Posts Tagged Arnold Kling
In a previous post examining the scientific pretentions of many atheists, I briefly mentioned that “in economic science, we are constantly confronted with theories and policies based around a denial, dismissal or subversion of the spiritual side of man and nature.”
F.A. Hayek would call it “scientism,” which, in The Counter-Revolution of Science, he describes as a “slavish imitation of the method and language of science” — one that improperly conflates the physical and the nonphysical. (Hayek would be unlikely to use the word “spiritual,” as I most often do.)
This week at The American, Arnold Kling explores the approach as it relates to your typical economist’s faith in macroeconomic models (and the media’s lemming-like trail behind him).
How many jobs will the latest stimulus package create? What will it do to GDP?
For answers to questions like these, the press always turns to the usual suspects: the proprietors of macroeconometric models, which are maintained by some economic consulting firms and by the Congressional Budget Office (The Federal Reserve Board also maintains a model, but the Fed tries to refrain from injecting its model into fiscal policy debates.)
I think that if the press were aware of the intellectual history and lack of scientific standing of the models, it would cease rounding up these usual suspects. Macroeconometrics stands discredited among mainstream academic economists. Applying macroeconometric models to questions of fiscal policy is the equivalent of using pre-Copernican astronomy to launch a satellite or using bleeding to treat an infection.
If you aren’t aware of the “intellectual history and scientific standing” of the models, Kling is glad to inform you, and does so with precision. His conclusion: “economists must be more forthcoming about what they can and cannot estimate.”
This means no more guarantees of “X number of jobs by year Y-thousand.” This means no more predictions of “gas at $Z per gallon” if you choose candidate W. This means no more manufactured certainty (gasp!).
Kling closes with this handle:
Imagine if somehow we knew how to launch satellites but still believed in pre-Copernican astronomy. We would have no choice but to send satellites into space using Read the rest of this entry »
I have been reading David VanDrunen’s Living in God’s Two Kingdoms, which I received as part of a promotion by Matthew Lee Anderson. Although I still have a ways to go, I recently read one little piece about kingdom economics that I found particularly interesting.
While writing about the church’s “distinctive ethic” of generosity, VanDrunen says the following:
Anyone who has studied economics — the economics of the common kingdom — has learned the fundamental principle of scarcity. Though worldly wealth is not exactly a fixed quantity that creates a zero-sum game (there is much more worldly wealth now than there was a thousand years ago), there is truly only so much to go around. A certain sum of money will only satisfy a certain number of needs and desires. A piece of property cannot be enjoyed by everyone.
The explanation lies not in a complex theory worthy of a Nobel Prize economist, but in the mysterious, wonderful, economics-defying work of God. He “is able to make all grace abound to you, so that having all sufficiency in all things at all times, you may abound in every good work” (2 Cor. 9:8). When the impoverished give generously, God makes them “enriched” in the experience (9:11). In part, this is about money, but only in part.
Then, VanDrunen offers this high-level summary of kingdom economics:
In the church there are no winners and losers, but every act of love is mutually enriching in Christ’s economics — an economics built not on the principle of scarcity but on the principle of extravagant Read the rest of this entry »
In today’s post at Common Sense Concept I provide a list of book recommendations for those who are doing any last-minute Christmas shopping or list-building. As far as the focus of the list, I offer five titles that proved influential in shaping my views on faith and free enterprise.
The five books are as follows:
- A Conflict of Visions: Ideological Origins of Political Struggles by Thomas Sowell
- The Virtue of Selfishness by Ayn Rand and Nathaniel Branden
- Who Really Cares: The Surprising Truth About Compassionate Conservatism by Arthur Brooks
- From Poverty to Prosperity: Intangible Assets, Hidden Liabilities, and the Lasting Triumph over Scarcity by Nick Schulz and Arnold Kling
- Free to Choose: A Personal Statement by Milton and Rose Friedman
As I note in the post, these titles are not (necessarily) religious: “Rather, [they] were extraordinarily valuable in steering my raw, Bible-based upbringing in the right direction when it came to economics.”
