarre.

[Optimist123]

Bob:

Mankiw is correct that we cannot measure how many jobs Obamanomics creates, because we don't have a control group that would tell us how many jobs would have been created without it.

But we can measure what's happening, and whether we can afford it. I'll be posting something on that tomorrow.

[tttar]

Beancounter, considering the point of my questions, "illegitimate" was a poor choice of wording on my part. It did make you say some rather surprising things that I'd love to take issue with, but I'd like to first get back to the public vs private efficiency in spending issue.

In your last sentence, you say we should assume that any government spending people vote for is more efficient than what the private sector can do, if it spent the money instead, and that libertarians should have the burden of proof in showing it's not? (Here, you seemed to use the word "illegitimate" in the same way I'd awkwardly meant it - as "less efficiently than the private sector can.")

For that to be valid - and you even specifically say "I believe in the will of the people," although you also say you understand the tyranny of the majority - aren't you presupposing that a population of whom 25% can't locate the US on a map is somehow in a position to tell a private business that it has an even more productive way of spending its money, and will therefore be taking some?

Hell, I think I'm much too dumb to make such a decision - and you'd probably agree with me.

But I did score 100% on this here civics exam, without any preparation:

http://www.americancivicliteracy.org/2008/report_card.html

I think a truck driver I once ran into represents the typical level of knowledge of those who you say you believe in. He was explaining his retirement program to me, which was just the greatest thing.

How was it being funded, I asked?

Oh, they take out $10 a month for that.

But $10 a month can't possible add up to tens of thousands per year in perpetuity...?

"...aw, they got accountants to figure all that shit out."

Soooo, we were debating public vs. private sector efficiency, and you were saying how much of a believer in the voter-driven system you were - in which every dollar you make is theoretically up for grabs? (I think that's why there was such an emphasis on "inalienable rights" back then, that no voter could ever take away, but I'd really like to first hack out this growth and efficiency issue.)

Now, where were we... ;-)

[tttar]

Sorry, only 11% can't find their own country:

http://www.usatoday.com/news/nation/2002-11-20-geography-quiz_x.htm

But they sure can vote!

[beancounter]

So ttar, you are concerned with efficiency. Very well.

1. Private sector more efficient

2. Public sector more efficient

3. Private sector more efficient but will not invest.

You seem to believe that 1 is always true (and with rare exceptions like roads 3). It's not for a vast majority of investments. For example, imagine if preschool, primary, secondary and college were all 100% private. What kind of corporation will wait 20 years for a *possible* return on investment? Words and language have existed for thousands of years but only upon advent of public education has the majority of the populace been literate. Government is clearly more efficient in delivering education. So people support a mixed system for education and with it all the Obama liberal policies like increasing Pell Grants etc.

Maximum resource efficiency is not always the primary goal. For example the most efficient use of resources would be to let those who are at the end of their lives, who produce nothing and have little future potential to produce anything *die*. I suggest by default pure capitalism favors this conclusion (and why shouldn't it: those who do not work get nothing under pure capitalism). Now if you want to take the position that all old people who aren't working should die, that's your perogative, but many are willing to sacrifice economic growth for healthcare so their grandfathers and grandmothers live longer. Hence they support a mixed system for healthcare.

That truck driver seems to understand something you do not. That 10 people with 10 dollars can do far less than 1 person (or organization) with 100 dollars -- economy of scale. Angel investors receive x20 - x30 times the investment back, so it's entirely possible for a far more conservative investor to receive single digit multipliers back, sacrificing return for less risk. The truck driver also understands money in the present is worth more than money in the future -- I'm not talking just about inflation, but the ability to invest money here, now, is worth more than the same amount later. Social security is not a ponzi scheme and neither are pension plans: they assume perpetuity because surprise, they assume humans will continually be born and the same trends will continue. The mistake they often make is not taking into account changing demographics. No problem, cut benefits later or increase immigration.

