These are remarks I prepared for a symposium at Hoover in honor of George Shultz on his 95th birthday. Willie Brown was the star of the symposium, I think, preceded by a provocative and thoughtful speech by Bill Bradley.
Institutions and Experience
Our theme is “learning from experience.” I want to reflect on how we as a society learn from experience, with special focus on economic affairs. Most of these thoughts reflect things I learned from George, directly or indirectly, but in the interest of time I won’t bore you with the stories.
An English baron in 1342 tramples his farmers’ lands while hunting. The farmers starve. Then, insecure in their land, they don’t keep it up, they move away, and soon both baron and farmers are poor.
How does our society remember thousands of years of lessons like these? When, say, the EPA decides the puddle in your backyard is a wetland, or — I choose a tiny example just to emphasize how pervasive the issues are — when the City of Palo Alto wants to grab a trailer park, how does our society remember the hunter baron’s experience?
The answer: Experience is encoded in our institutions. We live on a thousand years of slow development of the rule of law, rights of individuals, property rights, contracts, limited government, checks and balances. By operating within this great institutional machinery, these “structures” as senator Bradley called them last night, these “guardrails” as Kim Strassel called them in this morning’s Wall Street Journal, our society remembers Baron hunter’s experience in 1342, though each individual has forgotten it.
In particular, self-appointed technocrats — us economists — do not offer “advice” to benevolent “policymakers” to implement, though we often so flatter ourselves. Strong institutions of limited government defend against bad and transitory ideas.
Hayek told us how prices transmit information through an economy, information that no individual knows. In a similar manner, these institutions encode memories and wisdom that no individual remembers.
These great institutions do not operate of their own. They need maintenance, repair, continual improvement, and the incorporation of new experience. I am not arguing for mindless conservatism. Many of our legal structures have been, and continue to be, in need of fundamental changes.
But the mechanics who fix them, their operators, and us, their beneficiaries, need to be vaguely aware of how the machine works and why it is built the way it is. When institutions, structures, long standing traditions, rights, separations of power and so forth are abandoned or broken, when guardrails are smashed, the treasure trove of experience involved in their construction can be lost.
The Era of Forgetting
In this regard, I fear we live in an era of great forgetting.
Foreign policy increasingly seems unhinged from simplest lessons of history as well as from the carefully built institutions of the postwar order. Eisenhower and Roosevelt did not call a press conference, announce the US putting 5000 soldiers on Omaha beach, and promise the soldiers would be out by July. They set a goal, and promised to unleash whatever resources are needed for that goal. As senator Bradley reminded us, they knew that managing the peace is just as important as winning the war.
As John Taylor reminds us in his remarks today, monetary and financial policy has veered away from its traditional base in both domestic and international institutions and institutional limitations.
In economic and domestic affairs, the administration and its regulatory agencies are more and more telling people and businesses what to do, unconstrained by conventional rule-of-law restrictions and protections.
But what will happen on a change of administration? Will a new administration retreat, say we must restore rights and rule of law? Or will a new administration — once again — admire an expanded set of tools for ramming through its agenda, punishing political enemies, demanding cooperation of people and business, and set to work institutionally grabbing power for itself?
The temptation will be strong: To direct Lois Lerner’s successor to blackball different applications; to use campaign laws to persecute a different set of officials; to have its environmental, health care, and financial regulators demand the same tribute and that a different set of doors revolve; to wipe out its predecessors executive orders and issue new ones.
Or will it say, no, we eschew these methods, we will go back to respect and rebuild institutional limits, though it will take a long time and reduce our hold on power? Once the traditional restraints are broken, it’s awfully hard to go back.
The leading candidates have already promised which way they’re going. For example, Ms. Clinton, quoted by Kim Strassel, promises to use Treasury regulation to punish companies that legally reduce taxes by moving abroad. And Mr. Trump outrages the law and constitution daily.
Every society needs institutions to pass on its structures and traditions to the next generation. Grade for yourselves how well our schools and universities, even Stanford, are doing to pass on the lessons of limited government, rule of law, individual rights; the institutional wisdom of western democracy.
Our society’s premier institution for collecting, vetting, and passing on experience, science itself, is in trouble. The politicization of climate research is only the latest example.
Our policy debates are taking on a magical tone. Simple lessons of hundreds of years of experience, simple logic of cause and effect, and basic quantification, are disappearing.
Long experience tells us simple steps that encourage economic activity: Low, stable and simple taxes, good public infrastructure, an efficient legal system, predictable simple and uncorrupt regulations, and largely stay out of the way.
Long experience also teaches us many mistakes. For example, price and quantity controls induce scarcity, illegality, sclerosis and poverty. It also teaches that grand plan after grand plan for government directed growth or development has fallen apart.
But our policy debates chase ghosts instead. Rather than fix these humble and broken institutions, we are consumed whether Ms. Yellen might pay banks a quarter of a percentage more on their reserves. Action is regularly demanded over “bubbles,” “imbalances,” “reach for yield” “risk premiums” and so forth, as if anyone had any idea what these meant let alone scientific understanding of what one should do about them.
Serious people and international institutions advocate that the road to prosperity is for the government to borrow money and deliberately waste it; to confiscate wealth by extortionate taxation; to welcome natural disasters for their stimulative rebuilding opportunities; to deliberately throw sand in the gears of productivity; almost magic recommendations that ignore centuries of experience.
