War is Destruction Not Production

From Tyler Cowen:

Put aside Bob Higgs’s points about restricted consumption, Alexander Field has another angle:

Had trends persisted in the absence of war, employment, TFP, and labor productivity would all likely have been higher in 1942…housing construction was robust and growing in 1939, 1940, and 1941, and when the postwar housing boom emerged with full force in 1946, it took off from where it had been arrested in 1941. Since the failure of residential construction to revive fully was one of the major contributors to the persistence of low private investment spending during the Depression, its signs of revival in the years immediately preceding the war suggest that had peace continued, investment, output, and employment growth would have continued as the economy reapproached capacity.

…There continues to be a popular perception that war is beneficial to an economy, particularly if it does not lead to much physical damaged to the country prosecuting it. The U.S. experience during the Second World War is the typical poster child for this point of view. Detailed research into the effects of armed conflict, however, has usually produced more nuanced interpretations…In that spirit, the research reported in this chapter represents a revisionist approach to the analysis of the Second World War, although one that is not entirely unanticipated.

You can buy Field’s excellent book here and here is my previous post on the work. Here is Kling on Field, very useful.

You can't use scarce resources to blow things up and count that as wealth. Just another reason why GDP isn't the best measure of wealth.

Gross Downtime Product

In my two posts on Tyler Cowen's new ebook, The Great Stagnation, I described a concern (but not crisis) about the possibility of future economic growth. But perhaps even if we don't don't get more productive at work, we are getting more productive at play:

recent advances in technology are actually increasing per-hour productivity by much more than we realize. But then workers are absorbing those gains by goofing off more at their desks, spending their time on Facebook and surfing the web, and completing their tasks only marginally faster than they used to despite much greater productivity. Admit it: the typical white collar office worker under 35 is spending at least a quarter of his or her day on social networking, reading blogs and chatting with friends. Hours worked are shrinking much faster than hours “worked,” and we’re enjoying a lot more leisure time than is reflected in the data.

Maybe this is the solution to our money > time problem.

Takeaways from The Great Stagnation

As I described in an earlier post, I recently finished Tyler Cowen's ebook The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History,Got Sick, and Will (Eventually) Feel Better. You can read more at his blog Marginal Revolution. Here are my takeaways that didn't make it into the original post:

Things are still great, but paying off debt will be very difficult. In the past it's been useful to have a divided government, it's hard to pass bad laws. But now that we've set things into motion that need to be stopped (Social Security, Medicaid, Medicare, war), something needs to be done. Sadly, what our debt has done is actually encourage us to spend more (perceived price of government is down because it's all borrowed). The "low hanging fruit" mentioned in the subtitle is divided into three categories:

*Land: initially America had a lot cheap western and and easily accessible natural resources.

*Labor: in the beginnings of American education, there were huge gains to be had. Educating the brightest and hardest working can lead to huge innovation. Today, we educate everyone. The gains from and time needed to educate all will result in less gains.

*Technology: the technology created initially after the Industrial Revolution were more valuable than the inventions created later.

The difference the technologies that have been created recently is that they lead to a lot of private good, not public good. Think about how many spillover benefits there we to the invention of the printing press or running water. But most of the inventions recently, like smart phones and heart surgery, have seen the benefits centralized on the upper half of society.

The thesis only applies to the Western world and those that have already gone through industrialization. For the next century global growth will continue to surge under the "low hanging fruit" from the rest of the world. Hopefully by the time they are done we will be out of our innovative plateau (I'm hoping for teleportation).

One of the reasons innovation has slowed is because it has become more and more difficult for science to be done by amatuers (like for example Gregor Mendel and Thomas Edison).

The exception to this is the internet. From the accuracy of Wikipedia to the great things open source has created, the internet is the last place for smart nonprofessionals to leave their mark. But, as Cowen notes, the internet has not greatly increased GDP nor does it increase median wages. Though some claim it is worth at least a couple thousand dollars.

Cowen cites specific industries that he believes still have some "low hanging fruit" to be had: health care, education, financial, and government services. Each of these are full of inefficiency and often bad rule writing. Sadly, they are all also becoming bigger parts of our economy. Cowen wisely notes that as technology made large corporations possible, it also made big government possible. Could you imagine a welfare state without computers or even the printing press?

Here are his solutions to the stagnation: 1) shrink/improve government (easier said than done), improve science by making scientists rock stars (from the Onion), 2) look forward to and beware of the next big time of economic growth (after all the industrial revolution brought better technology in the form of medicine and weapons).