It is quite a contradictory position to say truck drivers, salt of the earth types with the most experience (generally anti-regulation, anti-tax types) are too stupid to vote for those who will implement good policy (they are *not* the ones pointing at this or that business to take money away from but voting for those who they think know how big difference) but at the same time rail on the liberal elite who generally have the most formal academic education as similarly incompetent. So who's left? Perhaps you would rather libertarians, who get the majority of their economic education from neither experience nor study but the Internet, have the strongest say. I would not. Hopefully the libertarians do not hijack the GOP, or there will be no conservative option left in America: the other day a libertarian said to me "if only conservatives would stop listening to Bush and *Reagan*" I had to supress my urge to utter many four letter expletives.

[tttar]

Well yeah, I'm "concerned with efficiency."

Isn't that what this site is all about? More efficiently used resources lead to higher growth, so we're debating where they're best spent.

I wish I had hard numbers I could just link to, and I'm sure you do also.

Generally speaking, I'd say that money is best spent by millions of decision makers with first hand knowledge of what will bring them the greatest rewards, and who will actually care if their ventures lose money. That obviously hasn't been the case with the multi trillion-dollar moral hazards (which were "legitimate" because they sounded good to the masses) that got us into this mess.

And I think that's really understating it. I remember Hans Sennholz or someone like that estimating the private sector is 5-6 times more efficient than the public.

I have no idea what you mean with a corporation having to wait 20 years to "possibly" make money with a private school.

Why couldn't a business that teaches children not be profitable doing it, as any other business?

You know of a stat that says the average private/parochial school only started making money in its 20th year?

RE historical literacy, start reading the last paragraph of page 461 here:

http://tinyurl.com/o9z5l3

"...there are found no children 10 years old who do not read well..." in 1701 New England - about 150 years before there was the kind of compulsory public school system we have today. There were indeed other public forms in use in some areas before then, but they were effectively church-run and had little resemblance to the almost year-round, compulsory K-12 institutions we have today.

These appear to have been almost totally replaced by private institutions by the early 1800s, and the literacy percentage was said to be in the 90s again, and school attendance at 96%, just before the public school system was put into place.

The gist of all that is that universal private schools can work, because they *did*.

De Tocqueville said that practically every pioneer cabin he'd visited had a few volumes of Shakespeare!

And sure, the classrooms are full now, but 42 million adult Americans can't read, and you're trying to sell me on the efficiency of that system?

And that's only the result. What about the costs? I once saw a comparison done between Chicago public and parochial schools. Something like 600 do-nothing administrators on the payroll, vs. maybe a couple dozen. I'd love to see that again, it's been a few years.

People are illiterate because illiteracy PAYS. Problems get more funding, successes don't.

Then there's Marva Collins, but we were talking about so much else...

Nobody believes in letting their incapacitated friends and family die, and I'm sure they could do a much better job of helping them, if two careers weren't now required to support a household. Charities women used to give their time to have died along the way, after they were forced to work. One income for the family, the other for the government.

Government subsidizes education and health care, so they keep shooting up by double digits - and are increasingly only affordable with help of the government. It's almost as if it were planned that way. Maybe here you do have an economies of scale argument, but also remember that it's rationing through waiting lists that helps make things look so much cheaper in Canada, etc. Those who can't wait come here. And if they can't, they'll die, right?

All I said about the truck driver was that he thought $10 a month was taking care of his retirement. Somehow I don't think he'd be able to explain the economies of scale of angel investors, and definitely the time value of money, very well. Maybe you're right that he's really very smart in other ways... :)

I think you're making an analogy to government spending, with the angel investor example, but I can't imagine these economies of scale being such a large factor in our economy, and we are talking about the entire country's bottom line growth rate. Millions of small spending decisions are made by all levels of government, by people who have no reason to care if they're good ones. I'm sure you've heard of departments rushing to spend their allocations at the end of each year, lest their budgets get cut if they don't. If they want the money, they'll find "reasons." Private businesses would go under, thinking that way.

You'll have to be more specific on that - and show that the concept is a deciding factor in a large percentage of government spending being more efficient than what can be done privately.

I'm with you on one thing about SS - a default on its promises is on the way. But "no problem?" I heard talk of a 42% cut in benefits once. Ponzi schemes are no problem either, if promised benefits are cut, or if more contributors are found, right? The structure is the same, it's only a matter of rates of return. :)

The guy who made those stupid remarks *happened* to be a truck driver. I wasn't picking on truck drivers per se.