(To clarify: yes, we should keep our minds open new ideas. Quantum mechanics sounded like magic when introduced. I play with radical ideas too, such as the idea that higher interest rates lead to more, rather than less, inflation. The issue is, how quickly should new, revolutionary, everything you thought you knew is wrong ideas make their way to public policy? Too much economic policy jumps from "here's a cool idea I thought up on the plane" to "the US should spend a trillion bucks." I do not advocate that the Fed should act on my latest paper!)
Our regulatory policy seems a parody of making the same mistakes over and over and refusing to learn the lessons. The Dodd-Frank act is not a new idea. It simply tries again and bigger the same set of ideas that failed in crisis after crisis — guarantee debts, bail out banks, and add more regulators in the vain hope to stop increasingly large, politicized, too big to fail and hugely over leveraged banks from ever losing money again. The ACA/Obamacare is not a new idea. It just adds layer after layer of the same health insurance and care regulations that failed before. This time price controls will surely work to lower costs without cutting supply or innovation — let’s forget the thousands of times they have failed.
And economics is relatively sensible. Magical beliefs pervade our political system’s discussion about terrorism, migration, or the environment. No, a high speed train will not fill California’s reservoirs, or stop terrorism or refugee migration.
There is a late Roman empire feeling in the air. Conventional limitations on action are ignored. People distrust the great institutions of their society, have neglected them, and now they have forgotten how those institutions work. People follow inspirational leaders, who use any tools at their disposal to crush enemies — only to be crushed in turn. New magical faiths sweep through. I fear that our grandchildren will walk among wondrous ruins like medieval villagers, having forgotten how to make concrete.
Optimism
But I learned an important lesson from George Shultz: Any time I start down this sort of line of thought, he says, "Stop being so grumpy!" As Ronald Reagan famously put it, there must be a pony in here somewhere. There is.
Our society also has self-correcting institutions. You’re sitting in one, and you’re part of that process today. We’re here. The ideas that define a free — and prosperous — society are alive. The memory of a rule of law structure is alive.
We still have a free press, for now relatively free speech and most people still understand how important that is. The full potential of the regulatory and surveillance state to silence dissent has not yet been used. And in that press, and Internet, horror stories are adding up. People are getting sick of it.
Congress has noticed. There are good people who want to pass simple clear laws and bring back its rule.
For example, In November the House Judiciary Committee passed (WSJ commentary) a package of regulatory reforms. One is, to be guilty of a crime, you must have some intent to violate the law. They can’t charge you after the fact with unknowable laws or regulations, evidence such as statistical discrimination programs that you cannot see or challenge, and fine you millions or put you in jail without even claiming you intended any harm.
This principle of intent, “mens rea”, is a centuries-old bedrock of common law. It encodes a thousand years of experience. It is sad that Federal regulations forgot and trampled it. But it is great news that an effort to fix it is under way. A wider set of rights against regulators, a magna carta for the regulatory state, reestablishing the rights to know the rules ahead of time, to see and challenge evidence, to appeal, and to speedy judgment could well follow.
Financial regulators are seeing daily how ineffective the Dodd-Frank apparatus is. Slowly but surely, the realization that very simple capital standards can obviate this mess is making way. You heard it from Senator Bradley last night.
I see hope on climate. There is a small but increasing alliance between environmentalists and free-marketers. The environmentalists think carbon is such a big problem, that they want policies that will actually do something about it. Free marketers are aghast at the waste and cronyism of energy policy. They are coming together on a deal: A simple straightforward carbon tax in place of wasting money and economic capacity on tax dodges, crony subsidies and ineffective regulations. Sure, there will be a big discussion on the rate, but any conceivable rate will be a big improvement for both environment and economy.
Similar grand bargains on taxes and entitlements are sitting before us, needing only a small amount of leadership and public pressure. The experience of 1982 and 1986 is not forgotten.
A hunger for monetary policy anchored in rules or at least strong institutional traditions and constraints is palpable, even producing bills in Congress. Those may not be perfectly crafted, and may not pass. But the force for rebuilding an institutional structure for monetary policy is there.
Collegiate humanities and social science education has passed the point of the fashionable to the ridiculous, so that study of the successes of western civilization, and not just its many sins, is returning.
I don’t yet hear “it’s your property, do what you want with it” from the Palo Alto zoning board, or the citizens who elect them, but who knows, that too is possible someday.
Even the widely reported disgust with government has a silver lining. People who distrust the government are less likely to vote for the next big personality promising big new programs. Instead, they might be more attracted to candidates who promise restraint and rule of law; to administer competently and to repair broken institutions.
Our society codes its experience into its institutions; in a grand edifice we call limited government and rule of law. The old boat is rusty, but she’s not beyond hope. The bilge pumps are working. And we face no real external pressures. ISIS is the JV; compared to the Visigoths, or to Germany, Japan and the Soviet Union. A rich China should be a godsend, posing no more threat than a rich Europe and Canada. Silicon valley is full of ideas and entrepreneurs waiting to unleash prosperity on the country. If only they can get the permits. If we fail, and the grand forgetting takes over instead, the fault will only be our own.
Selasa, 15 Desember 2015
Tilting at Bubbles
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| Source: Wall Street Journal |
I thought I was reading The Onion. There it is, a graph marked "Asset Bubbles," measured, apparently, with interferometer precision.
