Tabarrok v. Tabarrok

by Henry on July 11, 2011

As a quick addendum to John’s post, it’s worth remembering that Alex Tabarrok got “quite upset”:http://marginalrevolution.com/marginalrevolution/2007/08/dani-rodrik-has.html a few years ago, when Dani Rodrik “suggested”:http://rodrik.typepad.com/dani_rodriks_weblog/2007/08/irreconcilable-.html that he and other libertarians were anti-government ideologues who had immunized themselves against countervailing evidence.

bq. Dani Rodrik responds here to my pointed remarks on his argument for industrial policy. Rodrik’s response, however, is along the same lines of his earlier – “I’m sophisticated, you’re simplistic” – post on why economists disagree. In this case, it’s ‘libertarians are ideologues who are immune to evidence.’ Rodrik, however, has painted himself into a corner because he cannot at the same time say that the “systematic empirical evidence” for market imperfections in education, health, social insurance and Keynesian stabilization policy is “sketchy, to say the least” (also “difficult to pin down” and ‘unsystematic’) and also claim that libertarians are ideologues who are immune to evidence. Say rather that libertarian economists are immune to sketchy, unsystematic, difficult to pin down evidence. Rodrik is thus right that he is “not as unconventional as I sometimes think I am. The real revolutionaries here are the libertarians.” The libertarian economists are revolutionaries, however, not because they are immune to evidence but because they respect evidence so much that they are unwilling to accept “conventional wisdom” simply because it is conventional.

I’m trying really, _really_ hard to reconcile the argument that Alex and his mates are not anti-government ideologues, and indeed have far greater respect for evidence than their opponents, with his more recent “claim”:http://marginalrevolution.com/marginalrevolution/2011/07/the-great-fiction.html that:

bq. As Bastiat said, “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.” What Rampell et al. want to do is to make people believe in this great fiction.

It seems to me difficult to maintain the claim that government is necessarily a communal fraud (and that the people who you disagree with are trying to make people believe in this fraud) and at the same time argue that you and other libertarian economists are open-minded individuals happy to go wherever the evidence about politics and markets takes you. But then I’m not a “libertarian economist”:http://www.cscs.umich.edu/~crshalizi/weblog/253.html.

{ 77 comments }

1

Alan 07.11.11 at 9:00 pm

I think both you and Henry are making the same mistake, namely that opinions and attitudes about social and economic questions are derived from facts. Most positions on the two axes of social and economic conservativism/liberalism are determined by genetics and upbringing. After the age of 15, facts only serve to confirm this position and personal tastes and preferences become universal, eternal truths.

2

mpowell 07.11.11 at 9:27 pm

Well, you have an actual image to maintain so you have to be nice. For me, if an economist wishes to be ‘skeptical’ regarding the claims that markets in education, health care, social insurance and economic stabilization are plagued by market imperfection, that is an invitation to assume they are an ideologue.

3

Metatone 07.11.11 at 9:32 pm

mpowell – surely “ideologue” is sugar-coating it – when someone wishes to be skeptical about the concept that the earth rotates the sun, we have much stronger names for them… and are much less interested in their views…

4

bianca steele 07.11.11 at 9:40 pm

It sounds like Tabarrok thinks Rodrik is presenting an argument that supports Tabarrok’s point of view, so then he must be willfully or ideologically refusing to look at his own evidence. For some reason, I doubt Tabarrok’s interpretation of what Rodrik is doing is correct. Unfortunately, at the moment I don’t have time to read all of Rodrik’s piece, so probably I will not be able to present a convincing argument against Tabarrok’s interpretation. Anyone have the time?

I also think Tabarrok is wrong about what the “conventional wisdom” is, as it happens. So two problems, then, at least.

5

Satan Mayo 07.11.11 at 9:55 pm

This often happens with public intellectuals. I doubt Tabarrok believes that everything the government does is useless, but he’s taken it upon himself to adopt the “Everything the government does is useless” role in public. Probably there were earlier incidents in his career when he made more nuanced statements, and his fans responded with confusion and cries of betrayal, so now he’s become more reliable, figuring that overall, he’s more valuable to the cause this way than if he assessed each issue individually. Like the designated Conservative and Liberal talking heads on U.S. TV’s Sunday morning blatherfests.

6

andrew 07.11.11 at 10:24 pm

On the post “Dani Rodrik has painted himself into a corner,” the link for “Worst Argument” (another MR post) is dead. I have noticed that some very important posts have gone missing on MR. For example, Tyler Cowen’s post on “first-best economists” is nowhere to be found, no matter how much you look. This is very troubling, because though I am more left-wing, I regard MR as very interesting and thought-provoking. Erasing posts that you might have regretted posting is disingenuous and makes you look petty

7

polyorchnid octopunch 07.11.11 at 10:49 pm

I figure the real solution to libertarians is to introduce them to some real honest-to-god pirates with no compunction about killing to get what they want, and find out how long it takes for them to cry uncle and start looking for communal (ie governmental) solutions to the problem.

Really, they’re tools. imho, of course.

8

dr_eats_babies 07.11.11 at 11:23 pm

this comment is fake

9

hartal 07.11.11 at 11:38 pm

I would be interested to know whether Tabarrok or Jonathan Alder have reviewed Alperowitz and Daly’s Unjust Desserts. http://www.garalperovitz.com/UnjustDeserts.html

The book does a good job of puncturing libertarian myths about self-made heroes who owe nothing to society.

Adler wrote a rather silly dismissal of Speth’s Bridge to the End of the World. Basically he talks himself out of engagement with the book on the grounds that actually existing communism was even harder on the environment than unregulated capitalism.

So even if he did write a review…well, it would be instructive.

10

Russell L. Carter 07.12.11 at 12:15 am

@andrew.

Huh. I have been looking for that post where TC stated that the only possibility for health care reform was to do nothing and let health care costs reach 30% of GDP, with a lot of bad outcomes (“It’s simply the best we can do”), and I have not been able to locate it. I wonder…

11

Sebastian 07.12.11 at 1:49 am

“Erasing posts that you might have regretted posting is disingenuous and makes you look petty”

Haven’t they changed platforms twice? Never attribute to malice what you can attribute to the nastiness of going from one blogging format to another.