People who don't understand basic economics won't make good choices when they vote, so there's the temptation follow anyone who says Yes We Can, until we finally get hit with the undeniable reality that No We Can't. I once knew a girl who kept repeating that her dad always said things would be all right "if everyone would just give $10." Maybe her dad was the truck driver.

Look at the example of Nauru. They were super rich for a few decades, many were incredibly overweight - one guy ordered a Ferrari, sight unseen, and upon delivery discovered he was too fat to fit behind the wheel - and when their phosphate mine gravy train ran out, they started slipping into Third World status. A few who saw it coming (how could anyone not!) were openly laughed at for saying so by some in parliament. Not anymore.

Why's that controversial - that large numbers of people don't have a clue as to what's going on, and will vote accordingly?

42 million can't even read.

You've probably heard that some Democrats hope to eventually only tax the top 50% of the population. After that point, you can guess what will happen to any talk about tax cuts. "Do you want the other guys to give you more? Just say so!"

Can you list the ways in which Reagan and Bush were really conservative on economic issues (like libertarians, in other words), or do you just mean that they were more conservative than the Democrats. That wouldn't really mean much...

Please, by all means, don't stifle your feelings on that. I'm a good listener. :)

[tttar]

Oh, on your last paragraph (I got worn out and forgot), why is there a contradiction?

There are all kinds of categories besides those two, with all kinds of educations and motivations.

The one that actually bothers me the most is the Limbaugh crowd, that actually believes in free enterprise - but who has this overpowering desire to "win, NOW."

For most of them, all the good reasons in the world really boil down to another rationale for supporting the lesser-of-two-evils Republicans, who know that no matter what, they'll keep coming back, much like a battered girlfriend, who keeps saying that next time, she really will stand on her principles.

[beancounter]

Very long and many points so I'll try and keep it brief:

1. "Literacy" rate exploded in that time period due to the rise of the serialized novel, entertainment, made possible by the industrial revolution's printing press, not through any triumph of private education (which existed for thousands of years before that). I will ignore for brevity that this is not literacy and accept your definition. All this means is without public education, people would be reading at a level well enough to enjoy novels, entertainment. But given the tremendous selection of visual entertainment available today and how every child prefers television and even more advanced interactive media like video games, literacy would be abysmal. I have thousands of years of precedent (not just America but other cultures) while you have a hundred year window where the economy was undergoing a vast technological shift.

2. Biology is the strongest argument in favor of public education. You are looking for those with the genetic mutation to be a future Einstein or Hawking, and this ignores ability to pay. That is why you spend millions, billions just to find the one diamond in the rough with scholarships, free education and so on. Libertarians like to believe all men are born equal but they are truly not.

3. The reason for the efficiency of private systems is competition. I submit that the majority of libertarian arguments with respect to private/public dual systems are poorly thought out precisely for the fact that another choice increases competition. The "crowding out" theory is just another way of saying the economy is finite and private business is competing for the same amount of dollars that funds public uses, but economics is not a zero sum game. If it is at all possible for a government dollar to have a multiplier greater than 1 (and according to economists it can) then crowding out is a weak theory (see Steve's post a few weeks back on interest rates). For true crowding out the government must ban the same service being delivered by the private sector as they do in Canada with healthcare.

4. So the new rage is to declare Reagan and Bush non-conservative, to avoid taking responsibility for their "failures." I understand this as a political tactic but not during debate. Conservatism at its core is keeping tried and tested paths, and unfortunately for libertarians the past hundred years of tremendous growth and technological innovation have coincided what they call massive "inflation" and steady debt/GDP ratio (contingent on circumstances: I would argue global war on terror is the greatest threat since WWII). Correlation is not causation but conservatism is surely stay the course. Why not continue encouraging growth to deal with debt that rather than radical libertarian proposals such as mint a single coin with the worth of the entire US debt (yes, that is on the Internet what abysmal economic knowledge) or to default on everything and start from "square one"?