I must have been asleep or something, since the last time I touched base with finance, mid-yesterday, we still didn't have an operational definition of "bubble," let alone a way of measuring one, beyond academics and Fed officials looking out their office windows and opining that prices seem awfully high (but not quite enough for them to put on a big short.) Let alone any scientific understanding of what policies might calm such bogeymen. How does the Fed know a "bubble" from a "boom," an "irrational valuation" from a rational willingness to take risk in a slow but steady real economy?
And, much more importantly, when did it become the Fed's job to diagnose and prick its perceptions of asset price "bubbles?"
Yet here we read
Six years after the financial crisis ended, the central bank remained ill-equipped to quell the kind of dangerous asset bubbles that destabilized the savings-and-loan industry during the late 1980s, tech stocks in the 1990s and housing in the mid-2000s.
...financial bubbles have been root causes of the past three recessions
Iowa farmland prices rose 28% between the fourth quarter of 2010 and the fourth quarter of 2011, igniting fears of a dangerous bubbleApparently "bubbles" have made their way from Monday-morning quarterbacking to established and measurable facts. (To clarify, this is a news story not an editorial, and the reporters, Jon Hilsenrath and David Harrison, are just passing on what they hear. )
Commercial real-estate prices are soaring and Fed officials face the conundrum of what, if anything, to do.
Fed officials said afterward they saw they lacked clear-cut tools or a proper road map of regulatory measures to help stem the simulated booms.
Even though many Fed officials favor using regulatory powers over interest rates to stop bubbles, the U.S. was a “long way” from establishing a regulatory system that could achieve that, Mr. Dudley said in September.Your darn tootin' they face that conundrum. Because diagnosing the sources of, and controlling, asset and real estate prices is not, and never has been, part of the Fed's job.
The Fed has great power and independence. The price of that power and independence is limited sphere of action. It's also wise. Once the Fed becomes the central planner of real estate prices, and allocator of credit to control prices, it will neatly be sandwiched into a political role. Sellers and developers want more, and chant "prices are depressed, stimulate." Buyers want less and chant "pop this bubble" (but give me credit to buy.) The only possible answer is, real estate prices are just not our business.
Central banks have always been severely limited by statute and tradition to what they can try to control, and what tools they can use, in return for their independence. Traditionally, the central bank bought only short-term treasuries, and controlled only short-term interest rates, and its targets were limited to inflation and employment. Intervening in mortgage backed security and long term treasury markets is already a stretch. Using interest rates to target asset prices is a stretch. Using regulatory power, to allocate credit, to control real estate prices, is way, way beyond the Fed's mandate.
Memo to Fed: There is already a chorus angry at how much you exceed your sphere now. You may regard them as ill-informed peasants with pitchforks, but they happen to occupy seats in Congress and they're writing bills. If you decide to judge whether the price of farmland in Iowa is a "bubble," and to use your regulatory powers to stifle credit to Iowa farmers with the goal of determining the just price of farmland, those peasants with pitchforks aren't going to take it quietly.
The Fed has neither authority, mandate, road map, nor regulatory measures, because controlling real estate prices is no more its job than controlling carbon emissions. Congress could change that, and give the Fed broad authority. But it has not done so.
To be fair, perhaps this is a natural extension. The Fed took on the job of propping up house, bond, and arguably stock prices in the recession, and there is not a huge outburst of complaint. Perhaps therefore it is entitled to tamp down house, bond, and stock prices in a boom, if it so desires. Oh wait, there is a huge outburst of complaint.
Mr. Rosengren [president of the Boston Fed] had noticed more building cranes in Boston.
“Given our low interest rates, given that it is an interest-sensitive sector, it is probably worthwhile to start thinking about at what point do we become concerned that is growing too rapidly,” he said.
The Fed’s low interest-rate policies have helped drive investors into such assets as commercial real estate as they search for higher returns.
Fed officials said afterward they saw they lacked clear-cut tools or a proper road map of regulatory measures to help stem the simulated booms. (Repeated, with emphasis)The vague rationale for intervention is that there is a difference between "boom" and "bubble," between asset prices that are high because of "real" valuations vs. "irrational" ones, between something like "supply" and "demand" and somehow the Fed can tell in real time, offset the bad and allow the good. But that all disappeared in the above paragraphs. Boom and bubble are now the same. And we're not even talking about national or "systemic" "bubbles" anymore. Now the Fed is supposed to worry about the price of farmland in Iowa
This is how it's supposed to work. The Fed lowered interest rates, that raises asset values, higher asset values induce people to invest, which is "stimulative." Q theory 101. How do we know it's "too much?"
Despite the action in commercial real estate, debt levels across the broader financial system are still modest. Overall U.S. financial sector debt— $15.2 trillion in the second quarter—was down 16% from the third quarter of 2008. Financial sector debt has fallen to 84% of economic output from 125%, a sign the economy is less prone to a financial crisis on the scale of 2008.
“Our quantitative measures indicate a subdued level of overall vulnerability in the U.S. financial system,” Fed economists said in an August research paper that sought to assess risks of banks and markets overheating.Now we're getting somewhere. How are asset price gyrations a "risk" anyway? Answer: if and only if they make their way through debt to default and runs. The right answer to such worries is to make sure there isn't a lot of debt in the way, and let asset prices do whatever they want to do. Keep people from storing gas in the basement; don't try to stop them from ever lighting a candle. The project that the Fed will micro manage prices so nobody ever loses money again is hopeless.
