All posts filed under: Economics

How the Social Justice Movement Fuels Corporate Capitalism

Before diving into a topic I’m sure will prove controversial, I want to start by clarifying that, as my other articles or my book Modern Sexuality can attest, I am very much pro-social justice. This piece is about how social justice has gone off the rails and been co-opted by capitalist or, dare I say, corporatist influences. Secondly, I am not anti-capitalist, in the sense of individuals having free rights to produce whatever product or service the market demands and receiving a fair price in return. Rather, I am opposed to unfettered, corporatist capitalism in which corporations create monopolies and influence politics and culture mainly to serve their business interests. With that out of the way, let’s go back to the fall of 2008 to examine how the social justice movement lost its way. On September 24, then-President George Bush made a special appearance on TV to warn the American public that the economy was on the verge of collapse. Several weeks prior, investment bank Lehman Brothers had filed for bankruptcy, producing a domino effect and taking the …

What Experts Do and Don’t Know

Some recent political events, from the result of the Brexit referendum to the nomination of Donald Trump as the Republican candidate in the US election, have been described in terms of clashes between the views of two tribes of people, often described as experts or elites and those who trust them on one side, and ordinary people on the other. While one may argue for one side or another on these specific issues, or have a preference for the views of experts or ordinary people in general, reflexively taking sides on this basis is neither principled nor likely to lead to correct judgments. Personally, I have a Bachelor’s degree in physics and applied mathematics, a PhD in astrophysics, and an academic career in statistics. I know what it’s like to be an expert in a couple of small areas, and how easy it is to imagine myself as one in other areas. Many of my friends are smart academics, and usually fall on the expert side of the discourse. I understand their frustration and anger …

‘Socialism’: Why the Word Matters

Bernie Sanders’ presidential campaign is practically over, but its impact is bound to be lasting. The Vermont Senator has achieved a remarkable feat in energizing voters, especially millennials, getting them more involved in the political process. He has also moved the public discourse in America leftward, by connecting with voters on economic issues that matter to them. College graduates in America are experiencing record levels of student debt, wages for the middle class have stagnated, and many Americans have trouble accessing quality healthcare. Sanders hopes to mitigate these problems by making public college tuition free, raising minimum wages, boosting government spending (particularly in infrastructure), and aiming to bring about a single-payer healthcare system. During the course of his wildly successful campaign, Sanders has also popularized the notion of socialism within the American zeitgeist. ‘Socialism’ used to be a bad word, but it isn’t anymore. A recent YouGov poll found that more than a third of the population between the ages of 18-29 has a favorable view of socialism. What does ‘socialism’ mean? According to Sanders, …

The White Death

“With my own eyes I have seen the countless diamonds stored in Solomon’s treasure chamber behind the white Death….” – H. Rider Haggard, King Solomon’s Mines. When I was a boy, I laboured under the delusion that so long as a man’s income remained the same, it mattered little whether he was on welfare or employed. The costs of globalization and mass immigration would be easily outstripped by the benefits; those workers displaced by these economic changes could be easily supported by welfare payments, and they would be, at the least, no worse off than before. In fact, due to the widespread availability of ever-cheaper luxury consumables, their lifestyles would be somewhat improved as a result. Over time, I grew to appreciate the errors of my ways, and just in case I hadn’t, the events of the current year arrived to reinforce the point. Nevertheless, it appears as though many still don’t quite get it. How else to explain the persistence of this exasperating meme, most notably voiced by the odious Jimmy Carr?     …

Why Innovation Requires Economic Freedom

Recently, I read a review of a new book, Lysenko’s Ghost: Epigenetics and Russia, by MIT science historian Loren Graham. The book surveyed Lysenko’s scientific legacy and “whether new developments in molecular biology validate his claims.” (Spoiler: They do not). Having studied evolutionary biology as an undergraduate, I was familiar with the story of Lysenkoism, a tragic episode of politicized science in the Soviet Union. For those who don’t know this history, a Soviet biologist named Trofim Lysenko explicitly rejected Mendelian genetics in favor of a pseudoscientific hypothesis propagated by Jean-Baptiste Lamarck. Here’s a brief summary of Lysenko’s career as described in the MIT Technology Review: He rose to immense power in the 1940s under Joseph Stalin by promoting a number of erroneous scientific techniques he claimed could increase wheat yields on famine-wracked collective farms. Among other things, he professed that by keeping seeds of winter wheat at low temperatures for longer than usual, he could convert the strain to a variety that would mature in the spring. When other scientists objected to his work, …

Conspicuous Consumption Is Not What You Think

The age of crass consumerism is dead Writing in the 19th century, Thorstein Veblen, the eminent sociologist and Progressive thinker, discovered an apparent failure of capitalism. Traditional economists saw consumption as a means of attaining individual ends, such as sustenance, pleasure, or a gift for your spouse. Contrary to this individualistic paradigm, however, Veblen perceived that in a social context, human beings care about relative status.  That is to say, where you are in the pecking order.  In his day, the nouveau riche spent money not to satisfy earthly desires, but to simply show off, to signal status. Veblen gave us theory of “conspicuous consumption.” In the 20th century, this behavior gained popularity amongst the middle class. It became “Keeping up with the Joneses.” The bigger car, the larger house, the air conditioner flipped to eleven in the middle of spring. The age of crass consumerism was upon us, with all the wasteful spending that it entailed. But that era is dead, and it is puzzling to understand why anyone would doubt its passing. I …

Socialism is worse than capitalism—you want a welfare state

The rise to prominence of Jeremy Corbyn and Bernie Sanders has seen a return of ‘socialism’ to the vernacular. The political movements behind these two men have frequently sought to associate popular welfare policies, notably universal health care, with socialism. Both of them seem to be suffering from a degree of conceptual confusion between socialism and the modern welfare state. This is ironic because it is precisely the socialist as opposed to welfarist elements of their respective platforms, like rent control in Corbyn’s case and trade restrictions in Sander’s case, that are unpopular. A second irony, one that is not lost on left-leaning economists, is that free markets, the antithesis of socialism, are necessary for providing the funding for a modern welfare state. What is the distinction between socialism and the modern welfare state? One way to think about it is in terms of market intervention vs. post- and pre-market intervention. Market interventions are those that distort prices and inhibit their ability to communicate the opportunity cost of a good. A pertinent example is rent …

How Capitalism and Globalization Have Made the World a Better Place

Throughout this week, the hashtag #ResistCapitalism was trending on Twitter. Using this hashtag, activists have aired their grievances against an economic system which they deem to be destructive, unfair, and immoral. In their view, the growth of global capitalism experienced over the last few decades has been only detrimental to human well-being. Indeed, since the early 1990s, global capitalism has lapsed into “its most savage form,” according to progressive populist Naomi Klein. In fact, the expansion of capitalism and freer international trade has coincided with an era of slow economic growth, high unemployment, increased child labor, skyrocketing inequality, and grinding poverty. Just kidding, that’s not what happened at all. In fact, as the world has become more capitalist and more globalized, the quality of life for the average person, and especially for the average poor person, has increased substantially. In 1990, 37% of the global population lived on less than $1.90 per day. By 2012, that number had been reduced to 12.8%, and in 2015 it was under 10%. The source of this progress isn’t …