Reality based Republicans

by Henry on January 29, 2005

I heard Chuck Hagel speak at the World Affairs Councils meeting in Washington DC yesterday (C-Span link “here”:http://www.cspan.org/search/basic.asp?ResultStart=1&ResultCount=10&BasicQueryText=Hagel&image1.x=0&image1.y=0&image1=Submit ), and thought it was pretty interesting. The content was vague, as is typical for US politicians warming up for a run at President, but in tone. Hagel was very clearly setting out his stall as the anti-Bush on foreign policy issues. He began his talk by talking about the need to focus on the allies, then spoke of how US public diplomacy had “lost its way,” of how our experience in Iraq should give us pause about trying to impose democracy by force etc etc. Most interesting in the short term, he hinted at some openness to the idea of Senate hearings on the disaster in Iraq, speaking at length about how Senator William Fulbright had come in for enormous criticism from his own party for holding hearings on Vietnam back in the day, but had been vindicated over the longer run. In Hagel’s words, we “should not be party to a false consensus on Iraq, or any other issue.” I’ve no idea of whether anything will come of this – but Hagel seemed to me to be presenting a possible opening for Democrats and reality-based Republicans.

An emerald the size of a plover’s egg

by John Quiggin on January 29, 2005

Readers of my previous post will have noticed that I don’t know much about MMPORPGs In fact, I don’t do much gaming these days, though I chewed up untold amounts of then-scarce mainframe computer time playing Adventure in the 1970s. Still my foray into the field has left me the kind of excitement you get the first time you wander into one of these domains and find precious jewels lying about everywhere.

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Just deserts and the market

by Henry on January 29, 2005

We’ve had a few discussions over CT’s life span where commenters have claimed that free markets produce just deserts; that is, that if markets are working correctly, people end up more or less where they deserve to be. Elizabeth Anderson has a “great post”:http://left2right.typepad.com/main/2005/01/how_not_to_comp_1.html over at Left2Right setting out Hayek’s argument that free markets can’t and shouldn’t lead to just deserts if they’re going to have the informational efficiencies that Hayekians see as essential. Key grafs:

bq. Let’s consider first Hayek’s claim that prices in free market capitalism do not give people what they morally deserve. Hayek’s deepest economic insight was that the basic function of free market prices is informational. Free market prices send signals to producers as to where their products are most in demand (and to consumers as to the opportunity costs of their options). They reflect the sum total of the inherently dispersed information about the supply and demand of millions of distinct individuals for each product. Free market prices give us our only access to this information, and then only in aggregate form. This is why centralized economic planning is doomed to failure: there is no way to collect individualized supply and demand information in a single mind or planning agency, to use as a basis for setting prices. Free markets alone can effectively respond to this information.

bq. It’s a short step from this core insight about prices to their failure to track any coherent notion of moral desert. Claims of desert are essentially backward-looking. They aim to reward people for virtuous conduct that they undertook in the past. Free market prices are essentially forward-looking. Current prices send signals to producers as to where the demand is now, not where the demand was when individual producers decided on their production plans. Capitalism is an inherently dynamic economic system. It responds rapidly to changes in tastes, to new sources of supply, to new substitutes for old products. This is one of capitalism’s great virtues. But this responsiveness leads to volatile prices. Consequently, capitalism is constantly pulling the rug out from underneath even the most thoughtful, foresightful, and prudent production plans of individual agents. However virtuous they were, by whatever standard of virtue one can name, individuals cannot count on their virtue being rewarded in the free market. For the function of the market isn’t to reward people for past good behavior. It’s to direct them toward producing for current demand, regardless of what they did in the past.

i.e. – you can’t have it both way folks. Via “Brad DeLong”:http://www.j-bradford-delong.net/movable_type/2005-3_archives/000241.html