And the bottom graph looks pretty darn good. So what is the worry? If there is no debt in the way, why must the Fed try to control prices?
Some of them, including Ms. George [president of the Federal Reserve Bank of Kansas City] said rates weren’t the right instrument to use against bubbles. She favored demanding banks hold more capital.Excellent! (I presume she was misquoted, as banks issue capital, they don't hold it, but a minor quibble.)
The graph: I looked up the original here, in a nice paper titled "Mapping Heat in the U.S. Financial System." The paper does not pretend to define or measure "bubbles." It's a nice index number/visualization/forecasting exercise with many more pretty graphs.
All I want for Christmas is a new iWatch
Is a new iWatch on your Christmas list for this year or are you already wearing your iWatch wondering what to do with it? I have a couple of suggestions for you . . . use it to help you manage your time and patients at your dental practice.
Imagine this . . . what if you could get a little buzz on your wrist from your iWatch letting you know that patient in room #1 is ready for an exam and you could check her medical alerts before you even walk into the room? What if you could then speak a command into your iWatch and it would automatically launch the patient’s most recent pano onto the monitor? Using these new apps designed around the efficiency of the dental practice gets me all excited … and it should you too.
I have learned about two new products specifically designed around the iWatch and helping you manage your time around the operatory. Below you will see a video interview I did on a company I spoke with at a recent dental meeting and a link to another product that I absolutely love. If you are interested in this technology, research both products and schedule a demo to look at each one.
CLICK HERE to check out Simplifeye
CLICK HERE to check out OperaDDS
Senin, 14 Desember 2015
Luke Skywalker and ISIS
Via Marginal Revolution, I found "The Radicalization of Luke Skywalker" interesting.
Despised people -- terrorists; slaveholders; Republicans, to the New York Times -- think of themselves as good and worthy, though they do things we find unfathomably evil. Understanding how they see themselves is the first step to any sort of progress in world affairs. Understanding need not mean agreeing or condoning. The language we use -- "terrorist," "radicalize" -- puts them beyond comprehension; useful for ordering drone strikes but not for understanding why people sign up and how they might be turned. The analogy is admittedly strained, but seeing that we might have felt the same feelings that attract terrorists is an unsettling and useful experience. Even if it's only a movie.
Despised people -- terrorists; slaveholders; Republicans, to the New York Times -- think of themselves as good and worthy, though they do things we find unfathomably evil. Understanding how they see themselves is the first step to any sort of progress in world affairs. Understanding need not mean agreeing or condoning. The language we use -- "terrorist," "radicalize" -- puts them beyond comprehension; useful for ordering drone strikes but not for understanding why people sign up and how they might be turned. The analogy is admittedly strained, but seeing that we might have felt the same feelings that attract terrorists is an unsettling and useful experience. Even if it's only a movie.
Kamis, 03 Desember 2015
Smith meet Jones
A while ago I wrote up a smorgasbord of policies that I thought could increase US economic growth, at least for a few decades, in "Economic Growth" (pdf, html here.) Noah Smith took me to task in a Bloomberg View column, complaining that I confused growth with levels,
Along the way, I offer one quantitative exercise to help think just how much additional growth the US could get from the sort of free-market policies I outlined in the essay.
Part I Growth and Levels
A quick reply: China.
China removed exactly the sort of "level" or "inefficiency" economic distortions that free-market economists like myself (and Adam Smith) recommend. What happened? Here is a plot of China's per capita GDP, relative to the US (From World Bank). In case you've been sleeping under a rock somewhere, China took off.
(Note: This blog gets picked up in several places that mangle pictures and equations. If you're not seeing the above picture or later equations, come to the original.)
Now, in the "growth" vs "level," or "frontier" vs. "development" dichotomy, China experienced a pure "level" effect. Its GDP increased by removing barriers to "short-term" efficiency, not by any of the "long-term" growth changes (more R&D, say) of growth theory.
But "temporary" "short-run" or "catch-up" growth can last for decades. And it can be highly significant for people's well-being. From 2000 to 2014, China's GDP per capita grew by a factor of 7, from $955 per person to $7,594 per person, 696%, 14.8% annual compound growth rate (my, compounding does a lot). And they're still at 15% of the US level of GDP per person. There is a lot of "growth" left in this "level" effect!
Lots and lots of people, even "liberals" in Noah's other false dichotomy, use the word "growth" to describe what happened to China, and would not belittle policies that could make the same thing happen here.
Part II. How much better can the US do?
But can liberalization policies have the same effect for us? Yes, you may say, China had scope for a big "catchup" growth effect. But the US is a "frontier" country. China can copy what we're doing. There is nobody for us to copy. Big increases in levels, which look like growth for a while, are over for us.
But are they? We know how much better China's economy can be, because we see the US. We see how much better North Korea's could be, because we see South Korea. (Literally, in this case.) How much better could the US be, really, if we removed all the distortions as in my growth essay?
To think about this issue, I made the following graph of GDP per capita versus the World Bank's
"Distance to Frontier" overall measure of government interference:
The US is $52,000 per year and a distance score of 82. China is $7,000 and a score of 63. The diagonal line is an OLS regression fit.