The Near Future of American Economic Growth

The inspiration for my series against self-verification was inspired by this final example of where I used to be wrong. A common theme of this blog is the recognition of just how rich we are. Whether you're an American, a high school teacher who's married to a social worker, a breakfast eater, a person with too many hobbies, or almost anyone who's been alive for the last 200 years, you're historically very rich. Along with that assumption, I've argued that economic growth will continue as it has since the Industrial Revolution. I'm less sure of that now.

If there was ever a person who could challenge such an important presupposition of mine it's Tyler Cowen. He's smart, well-read, and most of he's reasonable. He's also the only person with his own tag on my blog. Wikipedia (and his wife) describes him as a ""libertarian bargainer", a libertarian who's not so radical that he can't influence those in power. Tyler recently published a new short ebook, The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History,Got Sick, and Will (Eventually) Feel Better. Thanks to my friend with a Kindle, I was able to read it this weekend.

The thesis of the book is clear and the facts are to deny. Median income growth is down. The economic growth and technological innovation that began with the Industrial Revolution has slowed. From the late 19th century to the mid-20th century technological innovation changed the face of America. The use of fossil fuels and electricity, telegraph/telephone, radio, car, refrigerator, penicillin, light bulb, airplane, nuclear power, running water, and germ theory are many examples. Now compare those to the important inventions for last 75 years. Spaceflight, lasers, solar power, DNA/genome/stem cell discoveries, credit cards, heart surgery, cell phones, smaller better computers, and of course the internet. Although those are all very important, collectively they have made less of an impact on the human race.

It's the simplicity of his claim that makes it so believable. The world is not ending and is in fact is still getting better, just more slowly. Per his book's subtitle, he describes the problem as an issue of "low hanging fruit". The first set of inventions I described are fairly simple and more important compared to those in the second list. Finding out mold kills disease is much easier than how to successfully remove and replace a human heart. We've picked the easy inventions off the tree of innovation. The next ones will require more effort. Also, the benefit of the more recent innovations are also not as evenly spread as the earlier ones. The poor gain a lot from running water, light bulbs, and penicillin and very little from Google, smart phones, and heart surgery.

However the biggest problem with this new reality is what it means for debt and investing. Originally I was less worried about our government's debt because, like it has in the past, economic growth can help pay most of it off. If we're richer in the future, it's easier to pay off poor debt. Without even counting the Great Recession, if economic growth will continue to slow down, it will make paying those debts off much more difficult. Less economic growth also means less growth in the stock market. Which means less growth for retirement and savings accounts which can have important changes on how we invest.

But remember this is bad news, not tragic news. The world is still great and getting better. In many ways the irony of this ebook is that it is an ebook. The internet is the great shining hope for, as Tyler predicts, another spurt in economic growth. The book is an example of how good the great stagnation can be. Four dollars for a lesson on American economic growth doesn't add much to GDP, but it sure made a huge impact on my economic and political perspective. I highly recommended the book and for the author's personal words on the book I recommend the interviews from EconTalk, The American, and BloggingHeads.

The Story of Reason and Emotion

I recently took economist Steve Landsburg's blog, The Big Questions, off my blogroll out of protest for his harsh critisim of this story:



The criticism focused on the fact that although the speech was captivating, it had no specific evidence. Not only do I disagree with Mr. Landsburg's complaint, I think the that personal stories are an important part of any debate. A while back I posted on the balance between our reason and emotion. My conclusion was that both are important for decision making. Later I shared an example of how even our emotions can make the market more efficient and more accurate. Recently a friend reminded me of Tyler Cowen's TED Talk I shared a while back when I gave fictional support to my factual call to legalize drugs:



In this talk he affirms the idea that fiction is a powerful source of persuasion. He warns that stories can be overly simplified and used to mislead. Although I agree with Tyler's worry, I think stories are more than tricks for our rational brain. They're information for our emotions. If our logic and reason are conscious thought. Our emotion is unconscious thought. Both can be improved, just in different ways. Our emotional brain craves stories. This is why there is only short list of narrative possibilities. Tyler lists a few: a stranger comes to town, rags to riches, voyage and return, etc. This is shown beatifically in the ongoing video series Everything is a Remix. Part one is about music, part two is about stories:



