Friday, May 02, 2008

Here's another form of anti-intellectualism

Yesterday, as is typical on Thursdays, I participated in Backstory on Eric Von's show. I was frustrated - as I often am - about the fiercely held economic ignorance of certain of my co-panelists. They haven't studied the subject and they are proud of it. For guys like Dave Berkman, the idea that the GOP and free markets have ruined the country is a matter of faith. Yesterday I heard that free markets do nothing for anyone except me and my rich cronies. (Note to cronies: I'm working hard for you here. Shake a little my way.)

One of the things that we constantly hear is that the average family can't get ahead. Real wages are stagnant. This has always struck me as about a third of a truth. We can find studies that claim this but many economists have come to believe that the CPI overstates inflation (because the market basket of goods doesn't accurately reflect what people buy) and, although there have been improvements, use of the CPI to generate constant dollars significantly understates wage growth over time.

There is some corroboration for that in what we see around us. Measures of consumption and product quality show substantial increases over time. Although housing is expensive and we have recently seen the subprime snafu, the percentage of households owning their own homes keeps rising and houses themselves keep getting bigger. College education is expensive but more and more people are going.

Having said that, it does seem that the divide between skilled and unskilled labor has gotten larger. When I was in college, the financial return to a bachelor's degree was rather modest. It has gotten much larger. It does seem that it is more important than it used to be that you get an education or otherwise develop marketable skills.

It also seems clear that, particularly over the past few years, compensation increases have increasingly gone to health care benefits. While some of the latter is certainly attributable to the aging nature of the workforce (if you have older employees, you buy more health care), that is not a problem that is going to go away soon.

Finally, there has certainly been an increase in income inequality in the sense of those at the very top of the income distribution gaining more than those below them, although that this comes "at the expense of" those below is certainly not self evident.

These things are worth worrying about, but the assumption that they can be addressed by things like higher taxes, more social welfare, heavy regulation and unionization doesn't prove itself. Europe has all of these things and folks there are complaining about - stagnant wages.

On yesterday's show, certain of my colleagues seemed to suggest that the solution to high gas prices was for the oil companies to make less money. This seems exactly wrong. We tried a windfall profit tax in 1980. It brought in about 25% of what it was expected to and depressed oil production. ExxonMobil's recently announced net profit margin is a bit under 10%. That's good but hardly seems excessive. If we want to encourage investment in new sources of oil and in alternative sources of energy, there has to be prospects for return to capital deployed in pursuit of those things. As the price of oil goes up, opportunities to develop alternatives or to sell things like hybrid vehicles will present themselves.

We could, of course, tax away those profits and have the government seek these alternatives, but the market - disciplined by consumer demand - is far more likely to develop the best alternatives than legislators who are disciplined by rent seekers. Put the solution in the hands of the government and you get ethanol - a product that is chosen not because consumers demand it but because those who want to supply it are politically powerful.

25 comments:

James said...

One of the bigger things that people are going to have to come to grips with is post secondary education. The days of graduating high school and going to the local factory are gone due to the globalization of the economy. If you are counting on an employer giving you a job and training you to do fairly simple repetitive tasks, you are now part of a much larger pool of workers. Kids out of high school need to get some sort of education whether that be college, tech schools for trades (very lucrative), or other specialty that teaches you skills to set yourself apart of the average person with a high school diploma.

John McAdams said...

I'm always amused at the leftists who complain that conservatives are "anti-science" if we believe in Intelligent Design, or oppose killing human embryos for research.

But economic science is something they blow off.

The also blow off policy research when it doesn't turn out their way.

Anonymous said...

"I'm always amused at the leftists who complain that conservatives are 'anti-science' if we believe in Intelligent Design, or oppose killing human embryos for research."

Mcadams, I don't have any problem with people of your ilk opposing embryonic stem cell research, but I do think you folks are hypocritic because you invest no energy in opposing IVF.