The distance to frontier measure is highly correlated with GDP per capita. It tracks enormous variation in performance, from the abject poverty of $1,000 per year through the US and beyond.
The correlation would be stronger if not for the outliers. In red, Libya and Venezuela are arguably countries with temporarily higher GDP than the quality of their institutions will allow for long. In green, Rwanda and Georgia may have reasons for temporarily low GDP among improving institutions. Cuba and North Korea are missing. Luxembourg, Kuwait, have obvious stories. And I did not weight by population; large countries seem to be closer to the line.
Update: An attempt at nicer graph art. The countries are weighted by population. The dashed line is a weighted least squares fit, weighted by population. China is red, US is blue. Better?
One might dismiss the correlation a bit as reverse causation. But look at North vs. South Korea, East vs. West Germany, and the rise of China and India. It seems bad policies really can do a lot of damage. And the US and UK had pretty good institutions when their GDPs were much lower. (Hall and Jones 1999 control for endogeneity in this sort of regression by using instrumental variables.)
Too much growth commentary, I think, confounds "frontier" with "perfect." The US has good institutions, but not perfect ones. It takes forever to get a building permit in Lybia. It takes 2 years or more to get one in Palo Alto. It could take 10 minutes. We are not completely uncorrupt. Our tax code is not perfect. Property rights in the US are not ironclad. A lawsuit might take 10 years in Egypt. But it still could take 3 years here. (Disclaimer, all made-up numbers.) And so forth.
So, the big question is, just how much greater "level" -- and how much China-like "growth" on the way -- could the US achieve by improving our good but imperfect institutions?
The Distance to Frontier measure is relative to the best country on each dimension in the World Bank sample. So a score of 100 is certainly possible. I labeled that by a hypothetical country, "Frontierland" (FRO) in the graph.
Perhaps we can do better. Even the best countries in the world are not perfect. Let's call the best possible institutions Libertarian Nirvana (LRN). How good could it be? If the US is currently 82, and the union of best current practices 100, let's consider the implications of a 110 guesstimate.
The table shows China and the US along with my hypothetical new countries. Frontierland generates $163,000 of GDP per capita, 209% better than the US. If it takes 20 years to adjust, that means 5.6% per year compound growth. Libertarian Nirvana generates $398,000 of GDP per capita, 651 percent better than the US, a level effect which if achieved in 20 years generates 14.8% compound annual growth along the way.
These numbers seem big. But there are no black boxes here. You see the graph, I'm just fitting the line. And China just did achieve nearly 20 years of 14% growth, and a 700% improvement.
In a sense, the numbers are conservative. The US is above the regression line in the graph. By the regression line, our GDP per capita should only be $33,000 per capita. I extrapolated the regression line, not the current state of the US.
Summary: It is surprising that bad policies, bad institutions, bad ease of doing business, can do quite so much damage. Harberger triangles just don't seem to add up to the difference between $1,000 and $53,000 GDP per capita. But the evidence -- especially the basically controlled experiments of the Koreas and Germanys -- is pretty strong.
The converse must therefore also be true. If bad institutions and policies can do so much damage, better ones may also be able to do a lot of good.
This is admittedly simplistic. Growth theory does distinguish between "ideas" produced by the "frontier" country, that are harder to improve, and "misallocation", "development" of more efficiently using existing ideas. As traditional macroeconomics thinks about aggregate demand easily raising GDP until we run in to aggregate supply, there is a point of superb efficiency beyond which you can't go without more ideas. I don't know where that point is. But uniting the existing best practices around the world in Frontierland is surely a lower bound, and an extra 10 percent doesn't seem horribly implausible.
Lots of other new research suggests that level inefficiencies are sizeable. For example, Chang-Tai Hsieh and Pete Klenow measure misallocation -- the extent to which low productivity plants should contract and high productivity plans should expand, largely by just moving people around (yes, I'm simplifying). They report from this source "Full liberalization, by this calculation, would boost aggregate manufacturing TFP by 86%–115% in China, 100%–128% in India, and 30%–43% in the United States." And this is just from better matches. They're not even talking about policies that raise TFP at all plants, like removing regulatory barriers.
Likewise, Michael Clemens argues that opening borders -- again better matching skills and opportunities -- would roughly double world GDP. That too is (as far as I can tell) based only on "level" calculations, not the "scale" effects of better ideas that growth theory (below) would adduce. But you'd get a lot of "growth" on the way to doubling the level!
Part III. Smith, meet Jones; Growth effects are smaller than you thought
Conversely, it turns out that "growth" effects are vanishing from growth theory. Levels are all we have -- but big levels, that take decades of "transitory" growth to achieve.
The crucial references here are Chad Jones' 2005 "Growth and Ideas" and 1995 "R&D based models of economic growth" and 1999 "Sources of U.S. Economic Growth in a World of Ideas" My discussion will pretty freely plagiarize.
