Sunday, August 21, 2011

Stigler 'n' me

Again, recently I said this:

Keynes said, "It is astonishing what foolish things one can temporarily believe if one thinks too long alone." It is true, to be sure. But it is equally true that one may think foolish things because one thinks too much in the company of others, and the meme spreads like measles, spreads like the plague.

At Freakonomics, The Beekeeper Dilemma links to Steven N.S. Cheung's “The Fable of the Bees: An Economic Investigation,” a 1973 paper (PDF). In that paper, Cheung quotes George Stigler:

What I said... But not in 1973.

In 1973, I was still political.

In 1973, the Vice President resigned on account of criminal activity. The President was appointing a new Vice President, who would before long pardon the President, after the President resigned in the face of almost certain impeachment and removal from office.

In 1973, I was getting ready to write stuff like this:

Look at that: I left an "e" off "committee". Never noticed it before!

In 1973, you would buy sheets of rub-on lettering, position a sheet over your unfinished, typewritten remarks, and rub a pencil back-and-forth fast over a letter to transfer it onto your paper.

Those were the days.

And look at what I wrote:

No one has any money, but there is just as much money in circulation as there ever was. Where has it all gone?

Who knew? Not me. In 1973 it was still three or four years before I would finally get interested in economics. When I did get interested, one of the first things I found out is that there is *not* "just as much money in circulation as there ever was." There is not.

How much money is there in circulation? Depends how you figure it. If you figure it like an economist, you look at the quantity of money compared to output valued at constant prices. 1973 prices, say. And looking at it that way, there is a lot more money in circulation than there used to be, compared to what we buy in a year.

But if you figure it my way, you look at the quantity of money compared to output valued at the prices we actually had to pay to buy it. Current prices. And looking at it my way, there is a lot less money in circulation than there used to be.

I was wrong in 1973. Everyone else is wrong today. Gee, I don't believe I have the nerve to say that.

And look at what I wrote:

Economic crisis should be political crisis.

Ha! Today, I always say you can't solve economic problems with political solutions. And you can't. All you can do is change the political structure. That is a dangerous thing to do. And it still doesn't solve the economic problems.

The Freakonomics honeybee post reports:

There are now indications that colony collapse, the current plague of the industry, may result from too-frequent moves of hives and the resulting greater exposure to more varieties of pathogens.

Evolution, I think.

The economy has evolved to the point that it demands move-the-hive beekeeping. But move-the-hive beekeeping is incompatible with bee survival. So, survival of the fittest, most of the bees-that-move will die off. Maybe all of them. That's evolution.

But maybe there are limits on how much we should let the economy change our lives.

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