In the past 10 years perhaps 24-26 fertilized eggs destined for the medical waste incinerator have been used for research in Madison. In that same period of time, perhaps 10,000 fertilized eggs have been discarded in IVF clinics in our state.

What does the allegedly "pro-life" movement do in the interim? It wages total war against the research and turns a blind eye and deaf ear toward the IVF clinics.


That's why many of us find many of you folks to be total hypocrites!

The Wisconsin Catholic Conference has produced a video tape on embryonic stem cell research which is now available on line for your amusement, and it's a hoot, what with referring to intercourse as "the marital act" and perhaps a half-sentence (out of roughly 14 minutes) on IVF. It helps reinforce how out of step the organized church is with how Catholics live their lives in Wisconsin and across the nation.

Dad29 said...

It would be interesting to run a study which showed a relationship between 'total cost of taxes and regulations' vs. 'net personal after-tax income'.

In other words, at what point does the total tax/reg cost begin to either stall or erode after-tax personal income?

And for the class warriors you work with, it might be useful to break down those results by income quintiles.

One suspects that the tax/reg impairments hit the lower 3 quints a lot sooner than it hits the upper 2 quints.

illusory tenant said...

referring to intercourse as "the marital act"

What do a bunch of confirmed bachelors know.

Incidentally, "believing" in "intelligent design" does not necessarily lead to being "anti-science."

One may hammer away at "believing" in ID on the internets with one's 4.8GHz notebook connected to the WiFi station in the doctor's office while waiting for a flu shot developed according to evolutionary principles.

In fact, many do.

Brian said...

Whew, I think this post is going to get a lot of responses.

Quick quibble with one of your points, Prof. Esenberg. The rate of return on a college degree has been declining in recent years. I'm fairly certain that I read that the gap even between a four year degree and no college education was closing. This seems to me to be a product of the complete dumbing down of higher education ... not only do students in most higher ed programs not learn any useful technical skills, but they do not even "learn how to learn" as some would say.

The "rate of return" is going to dampen more and more over the years as the costs of education become nearly insurmountable: it's just not worth it taking out a mortgage-sized loan on a negative interest-appreciating asset so that you'll earn more when you're 40 years old. People also have to remember that not only are loans a cost in and of themselves, they also represent an opportunity cost.

If a Marquette education (mostly worthless based on my almost retired experience, sorry guys) costs about $150,000, the student could on average pay $100,000 after grants/scholarships (I don't know what the average is for an MU student). Let's say that the interest payment in loans is $50,000 over 10 years (an entirely reasonable assumption). A student would end up paying $150,000 or $300,000 in opportunity costs for taking a "risk" of that may potentially up your lifetime earnings by $500,000-$750,000.

In the next decade or so, is this going to sound like a worthy investment to a student of an average middle income family? I don't really think so.

Only other thing: McAdams has a wonderful point that's driven me crazy; liberals are entirely anti-science. You can look at it when it comes to economics and you can certainly look at it when it comes to embryonic stem cell research. No cures for embryonic research despite hundreds of millions funneled to research as opposed to the dozens of cures through adult stem cell research, but the libs just can't wait to to pry those little embryos apart and see what's inside all for "science."

Anonymous said...

Is the Catholic Church out of step with its members or are its members out of step with the Catholic Church?

Perhaps religion ought not to adapt to changes in culture.

Anonymous said...

"For guys like Dave Berkman, the idea that the GOP and free markets have ruined the country is a matter of faith. Yesterday I heard that free markets do nothing for anyone except me and my rich cronies."

It seems to me that China has had a change of heart regarding free markets. (Now only if they would change goverment)

I think if the advocates of inequality, oppression and tyranny (I think they call themselves progressives) would simply talk to people from what are thought to be successful socialist countries, they would learn that the people are very unhappy with what they live under.

I think the better debate for the US would be if few large corporations are better then thousands of small businesses that they've replaced.

Anonymous said...

Brian is way, way, waaaaaaay off the mark!