5. You can use as many children and/or truck drivers as you wish to prove the superiority of your position but on a dime this can be turned against you by an academic liberal who is the most educated (and can name every country on the map and all their capitals) hence the contradiction. I believe in the will of the people except in cases of violating law and/or natural rights. Deficit spending does neither, because the individual consumer is certainly not being asked to pay for the spending (debt rollover). Taxation is violation of natural rights, but all that counters is liberal spending which increase taxes, not liberal spending which increases deficit.

[tttar]

First, let me submit an alternate definition to your "I have faith in the electorate."

So do I - in their ability to choose what's best in their own lives. But the way you put it, you seem to have faith in their choosing what's best for YOU.

You're right, people do vote for what's best for them - but that's the problem. They generally don't care (and how could they possibly even calculate) at how much and at whose expense it comes.

I calculated that someone who stole some copper piping from the refrigeration unit for a food bank did about $500 of damage for EACH $1 he came out ahead.

But he knew what was good for him, alright. See my point?

To someone else, I once pointed out that only $1 out of every
$4 taxed makes it to a welfare recipient. The rest goes to administrative fees. "At least they're getting *something*," was this true believer's response.

And you say this must be as efficient as it could be, because it has the consent of the electorate?

In many ways the current system is like having a supermarket offer two baskets of goods for its customers to vote on - instead of allowing them to pick among thousands of options for themselves.

But no one seems to get that - after all, this is a free society, where we're given a *choice*, right? Geez, the ingratitude. People died so that we could have this freedom, it's said. Some places only have one cart...

1. I said what I did about literacy because you first claimed that "only upon advent of public education has the majority of the populace been literate." The printing press originally bringing about literacy of course makes sense - but how can you credit public education for that?

And we only talked about that because of what we're currently debating - how to maximize growth. 44 million public school graduates can't read a children's story to their kids (among them surely many potential Einsteins who you say public education exists to find), according to a site I saw a few daysb ago, and you're telling me that this is far superior to any other alternative, solely because it has been "legitimized" by majority vote.

I showed you statements made 300 years ago to the effect that literacy was not a problem here, and surely you've heard much about how subjects keep getting "dumbed down." Can you counter that with stats saying how much more educated average kids really are these days (in subjects that were also taught in earlier times)?

Marva Collins has many examples of "special ed" kids that the public schools gave up on (if anything, they brought in more state funding, so why should they have cared), that she turned around in her school. You're implying that there must be even more examples going in the other direction, I would think, so I'd love to see some stats.

2. I don't get the biology argument. Why wouldn't universal, competitive private education accomplish that much and more? It's like comparing the (private) Audi to the (public) Trabant.

There should be chains of competitive schools, all striving to teach kids better, faster, and more cheaply. Education is no different than hamburgers, in the sense that the consumer decides, and the best one wins.

Libertarian arguments don't rest on "all are equal," so that doesn't need to be defended.

3. I don't think I said anything that mentioned crowding out, but I think it can be a factor in schooling. What happens when something is offered for "free", alongside a non-free alternative? But this isn't anything that has much bearing on any private vs public efficiency arguments.

4. This isn't "the new rage" at all. I don't really like the label libertarian, because people new to it instinctively think it's some new "scheme." Call me a "classical liberal." I'd probably agree with most of what Wiki has to say about it:

http://en.wikipedia.org/wiki/Classical_liberalism

Think Bastiat, von Mises, and Hayek - as it says there Reagan credited. He does get bashed for not having backed up all those great speeches with more action. If his alleged intellectual influences are yours as well, why are we even disagreeing? Just show me where they back up what you're claiming. The public should just vote on what's best for everyone, they say? I'd love to see that! Why make any economic arguments at all, if we can just have referendums?

5. As I said, people too often vote in terms of what gives them the greatest personal advantage. Do you want goodies? Just vote. Let the other guy worry about how to pay for it. Those examples I gave, I think are typical of the economic understanding of most people. Rarely do I run into someone who knows more than what they hear on TV.

Academic liberals do know more, but I have yet to hear the promotion of economic growth as being a motivator for them. They talk much more about redistributive "justice."