Suppose output is produced using labor \(L_Y\) and a stock of ideas \(A\) by \[ Y = A^\sigma L_Y \] New ideas are likewise produced from labor and old ideas, \[ \dot{A} = \delta L_A A^\phi \] where \(L_A\) is the number of people working on ideas, often (but too narrowly, in my view) called "researchers." To keep it simple, suppose a fraction \(s\) of the labor force works in research, \(L_A= s L\) and that population \(L\) grows at the rate \(n\). The classic Romer, Grossman and Helpman, and Aghion and Howitt models specify \(\phi = 1\). Then we have \[ \frac{\dot{A}}{A} = \delta s L \] and growth in output per capita is \[ g_Y \equiv \frac{\dot{Y}}{Y} -\frac{\dot{L}}{L} = \sigma \delta s L. \] Here you see the new growth theory promise: an increase in the fraction of the population doing research \(s\) can raise the permanent growth rate of output per capita! This is a "growth effect" as opposed to those boring old "level effects" of standard efficiency-improving microeconomics.
But here you also see the fatal flaw pointed out by Jones. The growth rate of output should increase with the level of population. As world population increased from 2 billion in 1927 to 7 billion today, growth should have increased from 2% to 7% per year, per capita. The growth rate of output per capita should itself be growing exponentially! Substituting, we should see \[ g_Y = \sigma \delta s L_0 e^{nt} \] The problem is deep. The model with \(\phi = 1\) gets all sorts of scale effects wrong. Not only has the population increased over the last century, the fraction engaged in R&D has increased dramatically. Integration, by which two economies merge and effectively double their populations, should double their growth rates. Yet frontier growth rates are quite steady, if anything declining since the 1970s.
Jones' solution is simple: How about \(\phi < 1\)? Let's think hard about returns to scale in idea-production
Solving the model for \(\phi \lt 1 \) the idea accumulation equation is \[ \frac{\dot{A}}{A} = \delta s L_0 e^{nt} A^{\phi-1} \] Let's look for a constant growth rate solution \(A_t = A_0e^{g_At}\), \[ g_A= \delta s L_0 e^{nt} A_0^{\phi-1} e^{(\phi-1){g_At}} \] This will only work if the exponents cancel, \[n+(\phi-1)g_A = 0 \] \[g_A = \frac{n}{1-\phi} \] The steady state output per capita growth is then \[ g_Y = \sigma g_A = \frac{\sigma n}{1-\phi}\] This change solves the problem: It's still an endogenous growth model, in which growth is driven by the accumulation of non-rivalrous ideas. There are still externalities, and doing more idea-creation might be a good idea itself. But now the model predicts a sensible steady growth in per-capita income.
The model no longer has "growth effects." Jones:
This should remind you of the great unit root debate. A model \(y_t = \phi y_{t-1} + \varepsilon_t\) with \( \phi=1\) has a unit root, and shocks have permanent effects. A model with \( \phi < 1\) is stationary, with only transitory responses to shocks. But \(\phi=0.99\) behaves for a century's worth of data almost exactly like \(\phi=1\). So the difference between "permanent" and "transitory", like the difference between "growth" and "level" really is not stark.
So where are we? There is no magic difference between permanent growth effects and one-time level increases. All we have are distortions that change the level of GDP per capita.
The big question remains: how bad are the distortions? Which ones have large effects and which are tolerable small effects? Endogenous growth theory still suggests that distortions which interfere with idea production, including embodiment of new ideas in productivity-raising businesses, will have much larger effects than, say, higher sales taxes on tacos. Just why is the correlation between bad government and bad economies so strong? My essay just suggested getting rid of all the distortions we could find.
Part IV. Needless politicization
As I hope this extensive post shows, these questions are not political, and the subject of much deep current research.
Noah chooses to make this political. The quote again,
"Pretending" "bait-and-switch" are unsubstantiated charges of intentional deception. And to call permanent increases in efficiency "short-term" is itself a bit of a stretch.
Even the New York Times, and many respectable "liberal" economists use the words "growth" to describe what has happened in China and to describe what "short-term" level effects could do for the US. From the Hilary Clinton Campaign website,
Enough. Shoehorning interesting economics into partisan political "conservative" vs. "liberal" categories is not a useful way to understand the issues here.
...I want to focus on one bad argument that Cochrane uses. Most of the so-called growth policies Cochrane and other conservatives propose don't really target growth at all, just short-term efficiency. By pretending that one-shot efficiency boosts will increase long-term sustainable growth, Cochrane effectively executes a bait-and-switch.As it turns out, the difference between "growth" and "level" effects in growth theory and facts is not so strong. Many economists remember vaguely something from grad school about permanent "growth" effects being different and much larger than "level" effects. It turns out that the distinction is no longer so clear cut; "growth" is smaller and less permanent than you may have thought, and levels are bigger and longer lasting than you may have thought.
Along the way, I offer one quantitative exercise to help think just how much additional growth the US could get from the sort of free-market policies I outlined in the essay.
Part I Growth and Levels
A quick reply: China.
China removed exactly the sort of "level" or "inefficiency" economic distortions that free-market economists like myself (and Adam Smith) recommend. What happened? Here is a plot of China's per capita GDP, relative to the US (From World Bank). In case you've been sleeping under a rock somewhere, China took off.
Now, in the "growth" vs "level," or "frontier" vs. "development" dichotomy, China experienced a pure "level" effect. Its GDP increased by removing barriers to "short-term" efficiency, not by any of the "long-term" growth changes (more R&D, say) of growth theory.
But "temporary" "short-run" or "catch-up" growth can last for decades. And it can be highly significant for people's well-being. From 2000 to 2014, China's GDP per capita grew by a factor of 7, from $955 per person to $7,594 per person, 696%, 14.8% annual compound growth rate (my, compounding does a lot). And they're still at 15% of the US level of GDP per person. There is a lot of "growth" left in this "level" effect!