"No cures for embryonic research despite hundreds of millions funneled to research as opposed to the dozens of cures through adult stem cell research, but the libs just can't wait to to pry those little embryos apart and see what's inside all for 'science.'"

Dear Brian, the amount of money spent to date on embroyonic stem cell research is miniscule. Part of the reason is because Bush kow-towed to the know-nothing wingnuts (like you, apparently).

You compare it with adult stem cell research, which has been conducted for more than 30 years.
There's a reason that Time Magazine put Jamie Thomson on the cover a decade ago and that it has just named him one of the 100 most influential people in the world in 2008.

If the couple dozen frozen eggs hadn't been used in Madison to create stem cell lines, those eggs would have ended up in the medical waste incinerator. And that's the point -- you nuts sit on your hands when thousands of these little people are tortured to death, yet you turn apopletic (and type garbage here) over this promisng research. That's why you -- and others of your ilk -- are phony-baloney hypocrites!

Brian said...

"anonymous" discredits himself immediately with his Bush Derangement Syndrome commentary.

Federal spending on stem cell research is miniscule. State research and private research is mammoth. Which is why it's so tragic and comical at the same time that so much has delivered so little.

Time to do some research. And maybe see a psychiatrist about your BDS.

Anonymous said...

Actually, there's lots of evidence to indicate that the core CPI likely UNDER-states inflation, rather than overstating it. As Elizabeth Spiers says in the latest issue of Fortune:

'One of my favorite 91-percenters, Fusion IQ's Barry Ritholtz, puts it amusingly: "If you take everything out of the CPI basket that's going up in price, sure, you have no inflation!" Which is sort of like suggesting that if you take away insurgent fighting and the large U.S. military presence, there's no war in Iraq. Not that I want to give anyone in the Oval Office ideas for creative rhetorical devices.'

Also: Sorry, Prof. McAdams. It's not "economic science" that guys like me (who actually studied the discipline) are blowing off. It is, to be more precise, "economics," mainly as limited by the field's own more than occasional lack of science, or its frequent misinterpretation by true believers in the great river of ever-flowing capitalism; e.g., Milton Friedman's market-based ideas work swell if you believe in consumer access to perfect information, which unfortunately doesn't exist in the real world, where institutions actually work very hard to disinform and fuzz things up.

Badly conducted science isn't any better than "intelligent" design or lousy public policy research. Deify stochastics so our smart-bomb trajectories are presumed humanely accurate, but reject the great bulk of research in climatology so you can argue to voters that trees cause pollution? That's a conservative m.o., man.

Anonymous said...

Actually, there's lots of evidence to indicate that the core CPI likely UNDER-states inflation, rather than overstating it. As Elizabeth Spiers says in the latest issue of Fortune:

'One of my favorite 91-percenters, Fusion IQ's Barry Ritholtz, puts it amusingly: "If you take everything out of the CPI basket that's going up in price, sure, you have no inflation!" Which is sort of like suggesting that if you take away insurgent fighting and the large U.S. military presence, there's no war in Iraq. Not that I want to give anyone in the Oval Office ideas for creative rhetorical devices.'

Also: Sorry, Prof. McAdams. It's not "economic science" that guys like me (who actually studied the discipline) are blowing off. It is, to be more precise, "economics," mainly as limited by the field's own more than occasional lack of science, or its frequent misinterpretation by true believers in the great river of ever-flowing capitalism; e.g., Milton Friedman's market-based ideas work swell if you believe in consumer access to perfect information, which unfortunately doesn't exist in the real world, where institutions actually work very hard to disinform and fuzz things up.

Badly conducted science isn't any better than "intelligent" design or lousy public policy research. Deify stochastics so our smart-bomb trajectories are presumed humanely accurate, but reject the great bulk of research in climatology so you can argue to voters that trees cause pollution? That's a conservative m.o., man.

Anonymous said...

"Federal spending on stem cell research is miniscule. State research and private research is mammoth. Which is why it's so tragic and comical at the same time that so much has delivered so little."