12

Sebastian 07.12.11 at 1:49 am

Unless they are libertarians, in which case of course you should attribute malice. ;)

13

Popeye 07.12.11 at 1:57 am

I can’t be bothered to read these comment threads, but I don’t see the word “snob” anywhere, so here is the definitive Alex Tabarrok link.

Libertarian Economists Have No Idea What They’re Talking About

14

imajoebob 07.12.11 at 2:03 am

The problem with “Libertarian Economics” is that it is, as a philosophy, an oxymoron. Libertarians don’t want to “practice” economics. They simply want to leave things to the vicissitudes of the “silent hand,” even if that means society gets the back of the hand.

But most of these “Libertarians” are usually just hypocritical neocons who think the role of government is to get everyone else out of THEIR way, while greasing the skids for their schemes to profiteer from their mathematical games. They want us to believe that allowing them to operate crooked carny games in the finance markets is Libertarian, when it’s really exactly as it appears: criminal enterprise. The very laws that exist to protect them from other criminals somehow shouldn’t apply to them.

Government is not a fiction; it is a fact. It is a construct of society created to prevent a few bad players from (literally) killing others. That protection extends beyond just “Thou Shalt Not Kill” to include proscribed behaviors that would weaken society to the point where it would no longer function, thus resulting in more death. Most hypocritical is that these faux Libertarian Neocons think they should be able to do anything and everything with no regard for the very society they demand protect their right to do it.

Neocon “Libertarian” Economics says that their ability to do what they please, as they please to society, and society’s role is to prevent others who try to stop them.

15

imajoebob 07.12.11 at 2:09 am

Well, that got messed up. Final line (#14):
Neocon “Libertarian” Economics says that their ability to do what they please, as they please to society should not be impeded, AND society’s role is to prevent others who try to control their negative behaviors from stopping them.

Have no idea what I did to mangle that.

16

boconnor 07.12.11 at 2:24 am

imajoebob @ 14

Well said. E.g. get rid of the government organised, funded and staffed court system and the enforcement of contract law and watch the Libertarians squirm.

17

geo 07.12.11 at 2:33 am

The fact that the post Popeye links to @13 is still available speaks well for Marginal Revolution’s integrity. Surely if they wished to destroy evidence of their proneness to feature appallingly, humiliatingly stupid posts, this one (which is enthusiastically seconded by Tyler Cowen in one of the first comments) would have been among the first to go.

18

Russell L. Carter 07.12.11 at 3:46 am

@geo

Yeah I knew about that post still live so I took another stab at the google machine and found the post I was looking for. It’s not as bad as I remember, though still quite naive. It does take integrity to preserve these things.

For the record:

http://marginalrevolution.com/marginalrevolution/2007/01/the_bush_health.html

19

Bill Murray 07.12.11 at 4:34 am

Maybe you need some Koch funding to really see Tabarrok’s point

20

Jonathan 07.12.11 at 9:29 am

I really, really hate to say what I have to say here because all my instincts are for the economics of a Rodrik or a Robert Wade – and I am certainly not buying the libertarians general approach. But there are several reasons why I think progressives should be much warier of industrial policy than they tend to be (just because something offends Washington Consensus thinking doesn’t automatically make it right):
1. I have lost count of the number of times people assert it worked in Korea and Taiwan. Probably – although even here the devil is in the detail. Plus, I use past tense – these countries appear to have abandoned much of such policies, partly because of external pressure but also because domestic business people wanted to extricate themselves from such relations with the government.
2. If they have worked in Korea and Taiwan they have failed in many other places. Beyond the standard stories of effectively enforced performance criteria – and even this is less clear than it looks (cf. e.g. on Korea David Kang, ‘Crony Capitalism’, CUP, 2002) – we don’t have clear explanations of why, and what determines success or failure. Try getting a coherent answer as to why post-war industrial policy has limited success in India – after all, it had an effective relatively uncorrupt bureaucracy, a political elite committed to development and so on in terms of the conditions usually touted for a successful developmental state.
3. I have lost count of the number of times proponents of industrial policy argue that it has been dismissed by believers in perfect competition and markets. But as reference to libertarians here makes clear, many critics of industrial policy are broadly Austrian economists who don’t believe in stable equilibria under perfect competition either.
4. Industrial policy measures, at least in static terms, strike me as regressive – increasing consumer goods prices domestically, leading to low returns for small household savers and so on to raise industrial profits above what they would otherwise be.
5. The recent arguments from Rodrik, Wade and others have been couched in terms of encouraging countries to develop by exporting products that are higher up the ladder than would be expected by their income levels; this strikes me as problematic from fallacy of composition effects – all countries cannot develop above average exports.

21

Zamfir 07.12.11 at 10:33 am

@Jonathan, I think your fifth point doesn’t really hold. A big thing of exporting advanced products is that it aids in importing and learning the highly productive techniques and economic structures of the advanced economies. A lot of those depend on scale, so they’re difficult to bootstrap by raising production capacity and domestic consumption in paralel.

Keep in mind, “advanced” products only carry a premium because less countries can develope and manufacture them. If everybody could make them, the relative value of simpler products would rise and everybody could happily produce and consume a mix of both.

22

politicalfootball 07.12.11 at 1:53 pm

I don’t follow Marginal Revolution or Roubini, but I was fascinated to follow the links here to see this exchange between Roubini and Cowen.

In March 2007, Roubini more-or-less described how everything was going to go down, and Cowen mocked him for it.

Brad Delong has discussed where he erred in assessing the developing crisis. (He says he had too much faith in risk management at financial firms). Has Cowen/Tabarrok ever explained where they went wrong? How has the crisis changed their views? Have they fallen back on blaming Fannie and Freddie or the Community Reinvestment Act?

23

mpowell 07.12.11 at 2:01 pm

Jonathan: Who do you really think you’re talking about here? We were talking about education, medicine, social insurance and economic stabilization policy. Yeah, I can imagine that socialized medicine really is a form of industrial policy, but actually we have many example around the world of it working quite well. If libertarians actually stuck to making argument about the costs of protecting domestic industries or nationalizing them, versus opening domestic markets to foreign competitors, they would probably be taken a lot more seriously.