It's probably part economic ignorance, part wanting to personally benefit, part wanting to "change society" by socking it to the greedy businesspeople, etc.

If you still "believe in the will of the people" just start asking random folks to explain how their voting preferences translate into maximum growth (i.e., how they're best for the country economically).

Do I need to find economic surveys that prove that people who can't read also don't know squat about economics?

Here's an easy one:

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3580

I'm sure you'd get 13/13, but the average respondent got only 2 1/2 questions more right than they'd have gotten by chance (45% vs 25%)!

People do know what's best for *themselves*, so I think we're best off letting them only control their own lives, to the greatest extent possible.

To take your position to the extreme - what would you say to a referendum, in which the economically ignorant public were asked how much it "needed" and "deserved" and could just fill in a dollar amount. The rich could vote too (fair is fair), and money would just be distributed accordingly. That would just be nuts, but you would have to label it "legitimate", right?

I just read that around 40% of eligible voters don't have to pay the income taxes that fund the programs they support, now.

You can guess how much they think "your fair share" of their problems should be.

[tttar]

Sorry, I didn't finish a thought. After this sentence:

If you still "believe in the will of the people" just start asking random folks to explain how their voting preferences translate into maximum growth (i.e., how they're best for the country economically)...

...I meant to point out that I doubt they'd even be able to define such concepts as the GNP, etc. You might get vague statements like "if we forced businesses to offer free health insurance, we'd all be better off." But nothing remotely approaching a cost-benefit analysis.

[beancounter]

You are correct, libertarian arguments do not rest on the assumption that all men are created equal. However, they certainly do use documents like the Declaration of Independence and the American Constitution as de facto proof of their views, so you'll forgive me if I say that.

No, libertarian arguments rest on a far more easily attacked assumption that the _individual always knows what's best for himself_, give me liberty or give me death. That is false in some (perhaps many) cases, as you have strived so hard to "prove" these past few posts. I didn't think that's what you were trying to do, but apparently it is, and apparently you have not considered the contradiction you have generated. The problem is proving that the individual does not know what's best for himself is *fatal* to the libertarian argument. If it causes you "headaches" as you mention in the other thread I submit that is a good thing since likely you have only debated know-nothing leftists and/or partisans who are easy to respond to with canned answers but never an independent (who is not a libertarian but leans conservative on fiscal policy). Conservative, but not libertarian.

But before you say yes at last he has admitted the common man is "stupid" know that I too believe that the individual knows what's best for himself, on the aggregate. But I am willing to consider the possibility if a large majority of Americans support an initiative, even a liberal one, it may generate the greatest GDP growth precisely because my axiom is the individual, or sufficiently large group of individuals, always knows best in terms of economics. In other words me admitting that there are many stupid people in America is only fatal in exceptional cases. Meanwhile if you continue to consider yourself a libertarian but say "the people do not know" when it concerns public education or healthcare reform, it is a violation of your core axiom that the individual knows best. You can handwaive intelligence all you want, but a group of people is merely a collection of individuals and if a sufficiently large majority of them want this or that, it is unfortunately fatal to the libertarian hypothesis if you reject their wants in favor of libertarian essayists. No I am not going to say 52 or 60 or 90 is enough -- it all depends on the circumstances, who will be bearing the brunt of the taxation (if any) and who will be receiving the services. 51-49 could conceivably enough if the 49 are out of state and are not forced to do anything.

Besides the above contradiction, you have still not addressed the (lethal to your argument that pure private is *always* better) that public/private dual systems can increase competition. You mention "free" along with a non-free alternative without making a definitive statement, so I assume you say the individual will always pick the "free" choice. I submit this is insulting to the intelligence of the individual, not trusting him to pick the better product, and thinking him incapable of knowing no things are truly free. Rather a free system would simply be used by those who would not be otherwise able to afford *any* of that service (unless the government banned private delivery of that service).