Brian again demonstrates his gross ignorance. Most basic scientific research in the United States is performed at the university level, which is a marked reversal from the way research was conducted 50 years ago.

The patentable inventions are made in university research labs (using NIH or similar federal funds) and then private industry figures out how to turn the discovery into something useful. Because of the expense (and the growing role of federal funding), most corporations have shut down their research labs. Ever hear of the Dole-Bayh Act, Brian?

President Bush hopped into the sack with the anti-technology Luddites early in his first term. (It's not as if Pres. Clinton was a tower of strength on this issue either, it should be noted).

As a result, almost no federal money has been spent on embryonic stem cell research. The private sector component has been very small as well. (Brian, if there was so much money for embryonic stem cell research rolling around, why did folks in California find it necessary to conduct the $2 billion referendum? Remember that stream of money is just beginning to flow some two years after the measure passed.)

It's clear from polling done in Wisconsin and other states that something on the order of 60% of the American populace supports embronic stem cell research using fertilized eggs which will otherwide be discarded. And it doesn't matter who is elected President as all three remaining candidates have each voted twice to overturn the ill-advised Bush limitations. Regardless of who is elected, federal policy will change appropriately on January 21, 2009.

Anonymous said...

Rick

You make a great point about the ignorance of markets. I'm in the Urban Studies Masters Degree Program at UWM, which principally deals with the areas where people don't benefit from markets (labor, housing, healthcare, education, etc.)-in Urban Studies speak-"Where markets fail", but perhaps more suitably "what to do with people who do not benefit from markets, often due to the fact that they do not participate in the markets". Regardless of how it is defined, however, it is very telling that the Urban Studies curriculum DOES NOT INCLUDE A SINGLE ECONOMICS CLASS, either as a requirement or even as a pre-requisite.

Essentially, this results in severely uninformed discussions of people trying to solve complex social problems without even having a BASIC understanding of supply, demand, and equilibrium.

Great blog!

Publius said...

Prof. Esenberg;
The belief is that the oil companies must be “gouging” us because they are making profits while we are being swindled at the pumps.

If we consider the oil companies as capitalists, they are allowed to make the profits dictated by the markets.

Baby-Boomers tend to feel they are the first of many generations not to do “as well” as their parents, but it is tough to measure what “as well” is.

Infant mortality/morbidity rates and general health and welfare of the U.S. are far better overall than even 100 years ago.

Yet, people feel they are not doing as well as they should because of THEM. Whoever THEM is.

I tend to believe Richard J. Herrnstein and Charles Murray’s The Bell Curve on the possibility that society may diverge into increasingly differentiated groups. And actions must be taken to stop this.

Economics holds some of the keys to measuring wellbeing, but as previously stated it is not the sole measure of Life.

If one uses another measure of wellbeing, Greenbay Packer Games, the story is different. Fifty years ago in 1958, only those at the smaller Lambeau or willing to squint at small monochrome television boxes saw the games. Now millions have the pleasure and I see them 1,800 miles away in living color on a viewing device as large as my kitchen table was when growing up.

Citizens must see beyond the tripe they are being fed, IF they are to see where they want to go.

I do not know the full answer.

But, a trip without a Destination is a wandering meander.

Brian said...

anonymous 10:49 seems to have completely missed the boat. STATE RUN universities are inherently STATE projects. So, when Universities like Madison get dump trucks worth of cash to study embryonic stem cell research, research is being conducted by the STATE.

Did you have an actual point or just a desire to bitch about George Bush?

Also, for the conspiracy nut raving about inflation, I suggest you review this excellent article from January on the vast fed-wing conspiracy to prevent true knowledge about inflation from seeing the light of day:

http://article.nationalreview.com/?q=YzM3M2QxOWE4YzU3Y2Q2ZTRhN2RlOTYxMjZmMDVjYWQ=

Brian said...

Try this.

Anonymous said...

