My Books, Essay #3

"Learning Economics," a collection of essays

Learning Economics, which I self-published in 2004, is a collection of essays. My thinking has evolved since then. On some topics, I now write with more confidence and, I hope, greater clarity. On other topics, I have different views than I held then.

Some excerpts:

The title Learning Economics has a double meaning. It suggests a book that is intended to have educational value. However, it also refers to the economy itself as a system for learning. . .Economic growth is due primarily to the accumulation and successful application of knowledge.

to achieve prosperity, a country must foster three “ethics.”

1. A work ethic

2. A public service ethic

3. A learning ethic

The work ethic will exist if and only if people feel that work is fairly rewarded. If instead it becomes evident that rewards accrue to those who steal, deal in black markets, or serve a warlord or clan leader, then those behaviors will be more widespread than work.

…A public service ethic is something we take for granted in the United States. . .at least you can count on the public officials to process your application in a reasonable time without requiring a large bribe. In many other countries, the conduct of state employees ranges from routine petty corruption to organized extortion.

…Should we be surprised that the so-called “Washington Consensus” or “neoliberal” recommendations…have not brought rapid prosperity to countries that lack some of the necessary ethics?

At a time when nearly every household connection to the Internet was through copper telephone wires, I wrote,

The communication network will have a fiber skeleton and a wireless skin. Telephone landlines will be superfluous.

I argued that surveillance technology makes laws too enforceable.

many laws are the legal equivalent of oxymorons—legamorons, if you will. A legamoron is any law which could not stand up under widespread enforcement. Laws against marijuana use are a prime example. {others are]

• immigration laws

• laws against sexual harassment

• laws against betting on sports

• speed limits

• software licenses

• laws against music sharing

• laws requiring people to pay social security taxes for household workers

…Surely, it would be better to abolish the legamorons and instead write laws that we could enforce to society’s benefit rather than its detriment.

I suggested that the term “intellectual property” is misleading, and that the phenomena it describes should be split into various categories. I argued that a business process does not deserve a patent, but a new pharmaceutical does. But on pharmaceuticals, I wrote,

There are foundations that are dedicated to dealing with particular diseases. . .These foundations could offer prizes for the development of pharmaceuticals…

I predicted that for content creators the Internet would reconfigure the role of distributors rather than eliminate them.

Fundamentally, there is a lot of supply in the market for pop music. . .the average wage rate is never going to get very high…

Unless the Internet reduces network effects—and I can think of no reason it should—the random component of success will continue to be large.

Did you see my comment on Robin Hanson’s recent post? My book from 20 years ago included,

The theme of the seminar was the difference…between humanists…and scientists. It was Wilkinson who provided what for me is a useful way to describe this difference. He said that a humanist arrives at understanding subjectively, through introspection and empathy. A scientists arrives at understanding objectively, through the scientific method.

That chapter, called “Moore vs. Plato,” will give you a sense of my anti-classicist bent.

The book reproduces an essay I wrote in July of 1999, “Internet in a Bubble,” which in hindsight seems prescient about the Dotcom crash.

My favorite Internet IPO went off this week.

…musicmaker had $75,000 in revenue…They took in enough in sales to pay a secretary with benefits, and now they have gone public. Successfully.

But I am not a perma-bear. The book also reproduces an essay from 2002, called “What’s Your Margin of Safety?”

The way I read the data, the chance that the market will permanently adopt a margin of safety of 73 percent or higher is close to nil. . .At some point, the market’s margin of safety will recover to lower levels, and that would meant that investors who buy today will enjoy superior returns.

The last chapters in the book are on policy issues related to the welfare state. I will save discussion of those for the next post in this series.