Quote of the Day

The mere fact that someone disagrees with one's judgement is insufficient grounds for opening one's mind. Most epistemologists forget that it is just as urgent a question to determine when we are justified in opening up our minds as it is to determine when we are justified in closing them.

—Isaac Levi, "Consensus as Shared Agreement and Outcome of Inquiry." Synthese 62, pg. 3

Externalities in Trade

At the blog of Harvard economist Greg Mankiw, he writes about a debate he participated in over whether one person should be allowed to sell his right to vote to another. Dr. Mankiw said no:

It is true that both parties in the transaction must be better off if they agreed to the deal. Nonetheless, the standard argument for unfettered voluntary exchange does not apply because there are externalities. That is, when one person sells his vote to another, that transaction may affect unrelated third parties through the electoral process.

However, there are serious flaws in this approach. His colleague Michael Sandow points out one obvious point that if a person were merely persuaded to change his vote, instead of being paid to do so, it would still have the same negative effects on the third party. So by Dr. Mankiw's explanation, we would be forced to prohibit political persuasion as well as outright vote-buying.

There is another, larger problem which gets to the heart of reasonable critiques of free trade in general. That is, many types of trade create negative externalities for others. To cite an obvious example, if I buy an automobile and gasoline, I affect the air quality for the people around me who do not necessarily benefit from my having an automobile. More crucially, perhaps, engaging in international trade has effects for the geopolitical situation. China's rise in power, which is causing a great deal of heartburn for national-security types in Washington, has been enabled directly by the world's trade. To base the legitimacy of a voluntary exchange on whether it creates negative externalities would be to undermine the free market in its entirety.

That being the case, can one argue for free trade in a case where it creates negative externalities? Free-market advocates would say that in a true free market, any negative externalities would be mitigated through voluntary exchange, leaving everyone or nearly everyone in a far superior position than if there had been no trade in the first place. And to be sure, it is hard to imagine any alternative to free trade that has not created far more misery than free trade would have. (For example, in our rush to get away from oil, we have poured vast amounts of money into ethanol-based fuels which have had the perverse effect of encouraging clear-cutting in Indonesia and elsewhere, and have driven up food prices for the world's poor.)

But the problem of negative externalities remains an issue. In the absence of an omniscient despot, the best course would probably be for budding entrepreneurs to seek out such externalities and devise ways to mitigate them for a profit, and thus remove the perceived need for coercion. But we cannot pretend that such externalities do not exist in the first place.

Quote of the Day

"Cowardice" and "self-respect" have largely disappeared from public discourse. In their place we are offered "self-esteem" as the bellwether of success and a proxy for dignity. "Self-respect" implies that one recognizes standards, and judges oneself worthy by the degree to which one lives up to them. "Self-esteem" simply means that one feels good about oneself. "Dignity" used to refer to the self-mastery and fortitude with which a person conducted himself in the face of life's vicissitudes and the boorish behavior of others. Now, judging by campus speech codes, dignity requires that we never encounter a discouraging word and that others be coerced into acting respectfully, evidently on the assumption that we are powerless to prevent our degradation if exposed to the demeaning behavior of others. These are signposts proclaiming the insubstantiality of our character, the hollowness of our souls.

—Jeffery Snyder, "A Nation of Cowards", The Public Interest, Fall 1993.

Quote of the Day

[Information Technology’s] revolutionary significance is not merely in that it is a brand new technology itself, but more in that it is a kind of bonding agent which can lightly penetrate the layers of barriers between technologies and link various technologies which appear to be totally unrelated. Through its bonding, not only is it possible to derive numerous new technologies which are neither one thing nor the other while they also represent this and that, and furthermore it also provides a kind of brand new approach to the relationship between man and technology. Only from the perspective of mankind can mankind clearly perceive the essence of technology as a tool, and only then can he avoid becoming a slave to technology—to the tool—during the process of resolving the difficult problems he faces in his existence.

—Qiao Liang and Wang Xiangsui, Unrestricted Warfare, 1999. (PDF here.)

Quote of the Day

It is not generally realized that education can never be more than indoctrination with theories and ideas already developed. Education, whatever benefits it may confer, is transmissive of traditional doctrines and valuations; it is by necessity conservative. It produces imitation and routine, not improvement and progress. Innovators and creative geniuses cannot be reared in schools. They are precisely the men who defy what the school has taught them.

—Ludwig von Mises, Human Action pg. 314

[Note: "conservative" is here used not in the political sense, but in the sense of preserving an existing status quo. If one looks at the public schools today, one typically finds an entrenched class of educators and administrators who fight tooth and nail to impose and maintain a particular educational ideology, which has not shown great success in producing capable students yet is defended regardless.]

Quote of the Day

Every one who has had the misfortune to talk with people in the heart or on the edge of mental disorder, knows that their most sinister quality is a horrible clarity of detail; a connecting of one thing with another in a map more elaborate than a maze. If you argue with a madman, it is extremely probable that you will get the worst of it; for in many ways his mind moves all the quicker for not being delayed by the things that go with good judgment. He is not hampered by a sense of humour or by charity, or by the dumb certainties of experience. He is the more logical for losing certain sane affections. Indeed, the common phrase for insanity is in this respect a misleading one. The madman is not the man who has lost his reason. The madman is the man who has lost everything except his reason.

The madman's explanation of a thing is always complete, and often in a purely rational sense satisfactory. Or, to speak more strictly, the insane explanation, if not conclusive, is at least unanswerable; this may be observed specially in the two or three commonest kinds of madness. If a man says (for instance) that men have a conspiracy against him, you cannot dispute it except by saying that all the men deny that they are conspirators; which is exactly what conspirators would do. His explanation covers the facts as much as yours. Or if a man says that he is the rightful King of England, it is no complete answer to say that the existing authorities call him mad; for if he were King of England that might be the wisest thing for the existing authorities to do. Or if a man says that he is Jesus Christ, it is no answer to tell him that the world denies his divinity; for the world denied Christ's.

Nevertheless he is wrong.

—G.K. Chesterton (hat tip: Sydney Carton, commenting at Ace of Spades. Also notice the YouTube video that got the whole discussion started.)

(Is everyone else getting as bored with this QotD thing as me?

Sheesh, you work a real job for a change, and your brain just shuts off. On the bright side, next year I go back to school for my PhD…)

Quote of the Day

The relative, diminishing hardships of everyday existence, together with more extensive academic instruction, has laid a foundation of knowledge for most people that is less tested by experience and affirmed more by internal feelings and passions. More people may be better educated these days, but they are also more insulated and more naive.

—Richard Reay, letter to the Wall Street Journal, published 6 August 2003.