Christians love to talk about stewardship — about tending to the garden, being resourceful, and managing well. But we tend to shy away from God’s more specific call of dominion. This is understandable, because for many of us dominion implies some sort of aggressive or violent destruction.
Holcomb uses Genesis 1:26 as a starting point:
Then God said, “Let us make man in our image, after our likeness. And let them have dominion over the fish of the sea and over the birds of the heavens and over the livestock and over all the earth and over every creeping thing that creeps on the earth.”
The stereotypical “anti-greenie” view of this verse is framed aptly by Ann Coulter, who once interpreted Genesis 1:26 to mean, “Earth is yours. Take it. Rape it. It’s yours.” The obvious problem with this is that there is nothing productive (or moral) about “rape.” God does not view us as mere resources to exploit, and thus, we should not falter by viewing the rest of creation that way. In this verse, God is making us unique to the rest of creation by forming us in His image. By giving us this power, God is giving us a responsibility to recognize the value in His creation and leverage it appropriately.
As Francis Schaeffer explains (quoted by Holcomb):
Fallen man has dominion over nature, but he uses it wrongly. The Christian is called upon to exhibit this dominion, but exhibit it rightly: treating the thing as having value itself, exercising dominion without being destructive.
Holcomb goes on to say that viewing ourselves in God’s image means using Jesus as a primary example for how to dominate creation:
The lordship of Jesus should be our model for understanding how we relate to the natural order. This means that dominion should be expressed as service — sacrificial service of the others with and for whom we are responsible — rather than mastery.
I don’t disagree with this point, but I also don’t think Holcomb Read the rest of this entry »
Let’s say there’s an apple. I want to eat the apple and you want to eat the apple. Both of us can’t eat the same apple. We can divide it. We can determine who is more hungry. We can figure out who is willing to pay a greater price for it. We can find out who wants the core and who wants the seeds. But no matter how much we deliberate, we cannot share the apple in its entirety.
Economics used to be about how to distribute the apple most efficiently, but the world is changing. Although physical resources remain scarce, human innovation has flourished to the point where we can do much more with much less, and few have bothered to explain how or why.
Arnold Kling and Nick Schulz try to tackle this phenomenon in their new book, From Poverty to Prosperity: Intangible Assets, Hidden Liabilities and the Lasting Triumph over Scarcity. In the book, the authors try to grasp this new way of thinking by terming it Economics 2.0. Where Economics 1.0 saw the market as a means for allocating scarce resources (e.g. apples), Economics 2.0 sees the market as a mechanism for channeling innovation and triumphing over scarcity.
In the beginning of the book, the authors use laundry (of all things) to illustrate the difference. Economics 1.0 would try to explain how it might be more efficient for you to outsource your ironing to someone else. Economics 2.0, on the other hand, doesn’t look at the tangible items in the equation (the number of shirts, the cost of an iron, the cost of dry cleaning, etc.). Instead, Economics 2.0 is primarily concerned with the potential for innovation. For example, what about permanent press? What about wrinkle-free shirts?
As the authors explain:
Thanks to technical progress, many shirts today do not need to be ironed at all. Perhaps in another decade or two they will not need to be washed. Given the likely progress of nanotechnology, there is a good chance that shirts manufactured in 2020 will be ‘permanent clean.’ That’s Economics 2.0.
Another way to look at this is through what Kling and Schulz call the “software layer” of an economy. While Economics 1.0 is concerned with tangible inputs like labor and capital, Economics 2.0 is concerned with the intangible factors, such as collective intelligence, the existence of property rights, and levels of corruption. You can have all of the right hardware for a Read the rest of this entry »
As we approach Passover in 2010, many people are unemployed. But in a free society, government does not create jobs.
Pharoah created jobs for us. Moses led us away from those jobs. Even though those jobs helped to complete public infrastructure. Even though they were green jobs, where we used our muscles and our backs instead of fossil fuels.
Click here to read the rest.