Economics

"Look at home to find the efficiency gains from recent technological innovation"

John Kay makes an argument that I've seen elsewhere, but he does it exceptionally well:

But the technological advances of the past decade seem to have increased the efficiency of households, rather than the efficiency of businesses, to an unusual extent. An ereader in the pocket replaces a roomful of books, and all the world’s music is streamed to my computer. We look at aggregate statistics and worry about the slowdown in growth and productivity. But the evidence of our eyes seems to tell a different story.


"Is shale dead? Not by a long shot as efficiency improves"

Very encouraging. (Unless you belong to OPEC.)

Since oil prices began falling, most shale producers have responded by embracing hard times, working to make their operations more efficient, renegotiating contracts with service companies (such as Halliburton) and, most significant, cutting production costs and spending on new wells.

Instead of slowing in the face of low oil prices, the rate of innovation seems to be accelerating.


"What Causes Income Inequality?"

Guess. Go ahead, guess.

Could it be that progressive policies intended to reduce income inequality actually cause it to increase? Quite likely, yes. The reason has to do with the effect of these policies on the low end of the income distribution. The government doesn’t count the distribution of in-kind benefits as income—and means-tested handouts create incentives for recipients to keep their measured incomes low. Further, where higher minimum wages—another progressive agenda item—cause higher unemployment, we see even more zero-income earners. Having lots of low-earners or zero-earners doesn’t help reduce inequality. Meanwhile, at the high end of the income distribution, taking money from high earners through higher marginal tax rates is not counted in official statistics as a cut in income—which means that income inequality again doesn’t shrink.

(To be clear, progressive policies are far from the only cause. But that they contribute, even a little, seemingly would shock most Liberals.)


Precisely correct

Kyle Smith, reviewing  Ronald Bailey's new book, The End of Doom: Environmental Renewal in the Twenty-first Century:

Environmentalist groups are, of course, in the same business as the folks who brought you the “Saw” movies. Their fundraising depends on it, and the media rarely go back to fact-check past predictions, instead blustering ahead with the next dire warning.

Bailey doesn’t claim that global challenges simply resolve themselves — although, as we have seen, some scares were fictitious, based on junk science to begin with.

The doomsayers simply never account for the role of human cooperation and ingenuity in confronting challenges. . . .

So will global warming, a much more complicated issue than CFCs, be resolved by cooperation or ingenuity? Ask yourself which science has seen more breakthroughs in the last few decades — political science or technology.

Related: Matt Ridley, "The Green Scare Problem".

Also related: Jonathan V. Last, "Remember Ebola?"


"Market Failure and Analytical Failure"

Arnold Kling, with yet another terrific post. This one is on "the analytical gap between the theory of market failure and actual policy". His example is housing policy:

From the standpoint of the theory of market failure, the subsidize-demand, restrict-supply pattern almost never makes sense. If there is a market failure that results in under-production of a good, then it makes sense to subsidize both demand and supply. If the market failure results in over-production, then it makes sense to restrain both demand and supply. Subsidies for demand and restrictions on supply inherently work at cross purposes.

But, hey, who minds cross purposes when there is graft to get and there are interest groups to pay off?

Related: "Is Market Failure a Sufficient Condition for Government Intervention?"


A Potemkin Village, updated

Theodore Dalrymple writes a moving account of visiting, 25 years ago, Pyongyang Department Store Number 1.

But this is no joke, and the humiliation it visits upon the people who take part in it, far from being a drawback, is an essential benefit to the power; for slaves who must participate in their own enslavement by signalling to others the happiness of their condition are so humiliated that they are unlikely to rebel.

Link via Ed Driscoll, posting at Instapundit.

Very much related: Glenn Reynolds briefly describes why "Free markets automatically create and transmit negative information, while socialism hides it."

. . . markets deliver the bad news whether you want to hear it or not, but delivering the bad news is not a sign of failure, it is a characteristic of systems that work. When you stub your toe, the neurons in between your foot and your head don’t try to figure out ways not to send the news to your brain. If they did, you’d trip a lot more often. Likewise, in a market, bad decisions show up pretty rapidly: Build a car that nobody wants, and you’re stuck with a bunch of expensive unsold cars; invest in new technologies that don’t work, and you lose a lot of money and have nothing to show for it. These painful consequences mean that people are pretty careful in their investments, at least so long as they’re investing their own money.

Bureaucrats in government do  the opposite, trying to keep their bosses from discovering their mistakes.

And Glenn links to this with the wisecrack, "The story of socialism in one Bernie Sanders T-Shirt".