24

Uncle Kvetch 07.12.11 at 2:57 pm

Yeah I knew about that post still live so I took another stab at the google machine and found the post I was looking for. It’s not as bad as I remember, though still quite naive.

Well, it does contain a libertoonian nugget for the ages:

“The ambitious long-run program should be to restructure the insurance industry –through a judicious mix of regulation and deregulation — to encourage competition across service quality rather than competition across cost-shifting. Frankly I have no idea how to do that but no one has ever convinced me it is impossible or utopian.

Until such time as someone convinces me that it is impossible or utopian for me to fly from New York to London by flapping my arms, I will continue to maintain that it is possible for me to fly from New York to London by flapping my arms.

25

Lemuel Pitkin 07.12.11 at 3:02 pm

Jonathan is talking to/about Dani Rodrik, who certainly does support industrial policy, including trade restrictions. So whatever else you think of Jonathan’s comment, he is not arguing with a straw man. However, I would rewrite his five points as follows:

1. It is widely recognized that the most successful late industrializers followed a strategy centered on the use of a state-owned or -controlled banking system to direct credit to credit to favored firms and industries, combined with tight controls on trade and capital flows across their borders. Korea, Taiwan – but also Japan, China, and in many respects Brazil, among others Not every country that attempted this strategy succeeded, but no country following the liberal path did.

2. Once industrial policy had fostered the capacity to export in higher value-added sectors, it could be relaxed. This is a sign of success, not failure.

3. When it comes to industrialization, the state has performed better than centralized banking systems, which in turn have performed better than decentralized markets. This is a historic fact, it doesn’t depend on an idealized model of either states or markets.

4. Industrial policy can’t be evaluated in static terms. The whole point of industrialization is to change your comparative advantage, not to follow it. In the short run it is certainly true that the “East Asian model” involves higher investment and lower consumption than the alternatives. This may or may not be regressive in static terms. But again, those aren’t the right terms to judge by.

5. Only a limited number of countries can successfully export in a given industry. But the point of industrial policy is to move up the value chain, so the number of countries that can follow it is larger than the number that can be at a given stage at any moment. It is presumably true that the whole world could not follow the East Asian model. But this is a problem for the liberal alternative too. Countries trying to follow their comparative advantage are also prey to the fallacy of composition. Probably more so – demand for cocoa and coffee is less elastic than demand for clothing or cars or computers. But in the long run, Keynes was probably right: An adequate level of development and stability for all countries will require a world with less trade and much less finical integration, and more autarchy and autonomy for national governments. Fortunately, in the wake of the world financial crisis, that seems to be the way we’re headed.

26

hartal 07.12.11 at 3:10 pm

Did people see the debate between Jagdish Bhagwati and Ha-Joon Chang on industrial policy on the Economist Website? Chang certainly thinks that industrial policy and indicative planning were effective. that states can gather and act on quality information sometimes better than private actors, and that state regulation of industry solves can basically push an economy to a higher level equilibrium (see his 23 Things They Don’t Tell You About Capitalism, which seems to be driven by a kind of ‘progressive’ corporatist ideal in which state, industrial and financial capital and labor all balance each other out) . That Economist debate however is more about the importance of mfg. In the US Andrew Grove, one of the founders of Intel, has importantly called for industrial policy.

27

hartal 07.12.11 at 3:12 pm

Yes I think Chang would agree with much of what Pitkin has clearly said.

28

Lemuel Pitkin 07.12.11 at 3:32 pm

Yes I think Chang would agree with much of what Pitkin has clearly said.

I hope so. Chang’s stuff is very good.

29

StevenAttewell 07.12.11 at 3:41 pm

I’ll sign on to what Lemuel Pitkin has said and just add something – the widespread use of VATs and other arrangements to compensate for the elimination of tariffs has been really successful in a number of countries.

30

mw 07.12.11 at 4:39 pm

For example, Tyler Cowen’s post on “first-best economists” is nowhere to be found, no matter how much you look.

It’s available if you look here:

http://web.archive.org/web/20090428141048/http://www.marginalrevolution.com/marginalrevolution/2007/08/am-i-a-first–o.html

I’m not sure why it disappeared from from the main MR site, but I certainly don’t see anything embarrassing or that Cowen would disavow now.

31

Myles 07.12.11 at 6:18 pm

In the US Andrew Grove, one of the founders of Intel, has importantly called for industrial policy.

I think what Grove meant by industrial policy is “massive subsidies and tariffs for the benefit of the companies Grove can see himself as chairmen of.” Presumably he wants the US to produce more engineers too.

32

hartal 07.12.11 at 6:30 pm

Good point, Myles, though I think he would be happy to import a lot of those engineers!
Lemuel, I a bit skeptical of Chang’s vision. He calls for balance among groups or classes, so there is a return from the atomism of neo-classical economics to the class-based thinking of classical economics. Chang is at home with this class based thinking as he is with mercantilism of List. But is balance really possible or possible only under exceptional conditions? What are the prospects for balancing the interests of capital and labor and the state and capital? How is balance to be determined? Are there objective criteria for that? What would be a fair balance–one can hear echoes of Marx’s critique of LaSalle. And how viable are these corporatist ideas in a globalized economy? I think his latest book is a great read.

33

dictateursanguinaire 07.12.11 at 6:44 pm

Satan Mayo, I like your interpretation and that’s why I generally find CT to be pretty trustworthy at least in terms of intellectual honesty – notice how most people who comment here are clearly to the right or left of the posters

34

dictateursanguinaire 07.12.11 at 6:44 pm

Satan Mayo, I like your interpretation and that’s why I generally find CT to be pretty trustworthy at least in terms of intellectual honesty – notice how most people who comment here are clearly to the right or left of the posters

35

Frank in midtown 07.12.11 at 7:32 pm

Libertarian economist simply don’t appreciate how poor the free market is in recognizing social goods/costs. Businessmen are loathe to recognize the social costs of their wares, and so must be brought to recognize them. Additionally, who doesn’t like free social goods? Who wants to pay for social goods, particularly when the social good also has a private value (such as an educatied workforce/education.) I consider libertarian economist as members of the pro-free-rider school (poor, poor Adam Smith hijacked by the free-riders.)

