Pete Leeson On The Airwaves

Pete Leeson is one of my favorite young economists, and probably the brightest star of the latest generation of Austrian school economists.  He’s been AWOL from The Coordination Problem for a bit, but is back with a post on anarchy in Somalia.

Pete Boettke also links to a video on some of the work which Leeson has done lately (including piracy, ordeals, gypsies, and trial by battle).  What ties it all together is, as Leeson points out, individuals finding ways of coping with conflict when a State is incapable, unwilling, or simply not available to enforce its rulings.


The Costs Of Limiting Terrorism

Bruce Schneier has a post on the topic, linking to a study of Islamic terrorism post-9/11.

I follow the point and agree that the government has taken things rather far.  Treating Islamic terrorism as a war-fighting exercise, I would argue, worked:  as the article authors noted, Al Queda was not responsible for any attacks inside the continental United States since that point.  I don’t believe that many of the onerous regulations—especially regarding air travel—have done much, if anything, to achieve this state of affairs; rather, dismantling the political and funding sources knocked out their capability to engage in warfare.

I also think that it’s time to start scaling these regulations back.  Get rid of the TSA, scale down DHS, loosen airline restrictions, and stop treating every passenger as though he’s a terrorist in waiting.

One last quick point (seeing as how this is coming out more as a set of staccato bursts than a formulated thesis…) is that I’m glad that we didn’t need to deal with an organization which had resources, capabilities, and wasn’t willing to hobble its capabilities by focusing on silly targets.  Al Queda focused so much on airlines—and other symbols of modernity—to the exclusion of its ability to sow chaos.  An organization with their capabilities, circa 2001, could have caused a lot more damage by engaging in IRA or PLO-style tactics:  bombing cafes, nightclubs, malls, sporting events, etc.

First, Do No (More) Harm

Senator Ron Johnson wants a moratorium on new regulations until unemployment reaches 7.7%.  I want to go a lot further and begin dismantling regulations wholesale, forcing all regulations to be sunset within 4 years and requiring an act of Congress to renew any particular regulation.  Unfortunately, over the past few decades, Congress has abrogated its authority and delegated much of its rulemaking process to the executive branch.  Congress should be drafting legislation and rules, not the various departments; their task is to enforce the rules.  Getting this upside-down situation flipped back up should be a high priority, and given the sheer bulk of regulation out there, forcing it all to go before a vote every few years would put an absolute limit on the amount of garbage that can pile up.

Calculate The Scam

Political Calculations has a tool to figure out the rate of return for Social Security based on a few key statistics.  Considering that the Social Security Administration estimates a lifetime payout of 78% of payments for people under 30, the high-end estimate returned sounds reasonable (noting that the tool calculates _rate_ of return, not _total_ return).  In any event, you can see just how much more valuable something as simple as investing in an inflation-protected bond would be in comparison to the Social Security scam.

In The Papers: Human Action

Gene Callahan has a relatively old paper that I just recently found, entitled Oakeshott and Mises on Understanding Human Action.


Although Michael Oakeshott and Ludwig von Mises were arguably two of the more 
profound theorists of human activity in the twentieth century, there has been remarkably 
little comparative study of their ideas. That is especially surprising when one considers 
how compatible those ideas were in a number of areas, such as the a priori nature of the 
postulates of human action, the nature of historical thought, the  fundamental dichotomy 
between explaining not- intelligent goings-on and intelligent activity, the ambiguous 
character of the statistical social sciences, and the importance of meaning in theorizing 
human conduct. Comparing their formulations of common concepts permits new, 
illuminating perspectives into each thinker's work.
Despite such compatibility, their ideas also contain interesting and important differences: 
on the modality or lack thereof in human thought, the nature of rationality and its 
relationship to tradition, and the character of economics as a science. This paper will 
explore both the similarities and differences between the ideas of Mises and Oakeshott. 
Because a full consideration of all of the areas mentioned above would likely result in a 
book rather than a paper, I will restrict myself here to examining their views on the 
general principles of human action and how those principles relate to the character of the 
social sciences

Callahan starts by elaborating upon Ludwig von Mises’s idea of praxeology:  from the fact that humans engage in purposeful activity, we may derive a number of things (1).  Mises spent much of his career diving deep into the science of human action—science in the old European sense of an “organized body of knowledge” rather than the modern notion of a quantitative natural science.  Although Oakeshott never directly engaged with Mises’s ideas, Callahan argues that the two share a number of similarities.  For example, both find vital the notion that actors understand their own circumstances and assign their own meaning to these circumstances.  A person acts because something “as he understands it, must appear to be unsatisfactory to him.”  In addition, there is an expectation for both that this action will improve the individual’s circumstances (2).

For both philosophers, values are not “given” and certainly neither believed that human action was nothing more than maximization subject to constraints (3).  Beyond that, though, there are certain strands which are compatible even though the two were not in contact.  Callahan argues that Mises understands what praxeology implies, whereas Oakeshott “puts them on the broader philosophical basis” (4).  Neither had a required ontology regarding how postulates come to be—they could come from G-d, biological evolution, or even random guesses (4).  What is important simply is that they exist, not necessarily how we get there.

What’s interesting is that Callahan argues that Mises was a methodological dualist:  Mises subscribed to the idea that intelligent action needs completely different theories compared to “non-intelligent goings-on” and that these are “fundamentally different activities” (5).  Oakeshott seems a little fuzzier, but you could make an argument that his thoughts are compatible with that notion as well.  Both believed, as Nardin wrote on Oakeshott, that “the social sciences, like the natural sciences, are explanatory, not prescriptive” (7).  In other words, we may use the social sciences to explain how people behave, not necessarily how people should behave.  This is where normative individualism comes into play.  Both also reject the notion of social holism, placing them squarely in the methodological individualist tradition (7-8).

I’ll end this with a quotation from Mises which I like a lot and wish would get broadcast in every econometrics course:

If a statistician determines that a rise of 10 per cent in the supply of potatoes in Atlantis at a definite time was followed by a fall of 8 per cent in the price, he does not establish anything about what happened or may happen with a change in the supply of potatoes in another country or at another time. He has not “measured” the “elasticity of demand” of potatoes. He has established a unique and individual historical fact. No intelligent man can doubt that the behavior of men with regard to potatoes, and every other commodity is variable. Different individuals value the same things in a different way, and valuations change with the same individuals with changing conditions. (11)