by Tyler Cowen
on August 19, 2012 at 5:45 pm
1. Yglesias and Caplan on Bastiat.
2. Will Apple crack the TV market?
3. How doomed is Facebook?
5. Markets in everything paternity testing truck.
“The shallowest and therefore the most successful representative of the apologists of vulgar economics” – Marx on Bastiat.
Marx criticizing Bastiat on economics is like Chuck Lorre trying to call Vince Gilligan and Breaking Bad formulaic.
I think this post is rather damning. Please reply to it.
Well, I don’t live in an upper class bubble and I can’t speak for Cowen, but only one of those charts looks anything close to damming to me. And that is the welfare one.
Let me tell you what always bothers me about sites like the one you linked to. It is the fact that they always want to pick and choose what stereotypes they validate. They think they are such bold seekers after the truth but they try real hard to avoid seeing the truth when it is not convenient for them. Nowhere in the post that you linked to is that more clear than here…
There are occupations all for open borders, like agriculture (47.4%), domestic and commercial cleaning (34.0%), and construction (24.4%) that are significantly staffed by immigrants as well, to be sure. But unlike the legal profession, there are distinct hierarchies and not much in the way of upward mobility in these immigrant-intensive fields. They’re characterized by white natives running the operations and menial immigrants doing the dirty work for as little money and as compliantly as possible in the name of fattening the bottom line (at least in the short-run).
In the first place, I would like to know what evidence there is that immigrants can’t move up the food chain in construction. During my short life time it has seemed dramatic to me how much Hispanics have moved up the construction food chain. Use to be you never found them in the skilled trades. Maybe the ones moving up are second generation? Just trying to give the site the benefit of the doubt.
But regardless, what the site is trying really hard to avoid seeing is just how worthless young white males are. They may be smarter then the Hispanics on your fancy IQ tests, but when it comes to getten the work done they are not worth a dud nickle. I started work in agriculture, I went into the construction trades (carpentry and kit steel construction), and now I work HVAC. I am a white male in my early 30s. And I can tell you that the stereotype for a young white male is that of a wimpy momma’s boy who thinks he is too good for hard labor and would rather work a retail job at big box outfit then learn a trade with a future in it even though the starting wages are double what he currently makes. And I could tell you story upon story to justify that stereotype.
It is true that the skilled trades in this country are dominated by white males in their late 40’s and early 50’s. But there sons are not coming up behind them. The next generation of foreman and skilled tradesmen are going to be a lot more diverse. And this is not because the jobs are not there (housing bomb did hurt construction, but utilities are still doing fine). Nor is it because immigrant labor is driving down wages. I don’t doubt that wages in the trades would be higher if it where not for Hispanics coming over the border. But given the fact that I know more young white males wasting there lives away at retail jobs then I know working in the trades, I don’t think income is the factor preventing young white males from joining construction. In fact, most those guys I know for a fact had a chance at higher wage construction jobs and they either quit (most of them) or were fired.
I don’t want my country to turn into another Mexico. But I don’t want it to turn into another Japan either. And given the pukes I have to deal with who share my skin color, I often feel like turning into another Mexico is the best outcome on offer.
By the way, most Hispanics in the trades don’t make bad money at all. If you doubt this, just higher someone to put a roof on your house or remodel your bathroom. There is lots of competition to do both of those things but it still is not cheap to pay someone to do it. A rule of thumb that still holds true in my area is that about half that bill is going to wages. I would be leery about using statistics to figure out how much anyone in construction makes for reasons that I would think would be obvious.
The housing bomb did cut wages for the carpenters and related trades. But then, the housing bomb also did more cut immigration then any enforcement action ever attempted.
Couldn’t agree more with your sentiments. But it is still anecdote. The overwhelming data that Epigone came up with stands, and anecdote cannot falsify such conclusions as that the thought bubbles are real, those most in favor of unlimited immigration are most protected from the results thereof, and that mean US IQ is on a downward slope as a result thereof. There may be data in the GSS that tells us about work-ethic, and I for one would be interested whether that would fit what you described.