36

Myles 07.12.11 at 7:50 pm

Good point, Myles, though I think he would be happy to import a lot of those engineers!

In which case their country of origin, instead of the US, would have been subsidizing Grove’s companies. It’s pretty hard to avoid the conclusion that industrial policy consists of subsidizing one privileged group of plutocrats at the expense of another, as well as at the interest of consumers. It has the additional deficiency of privileging a designated group of established corporate powers rather than, as in liberal capitalism, being indifferent to specifically which group of corporate powers win. As Tim Worstall noted, we have a free economy for the benefit of consumers, not of businesses or businessmen. Industrial policy does the opposite.

37

imajoebob 07.12.11 at 7:51 pm

A simple ‘Libertarian Test” for the next guy who claims to be one:
Q: Do you have life insurance? Health insurance?
Then laugh in his/her face when they say yes.

38

Lemuel Pitkin 07.12.11 at 8:01 pm

Hartal-

Those are good questions. When I had the opportunity to speak with Chang last year, I asked him something similar. He didn’t have much of an answer I’m afraid — he doesn’t seem that interested in the political economy that underlies his economics. I don’t think that’s as damning a critique as some people do. As he says, he’s a pragmatist.

39

Jonathan H. Adler 07.12.11 at 8:03 pm

@hartal (9) –

If you’re going to attack my articles, you can at least post a link.

[For those interested in my review of Speth’s book, it’s here. I think there’s far more to it than hartal’s caricature.]

JHA

40

MPAVictoria 07.12.11 at 8:11 pm

“In which case their country of origin, instead of the US, would have been subsidizing Grove’s companies. It’s pretty hard to avoid the conclusion that industrial policy consists of subsidizing one privileged group of plutocrats at the expense of another, as well as at the interest of consumers. It has the additional deficiency of privileging a designated group of established corporate powers rather than, as in liberal capitalism, being indifferent to specifically which group of corporate powers win. As Tim Worstall noted, we have a free economy for the benefit of consumers, not of businesses or businessmen. Industrial policy does the opposite.”

Name a country in the last 50 years that successfully industrialized using the neo-liberal policies you support.

41

Myles 07.12.11 at 8:22 pm

(My responding post seems to have been lost in the mists of the Internet, if it ever left my mobile in the first place.)

Good point, Myles, though I think he would be happy to import a lot of those engineers!

In which case their countries of origin, instead of the U.S., would be subsidizing Grove’s companies through investments in human capital. It’s hard to avoid the conclusion that industrial policy necessarily consists of privileging one group of plutocrats at the expense of the others. Compared to liberal capitalism, however, it has the additional deficiency of privileging a specific, favoured set of corporate interests, which often become quickly obsolescent and ossified, rather than, as in the former, being indifferent to the which corporate interests win. I don’t think “making sure a specific group of middle-aged executives stay on top of everyone else” is in accordance with the liberal ideal, reform, classical, or otherwise.

As Tim Worstall noted, the reason we have a free economy is for the benefit of consumers, not of businesses or businessmen. If Andy Grove is butthurt because somehow the economy doesn’t privilege his interests anymore, that’s his problem, not ours. He has all the money in the world to make himself heard, but that doesn’t mean we have to listen.

42

Myles 07.12.11 at 8:23 pm

Oops, sorry. Looks like a double post. Please delete either one if it helps.

43

Myles 07.12.11 at 8:32 pm

Name a country in the last 50 years that successfully industrialized using the neo-liberal policies you support.

That’s either very easy or very hard, depending on if you count individual regions or provinces of China as discrete economic units. Shenzhen and the surrounding Pearl River delta area was more or less a case where the responsible economic decision-maker (in this case, the governments of the autonomous municipality Shenzhen or of surrounding provinces) was quite indifferent to what group of businessmen won or lost. (Foxconn is the outlier, rather than the rule.) Most businessmen in China do have very privileged access to municipal governments, but policies of political economy are made more at the provincial level, and the majority of even medium-sized export-intensive Chinese businessmen have very little say at that level.

In southern China at least, there was very little propping up of specific private businesses or specific groups of businesses a la Japan or South Korea. The state-owned enterprises are another matter, and even there the higher levels of government (provincial and national) have become more reluctant to intervene. The municipal governments, on the other hand, are generally completely and thoroughly in the pockets of businessmen, but they don’t make economic policy and their ability to tilt the playing field is limited to giving preferential access to land and real estate.

44

bianca steele 07.12.11 at 8:41 pm

Myles,
You distinguish between state-owned enterprises and private-owned enterprises of various kinds in the Shenzhen area. How would foreign-owned enterprises fit within your description?

45

Lemuel Pitkin 07.12.11 at 8:45 pm

The idea that a country without private banks could be considered an example of the liberal model is beyond laughable.

46

Myles 07.12.11 at 9:05 pm

Myles,
You distinguish between state-owned enterprises and private-owned enterprises of various kinds in the Shenzhen area. How would foreign-owned enterprises fit within your description?

Sorry, I better clarify. The importance and weight of state-owned enterprises (SOE’s) are relatively much lower in advanced regions like Shenzhen, which was meant as a private-sector zone. So in fact the total overall sway that business, whether private or state, holds over the responsible level of government (the Shenzhen government, I am guessing in this case) is in fact reduced, because the overall number of politically salient businesses is proportionally lower.

With regard to foreign-owned enterprises, they actually divide into two broad types. The first type is the large-scale joint venture, typically between a large state-owned enterprise and a large foreign company. These act similarly to other large SOE’s when it comes to political power. The other is direct foreign-owned subsidiaries. The ones that market chiefly to Chinese consumers (such as Walmart or Dolce & Gabbana) are regarded as normal businesses and the provincial and national governments don’t really care about them. The other is foreign-owned enterprises in certain key or technology-intensive sectors. These have some political influence, but not, as far as one can tell, anymore than technologically-sensitive enterprises (such as RIM or Intel or whatever) have in the West, nor anymore than domestically owned sensitive businesses. The other types of foreign-owned enterprises (such as privately operated joint ventures) are treated like their relevant domestically owned counterparts.