Stories are useful ways to to condense information. Narratives are memory tools for our emotional brain. It is important to use stories as a way to learn and grow. This topic came up in my church last Sunday when the pastor talked about how of the three ways we interact with the world (reason, emotion, action), our emotion is the most underused in our understanding God. As someone who is overly in their head, I couldn't have agreed more. But as he explained the ideas in an intellectual way, I couldn't help but ask him how we could improve our feelings directly. My question led him to blog this:

I was stumped Sunday morning. Admittedly, I don’t like being stumped. There is a small part of me that wants to always have an answer for any question that someone can throw at me. But then reality hits you in the face, you get flustered and give nonsensical round about answers. I have to smile a little when this happens because really it is good to be humbled and reminded I am human. I’m nowhere as smart as I would like to be. I simply offer what I have learnt in my journey with Jesus.

I spent 45 minutes making an argument for how, as Christians, we can just focus on thinking the right things (orthodoxy) and doing the right things (orthopraxis) but that it is just as important to work on feeling the right things (orthopathos). I was trying to show my flock that God cares about our feelings, and wants to use and redeem our feelings. Then someone basically asked me in Q&A, “This church is very intellectual so how do we work on feeling the right things?" Good question. A very good question. I really should have been ready for this question because it is the question that is begging to be asked. But I didn’t have the foresight to expect it. There is something very ironic in trying to get people to work on their emotional health by giving them an intellectual case for it. Can you really “right think” people into “right feelings”? The short answer is “no.” But that is where you start when your church’s culture is to emphasize the mind. Nothing wrong with that. Some churches emphasize the mind, some emphasize actions, and some emphasize feelings. You hope that all churches seek some balance between those things at the same time.

But back to the question that stumped me. I have been thinking about this question since I was asked it. On one hand, it is a very easy question to answer. On the other hand, it is a very difficult question to answer. The easy answer is, “Emotional health is ultimately an individual’s journey that starts with a person being willing to explore their emotional life and bring it honestly to God for redemption. Where God takes that journey afterwards is different for each person.” The reason why this question is easy and difficult to answer is because the burden IS on an individual to do the work towards emotional well-being and the things that can be done on a corporate level are limited.

On a corporate level, we can start talking in a way that acknowledges that feelings are important. We can stop giving over-spiritual answers that imply believing in Jesus gets rid of all the ups and downs of emotions. We can model emotional well-being by seeking it in our own lives as leaders of the church. We can provide training to small group leaders that open the door for both the leaders’ and the members’ emotional well-being. Even just those four things are actually a tall order for any church. And the thing is, even when a church can do those four things well, it still comes down to an individual’s willingness to delve into, what can be for many people, the murky and scary waters of emotions.

He goes on to give five practical ways to solve the problem. Although helpful, I think the main item missing from the list is the power of stories. Every so often our church has a member give their testimony (Christian word for story). In my weekly small group we've been taking turns giving our personal biographies. In my improv team we did an exercise creating characters through personal beliefs. Whether in a religious, relational, or educational environments, stories are powerful. Non-fiction is important, but so is fiction. This is the power of art. Sure they can also be used to distort truth, but that doesn't mean we shouldn't try to use music, paintings, movies, or even improv as "lies to tell the truth".

Why Employment is Low and Profits are High

The story runs as follows. Before the financial crash, there were lots of not-so-useful workers holding not-so-useful jobs. Employers didn't so much bother to figure out who they were. Demand was high and revenue was booming, so rooting out the less productive workers would have involved a lot of time and trouble -- plus it would have involved some morale costs with the more productive workers, who don't like being measured and spied on. So firms simply let the problem lie.

Then came the 2008 recession, and it was no longer possible to keep so many people on payroll. A lot of businesses were then forced to face the music: Bosses had to make tough calls about who could be let go and who was worth saving. (Note that unemployment is low for workers with a college degree, only 5 percent compared with 16 percent for less educated workers with no high school degree. This is consistent with the reality that less-productive individuals, who tend to have less education, have been laid off.)

In essence, we have seen the rise of a large class of "zero marginal product workers," to coin a term. Their productivity may not be literally zero, but it is lower than the cost of training, employing, and insuring them. That is why labor is hurting but capital is doing fine; dumping these employees is tough for the workers themselves -- and arguably bad for society at large -- but it simply doesn't damage profits much.

That's from Tyler Cowen in Foreign Policy Magazine.