I guess I did not make myself clear. I am not taking issue with the data or even claiming that my anecdotes should be regarded as authoritative. What I am objecting to is the “holier than thou we only believe the data” attitude when they make clear interpretive statements without any data to back them up that seem bogus to me.
The general thrust of there piece is that only those people who don’t actually have to come into contact with with those dang spics think they are a good idea. The actually data says the trades (Agriculture, Construction, and Cleaning) that have the most contact with Hispanics actually feel positive about them. They try to wriggle out of this fact by making up bogus facts about the construction industry (no up ward mobility?) and implies that all us whites guys in the trade just walk around beaten on the darkies when they don’t produce enough. There conception of how Hispanics are working in the trades just does not ring true to me.
“I don’t want my country to turn into another Mexico. But I don’t want it to turn into another Japan either. And given the pukes I have to deal with who share my skin color, I often feel like turning into another Mexico is the best outcome on offer.”
If we have but two choices, the U.S. turning into Japan instead of Mexico would be a huge win.
Immigration tax. Pay the natives.
Are we talking about now visa now or 20 years from now compared to 20 years from now? Japan has no future short of letting in lots of those dreaded third world low I.Q. types. It is basic math. You can’t get out of demographic death spiral without convincing woman to have more than two children for long enough to cause the demographics to stabilize.
Japan will continue to utilize high capital investment, robotics, and other productivity enhancing technologies to replace low wage service jobs rather then importing immigrants. This will allow them to retain high wages and their own culture intact.
Eventually the country will get less crowded as old people die off (Japan is incredibly crowded). This will lower rent costs and allow people to have bigger families because they are cheaper. Accepting immigrants prevents new space from opening up and easing overcrowding. It also lowers the price of labor and slows the adoption of productivity improving technologies as low wage labor gets substituted for capital.
Japan’s future is about more then a 20 year demographic hump. Japans future is measured by what happens over centuries or millenia. The political problems of baby boomer retirements are nothing on the scale of civilizations. Japan will or won’t be around and prosper based on how it cares for its genetics and culture. A Japan full of high IQ Japanese will endure. It endured two atom bombs to become a powerhouse in just a few decades. It would not have done so if it was full of low IQ immigrants.
Can you explain how this is damning? I’m not being obtuse, I just think it would be helpful if you made an argument based on the data he cites. That will make it easier for defenders of immigration to respond in a logical way.
Cowen lives in a bubble. He is pro immigration because the immigrants he meets and lives around are vastly different then immigrants as a whole in the country. He supports immigration because he benefits from it while others pay the price, and because he has built a bubble in which he doesn’t even have to observe the negatives.
Do you have any evidence that his opinion of immigration is based on his perception of immigrants in Virginia? Versus, say, his views on morality or on the economic benefits/costs of immigration?
I don’t really think that post adds anything to the conversation. It basically says that people from poor countries tend to be poor after immigration. This has been pretty well-documented since the early-1800s. The fact that many immigrants are poor and uneducated is not a strong argument against immigration. Hasn’t the whole “immigrants are parasites on society” thing been pretty well-exploded by now?
“Do you have any evidence that his opinion of immigration is based on his perception of immigrants in Virginia?”
His own snide posts.
“Versus, say, his views on morality or on the economic benefits/costs of immigration?”
His views economic analysis is based on false libertarian theories that don’t hold up in the data.
“The fact that many immigrants are poor and uneducated is not a strong argument against immigration.”
It seems like a really good arguement against immigration. They tend to become wards of the state and drag down living standards.
Studies that have looked at the total fiscal impact of immigrants impact that they are, on average, a net contributor to budgets.
Is the content-free quote from Marx supposed to be a devastating critique?