The idea that a country without private banks could be considered an example of the liberal model is beyond laughable.

China, in fact, does have privately owned banks. This is in addition to various provincially owned banks (principally Cantonese, I think) that operate outside provincial borders, which for all intents and purposes are private interests. I think it’s relevant to note, however, that even in the most statist of Chinese national banks, control is asserted vertically from the national government downward separately from the main bureaucracy, and even provincial governments (which are again the responsible decision-making units in political economy) have relatively limited influence over bank lending. For example, while good connections within the Chinese bureaucracy can get you very far, the financial side of the Chinese state (the central bank, big banks, the big insurance companies, and so on) will generally ignore you unless they are getting orders direct from the financial side of the State Council (i.e. the relevant deputy PM, the PM, or the People’s Bank of China).

47

bianca steele 07.12.11 at 9:28 pm

Myles:
Just curious: IIRC Shenzhen’s status as a private-sector zone implies greater labor mobility than possible in the rest of the PRC. Do you know whether this is , and if not can you correct me?

48

Myles 07.12.11 at 9:36 pm

Just curious: IIRC Shenzhen’s status as a private-sector zone implies greater labor mobility than possible in the rest of the PRC. Do you know whether this is , and if not can you correct me?

There is greater labour mobility between Shenzhen and the rest of China, and there’s also probably great labour mobility within Shenzhen itself.

49

William Timberman 07.12.11 at 9:37 pm

It doesn’t seem to me at all that there’s all that much more to Adler’s review of Speth than hartal’s supposed caricature makes of it. Fiber optics are produced with less of the earth’s substance than copper, therefore capitalism and its technological advances can be trusted. To do what, I wonder. While it’s true that once capitalism had chopped down all the mahogany trees, it began making furniture out of thermoplastics and aluminum, it’s also true that now, when it seems to be running out of light sweet crude, it’s bought up an England-sized chunk of Alberta and has started mining tar.

It always amazes me that capitalism has so many ardent defenders; it isn’t as though it actually needed any these days. Unless, of course, Speth is right. If so, I don’t think that God is likely be amused at the spectacle of Jonathan Adler — or capitalism, for that matter — standing steadfast in the path of an onrushing chemistry and physics.

50

John Quiggin 07.12.11 at 10:42 pm

“notice how most people who comment here are clearly to the right or left of the posters”

As DD observed a while back, we (posters) at CT run the gamut of opinion from social democrat to democratic socialist.

51

john c. halasz 07.13.11 at 3:34 am

@50:

But perhaps more importantly, the principals here, insofar as there is a common denominator, are all “liberal democrats”, committed to a “normative” defense of that “cause”, without recognizing the contradiction-in-terms, nor its actual “material” bases.

52

hartal 07.13.11 at 5:07 am

Adler linking to his critique of Speth would be like Cowen and Tabarrok linking to their mocking of Dean Baker.

“It takes more than identifying recent exponential trends to demonstrate unsustainability.”
But Speth does more.

” Exponential growth rarely (if ever) continues indefinitely, and the same factors that cause growth spurts can cause them to level off. Nor do negative environmental trends necessarily translate into harmful effects on human well-being.”

A lot of assertions about specific trends for which Speth provides evidence; of course exponential growth will not continue indefinitely—do you think Speth is claiming otherwise?

“he embraces the flimsiest of evidence to support his claims. For instance, he cites a largely discredited World Health Organization report concluding climate change already causes 150,000 deaths per year, and could reach 300,000 by 2030.”

No you chose what you think is the flimsiest of his evidence to dismiss his claims.

“This is an odd claim, as the least capitalist nations of the world also have the worst environmental records.”

By least capitalist what do you mean? The poorest capitalist countries– the former colonies of capitalist countries; the countries with least room for policy maneuver; the industrializing countries that regulate their markets as the capitalist US and Germany once did more heavily? In what ways do they have the poorest records–by environmental damage per capita measure?

“The West’s ecological nightmares were the Soviet bloc’s environmental realities.”

The USSR being worse does not make Western capitalism sustainable. This has no relevance to Speth’s argument.

“Tropical forests in less-developed nations are declining even as most temperate forests in industrialized nations are rebounding. Recognizing these different trends and identifying the key variables is essential to diagnosing the real causes of environmental deterioration and prescribing a treatment that will work.”

It is capitalism to produce that in which you have a comparative advantage.

“Were it not for market-driven advances in technological capability and ecological efficiency, humanity’s footprint on the Earth would be far greater.”

This does not make capitalist growth unsustainable

“Less material is used and disposed of, reducing overall environmental impacts from productive activity.”

Evidence? None! Speth has tons of counter-evidence for the claim claim of any overall reduction.

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John Quiggin 07.13.11 at 7:13 am

@jch as opposed to the utterly ineffectual and defeatist weltschmerz that characterises (with no exceptions I can recall) everything I’ve ever read from you. Your comments are so annoying that they even get special notice on other blogs.

http://howlatpluto.blogspot.com/2011/07/293-comments-on-marx-several-of-them.html

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More Dogs, Less Crime 07.13.11 at 4:18 pm

mw, that post was presumably written before the switch from typepad to wordpress. Posts sometimes disappear in such transitions, but if you let Tyler know maybe it will be restored.

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Watson Ladd 07.13.11 at 4:19 pm

In defense of Bastiat (ugh) his insistence that government is a fiction is a deeper point: government acts through individuals. It’s not that there aren’t political institutions.

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john c. halasz 07.13.11 at 9:18 pm

JQ @53:

Umm… what exactly do you have against “Weltschmerz”? One of the best parts of Jeremy Bentham’s work is the nominalistic sense of the rhetorical application of eulogistic and dyslogistic labels. So maybe “Weltschmerz” might be re-defined in terms of possessing a sense of compassion, worldly experience, justice, and outrage, eh? Matters that are “annoying” to the entitled.

