Showing posts with label policy analysis. Show all posts
Showing posts with label policy analysis. Show all posts

Thursday, June 13, 2013

Quote of the Day: Why using moral suasion as a policy tool is a bad thing

When you cast policy issues in moral terms, you degrade the character of public discourse. You lead people to see conflicting priorities as an occasion for battle, rather than an occasion for compromise. You send the message that policy is best decided by appeals to one’s inner conscience (or, more likely, to the polemics of demagogues), rather than by appeals to impersonal cost-benefit analysis. And this is a very bad thing… 

If we’re determined to instill blind moral instincts that make people behave better most of the time, I’d like to nominate a blind moral instinct to respect price signals and the individual choices that underlie them—an instinct, for example, to recoil from judging and undercutting other people’s voluntary arrangements.
This is from Professor and author Steven Landsburg at the Cato Unbound in a debate over recycling. 

Populist-personality based politics have almost always centered their policy discussions based on the moral "feel good noble sounding" context. The appeal to the moral is practically an appeal to the emotion; no matter how coercive, impractical or how short term oriented policies can lead to long term pain. That's the reason why the use of "moral suasion as a policy tool" signifies as "the polemics of demagogues".

Thursday, February 07, 2013

Quote of the Day: Protection-Racket Capitalism

Let’s see.

1. The Justice Department is suing a rating agency (Standard and Poor’s). The rating agencies are creatures of the SEC (which created their oligopoly and encouraged them to be paid by the raters rather than the customers of the ratings).

2. The SEC is suing Freddie and Fannie, which are creatures of the Department of Housing and Urban Development, under which the two firms were regulated and also given lending quotas for “affordable housing.”

So, when is HUD going to sue a company that is a creature of the Justice Department, just to complete the circle?

One way to view the period 2005-2009 is as a massive destruction of property rights by the government. First, they destroy the right of Freddie, Fannie, and commercial banks to maintain lending standards. Then they confiscate the property of holders of securities in GM and Chrysler to pay off the labor unions. Then they sell off AIG’s assets in order to bail out Goldman Sachs and several large foreign banks. And of course, the government has made every effort to keep banks from enforcing mortgage contracts, while extracting large fines from banks.

It’s beyond crony capitalism. It’s protection-racket capitalism
This is from author, economist and professor Arnold Kling at the Askblog on the financial crisis.

Sunday, December 30, 2012

Robert Higgs: Strategy for Winning People Over to Libertarianism

Austrian economist Robert Higgs at the Independent Institute articulates on how the ideals of libertarianism can be won through the premises of consequentialism (utilitarian) and deontology (ethics) 

[bold mine, italics original]
In any event, after the more recent decades of my libertarian journey, I am now struck by a different aspect of this longstanding debate, which has to do with our strategy for winning people over to libertarianism. Strategy 1 is to persuade them that freedom works, that a free society will be richer and otherwise better off than an unfree society; that a free market will, as it were, cause the trains to run on time better than a government bureaucracy will do so. Strategy 2 is to persuade people that no one, not even a government functionary, has a just right to interfere with innocent people’s freedom of action; that none of us was born with a saddle on his back to accommodate someone else’s riding him.

In our world, so many people have been confused or misled by faulty claims about morality and justice that most libertarians, especially in the think tanks and other organizations that carry much of the burden of education about libertarianism, concentrate their efforts on pursuing Strategy 1 as effectively as possible. Hence, they produce policy studies galore, each showing how the government has fouled up a market or another situation by its ostensibly well-intentioned laws and regulations. Of course, the 98 percent or more of society (especially in its political aspect) that in one way or another opposes perfect freedom responds with policy studies of its own, each showing why an alleged “market failure,” “social injustice,” or other problem warrants the government’s interference with people’s freedom of action and each promising to remedy the perceived evils. Anyone who pays attention to policy debates is familiar with the ensuing, never-ending war of the wonks. I myself have done a fair amount of such work, so I am not condemning it. As one continues to expose the defects of anti-freedom arguments and the failures of government efforts to “solve” a host of problems, one hopes that someone will be persuaded and become willing to give freedom a chance.

Nevertheless, precisely because the war of the wonks—not to mention the professors, pundits, columnists, political hacks, and intellectual hired guns—is never-ending, one can never rest assured that once a person has been persuaded that freedom works better, at least in regard to situation X, that person has been won over to libertarianism permanently. If a person has come over only because of evidence and argument adduced yesterday by a pro-freedom wonk, he may just as easily go back to his support for government intervention tomorrow on the basis of evidence and argument adduced by an anti-freedom wonk. As John Maynard Keynes once cleverly replied to someone who asked him about his fluctuating views, “When the facts change, I change my mind. What do you do, sir?” If libertarians choose to fight for freedom solely on consequentialist grounds, they will be at war forever. Although one may accept this prospect on the grounds that “eternal vigilance is the price of liberty,” this kind of war is deeply discouraging, given that the anti-freedom forces with which libertarians must contend possess hundreds of times more troops and thousands of times more money for purchasing munitions.