Takeaways from Q & A with Tyler Cowen

If you are a regular reader of this blog, then you're aware of my affinity for economics professor Tyler Cowen. He covers everything from blogging, to the market, to reading suggestions. He was even nice enough to answer my question about the timing of the Industrial Revolution on his blog. At a teaching economics conference I even heard his co-blogger at Marginal Revolution, Alex Tabarrok, say that "before there was Google, there was Tyler". The weekly podcast Surprisingly Free recently did a Q & A with Tyler. Here are my takeaways:


Water transport is significantly cheaper than trade over land. Though slower, the natural resistance of water travel is simply less than land and air. This may helps explain why buying local may not be that great. I wonder what percentage of the buy local movement is about personal image.

One of the main reasons why there has been relative peace instead of war is that the technologies of peace have been cheaper than the technologies of war. This has not been true through most of human history. Nuclear terrorism may change this.

Trying to incentivize marital fidelity may actually ruin the cultural norm. Shame may be one of the best motivators. Especially the guilt children might put of divorcing parents.

People are more likely to think they are above average when they don't have to pay to prove it. This may be why many teachers don't support merit pay. That said, if the administration, board, or superintendent positions aren't based on merit, then maybe they can't reward merit.

Most economic principles are correct. There may be changes on the margins, but the textbooks probably won't change much.

If the average person doesn't fly much, then they may actually want too much airport security. They are hurt (indirectly) by terrorist attacks, but are barely affected by increased invasive pat downs. Tyler predicts, and I agree, that there may be small cosmetic changes to the current TSA policy, but that most of it will stay intact. Then once we have another attack, anyone still protesting will seem crazy.

One of the best ways to learn economics, like anything, is to do it. That means reading it and writing it. That means blogging.

The best non-fiction books are about the past. The worst non-fiction books are about the future. Worst case scenario: have a very incorrect understanding the world with a high degree of certainty.

In the past I've specifically voted for divided government. Historically this has been the best way to limit the growth of bad government. However, now that our country is on an unsustainable growth in spending, gridlock will bankrupt us.

When asked where Tyler would most like to live in the world he said where he is now. Shouldn't we all say that?

Knowledge is contextual. My job as a teacher is to give my students the context to learn long after final exams.

Tyler thinks marijuana legalization will never happen because of the concerned parent vote. I hope he's wrong.

Apparently my old friend and Clemson economics study partner Tate Watkins is helping to produce the Surprisingly Free podcasts. I must say I'm at least a little jealous.

Here's Surprisingly Free's first Cowen interview from earlier this year on the internet, the iPad, and Lost.

Emptying the Bottle: Mid-November '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:

• Facebook knows when your most likely to break up [graphic].
• Maslow's Hierchy of Hats [graphic].
• Economic reasons for why the military marry earlier and divorce earlier.
• Why California voted down legal pot (earlier}.
• Tyler Cowen's impression of the election results (earlier).
• Our problems vs. real problems [graphic] (earlier).
• Too much foreign aid goes to the problem makers (earlier).
• Price discrimination in interest rates based on your web browser.
• The political experts aren't good at predicting outcomes (earlier and similar).
• Some evangelism is done out of insecurity in faith.
• More reasons why the gold standard isn't superior (earlier).

As always, feel free to email me anything interesting you come across.

Immigration Creates Jobs

I've posted before on selfish reasons, moral reasons, economic reasons, and population reasons for allowing more immigration. In light of reading the disgusting mix of business and government in imprisoning illegal immigrants, here's a benefit I haven't mentioned, employment:

The study notes that when companies move production offshore, they pull away not only low-wage jobs but also many related jobs, which can include high-skilled managers, tech repairmen and others. But hiring immigrants even for low-wage jobs helps keep many kinds of jobs in the United States, the authors say. In fact, when immigration is rising as a share of employment in an economic sector, offshoring tends to be falling, and vice versa, the study found.

In other words, immigrants may be competing more with offshored workers than with other laborers in America.

American economic sectors with much exposure to immigration fared better in employment growth than more insulated sectors, even for low-skilled labor, the authors found.

Hat tip to everyone's favorite economist, Tyler Cowen.