As to that being automatically “defeatist”, well, yes, maybe a good defeat is better than a bad victory. especially of the Pyrrhic sort. So how well are your reformist hopes and strategies going, mate? But then again my concern is with hermeneutic accuracy, veracity, in explicating or interpreting certain meaningful or conceptual claims, without regard to opportunistic expediency. If that is “annoying” and produces resentment, maybe I’ve done a good job and hit my aim, with respect to equally “annoying” apologists.

You once asked me what Heidegger could contribute ” epistemologically”, and I responded that he couldn’t, since his work was a critique of the basic epistemological project in modern philosophy. But then, given the lack of such epistemological “foundations”, a good part of knowledge depends on the “authenticity” of the projects of the knowers, the desirability as well as veracity of the ends that they seek. So how is the “authenticity” of economic “knowledge” working out for you? If that’s an annoying question and cause for resentment, then maybe I’ve done my small part.

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Henry 07.13.11 at 9:23 pm

Socrates was undoubtedly an annoying person, and indeed a troll . But not all annoying people are Socrates.

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LFC 07.13.11 at 9:55 pm

If I’d known that JQ (@53) was going to link my post, thereby giving my blog a stratospheric spike in traffic (compared to its usual), I probably would have taken a bit more care with it. But my basic point about jch would stand, and it has mainly to do with jch’s tone of (as I see it) pomposity mixed with an occasional air of superiority, as of one who has privileged access to something, which in my admittedly subjective opinion doesn’t serve the goal of “hermeneutic accuracy” in explicating claims, or any other desirable goal for that matter.

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Anarcho 07.14.11 at 2:42 pm

It is funny, but “libertarian economist” used to mean a few decades ago someone who considered “Property is Theft!”. Now it means, at least in North America, someone who subscribes to property is god!

Just shows the power of money — and the willingness of propertarians to steal other people’s names:

“One gratifying aspect of our rise to some prominence is that, for the first time in my memory, we, ‘our side,’ had captured a crucial word from the enemy… ‘Libertarians’… had long been simply a polite word for left-wing [sic!] anarchists, that is for anti-private property anarchists, either of the communist or syndicalist variety. But now we had taken it over…” (Murray N. Rothbard, The Betrayal of the American Right, p. 83)

What is equally funny is how willing others on the left are to let the propertarians appropriate libertarian from the left…

60

Sam Jackson 07.14.11 at 4:13 pm

Saw you on Beeb. You the star!!!!
:)

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Pyre 07.14.11 at 8:35 pm

Well, government is a fiction in that it doesn’t physically exist.

You can point to the people, the buildings, the furniture and other such equipment, and shelves and drawers full of paper with ink marks on it — but none of these physical objects is a “government”.

We have merely agreed to a conventional fiction that such a thing exists, and all acted accordingly.

In this respect, it is like the imagined “god” of a religion.

(I suppose either might evolve from the High Holy Rules of any sufficiently venerated game.)

One writer who presented this view clearly was the late Robert Anton Wilson.

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Popeye 07.14.11 at 9:24 pm

There’s no such thing as a “person” either, the world is just a bunch of particles in one configuration or another. How stupid.

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Pyre 07.15.11 at 1:18 am

Popeye: Rather, how enlightened. That comes later on, in Wilson’s discussion, but of course had been mentioned earlier by others — notably Alan Watts, who referred to our ever-changing configuration as a “vortex” — like a whirlpool in a stream, where water (new particles) enters and water (old particles) leaves, but the vortex remains… until the current shifts and the vortex dissipates, without any water disappearing from the stream.

The vortex didn’t “go” anywhere, there’s no supernatural mystery about it — any more than your fist “goes” somewhere when you open your hand, or your lap “goes” somewhere when you stand up.

Why should we think that a person or personality or mind or anima or soul has “gone” somewhere, when the vortex of his life has simply stopped?

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Slex 07.15.11 at 1:24 pm

@ Pyre

“Government is a fiction in that it doesn’t physically exists.”

So then, what doesn’t exist physically does not exist at all, according to libertarians? For example, friendship doesn’t exist? I find it suprising how libertarians and especially Austrian economists attack positivism, when they selectively exhibit positivism-like tendencies.

By the way, does liberty exist physically?

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Slex 07.15.11 at 1:41 pm

@ Pyre

On a related note, if government does not exist, then government oppression does not exist either.

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Pyre 07.15.11 at 6:50 pm

Slex: I spoke only for myself, not as a representative of libertarians, so kindly don’t take what I said as “according to libertarians”.

From parsing right-wing babble, I gather “liberty” consists of the speaker’s ability to do whatever he wants without anyone else’s interference, including interfering in anyone else’s life on matters of religion, politics, education, science, medicine (e.g. birth control, abortion, end-of-life care) — a “mine-and-not-thine” quality. Other views differ. Apparently the common word doesn’t even have a singular common (=shared) referent; the fingers are pointing in different directions. What “physical object” could we be discussing? This sounds more like a situation of theology… that is, a squabble over abstractions with no agreed definition.

And, yes, “oppression” likewise — cf. Monty Python, “s/he’s oppressing me!”

Try considering “government” as, not a physical object (which is suggested by a noun), but an activity (which in English might be more clearly suggested by a gerund, say, “governing”?)

When we speak of the game “bowling”, we know that it has dedicated places (bowling halls), it has participants (bowlers), it has game rules — just as government/governing has buildings, participants, and rules — but we do not tend to fall into the delusion that “bowling” itself is a physical object, because the verb-form “bowling” (“let’s go bowling!”) does not falsely imply that to us.

Nouns unfortunately do, which is why riddles like “Where does your fist go when you open your hand?” / “Where does the candle flame go when you blow it out?” are such old puzzlers. If we asked “Where does the candle burning go…?”, it would be easier to answer “The burning just stops.”

Corporations (another legal fiction) have been declared “persons” — just like those vortices of particles actually walking around — and if this conveys “physical existence” in your view, I can only exclaim, what sorcery is this!

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Slex 07.15.11 at 9:16 pm

@ Pyre

I think I have encountered this claim about government from libertarians, even if you are not one.

I don’t know where you were going with you last posting exactly, but I think that you think that everybody else thinks that government exists as a physical entity, such as a rock, for example. Governments, of course, exist as social conventions. Unlike rocks, governments need human (or other intelligent enough) beings to exist, but it does not mean that governments can’t and don’t exist.