"anonymous 10:49 seems to have completely missed the boat. STATE RUN universities are inherently STATE projects. So, when Universities like Madison get dump trucks worth of cash to study embryonic stem cell research, research is being conducted by the STATE."

Earth to Brian! Earth to Brian! The UW doesn't get ANY state money to conduct embryonic stem cell research. And what embryonic stem cell research is conducted on the non-approved lines is conducted with very limited PRIVATE funding and cannot be done in state-owned buildings!

You make a lot of assumptions about something you know absolutely nothing about! With every post you get further and further from the truth.

I voted for George W. Bush in 2000, but his idiotic policy on stem cell research drove me away in 2004. Thank God for John McCain, who will restore some sanity in Washington on this issue in January, 2009!

Brian said...

Wait a minute!

So one minute it's "Most basic scientific research in the United States is performed at the university level"

and the next minute it's

"The UW doesn't get ANY state money to conduct embryonic stem cell research"

Well, which is it?

Given that, uh, Madison has a program called the Wisconsin Stem Cell Research Program, I'd say that, uh, they are doing stem cell research.

From their very homepage:

Beginning in 1995 with the first successful culturing of embryonic stem cells from non-human primates, and later with the isolation of the world’s first human embryonic stem cells, the University of Wisconsin–Madison has been a leader in the companion fields of stem cell research and regenerative medicine.

Maybe they're just kidding around!

For a recentexample of their work:

For the first time, scientists have used human embryonic stem cells to predict the toxic effects of drugs and provide chemical clues to diagnosing disease.

You'll notice the ending:

The new study was supported in part by grants from the Draper Technology Innovation Fund and the UW-Madison Graduate School.

The UW-Madison Graduate School. You know, like, the University of Wisconsin Graduate School.

****

Have you seen your doctor about your BDS? I'm surprised the doctors at the funny farm are letting you near a computer.

Anonymous said...

Every time you pound the keyboard, Brian, you dig your hole deeper and deeper and your ignorance becomes more pronounced.

Is embryonic stem cell research being done on the Madison campus? Well -- duh! -- of course it is being done. This is where the scientific discipline was invented!

What is being done on state property by state employees is done on the approved federal lines -- you know, the lines that were created before President Bush restricted federal funding to the lines in existence on the day he issued his edict.

The bottom line is that it isn't legal to use federal money, or UW property, to conduct research on anything except these old lines. (This changes, of course, on 1-21-2009.)

You started out by aruging that "boatloads" of federal money had been spent on embryonic stem cell research and that no good had come of it. Now you link to a UW press release that demonstrates clearly that something good IS coming out of it!

Which way is it, "Brain"?

My problem with the President is that he listened to the wingnuts on this issue -- the same people that apparently have no problem with IVF. If you don't oppose IVF, you condone the wholesale descruction of thousands of fertilized eggs all across the country every year. If they be "little people" when a couple dozen are used over a decade to create stem cell lines, where is the outrage when the number of little "lives lost" is 100 times as great over the same period of time with IVF? This is the rank hypocrisy of the so-called "pro-life movement" and of YOU, dear "Brain"!

Brian said...

I hope this will be my last response to the absolutely brainless moron posting under "anonymous." It takes real courage to post under anonymity, which is why Lefties seem to thrive on it. If instead of acting like an absolute fool you actually read what I wrote, you'd find that I said "Federal spending on stem cell research is miniscule." Nowhere did I actually say ""boatloads" of federal money had been spent on embryonic stem cell research".

It amazes me how every single conversation with any liberal whatsoever devolves into an epistemological pissing match. Again, embryonic stem cell research has brought about little or no results, compared with the dozens and dozens of cures from adult stem cell research. Idiots like "anonymous" want to get into pissing matches about whether State government constitutes State government rather than debate real evidence. If I really cared, I could go back and document each twist in his argument. Universities are the center of research or they aren't. The University of Wisconsin is conducting research or it isn't. It's hard to keep track. Ultimately, he just does not want to debate the real evidence about the merits of embryonic stem cell research.