Lots and lots of people, even "liberals" in Noah's other false dichotomy, use the word "growth" to describe what happened to China, and would not belittle policies that could make the same thing happen here.
Part II. How much better can the US do?
But can liberalization policies have the same effect for us? Yes, you may say, China had scope for a big "catchup" growth effect. But the US is a "frontier" country. China can copy what we're doing. There is nobody for us to copy. Big increases in levels, which look like growth for a while, are over for us.
But are they? We know how much better China's economy can be, because we see the US. We see how much better North Korea's could be, because we see South Korea. (Literally, in this case.) How much better could the US be, really, if we removed all the distortions as in my growth essay?
To think about this issue, I made the following graph of GDP per capita versus the World Bank's
"Distance to Frontier" overall measure of government interference:
The distance to frontier score...shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005.The individual measures are things like
Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts, Resolving Insolvency(I used GDP data for 2013, and distance for 2014. That gave the largest number of countries.)
The US is $52,000 per year and a distance score of 82. China is $7,000 and a score of 63. The diagonal line is an OLS regression fit.
The distance to frontier measure is highly correlated with GDP per capita. It tracks enormous variation in performance, from the abject poverty of $1,000 per year through the US and beyond.
The correlation would be stronger if not for the outliers. In red, Libya and Venezuela are arguably countries with temporarily higher GDP than the quality of their institutions will allow for long. In green, Rwanda and Georgia may have reasons for temporarily low GDP among improving institutions. Cuba and North Korea are missing. Luxembourg, Kuwait, have obvious stories. And I did not weight by population; large countries seem to be closer to the line.
Update: An attempt at nicer graph art. The countries are weighted by population. The dashed line is a weighted least squares fit, weighted by population. China is red, US is blue. Better?
Too much growth commentary, I think, confounds "frontier" with "perfect." The US has good institutions, but not perfect ones. It takes forever to get a building permit in Lybia. It takes 2 years or more to get one in Palo Alto. It could take 10 minutes. We are not completely uncorrupt. Our tax code is not perfect. Property rights in the US are not ironclad. A lawsuit might take 10 years in Egypt. But it still could take 3 years here. (Disclaimer, all made-up numbers.) And so forth.
So, the big question is, just how much greater "level" -- and how much China-like "growth" on the way -- could the US achieve by improving our good but imperfect institutions?
The Distance to Frontier measure is relative to the best country on each dimension in the World Bank sample. So a score of 100 is certainly possible. I labeled that by a hypothetical country, "Frontierland" (FRO) in the graph.
Perhaps we can do better. Even the best countries in the world are not perfect. Let's call the best possible institutions Libertarian Nirvana (LRN). How good could it be? If the US is currently 82, and the union of best current practices 100, let's consider the implications of a 110 guesstimate.
| Country | Code | Distance | GDP/N | % > US | 20 year growth |
|---|---|---|---|---|---|
| China | CHN | 61 | $7,000 | ||
| United States | USA | 82 | $53,000 | ||
| Frontierland | FRO | 100 | $163,000 | 209 | 5.6 |
| Libertarian Nirvana | LRN | 110 | $398,000 | 651 | 14.8 |
The table shows China and the US along with my hypothetical new countries. Frontierland generates $163,000 of GDP per capita, 209% better than the US. If it takes 20 years to adjust, that means 5.6% per year compound growth. Libertarian Nirvana generates $398,000 of GDP per capita, 651 percent better than the US, a level effect which if achieved in 20 years generates 14.8% compound annual growth along the way.
These numbers seem big. But there are no black boxes here. You see the graph, I'm just fitting the line. And China just did achieve nearly 20 years of 14% growth, and a 700% improvement.
In a sense, the numbers are conservative. The US is above the regression line in the graph. By the regression line, our GDP per capita should only be $33,000 per capita. I extrapolated the regression line, not the current state of the US.
Summary: It is surprising that bad policies, bad institutions, bad ease of doing business, can do quite so much damage. Harberger triangles just don't seem to add up to the difference between $1,000 and $53,000 GDP per capita. But the evidence -- especially the basically controlled experiments of the Koreas and Germanys -- is pretty strong.
The converse must therefore also be true. If bad institutions and policies can do so much damage, better ones may also be able to do a lot of good.
This is admittedly simplistic. Growth theory does distinguish between "ideas" produced by the "frontier" country, that are harder to improve, and "misallocation", "development" of more efficiently using existing ideas. As traditional macroeconomics thinks about aggregate demand easily raising GDP until we run in to aggregate supply, there is a point of superb efficiency beyond which you can't go without more ideas. I don't know where that point is. But uniting the existing best practices around the world in Frontierland is surely a lower bound, and an extra 10 percent doesn't seem horribly implausible.
Lots of other new research suggests that level inefficiencies are sizeable. For example, Chang-Tai Hsieh and Pete Klenow measure misallocation -- the extent to which low productivity plants should contract and high productivity plans should expand, largely by just moving people around (yes, I'm simplifying). They report from this source "Full liberalization, by this calculation, would boost aggregate manufacturing TFP by 86%–115% in China, 100%–128% in India, and 30%–43% in the United States." And this is just from better matches. They're not even talking about policies that raise TFP at all plants, like removing regulatory barriers.