The Real Power of the Market

Often the phrase "the market" is described as a god-like entity by its supporters (of which I am probably guilty) and a false god by its opponents. The always interesting Tyler Cowen puts it best in his Big Think interview:

So I think for the most part, markets and capitalists’ wealth help people become more of what they are, that’s something, in most cases, entirely acceptable. There are exceptions. There are people who are psychotics. And in a market economy, they can buy a gun, whereas back in the Stone Age, they only had a club and that make society worse. That’s a case where markets, I wouldn’t say they corrupted the psychotic, but they help a corrupted person be more destructive, but if you look at the world as a whole, do you see more production or do you see more destruction in market economies? I think it’s pretty clear what the answer is. You see a lot more production, you see a lot more cooperation, you see a lot more people striving after noble ends even if it’s just for their own happiness and the happiness of their families.

How does the market do it? Through the organization of its components, primarily human beings. This inherent market structure is shown in this video posted by the other writer of Marginal Revolution, Alex Tabarrok:

The Economic Stimulus Package, Last Part

Two years ago I posted on why I didn't think the stimulus package would work, why I didn't think the very very first worked, and why I might consider it as a "temporal progressive tax". But since the Federal Reserve recently predicted the recovery is slowing down, it's worth one last look. In this NPR podcast (via Justin) one of my favorite economists Tyler Cowen puts it like this: there has never been a very good test of Keynesian stimulus and in fact, this last stimulus package has probably the best chance to test it. A year and half ago he predicted it wouldn't help, and that it wasn't worth the risk to spend a trillion dollars on an untested idea.

But here's the worst part, because the macro-economy is so large and so unwieldy, even though this stimulus hasn't ended the recession in the predicted amount of time, it proves nothing. Supporters can reasonably say it would have been worse without it. Although I can't say with completely certainty the stimulus package has done more harm than good, the opposite can't be proven either. And it seems the burden of proof should be on the party wanting to spend a billion dollars.

Don't Fear China, Celebrate with It

I've posted before on why trade deficits are actually investment surpluses and why Chinese government subsidies actually benefit us. However, after reading this mediocre argument for why we shouldn't fear China, I've decided eradicating fear isn't enough. America should not only not fear China, it should celebrate the amazing progress its made in the last decade. Here's Tyler Cowen first on how far China has to come:

CHINESE labour is still pretty cheap, at least by Western standards. To give an example, the minimum wage in Shenzen—a very active economic area—is still only $160 a month and in other parts of China it runs even lower. It’s not that all Chinese wages are so low but overall China is a much poorer country than most people think. It’s not even close to having the average wages of, say, Mexico.

And here he his again on why we should look forward to more gains:

If Chinese wages are rising, it is because Chinese workers have shown that they are more productive. All the capital investment in China is yielding dividends in terms of greater output per worker and that’s good for virtually everyone.

We benefit from increases in Chinese production in the same way they benefit from production in the US. China is now going through our Gilded Age. Huge national economic growth that will eventually bring up even the poorest citizens. Progress will happen faster for them thanks to the developed world leading way. As I've mentioned before, they are predicted to catch up around 2048. Good for them, good for us.

Where Charity Meets Profit

The Dirty South Improv Theater, where I perform and teach, is well known for supporting the local community of Carrboro-Chapel Hill. From the annual Y Laugh fundraising campaign to special shows for non-profits like a used-bicycle collective and a youth mentor-advocate program. For all of this month, 20% of the ticket sales will go to the local Boys and Girls Club. The reason behind any business doing this is two fold: 1) as a form of advertising and brand image, 2) support causes the boss feels are worthwhile.

I've always questioned both of those motivations. The first feels like a deceptive way to convince the public your product is valuable. For example BP recently announced it would donate any revenues from collected oil in the Gulf to the National Fish and Wildlife Foundation. Any energy spent making it seem like your company is good, is energy not spent actually making your company good. The second motivation also makes me uncomfortable because if the bosses want to donate money, they should pay themselves more and do it. Why involve the company, the employees, and the stock holders?

My question was recently answered when Tyler Cowen shared an interesting research finding. When customers at an amusement park were asked to buy pictures of themselves on a roller coaster only 0.5% paid the $12.95 asking price. Next they allowed customers to pay what they wanted. Sales went up to 8.4%, but the average payment was only $0.92. Later they were told that half of the $12.95 went to charity. This barely changed the amount of payers. Finally, the two ideas were put together. Customers could pay what they wanted, but half would go to charity. Suddenly, 4.5% of the customers bought a photo, nine times the original number, each paying an average of $5.33.