Manchester United does not exist as a purely physical thing, but it still exists as a football club. And when they play against Chelsea, a lot of people could be interested in the outcome of the game (by the way, “outcome” is not a physical object either, even though depending on the situation it could have a physical object as its manifestation). Football, football clubs, wins, draws and losses exist, even if they are not physical objects.

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Pyre 07.15.11 at 10:02 pm

Slex: “I don’t know where you were going with you last posting exactly, but I think that you think that everybody else thinks that government exists as a physical entity, such as a rock, for example.”

How else could it be “drowned in a bathtub”, as Grover Norquist would have it be?

If a corporation is a person, and a township (or other government) is a “body corporate”, it follows that governments are people too, with rights, opinions, property, good and bad habits, feelings that can be hurt, and social needs. Invite yours over for tea and a long chat sometime; it could probably use the break.

> “Governments, of course, exist as social conventions.”

Remarkably, you’ve nearly restated what I said the first time:

“We have merely agreed to a conventional fiction that such a thing exists, and all acted accordingly.”

(Though my version avoids the statement “Governments… exist” with that firework of an “of course” in the middle of the precise claim at contention.)

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Slex 07.16.11 at 6:21 am

Nearly, but not quite. You say that government is a fiction, because it exists as a convention and not as a physical thing. Because the word “fiction” implies something, which is false and not really true, I disagree. It is also false to compare “government” to the god of a religion. Instead the comparison should be between “government” and “religion”.

I can’t have a corporation or the township drinking tea at home, but it doesn’t mean that these don’t exist. And it has nothing to do with their existence as social conventions. I can have a tea with the mayor, even though he exists as a mayor again by social convention.

Drinking of tea with governments is not a requirement for their existence. I can’t have a tea with “gerunds” either, but it does not mean that gerunds or adjectives or nouns don’t exist.

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Slex 07.16.11 at 7:02 am

As for the Grover Norquist quote, it may have occured to you that it is a figure of speech and is not meant literally.

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Pyre 07.16.11 at 10:50 pm

Slex: “fiction” and “lie” both refer to things which are “false and not really true”.

The difference is that a fiction is intended to be recognized as false by all parties, so there is no deception involved — whereas a lie is intended not to be recognized as false by at least one party.

When Jesus told the parable of the Good Samaritan, his listeners understood that incident may never literally have happened, but went along to learn the point it illustrated.

Metaphors are common in speech, even as single words in sentences, and are applied fictions; e.g. plant parts like “roots” and “stems” and “branches” are used describing non-plant abstractions like words, languages, algorithms,….

> As for the Grover Norquist quote, it may have occured to you that it is a figure of speech and is not meant literally.

Oh, what a thought! Just like the metaphor of a word’s “roots”, not literally growing into the ground. Right: its literal meaning is false here; put another way, “it is literally false.”

But that is recognized to be the case, by all parties; we are dealing with a fiction, not a lie. By convention, we take that literal image and extract some meaning from it — as we do with a parable’s lesson — and apply it in the present context.

“Root” then conveys “earlier word from which this one developed”; “small enough for me to drag into my bathroom and drown in my bathtub” then conveys a reduced and weakened target that can more easily be destroyed.

(And that, incidentally, was the sort of statement that used to put someone on a list of people dedicated to the violent overthrow of the U.S. government. Unless Norquist’s figure of speech, once already “not taken literally” in order to parse the metaphor, is then a second time “not to be taken literally” as expressing his seriousness. Norquist and the Congressional GOpers who sign his pledge seem pretty serious.)

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Slex 07.17.11 at 6:53 am

Quidditch is a sport that exists as a mere fiction. Football is a sport that really exists by a social convention. Respectivelly, the federation in the Star Trek universe exists as a mere fiction. The US government really exists by a social convention.

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Slex 07.17.11 at 7:10 am

This is the original context of the Norquist quote:

Slex: “I don’t know where you were going with you last posting exactly, but I think that you think that everybody else thinks that government exists as a physical entity, such as a rock, for example.”

Pyre: “How else could it be “drowned in a bathtub”, as Grover Norquist would have it be?”

You response seems to use Norquist as an example that other people but you consider government as a physical entity. And subsequently in you later post you say that, of course, it is a metaphor (and a fiction). If you knew that Norquist never meant that government can really be put in a bathtube (if small enough), why did you give it as an example for the opposite in the first place?

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Pyre 07.17.11 at 10:03 am

Slex: After you’d read my earlier statements — including “We have merely agreed to a conventional fiction that such a thing exists, and all acted accordingly.” — and from these concluded “I think that you think that everybody else thinks that government exists as a physical entity, such as a rock, for example.” — I replied with that Norquist example, corporate “personhood”, and the suggestion that you invite your government over for tea and a long chat.

Did you think my suggestion of tea was literal, meant to take place in physical reality? Do you think corporate “personhood” is physically real? (As to legally real: it’s known as a “legal fiction.) Did you think physical reality was the common thread there?

No. But unfortunately, once a fiction is long-established, it becomes easy to forget that it is a fiction. (Many people may never even know. Is “Big Brother” physically real inside the 1984 storyworld, or a propaganda personification? Do the citizenry know?) Refer to an non-object as a noun rather than a verb, and English grammar itself conveys the presumption the referent is a thing and not an activity. (Benjamin Lee Whorf’s Language, Thought, and Reality discusses how strong and misleading a linguistic presumption can be; fires started because matches were tossed into “empty” oil drums, etc.)

What I am suggesting is that “the government” is talked about so much as a thing unto itself that many people may forget it’s a fiction, or indeed grow up from childhood never questioning the presumption — to the point of cognitive dissonance when you try to explain that government doesn’t physically exist. The non-literality of a metaphor? Never thought about it. The non-literality of a parable? But the Bible is a literally true, and how dare you call Jesus a liar! Norquist himself may know these are all “figures of speech”… but are you sure everyone else does?

