All posts filed under: Economics

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 …