Charitable donations increased and so did profits. Not counting any loss due to consumer guilt, it was a net gain for all. Businesses made more and looked good doing it. Charities got more and people felt better giving it. This also allows the boss to give to his desired charity with a positive impact on his company. Until I can convince theater owner Zach Ward to change the pricing, you can still go see shows all this month and donate any extra at the door. This weekend marks the end of our two special sketch shows, Harvey Wallbanger and We Need A Hero.

Culture of the Industrial Revolution

A while back I posted Tyler Cowen's answer to my question about why the Industrial Revolution happened when it did. Although his list is exhaustive, he didn't mention this one:

the wide adoption of Bourgeois values was critical. By that, she means that once innovators and capitalists were looked up to or were considered gentlemen, an economic transformation towards industrialization could happen.

Not surprisingly, there is a correlation between the cultural appreciation for entrepreneurs and past economic growth. Now, what does the recent backlash against CEO's mean for future growth?

Difference Between Humans and Animals, Part VIII

Pointed out by Tyler Cowen, I've come across not another difference, but a similarity. This comes from David Hume, an 18th century Scottish philosopher in his Treatise of Human Nature:

It is plain, that almost in every species of creatures, but especially of the nobler kind, there are many evident marks of pride and humility. The very port and gait of a swan, or turkey, or peacock show the high idea he has entertained of himself, and his contempt of all others. This is the more remarkable, that in the two last species of animals, the pride always attends the beauty, and is discovered in the male only. The vanity and emulation of nightingales in singing have been commonly remarked; as likewise that of horses in swiftness, of hounds in sagacity and smell, of the bull and cock in strength, and of every other animal in his particular excellency. Add to this, that every species of creatures, which approach so often to man, as to familiarize themselves with him, show an evident pride in his approbation, and are pleased with his praises and caresses, independent of every other consideration. Nor are they the caresses of every one without distinction, which give them this vanity, but those principally of the persons they know and love; in the same manner as that passion is excited in mankind. All these are evident proofs, that pride and humility are not merely human passions, but extend themselves over the whole animal creation.

Here's part one, two, three, four, five, six, and seven of this continuing series.

Legalize Drugs: The Story

In a recent post, Legalize Drugs: The Facts, I listed 20 fact based reasons why I believe the legalization of drugs would improve the lives of drug users, street level drug dealers, and everyday citizens. Facts however, are not always as convincing as we might think. Here's some research I've shared before showing that fiction books are more convincing than non-fiction books. Similarly, here is economist Tyler Cowen both praising and warning about the strong impact a convincing story can have. In line with that, here's a good fictional story about the costs and benefits of drug legalization. It's one of the subplots of The Wire, a show about the drug trade in intercity Baltimore:

Over the course of this series, police chief Bunny Colvin establishes three drugs-tolerance "free zones" in derelict areas of Baltimore, and the programme carefully and even-handedly analyses how these would work and what the eventual political, media and public reaction would be.

Quickly nicknamed Hamsterdam – a corruption of Amsterdam, "one of those countries where drugs are legal" – the experiment is successful in clearing drug dealing off residential street corners that had been blighted by the dealing and its attendant violence for years. We see peaceful corners presented like a dream or a fantasy, or a trip to the past, with neighbours hanging up their clothes, the radio trilling softly, kids rushing past to play games.

In the show, due to the isolation of the drug trade, there is a 14% drop in violent crime. That is until Major Colvin's superiors find out and raid the zones. The Wire does not present this as the solution to all the problems of the drug trade:

The free zones themselves, while largely violence-free, are shown encouraging addiction and promoting disease and prostitution. (Colvin eventually invites public-health charity workers and harm-reduction experts into Hamsterdam to deal with these problems – an impressively undramatic, realistic touch.) Young children formerly employed by dealers as look-outs are laid off, leaving them idle and in poverty. The viewer is also invited to sympathise with the one person who lives in the derelict area, an elderly woman who tells Colvin: "You say you've got a programme that can place me somewhere else, but you ain't got a programme for what's outside my door." The writers are not afraid to point out flaws in the plan.

To get a complete feel for the implementation and reaction to the free zones, here are some graphic but descriptive summary clips from The Wire, Season 3:

This is a fictional representation of what might happen, but I believe the real life results would be similar. I'll leave you with some a summary of the drug problem from The Corner, the nonfiction book in which The Wire is based on:

It criminalises swaths of society, fills prisons with non-violent offenders, facilitates the creation and enrichment of violent gangs, forces those who use drugs to use adulterated, dangerous products, brings the law into disrepute, and costs vast amounts of money that could be put to better uses.