No. But your inability to distinguish an amusing diversion from a “devastating critique” is revealing.
“Of all recent economists, Monsieur Bastiat with his Harmonies économiques represents the very dregs of fatuity at their most concentrated. Only a crapaud could have concocted an harmonious pot-au-feu of this kind.” -Marx on Bastiat
Still confusing amusement for critique?
“Wherever Bastiat pretends, by way of exception, to descend from his glib and coquettish platitudes to an examination of real categories (for instance, in ground rent) there he simply rewrites Carey. So while the latter combats mainly the objections to his harmonious view, objections in the form in which they have been developed by the English classical economists themselves, Bastiat skirmishes with the socialists.” -Marx on Bastiat.
How many billions of people did Bastiat’s fatuity enslave, oppress, and murder?
And to begin one’s critique with a racial slur? How delightfully thoughtful of Marx.
I happen to like beef stew. Es smeckt besser als Engels würst mit Kike kraut.
Oh Karl, you and your amusing diversions, your playful sense of whimsy, are much missed.
I thought it was funny to quote Marx mocking someone else for being shallow. Where is your sense of humor?
“your inability to distinguish an amusing diversion from a “devastating critique” is revealing.”
Isn’t that what Yglesias and Marx are doing?
Bastiat prolly wasn’t using the broken window story to argue against humble Keynesianism.
I understood your point. I don’t really have a dog in this fight except that I have read some Marx and I find the idea of him mocking someone else for being shallow funny. That does not mean Bastiat was not shallow but quoting Marx to make that point is a good way of making me laugh.
Isn’t mockery always shallow?
And hence all mockery over shallowness, necessarily hypocritical?
I would have NEVER IMAGINED that matt yglesias wouldn’t like the writings of bastiat. not in a million years
There’s another problem with ad-based web businesses.
The inventory of ad space is infinite. We are not living in a time when there are three TV networks, and local newspaper and radio.
The number of places to put an ad is unlimited, and theer are new ones every day. Of course rates drop like a stone in that environment.
The amount of land is “infinite”. Yet the availability of unlimited land in Antarctica does not drive down the price of a billboard in Times Square.
Maybe the Internet is just a vast Antarctica, and there is no Times Square. But it’s still early days.
On the robots thing. It occurs to me that capital investment faces a different set of trade off when the cost of labor is insignificant, as in a robot based investment. In the case of someone considering investment in a robot factory, the important thing will be to get as low a rate of interest as possible. Which means strong rule of law to support property owners, peaceful environment and so on. So could this mean a massive return to investment in western countries at the expense of the developed world? Could it mean an arms race between countries to develop their institutions? (We have stronger rule of law than they do etc) At the moment China and other developing countries can offset their political risks with lower cost labor, what will they do if low cost labor is no longer a factor?
I’m very interested to see (and sometimes dreading) the medium term future of almost total robotic production of ‘things’ and the declining world population (which starts around 2050). Most of what has driven capitalism for the past 300 years changes significantly with those two factors.
Yglesias completely missed Caplan’s point. It isn’t that Bastiat sound defeaters against the most sophisticated arguments for government intervention put forward by modern economists; it is that he has knock-down arguments against the folk-economics arguments that are used in defense of government intervention that are *actually persuasive* to the median voter.
If Caplan thinks median voters can be educated out of their ignorance, maybe Caplan should re-read Caplan!
The broken window story is actually believed by people and not in a Keynesian run deficits in a downturn way. In fact, it’s probably the null hypothesis for laymen.
It seems like Yglesias is actually taking issue with the persuasiveness of Bastiat which goes to the core of Caplan’s argument. Does Bastiat really destroy the knee jerk arguments for minimum wage, social security, drug prohibition, the FDA? Caplan helpfully links us to the slam dunk Bastiat vs Social Welfare State FAQ, a handy …. 28 page academic paper of his (and Ed Stringham’s) from 2005 where he seems to end up advocating a return to Jim Crow style literacy tests. We’ll I mean let’s just talk about it haha! Anyway I didn’t see much destruction of knee jerk arguments going on, could be my own inadequacies at play.