Don't you guys have an ROTC facility to go protest or something?

Anonymous said...

Yesterday Brainless Brian typed: "Nowhere did I actually say ''boatloads' of federal money had been spent on embryonic stem cell research'".

Earlier he said the Wisconsin and other universities got "dump trucks worth of cash" to conduct stem cell research.

Well, Brainless, you finally got me -- you used "dump trucks" and I misquoted you and typed "boatloads." Let me apologize for this gargantuan error!

Congratulations -- after all your mindless rants the blind squirrel has finally found an acorn!

I'm confident that virtually all of the readers here can gauge your rank hypocrisy and many inconsistencies.

Brian said...

Yesterday Brainless Brian typed: "Nowhere did I actually say ''boatloads' of federal money had been spent on embryonic stem cell research'".

Earlier he said the Wisconsin and other universities got "dump trucks worth of cash" to conduct stem cell research.


For thte "anonymous" oldster, then, apparently:

Federal government = State of WI

And with that you officially concede the argument to me. Thanks for playing. Enjoy your pudding this morning with your meds.

Anonymous said...

Brian, you must be a "Densa" member. You typed "...embryonic stem cell research has brought about little or no results, compared with the dozens and dozens of cures from adult stem cell research."

The truth is that we're on the cusp of major medical advances from embryonic stem cell just a decade after the technology was invented in Madison, whether you and the other anti-technology Luddites have the intellectual honesty to admit it or not.

Case in point, this UW press release issued earlier today:

Invitrogen, WARF sign license agreement for human embryonic stem cells

May 8, 2008

Invitrogen Corp., a provider of essential life science technologies for research, production and diagnostics, and the Wisconsin Alumni Research Foundation (WARF), the private, nonprofit patenting and licensing organization for the University of Wisconsin-Madison, announced today (May 8) that they have signed a license for human embryonic stem cell (hESC) patents for the development of research tools. Under the terms of the agreement, Invitrogen will have the right to work with karyotypically normal hESCs to develop novel research and drug discovery tools.

"Invitrogen's goal is the development of research tools that enhance the ability of scientists to work with embryonic stem cells and to enhance the utility of these cells for research and drug discovery," says Joydeep Goswami, vice president, stem cells and regenerative medicine at Invitrogen. "Having the ability to work with karyotypically normal hESCs through our license with WARF allows us to develop better technologies for research, such as more defined media and engineered stem cell lines. This agreement is another step in our strategy of pursuing advances in the high-growth area of regenerative medicine."

"We are pleased to have a signed license with Invitrogen," says Carl Gulbrandsen, managing director of WARF. "Invitrogen's market penetration and knowledge of cell biology research tools will help support and nurture the growth of the burgeoning hES cell industry."

WARF officials note the licensing agreement with Invitrogen demonstrates that commercial interest in human embryonic stem cells remains strong. With this agreement, WARF now has completed 24 licensing agreements for stem cell technologies with 18 companies.

Invitrogen Corp. provides products and services that support academic and government research institutions and pharmaceutical and biotech companies worldwide in their efforts to improve the human condition. The company provides essential life science technologies for disease research, drug discovery and commercial bioproduction.

Invitrogen's own research and development efforts are focused on breakthrough innovation in all major areas of biological discovery including functional genomics, proteomics, stem cells, cell therapy and cell biology — placing Invitrogen's products in nearly every major laboratory in the world.

Founded in 1987, Invitrogen is headquartered in Carlsbad, Calif., and conducts business in more than 70 countries around the world. The company employs approximately 4,700 scientists and other professionals and had revenues of approximately $1.3 billion in 2007. For more information, visit http://www.invitrogen.com.

The Wisconsin Alumni Research Foundation supports world-class research at UW-Madison by protecting the intellectual property of university faculty, staff and students, and licensing inventions resulting from their work. WARF was established in 1925 as the world's first university-based technology transfer office.

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