Now you will say what makes them deserve this or that service? Rather than discuss whether these people "deserve" this or that (bound to degenerate into what you think and what I think are natural rights) I would rather point out competition is increased, deadly to your axiom (which you have never explained) that a purely private system always generates more growth. Growth is the result of healthy competition, not morals like "this man deserves it because he worked for it" or "this man doesn't because he doesn't work for it" If we were at all concerned with "this man deserves this because he worked hard and not that man" we would take away property from those who do absolutely no work for it, perhaps even institute near 100% estate tax (perhaps money to be redistributed to everyone), but we do not because it inhibits growth. I am sure libertarians would not even consider a high estate tax despite their 'fruits of my labor' arguments.

I certainly do not insult the American people by saying that people vote for whatever government will "give them free stuff" as many libertarians seem to do. By the way, Californians shot down Arnold's attempt to raise taxes to fund the bloated Californian bureaucracy.

So in sum before we go any further (and I do not believe we will because I do not believe you will be able to answer this contradiction to any satisfaction) you need to explain how to reconcile your positions that the common man is too stupid to know "liberal policies" are bad for GDP growth with the position that the individual knows best. I solve this by saying it's entirely possible even liberal policies (however rare) could grow GDP more. You cannot, because you prefer a 100% private system under all circumstances.

[tttar]

Beancounter, I assure you my headaches came SOLELY from staring at the screen for too long! I can use the practice, and I'm fortunate to have found someone equally tenacious, who must have his own odd reasons for spending his unpaid time like this.

You do have some interesting things to say and I'm enjoying the discussion, so let that serve as some measure of consolation for the kind of flattery you thought you were receiving from what you imagined as, "your arguments are just too good." ;-)

You said "Libertarians like to believe all men are born equal but they are truly not," in the context of your point 2 on biology and the public educational system supposedly being uniquely qualified to find the next "genetic mutation" in the form of an Einstein, who the private schools would have been likely to miss. (To that, I gave evidence that illiteracy wasn't a big problem when schools were private, and that it surely is now, which should undercut the argument.)

I disputed that they say that, and then you pointed to the DoI and the Constitution, which of course can't mean it in this context, either. We are to have equal standing in the eyes of the law, nothing more.

The individual does NOT "always know what's best for himself."

The individual GENERALLY knows what's best for himself, is all I'm claiming, and I see you do also. (And therefore I claim we should assume he does, when it comes to deciding what to do with his money and life, with rare exceptions like suicide prevention, etc.)

I'm not saying the common man is biologically stupid. The common man simply follows the path of least resistance, and for whatever reasons there may be, it's obvious that he prefers entertainment to getting a grasp on economics. As long as someone who can't outline basic macroeconomic principles (as evidenced by just about any study you can find - I dare you to show me an exception!) only makes decisions affecting his own household (which I'm sure he's more than capable of doing - people do understand, "work hard and you'll get ahead in life"), that's not a huge problem. But you can see by those survey results that they're easy pickings for any demagogue who says he has a New Plan that will bring them free stuff that only Other (greedy, exploitative...) People will have to pay for. Especially when the New Plan can seem to work for many years because most people can't follow the stats.

That's where I don't understand you. You surely can't dispute studies showing people don't understand economics (or civics - Jay Leno did an informal survey where he found out 70% rejected the Bill of Rights, when told it was a new law being considered by Congress).

We agree that people are generally competent to run their own affairs - but how can you say they can run those of others? That's saying those others DON'T know how to run their own, violating the premise.

And of course even if they could be said to understand the issues - there's also this HUGE factor of "who cares what it all means, someone else is paying for it. It's my right, because they have more than I do."

41% pay now pay zero income taxes:

http://www.taxfoundation.org/research/show/1410.html

And how many others pay a miniscule amount, in proportion to the benefits gained?

So, I remain flabbergasted at "my axiom is the individual, or sufficiently large group of individuals, always knows best in terms of economics."

I say that yes, they generally understand their own economic situation far better than you or I ever can, but in the aggregate they

1. Can't know what's best for the country (as evidenced by economic surveys), and/or

2. Don't care what's best for the country (since often others must pay)

Yes, even a majority can know what's best for its own group, and vote in terms of it - but only in the sense that 80% can tell 20% to pay up. Yes, that DOES work, and they WILL come out ahead by doing that.

But surely not in the long run - and we're talking about the state of the entire country, not just a majority of voters - and about maximizing the GNP in particular. The mere shifting of resources that they always vote for won't achieve that.

