"When you shoot from the hip, you risk blowing off an important appendage." -- North's law of instant criticism
Recently, I wrote an article on how the Bureau of Labor Statistics, an agency in the Commerce Department, underestimates the tremendous economic improvements that Americans have enjoyed since 1970.
I posted it on GaryNorth.com. Then I posted it on Tea Party Economist. Next, Lew Rockwell posted part of the article on his site, with a link back to GaryNorth.com. So, it got a lot of readers.
I received a few emails thanking me. But then I received a critical response. This email is typical of those people who dwell in the past. It was clearly written by an old-timer. He may even be my age. These people think the good old days, economically speaking, were good -- better than today. Put differently, they do not recognize that the free market has made the whole world richer, and with the world, Americans are richer. No, no, no, they insist. Things were good in Richard Nixon's first term. Really good. Better than today, even.
This is from Mark, as in "missing the." We read this:
Improved cars and appliances sounds like the hedonic CPI quality adjustments criticized as a distortion of the real cost of living by most Austrian economists.The lack of conservative publishing outlets probably was a reflection of the steady increase in incomes from 1946-1970, and the fact that the country was much less polarized. Especially since at that time foreign policy was believed to be mostly non-partisan, and we were only a few years into the culture wars, it just wasn't that important who won elections, so there was little interest in alternate sources of information.
Private education may be better, but it's also much more expensive, pretty much out of reach for people in the lower half of incomes. Probably because public education is so much worse. Christian values may be part of the learning environment in some private schools, but, for those values, parents stuck with the public schools are out of luck.
You didn't address the, in my opinion, most significant difference. Before the late 1960's, there was much less of the lawlessness, violence, hostility, and vulgarity in society that we take for granted today.
I love to receive emails like this one. They make possible responses like this one.
ECONOMIC INDEXES
He begins with this statement: "Improved cars and appliances sounds like the hedonic CPI quality adjustments criticized as a distortion of the real cost of living by most Austrian economists." First, most Austrian economists do not take very seriously any index, because of the fundamental premise of Austrian economics: subjective value theory. This leads to a conclusion made by one of Ludwig von Mises' disciples, Lionel Robbins. In 1932, Robbins made this point: it is impossible scientifically to make interpersonal comparisons of subjective utility. There is no objective unit of measurement. There is common scale of well-being. He argued this in Chapter VI of his book, The Nature and Significance of Economic Science.
If this is true -- and it has never been refuted in terms of the logic of subjectivism -- then all price index numbers are scientifically bogus. One or more of them may throw intuitive light on what has happened, but they are not scientific in the sense of being consistent with economic epistemology. This is why I began my article as follows:
Most economic statistics don't lie, but they mislead.The statistics produced by the Bureau of Labor Statistics are pretty good, according to prevailing economic theory and statistical theory, but they are misleading to a fault. This is not because the government rigs the statistics. It is because objective statistics cannot deal effectively with subjective value. But subjective valuation is the essence of economic theory. This was discovered in the early 1870's. The statisticians still have not come to grips with this development. They try hard, but the labor theory of value is wrong. They fail.
But my critic did not understand this, and so he claims that "most Austrian economists" -- unnamed -- reject "the hedonic CPI quality adjustments criticized as a distortion of the real cost of living by most Austrian economists." Most Austrian economists are skeptical about the concept of indexing altogether. My point in my article was this: the CPI does not reflect all kinds of crucially important things. The statisticians do their best to account for quality improvements, but they fail. This was the thesis of my article, and my critic did not understand this central fact.
Warning: if you ever send an email to someone who has had an article published, and you have never had an article published, it is best to begin with a clear understanding of what the article says. Does this make sense?
I will say this of "most Austrian economists": they perceive that free market competition and innovation lead to quality improvements. They see this from introspection. They have memories of changes that have made their lives better. They may even collect old items, such as typewriters. They no longer use these items, because these items are obsolete. I do not call this the "hedonic calculation effect." I call it the buggy-whip effect. Anyone who is unaware of the fact that buggy whips are obsolete is probably Amish. But, then again, he does not read my articles online.
CONSERVATIVE PUBLISHERS IN 1946
Next, my critic says:
The lack of conservative publishing outlets probably was a reflection of the steady increase in incomes from 1946-1970, and the fact that the country was much less polarized. Especially since at that time foreign policy was believed to be mostly non-partisan, and we were only a few years into the culture wars, it just wasn't that important who won elections, so there was little interest in alternate sources of information.
Let's analyze this. I said there were three conservative book publishing companies in 1946: Regnery, Devin-Adair, and Caxton, in descending influence. This, he says, was due to the lack of wealth in 1946. This may come as a shock to my critic: there were hundreds of mainstream, liberal book publishers in 1946. My point was this: conservatives had no access to these publishing houses. This had nothing to do with the poverty of America, which was the richest nation on earth in 1946. It had to do with ideological censorship and the fact that we had no publishers. Also, "it just wasn't that important who won elections, so there was little interest in alternate sources of information" in 1946.
My critic is unaware of the election of 1946, in which Republicans recaptured both houses of Congress by means of the greatest slogan in the history of American politics: "Had enough?" In two words, Republicans captured the spirit of the immediate post-war electorate. Republicans had been in a helpless minority since 1933. They swept out the Democrats. That was the 80th Congress. President Truman often referred to it as "the idiot Congress." Nevertheless, book publishers blocked the publication of conservative books.
In short, my critic has invented a fantasy historical world in order to beat me up with his fantasies.
EDUCATION
Then it is on to education.
Private education may be better, but it's also much more expensive, pretty much out of reach for people in the lower half of incomes. Probably because public education is so much worse. Christian values may be part of the learning environment in some private schools, but, for those values, parents stuck with the public schools are out of luck.
Again, he lives in a fantasy world of his own creation. The Khan Academy educates 26 million registered students from all over the world. The curriculum is free. It is online. It is based on YouTube videos. Most families in America's inner cities have at least one cell phone. Thus, their children can get a great education free of charge. If children in Outer Mongolia can get a free education with the Khan Academy, some kid in the inner city can, too.
He says that public education is terrible. So do I. This is why I wrote this in my article: "If I think back to what it was like to live in 1970, and I leave out anything controlled by government, there are only a few areas in my life where I would not regard a return to 1970 as a disaster." But my critic has a problem: he is unable to understand what he reads.
Again, if you plan to send a corrective email to some ill-informed author who had his article published on a popular website, you should read what the author wrote before you send your email.
NON-MARKET PHENOMENA
Then he presents his attempt at a coup de grâce. "You didn't address the, in my opinion, most significant difference. Before the late 1960's, there was much less of the lawlessness, violence, hostility, and vulgarity in society that we take for granted today." Quite true. But these are not generally market phenomena. They are social phenomena.
My article was on the Bureau of Labor Statistics. If my critic thinks that the so-called hedonic (buggy whip) adjustments are questionable, how would he have the BLS to factor in non-market phenomena that leave no statistical traces in market prices?
My critic lives in a fantasy world called the good old days. I close with the observation of libertarian humorist P. J. O'Rourke: "When you hear about the good old days, think 'dentistry.'"
CONCLUSION
I suggest that people living in the good old days, when things were so much better economically, should keep their opinions to themselves, in order to avoid snickering behind their backs. But those who refuse to take my advice should take this advice: don't send a critical email to someone who prefers the present. Send a letter with a stamp on it.
Or, as I would modify O'Rourke: "When you hear about the good old days, think 'Post Office.'"
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