The Rise and Fall of Rome

Via Larry Reed, here’s a link to an animated picture that tells the story of Rome. It’s a simple picture. But it tells an amazing story. It’s fun to watch it and play the events over in my mind.

The map begins as a tiny dot in 510 B.C. That’s the year before Tarquin the Proud, the last of the Roman kings, was overthrown. That event marked the birth of the Roman Republic. Roman territory quickly grows, despite the famous Punic Wars against Carthage. Romans come to view the Mediterranean as “Mare Nostrum” — our lake.

But not forever. The Empire starts shrinking in the third century A.D., slowly at first and then with alarming speed. Population pressures in the Far East push Goths and other barbarians into Roman territory faster than they can be assimilated. They turn hostile.

Eventually the Empire splits into Eastern and Western halves. The Western halfdisappears after 476. The Eastern half survives for another millennium as the Byzantine Empire. It prospers for a while, but it spends its last few centuries as a depressing rump of what it once was.

It’s a fascinating story; in learning it, one learns much about human nature, about art, philosophy, literature, economics, politics, war, peace, church and state, and more. No wonder it has captured so many imaginations over the years.

New CEI Podcast: Creating High-Tech Jobs

Ryan Radia, CEI’s Associate Director of Technology Studies, talks about obstacles and opportunities for job creation in the high-tech sector. Regulatory uncertainty is making companies wary of making long-term investments. The sheer number of regulations makes it very expensive to hire workers. According to an article Ryan and I coauthored at RealClearMarkets, rolling back the regulatory state could pave the way for more jobs.

Have a listen by clicking here.

Stimulus Roundup

Most people doubt Congress’ ability to spend money wisely. The stimulus has given them some proof:

-$800,000 for an African genital-washing program.

-$700,000 to create computer software that can tell jokes.

$40,000 for ten trash bins.

-$1.6 million to irrigate a golf course inTexas.

-Thousands of dollars to replace – twice – a sidewalk “that doesn’t front any homes or businesses, and leads into a ditch”

300 truckloads of oyster shells.

Bonus non-stimulus spending: “[T]he Census spent $23,000 on a totem pole in Alaska. Census representative Hector Maldonado says the agency thought it was a great idea. The plan was to increase participation in Alaska, but despite the totem pole, participation dropped in the state by two percent from the last census.”

Who Says Economists Are Selfish?

And hence it is, that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature; and can alone produce among mankind that harmony of sentiments and passions in which consists their whole grace and propriety.

-Adam Smith, Theory of Moral Sentiments, p. 25.

That sentence is more important to understanding how markets work than most people realize. The ability to feel empathy is part of what makes us human. It is also what makes market economies possible.

Without empathy, killing the customer would be at least as common as serving him. Mutual exchange — trade — is an act of peace. That wouldn’t be possible without the human ability to put ourselves in others’ shoes and feel for them. After all, it’s a lot easier to hit someone and take their stuff. And yet few people do. Empathy is a big reason why.

Adam Smith was one perceptive guy. Others have filled in gaps in his thought, and proven him wrong on some details. That does not take away from the fact that he was as perceptive as any thinker in history.

Clearing the Way for High-Tech Jobs

Over at RealClearMarkets.c0m, my colleague Ryan Radia offer some ideas for how to create more high-tech jobs. Our main points:

-Do more with less. This often involves cutting workers who aren’t productive enough to offset their wages. Sounds like bad news. But it’s actually crucial to job creation. That’s because in the long run, automation frees up resources — and employees — for new opportunities.

-Hiring new employees means jumping through countless regulatory hoops. According to a 2005 study by economist W. Mark Crain, compliance costs average $5,282 per employee at large companies. Small businesses pay $7,647 per employee. Some of those resources could have been spent hiring more employees. Over-regulation causes unemployment.

-Politicians can’t create jobs. But they can help to foster better conditions for wealth and job creation. Regulations cost businesses and consumers $1.17 trillion last year alone. Congress should roll them back. Some companies fear potential clampdowns on their businesses. Congress should leave them alone. Some failing businesses are eating up resources that could be better used elsewhere. Congress should stop bailing them out.

The Real Cost of TARP

Russ Roberts nails it over at Cafe Hayek:

Please remember that the cost of the TARP isn’t the cost to taxpayers. Even if banks paid back every single penny, the cost of the TARP is that it reduces current and future prudence.

One Way to Create High-Tech Jobs

My colleague Ryan Radia and I recently sent this letter to The New York Times:

Editor, New York Times:

Catherine Rampell’s September 7 article, “Once a Dynamo, the Tech Sector Is Slow to Hire,” mourns the recent decline in U.S. data processing jobs. She blames much of the decline on the automation of previously tedious tasks.

May we suggest one way to get those jobs back: No more automation. Ban the use of computers for data processing. Imagine how much information flows through today’s global economy in an average day. Computers handle most of the load. That costs millions of jobs.

The effects would reverberate far beyond the tech sector. The paper, pen, and pencil industries would also boom.

Companies are dead-set on doing more with less. True, that creates more jobs in the long run by freeing up resources — and employees — for new ventures. But if only they would consider doing less with more, they could create more data processing jobs.

Ryan Young and Ryan Radia
Competitive Enterprise Institute
Washington, D.C.

Shifting the Burden of Explanation

A lot of people get angry when somebody suggests privatizing some or other government service. For example, someone who opposes government-run schools is accused of opposing all education, period. Not a rigorous line of thought. But it’s common.

Why do some people propose privatization? It’s not because they’re against the service. It’s because they think the private sector will do a better job providing that service.

If anything, because theory and data usually side with privatizers, the burden of explanation actually lies on those who favor government provision of many services. Why support more expensive and less effective schools, or mail service, or health care, or rail travel?

Mises briefly touches on that disconnect in his short 1927 book Liberalism (that is, liberalism as the word originally meant):

If I am of the opinion that it is inexpedient to assign to the government the task of operating railroads, hotels, or mines, I am not an “enemy of the state” any more than I can be called an enemy of sulphuric acid because I am of the opinion that, useful though it may be for many purposes, it is not suitable either for drinking or for washing one’s hands.

-Ludwig von Mises, Liberalism: The Classical Tradition, p. 18.

Cops on Camera

The vast majority of police officers are good, honest men and women. But a few aren’t. That’s why people should be allowed to record their encounters with police. The camera is an objective witness when events get out of control. People with guns in hand and the legal authority to use them on other human beings should be held as accountable as possible.

Watch this video from the Cato Institute. Real people have been hurt. Without cameras, the perpetrators would never have been held accountable.

Study: Cash for Clunkers Didn’t Work

A new NBER working paper from Atif Mia and Amir Sufi finds that the Cash-for-Clunkers program didn’t work. Here’s part of the abstract:

We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.

In other words, cash for clunkers didn’t change how much people spent. It only changed when they spent. Sales were higher than normal during the program, and lower than normal after.

As the data come in, they are proving what theory predicts: fiscal stimulus doesn’t work. President George W. Bush tried Keynesian stimulus in 2001. It didn’t work. He tried again in 2003. It didn’t work then, either. President Obama’s stimulus programs aren’t faring any better. It’s time for a different approach.