In contrast, once the libertarian has persuaded someone that government interference is wrong, at least in a certain realm, if not across the board, there is a much smaller probability of that convert’s backsliding into his former support for government’s coercive measures against innocent people. Libertarianism grounded on the moral rock will prove much stronger and longer-lasting than libertarianism grounded on the shifting sands of consequentialist arguments, which of necessity are only as compelling as today’s arguments and evidence make them. Hence, if we desire to enlarge the libertarian ranks, we are well advised to make moral arguments at least a part of our efforts. It will not hurt, of course, to show people that freedom really does work better than state control. But to confine our efforts to wonkism dooms them to transitory success, at best.

If we are ever to attain a free society, we must persuade a great many of our fellows that it is simply wrong for any individuals or groups, by violence or the threat thereof, to impose their demands on others who have committed no crime and violated no one’s just rights, and that it is just as wrong for the persons who compose the state to do so as it is for you and me. In the past, the great victories for liberty flowed from precisely such an approach—for example, in the anti-slavery campaign, in the fight against the Corn Laws (which restricted Great Britain’s free trade in grains), and in the struggle to abolish legal restrictions on women’s rights to work, own property, and otherwise conduct themselves as freely as men. At the very least, libertarians should never concede the moral high ground to those who insist on coercively interfering with freedom: the burden of proof should always rest on those who seek to bring violence to bear against innocent people, not on those of us who want simply to be left alone to live our lives as we think best, always respecting the same right for others.
Mr. Higg’s proposition of libertarians making “moral arguments at least a part of our efforts” has been the bedrock of my “policy analysis” which some have mistakenly construed as being partisan.  

For clarity purposes, libertarianism is a cause to advance a free “non-aggression based” society and not to promote superficial and delusory "personality based politics" predicated on the principles of aggression.

Friday, July 20, 2012

Why Macroeconomics as Policy Tool Shouldn’t be Trusted…

…especially of the Paul Krugman strain.Link

Writes author and University of Rochester professor Steven Landsburg, (bold original)

Supply and demand (and, especially, triangles of welfare loss, etc) are not entirely rigorous, but they’re good useful simplifications that actually give useful (though approximate) answers to important policy questions. Sort of like Ohm’s Law for electrical circuits.

But IS-LM is not like that at all, because IS-LM does not even address the key policy questions in macroecomics. IS-LM can tell you, perhaps, how to fight a recession, but it can’t tell you whether the recession is worth fighting — not even loosely, because the model contains no individual utility functions and no social welfare function. It therefore does not allow you even to formulate the question of whether a given policy is worth its costs, because it provides no framework for weighing costs against benefits.

Analyzing policy via supply and demand is like analyzing electrical circuits with Ohm’s Law. It answers questions, and over a fairly wide range of situations, it answers them with tolerable accuracy. But analyzing policy via IS-LM is like analyzing electrical circuits with a barometer.

Thursday, January 27, 2011

Will Traffic Cameras Bring Discipline To Philippine Motorists?

Philippine authorities and the local media think that they’ve found the antidote against erring motorists-traffic cameras!

From the Philippine Star,

The MMDA said its enforcers, armed with cameras and speed tracking guns, will man strategic portions of the highway to make sure motorists observe the speed limit. Violators caught on camera and tracked by speed guns will be sent notices within seven days, following the agency’s “no contact” policy.

Unfortunately, as always they are likely to be wrong. That’s because the relationship between speed cameras and accidents have been ambiguous.

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This from the Economist, (bold emphasis mine)

TRAFFIC cameras are always controversial. Proponents maintain that an increase in their number results in fewer deaths on the roads. Opponents grumble that they are merely money spinners for local governments at the motorist’s expense. Drivers in Edmonton, Canada, will be refunded for speeding fines issued since November 2009 because of a technical glitch with a particular camera. In Britain, the government’s claims over improved safety were rebuffed by the British Medical Journal, and local councils have begun to turn off cameras. Research carried out recently in Australia by Queensland University points the other way, showing cameras do reduce accidents. The arguments will continue. Our chart shows that the effectiveness of traffic cameras is inconclusive, perhaps because many other factors contribute to road safety, such as population density, the condition of vehicles and roads, and other pedestrian-protection measures.

Authorities are likely to underestimate people’s reaction towards new rules and overestimate on their power to control or regulate people’s behavior.

Yet such “do something” attitude would likely succumb to the ningas cogon trap (enthusiasm only at the start of the project) brought about time consistency problem (popular policies are put in place due to the public’s fickle demand for it) and political grandstanding by the authorities that would lead to inconsistent and arbitrary implementation (in pursuit of popularity, new policies and its implementation will be redirected towards issues or flavors of the day).

Bottom line: Government use of taxpayer resources on these “fashionable” policies will likely end up wasted, the government will fail to accomplish its goal, and at worst, such new policies risks unforeseen consequences.