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Cahal 07.17.11 at 3:12 pm

The thing is that free traders/libertarians ignore the most successful school of economics that has ever existed: the American School.

http://www.amazon.com/Americas-Protectionist-Takeoff-1815-1914-Michael/dp/3980846687

Yes, keep worrying about some (flawed) ideas of freedom and natural rights whilst the rest of the world enjoys a nice ‘statist’ increase in living standards.

@7 polyorchnid octopunch

‘I figure the real solution to libertarians is to introduce them to some real honest-to-god pirates with no compunction about killing to get what they want, and find out how long it takes for them to cry uncle and start looking for communal (ie governmental) solutions to the problem.’

Or just make them do some community work in a poor area, so they can understand how the world actually works instead of spouting their nonsense from middle class suburbia, with people like Bryan Caplan saying ‘if poor people knew the causes of being poor, they wouldn’t be poor for long’ (wtf??)

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Slex 07.17.11 at 6:47 pm

Again, if you knew that Norquist may have considered it a figure of speech, why did you give it as an example that people consider government to physically exist? And if, as you wrote in your last post, you think that physical reality is not a common thread, why do you give examples of governments and other socially constructed entities as if they were physical entities – the tea invitation remark which, from my point of view, was literal in the sense that it was ironic, trying to demonstrate the impossibility of a position (to which I actually don’t subscribe)?

As for my position, it is and has always been in this thread that government is a socially constructed reality. But just because it is socially constructed it does not mean that it is not real. And your position, as far as I understand, is that social constructions do not really exist. As for the “legal fiction” term, it is used in a specific context. According to some definitions it does not even require to be based on something false. And yes, corporations really exist as legal entities (they are fiction, i.e. do not really exist, as physical entities). Microsoft is a corporation that realy exists, Wayne Enterprises exists merely as a fiction.

If all you were saying was that government was an invention of the human mind, I wouldn’t have disagreed. But you are saying that because it is invented and exists by agreement, it in fact does not exist.

I’ll stick for now to your definition of “fiction” to elaborate further what I mean and why I think your position is problematic and incorrect:

Pyre: “fiction” and “lie” both refer to things which are “false and not really true”.
The difference is that a fiction is intended to be recognized as false by all parties, so there is no deception involved—whereas a lie is intended not to be recognized as false by at least one party.

And also to your view of government:
“We have merely agreed to a conventional fiction that such a thing exists, and all acted accordingly.”

If I say that Sarah Palin is currently the president of USA, this statement is clearly false and not really true. So, Sarah Palin as the current president of USA is merely a fiction. I think that both you and I will agree on this. But if I say that Barak Obama is the current president of USA, I will say that he is really the current president of USA, and you will say that Barak Obama as the current president of USA is merely a fiction. Because the position of president exists as a social convention and by your criteria, expressed so far, it is a fiction.

So you lump as fiction two very different situations.

Yahweh exists as an object of worship in Judaism. In this sense he is a socially constructed reality. Note that it is true regardless if Yahweh really exists as the creator of the universe and all the other attributes ascribed to him. Now, let us assume that Yahweh the creator does not exist. If that is the case, according to my position, Yahweh really exists as a socially constructed reality (as an object of worship), but does not really exist as the creator of the universe (in this role he exists merely as a fiction).

As for you position, I am not sure what it is exactly. From your previous posts where you wrote about governments, corporations, etc., I would assume you would consider Yahweh existing merely as a fiction. But if we follow your definition, Yahweh is not a “fiction”, because Yahweh the creator is intended to be recognized as real by his worshippers (I take it that people don’t worship gods in which they don’t believe), though could probably be considered a “lie” under some circumstances.

As a matter of fact, most definitions of “fiction” in dictionaries allow for the possibility of deception, so I find your distinction between “intended to be perceived as false/non false” as unnecessary, based also on common usage of the noun and its derivatives. But more importantly, your treatment of “fiction” obscures important differences. There is a reason why we use “fictional/fictious” as adjectives before nouns such as “corporation”, “contract”, “deal”, “marriage” – it is to denote those which really exist as social constructions from those that don’t (and exist only either in works of fiction, as instruments of deception, etc.). If we follow your reasoning, then it would be unnecessary – since all of these exist as social conventions, they are fictions, and we need not use either of these adjectives, since “fictional” or “fictitious” is already contained in the meaning of “marriage”, for example.

Not everything that people imagine, invent or agree upon will become real. If Yahweh did not create the universe, Yahweh the creator will be merely a fiction, no matter how many people subscribe to the view that he actually did it. But if two people consider and treat each other as friends, their friendship will be really existing.

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Pyre 07.17.11 at 11:04 pm

Slex: In the case of a god (e.g. Yahweh), the action of worship is really occurring — or we could say, parallel to your friendship example, the relationship of worship (which may be one-sided) “really exists” in the sense that the worshipers, at least, are not fictional.

If a god is defined as whatever someone worships (be it a rock, the Sun, a Roman Emperor, et al.), it would seem that covers fictions which are worshiped. In that sense, Yahweh is a “real god” no matter whether or not he himself actually exists. But “real” in this usage no longer refers to the reality of Yahweh himself; it refers to the reality of the worship. Another reader might pardonably be confused by the phrase “real god” into thinking we assert the reality of Yahweh himself, because that is normally how such a phrase would be parsed.

This is why I keep trying to steer away from phrasings like “Governments exist as a social convention” (or, now, “Yahweh really exists as a socially constructed reality”), to phrasings like “We have merely agreed to a conventional fiction that such a thing exists, and all acted accordingly.” The earlier two actually assert the existence (which is the point of contention); the last does not, but refers to that assertion as a fiction.

Barack Obama physically exists as an adult male human being of such-and-such height, weight, and other physical attributes, no matter who else is around. Whatever offices he holds or has held in various organizations (e.g. editor, senator, president) are not attributes of himself alone; they are dependent on the organizations, and might be better thought of as relationship roles. If he played a part in a high school play, that should count as a role he “really” played — despite the play and all its roles being fictional — but we wouldn’t claim he “really” was that character. Someone else played that part the next time the play was put on. Someone else will take the office of U.S. President in a few years. The umpires and referees and pitchers and quarterbacks will all still be on their respective playing fields — but the people filling those game roles will change over time. The roles don’t belong to those people.

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