Back in the day (turn of the century), I knew a “domainer”, one of those bastards who picked up a bunch of domain names before most of the world realized what they were worth. No trademark-squatting, just generic nouns or adjective+noun domain names. He made enough money to make you grit your teeth, and that was as a second-tier player, or third-tier really, picking up the crumbs that the true pros left behind. Google “Yun Ye” if you want to know how much the big boys made.
Anyways, in the very early days, whenever he had doubts about whether or not he was on the right track, he took great comfort in the fact that major mainstream companies were starting to mention their domain names in their print ads and TV commercials. It felt like validation of the investment thesis, and as it turned out, it was.
My own opinion, I definitely wouldn’t recommend getting into the domain game nowadays, it’s been thoroughly strip-mined and multiple technological trends seem unfavorable… but what do I know.
These days, I can’t help but notice that many companies don’t even bother to give their domain names anymore in their ads. Instead, they say, “visit us on Facebook”. That is a very, very big deal.
Streams of attention flow through Facebook like water through Niagara Falls. They just have to figure out how to slap together a hydroelectric station. Any gatekeeper eventually figures out how to exploit and tap into a resource flowing through it. Wall Street banks have done it with financial flows; Facebook, or whoever dislodges them and usurps the role, will do it for attention streams. Just ride the network effect and be patient about letting the revenue puzzle solve itself, over time.
The only problem is that tech companies are going public at a much more mature stage nowadays, and Facebook was an extreme example. Insider made their billions and left nothing on the table for the post-IPO retail investor. Even at $19 a share, exactly half the IPO price, the stock is just starting to ease into what could be considered fair value range.
I wonder if this Yglesias character ever actually read Bastiat. What do the candlemakers have in common with drug patents?
That was my question that I posed in Yglesias’s blog comments. It is completely mystifying to me. Of course Yglesias never reads or responds to his commenters.
Moreover, has he ever heard of this country “France” where people have French names so that the person’s name was Frédéric, not Frederick? And in the existence of an output gap — how does destroying wealth help create wealth?
This article must really be some sort of satire, no?
A lot of Yglesias reads like satire, he reads like a very clever homeschooled freshman who has never encountered your subject before. The sad part is that he has been like this for years now. He literally lives the definition of the word sophmoric.
The other sad thing is the few intelligent thoughts he has like his land use stuff are smothered by his own callowness.
While this exchange is entertaining, I can’t shake the feeling that Martin and Roy is the same person.
Yglesias’s reading of Bastiat is a bit off. With respect to the ‘Broken Windows Parable’ why would his first thought be about stimulus in general rather than an obvious modern analogue like ‘Cash For Clunkers’? And the “Candlemakers Petition’ leads him to think not about tarrifs and protectionism — but about pharma patents?
Why do you think these are his first thoughts?
These examples seem carefully chosen to show why Bastiat lacks relevance today: no one is pro-rent seeking except we might consider that some rents may be worth granting (e.g. pharma patents); the broken window parable is a special case that lacks relevance where it’s almost always invoked.
The interesting thing about Facebook and ads is, the actual ads are horribly ineffective. What IS effective though, is when you can build up tens or hundreds of thousands of Likes for your company/brand page, then post a new product or a sale. This is so effective in fact that (my understanding is) Facebook limits the proportion of your Liker audience that such posts reach via news feed.
I suspect they are biding their time, waiting for more and more companies to become reliant on their Facebook pages — vs. their own websites — as a marketing channel, and then they will start charging for those pages, charging for posts to those pages, charging for each click through those posts, etc.
If they don’t… well… I have no idea how they’re going to make any money then. Google ads make money because people do Google searches on things they want to buy. The information density on Facebook is far too poor, and always* will be, to support such searches.