The Elderly Economy

Here is quite a "sentence to ponder" from Tyler Cowen:

Of all the people in human history who ever reached the age of 65, half are alive now.

Here's the explanation:

The revolution has two aspects. First, we are not producing babies like we used to. In just a generation, world fertility has halved to just 2.6 babies per woman. In most of Europe and much of east Asia, fertility is closer to one child per woman than two, way below long-term replacement levels. The notion that the populations of places such as Brazil and India will go on expanding looks misplaced: in fact, they could soon be contracting.

It goes on to explain that traditional pensions and social security schemes where young workers support old workers will not survive. Here's a bit of historical perspective:

The idea of a retirement age was invented by Otto von Bismarck in the 1880s, when as chancellor of Germany he needed a starting age for paying war pensions. He chose the age of 65 because that was typically when ex-soldiers died.

Retirement will be pushed back. Under the current state teacher pension system I can retire at 51. That's 5 years as a child, 17 years of education for 28 years of work so I can "rest" for 25 years (at least, my grandpa is over 90). This is bankrupting both governments and private businesses that try to use it. Overall this isn't bad news, we are healthier at 70 than our ancestors ever were. We shouldn't be afraid, but we should be willing to change.

Worthwhile Sentences on Suggestions

From Science Daily: "The idea that simply being more supportive is better for your marriage is a myth. Often husbands and wives think, 'If my partner really knows me and loves me, he or she will know I'm upset and will know how to help me.'"

From Tyler Cowen: "check the non-fiction Return carts, to see what other people have been reading."

From Clay Shirky: "Behavior is motivation filtered through opportunity"

From Steve Landsburg: "As any historian could tell you, no society has every pulled itself out of poverty without putting its children to work."

From Bryan Buckley (privately in response the previous article): "Just because you have good intentions doesn't mean you're doing something noble."

From Justin Wehr: "Treat your world view as nothing more than a default position -- a starting point from which to assimilate contradictory evidence."

From previous worthwhile sentences.

Timing of the Industrial Revolution

Tyler Cowen recently did a request for requests. I asked him this:

Why did it take so long for humans to have the Industrial Revolution?

He was gracious enough to give a thorough answer:

That's a reader request from the especially loyal Harrison Brookie. First, you might wish to go back and read the MR reviews and debates of Greg Clark's Farewell to Alms,

More generally, extended periods of economic growth require that technologies of defense outweigh technologies of predation. They may also require that the successful defender, at the same time, has good enough technology to predate someone else and accumulate a sizable surplus. Parts of Europe took a good deal from the New World and this may have mattered a good deal.

Building a strong enough state to protect markets from other states is very hard to do; at the same time the built state has to avoid crushing those markets itself. That's a very delicate balance. China had wonderful technology for its time and was the richest part of the world for centuries but never succeeded in this endeavor, not for long at least.

England was fortunate to be an island. Starting in the early seventeenth century, England had many decades of ongoing, steady growth. Later, coal and the steam engine kicked in at just the right time. English political institutions were "good enough" as well and steadily improving, for the most part.

Christianity was important for transmitting an ideology of individual rights and natural law. As McCloskey and Mokyr stress, the Industrial Revolution was in part about ideas.

There are numerous other factors, but putting those ones together -- and no others -- already makes an Industrial Revolution very difficult to achieve. It did happen, it probably would have happened somewhere, sooner or later, but its occurrence was by no means easy to achieve. The Greeks had steam engines, proto-computers, and brilliant philosophers and writers, but still they did not come close to a breakthrough.

One question is how long the Roman Empire would have had to last to generate an Industrial Revolution and don't mention the Eastern Empire smartypants.

If you are asking why the Industrial Revolution did not occur in the Mesozoic age, or other earlier times, genetic factors play a role as well.

I tell my high school students that the Industrial Revolution is second only to learning to farm when thinking about human history. If that's true, then this answer is important. If I'm understanding Tyler correctly, it took humans a while to figure out how to make a government strong enough to defend property rights (especially from the outside), but weak enough to allow the market to work. I also agree that religion, perhaps in the form of the Protestant Reformation was an important step in understanding human liberty. That also helps explain why England as an island was more likely to begin this revolution.

Other interesting suggestions from the comments of Tyler's post are the importance of the printing press in saving and spreading ideas and how cheap manual labor in the form of slavery may have delayed it (I don't buy the second one).