Why don't we see most people explicitly talking in terms of growth, if that's what you believe is being maximized when they vote?

And can you point to any school of thought that preaches this? There must be studies out there confirming that the will of the majority is in perfect alignment with whatever "good economics" has to say.

We don't really need economics, then, we just need more and better surveys, right?

I've more clearly spelled out my starting points, so I don't know how pertinent you now think some of the rest of what you wrote is.

Public education and health care? Doesn't "someone else pays!" explain a lot? And once the system is entrenched, even a majority's dissatisfaction may not be enough to change it. An overwhelming majority has wanted medical marijuana legalized - for decades - but it hasn't happened, has it?

http://www.onlinepot.org/medical/surveys.htm

I don't think it's fair to start with the premise that, "perhaps libertarians should assume government spending is legitimate then go on to prove it is illegitimate with hard numbers."

I'll have to put the burden of proof on you, here.

Given that we agree that people generally know what's best for themselves, it seems unfair to say others should simply assume that this or that plan that takes their money in violation of that premise is just great by default and that they must exhaustively study and debunk it before they can claim it's not.

"Maximum growth through majority vote" I think is something that you will first need to prove (especially since I've not seen anyone else claiming this!)

I can point to several things I've pointed out that you seem to have left hanging as well, if you think I'm not addressing something significant, but I would be satisfied if we just went back to where we started.

You claim the public always votes for the most reasonable thing, and I say it doesn't, although it can happen.

I don't see anyone but you saying it, but I've certainly seen hundreds of references to bread and circuses in my lifetime.

What school of thought do you represent when you say that, or why isn't there one, if you are right?

I didn't say that private is "always" better, just that this should be assumed before we pass laws. So exceptions aren't "lethal" at all. So many exceptions that they constitute the rule would be.

Growth comes from healthy competition. Yes.

But you said it also comes from policies decided by majority votes, and the majority gives its "legitimate" consent to so much competition-inhibiting legislation.

It's "legitimate" (the law) that you can't be an interior decorator in some parts of the country without going to a state-accredited school first, to pick a relatively trivial but representative example. This INHIBITS competition. But you support it, because "the public" (which I'm sure is fully aware of these laws :) ) says so, right?

Do you want to take a stand for every single, special interest-sponsored, competition (and growth) -reducing piece of legislation that favors one group of people at the expense of another, simply because it's law, and that that makes it legitimate?

I can dig up many such examples, if you like.

You practically have to defend every line of the Federal Register with all the fervor of a religious inerrantist to take the position you do. The public supports it, you believe it, that settles it.

Sure, Californians voted down the tax increases - because the propositions were all about taxes. But they didn't vote down the promised benefits earlier, did they? Because they simply never knew what the hell was going on before, and they sounded good to them, would be my guess.

"you need to explain how to reconcile your positions that the common man is too stupid to know "liberal policies" are bad for GDP growth with the position that the individual knows best."

I think I did - the individual generally knows and does what's best for himself, but generally can't/won't do this for the country as a whole. He's willing to take away from someone else's ability to do what's best to serve his own needs.

If unseen, abstract others have to pay for it, and if the country's growth suffers, so be it. It's all opinion, anyway. Politicians even promise it's good. Who really knows? They have bills to pay, lives to run.

Talk about the state of the country or the world, and you get indifferent shrugs. How many "common interest" groups are out there, as opposed to focused lobbyists and special interest groups? Only a few nut cases will spend their time trying to figure out what's best for everyone. There's just no tangible gain, there.

So it's part ignorance, part indifference, and part self-interest, depending on the person. What people experience is real to them. What they only hear about is just an abstraction.

You know the example of the "common" field, that belonged to "everybody." It was in everyone's individual interest to get what they could get out of it, before their neighbors did, and to the detriment of everybody else. From that came the idea of property rights. Get out only what you put in, plan for the long run, etc. Doesn't that "reconcile my positions" also?

Here's another topic that should be front and center in everyone's mind:

http://www.hawaii.edu/powerkills/20TH.HTM

I've told countless people about it, for a good 20 years. As RJ Rummel himself will also tell you, nobody gives a dam. Why is it any different with economics?