* famous last words
Actually, people increasingly bypass Google searches. They just go directly to Amazon and search there then buy.
This article suggests to me that we are facing an AD problem not an AS problem as productivity ever increases. Yet how would we solve an AD problem? Not only are there no jobs but there won’t be any jobs; not for low education people. Maybe we should have a realistic dialogue about what that means?
There will need to be a way to increase the ability of the median worker (or, as human labor is replaced, the median citizen) to make claims on a society’s production. This suggests that the wage-based economy will eventually fail to provide adequate distribution under a robot-based economy. Note that although wages become increasingly meager, given productivity gains, the return on capital ownership (the person who owns the robots) remains intact. Therefore, distribution of capital ownership will need to be established so that claims on production can be shared with everyone. The alternative would be to let the owners live large and the workers starve, but the owners couldn’t possibly demand enough staples to maintain AD. Even if we let there be a population crash, decimating the workers and entrenching the owners, this would only serve to drop AD even further, until the robot factories have to duel for the remaining demand from a dwindling consumer base.
As an example, let’s say we only need 1 billion people (and their robots) to meet the needs of 10 billion people. If we say that the 1 billion can claim everything, and the other 9 billion can just starve, then we have a balance… but we now need only 100 million to meet the needs of the remaining billion. So the cycle continues, and the crash accelerates from there. So, the 9 billion will by necessity for the system be able to claim a portion of the production of the billion’s robots–in essence, ownership of the robots must be shared.
Egad, what I just wrote suggests that we will be returning to Marx once society no longer depends on the efforts of the proletariat, to avoid a Malthusian catastrophe. I don’t know how I feel about that.
Okay, so agriculture, manufacturing, transportation (driverless cars) and large parts of the service sector will be automated. Online retail will replace most brick and mortar. You’ll need statisticians, analysts and whatnot to handle the logistics of these networks, but there will be few jobs for people who are uneducated. And the labor costs of goods and services will be really cheap so educated people will have a lot of extra purchasing power. What will they spend it on? Maybe things where the value is created through interaction with a person: personal coaches of various kinds might become very popular to train you in hobbies and whatnot. Maybe you’ll get headhunters to help you find jobs, date, make friends, etc. So perhaps society will look like an educated elite and then a class of personal assistants of various kinds to manage the affairs of that elite. In the extreme, you could basically pay a team of people to be like your parents. They help you figure out what you want out of life and then manage you toward it.
I will admit that I have no thoughtful critique of this. It makes me feel bad but it is a perfectly reasonable projection of future events.
Why do we keep saying low education when we really mean low IQ?
I’m going to guess it’s because not everyone believes in the sort of IQ determinism that you internet race realists are so fond of.
We have the evidence on our side though.
No. Not really. IQ matters. And race matter a little as well. It just doesn’t matter the way you think it does.
Because there are plenty of smart people who didn’t go to college? Just a thought.
I can’t believe nobody noticed the curious situation in robots packaging organic lettuces. This is sacrilege to organic food & farmer’s market hipsters……..where’s the lovable farmer in plaid flannel shirt?
Even tough robots package now lettuces, one day machines may also farm and harvest lettuces. “Organic” label still applies since no pesticides or chemical fertilizers are used. But, what will be the new label for lettuces that are farmed by the archetypal plaid shirt farmer that now is associated to organic food?
‘Handcrafted’ food will become hipster catnip and they’ll charge more for it.
This is actually so spot on that I suggest you trademark it right away.
Don’t small farms already cultivate this image? And heck, consider the opportunity costs of home gardening. Hipsters are already buying it, with both their time and their money.
ps. I’m wrtiting from my local hipster bubble. And I’m talking about how stores market their products trough images( marketing), not about real world facts.
If this is spam, it’s entertaining spam – “my local hipster bubble”. That’s poetry. Or beatnik science fiction.
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