[tttar]

I'll tell you what, beancounter.

I will find you anti-growth answers a majority of respondents has selected to survey questions, and see how you defend them one-by-one as really being pro-growth.

I'm sure that by such an exercise we can both learn a lot.

Are you game? ;-)

[tttar]

Re "I solve this by saying it's entirely possible even liberal policies (however rare) could grow GDP more," that's not what you say elsewhere at all.

You say the theory behind a particular policy is irrelevant.

There is only one standard a policy must meet: if the public supports it, it is guaranteed to be better (not just possibly or rarely) than any conceivable alternative.

[beancounter]

Ah, the "burden of proof" issue. What started this? You, saying that "most government spending" was illegitimate, then deciding you picked the wrong word perhaps changed to irresponsible. You create a clear distinction between individual and group, as if a group wasn't comprised of many individuals, then declare that an individual is incapable of deciding the destiny of other individuals. Besides the fact this is a rhetorical trick (a person voting for healthcare can surely vote for healthcare for himself and not others) it certainly does not solve the contradiction of you praising a man voting purely out of self-interest then declaring him wrong to do so because the "needs of the many" are not served.

"Some else pays" -- so what? How does that prove a course of action is anti-growth, other than Randians declaring (incorrectly) that unearned income is automatically destructive? Has anyone ever asked you to consider the possibility certain types unearned income (not all) could be pro-growth? Possibly not, since it seems so "common sense" that a man should only receive what he's "earned" but common sense is often wrong. I already pointed out that "who deserves it" is a moral question that has no place in a discussion of economics. The healthier a nation is the more productive it is -- this is clear -- and health is a collective responsibility given diseases are spread communally.

I believe in rule of law and stable government. I am very well aware of where I am; this is the same blog that said months ago that the bank bailout was necessary to prevent a total collapse of Western civilization (words were not minced; Steve posted a C-SPAN interview of a Senator saying that exact thing.) The only legitimacy a government has to rule is at the pleasure of the people. You ask me what school of thought or philosophy espouses this; do the names Hobbes, Locke and Rousseau mean anything to you? Perhaps you will now act shocked a if you have never heard of social contract (or pretend it is socialism as many Internet libertarians do) or perhaps you will now ask me where is the signed contract, as if a contract must be literal and physical rather than implied consent. I would rather not debate the validity of social contract as this is an economic blog not a political or philosophical blog, so the point I make is simple: *anarchy is the most anti-growth scenario imaginable*, and disregarding the will of the people continuously in favor of say, libertarian theorists, results in overthrown governments and revolutions.

There is a *very* big difference in saying the electorate is competent enough to pick politicians who will pursue pro-growth policies (on the aggregate) and saying the electorate are experts in economics and could implement the minutiae of day-to-day policy decisions. I wish you would stop trying to represent my position as the electorate being economic experts rather than picking those they think can implement pro-growth policies -- there is a difference between being a leader and choosing a leader.

From your source:

"This was not conductive to the development of specialized education, but fostered an exceptionally high level of general literacy. Because general literacy was so widespread, intellectual monopoly was resented; priests, lawyers and physicians were regarded as the three great scourges of mankind."

A modern economy, much different than an economy in the 18th Century, is highly specialized. Indeed, the greatest achievements of the 20th Century such as the Manhattan Project and Apollo Missions are extreme applications of specialization. Perhaps private education was better in the 18th Century when an educated man was a renaissance man, but your own source says that private education was not conductive to specialized knowledge. I stand by my original assertion that a mixed education system is superior to a purely private system -- this is not the 1700's where the sum of science could be learned in a single human lifetime. You also have *not* answered the blatant fact genius potential ignores family income.

As for your "challenge" for me to "defend" that individuals on the aggregate vote for pro-growth policies, I respectfully must decline. I see no point in that exercise rather than more of your headaches -- what you and I consider anti-growth are no doubt diametrically opposed, as libertarians believe deficit spending is anti-growth and investment that doesn't yield tangible dollar returns in the short term are anti-growth.