Likewise, Michael Clemens argues that opening borders -- again better matching skills and opportunities -- would roughly double world GDP. That too is (as far as I can tell) based only on "level" calculations, not the "scale" effects of better ideas that growth theory (below) would adduce. But you'd get a lot of "growth" on the way to doubling the level!
Part III. Smith, meet Jones; Growth effects are smaller than you thought
Conversely, it turns out that "growth" effects are vanishing from growth theory. Levels are all we have -- but big levels, that take decades of "transitory" growth to achieve.
The crucial references here are Chad Jones' 2005 "Growth and Ideas" and 1995 "R&D based models of economic growth" and 1999 "Sources of U.S. Economic Growth in a World of Ideas" My discussion will pretty freely plagiarize.
Suppose output is produced using labor \(L_Y\) and a stock of ideas \(A\) by \[ Y = A^\sigma L_Y \] New ideas are likewise produced from labor and old ideas, \[ \dot{A} = \delta L_A A^\phi \] where \(L_A\) is the number of people working on ideas, often (but too narrowly, in my view) called "researchers." To keep it simple, suppose a fraction \(s\) of the labor force works in research, \(L_A= s L\) and that population \(L\) grows at the rate \(n\). The classic Romer, Grossman and Helpman, and Aghion and Howitt models specify \(\phi = 1\). Then we have \[ \frac{\dot{A}}{A} = \delta s L \] and growth in output per capita is \[ g_Y \equiv \frac{\dot{Y}}{Y} -\frac{\dot{L}}{L} = \sigma \delta s L. \] Here you see the new growth theory promise: an increase in the fraction of the population doing research \(s\) can raise the permanent growth rate of output per capita! This is a "growth effect" as opposed to those boring old "level effects" of standard efficiency-improving microeconomics.
But here you also see the fatal flaw pointed out by Jones. The growth rate of output should increase with the level of population. As world population increased from 2 billion in 1927 to 7 billion today, growth should have increased from 2% to 7% per year, per capita. The growth rate of output per capita should itself be growing exponentially! Substituting, we should see \[ g_Y = \sigma \delta s L_0 e^{nt} \] The problem is deep. The model with \(\phi = 1\) gets all sorts of scale effects wrong. Not only has the population increased over the last century, the fraction engaged in R&D has increased dramatically. Integration, by which two economies merge and effectively double their populations, should double their growth rates. Yet frontier growth rates are quite steady, if anything declining since the 1970s.
Jones' solution is simple: How about \(\phi < 1\)? Let's think hard about returns to scale in idea-production
If \(\phi > 0\), then the number of new ideas a researcher invents over a given interval of time is an increasing function of the existing stock of knowledge. We might label this the standing on shoulders effect: the discovery of ideas in the past makes us more effective researchers today. Alternatively, though, one might consider the case where \(\phi < 0\), i.e. where the productivity of research declines as new ideas are discovered. A useful analogy in this case is a fishing pond. If the pond is stocked with only 100 fish, then it may be increasingly difficult to catch each new fish. Similarly, perhaps the most obvious new ideas are discovered first and it gets increasingly difficult to find the next new idea.Or, maybe \(\phi=0\) is a useful benchmark: each hour of work produces the same number of new ideas. But \(\phi=1\) is a strange case; each hour of effort produces the same increase in the growth rate of new ideas.
Solving the model for \(\phi \lt 1 \) the idea accumulation equation is \[ \frac{\dot{A}}{A} = \delta s L_0 e^{nt} A^{\phi-1} \] Let's look for a constant growth rate solution \(A_t = A_0e^{g_At}\), \[ g_A= \delta s L_0 e^{nt} A_0^{\phi-1} e^{(\phi-1){g_At}} \] This will only work if the exponents cancel, \[n+(\phi-1)g_A = 0 \] \[g_A = \frac{n}{1-\phi} \] The steady state output per capita growth is then \[ g_Y = \sigma g_A = \frac{\sigma n}{1-\phi}\] This change solves the problem: It's still an endogenous growth model, in which growth is driven by the accumulation of non-rivalrous ideas. There are still externalities, and doing more idea-creation might be a good idea itself. But now the model predicts a sensible steady growth in per-capita income.
The model no longer has "growth effects." Jones:
Changes in research intensity no longer affect the long-run growth rate but, rather, affect the long-run level of income along the balanced-growth path (through transitory effects on growth). Similarly, changes in the size of the population affect the level of income but not its long-run growth rate. Finally, the long-run growth rateOn reflection, this distinction isn't really a big deal. The model behaves smoothly, for any finitely long period of time or data, as \(\phi\) approaches one. The "level" effects get larger, and the period of temporary "growth" in transition dynamics to a new level gets longer. Even a century's worth of steady growth can't easily distinguish between values of \(\phi\) a bit below one, and the limit \(\phi=1\) of permanent growth effects.
This should remind you of the great unit root debate. A model \(y_t = \phi y_{t-1} + \varepsilon_t\) with \( \phi=1\) has a unit root, and shocks have permanent effects. A model with \( \phi < 1\) is stationary, with only transitory responses to shocks. But \(\phi=0.99\) behaves for a century's worth of data almost exactly like \(\phi=1\). So the difference between "permanent" and "transitory", like the difference between "growth" and "level" really is not stark.
So where are we? There is no magic difference between permanent growth effects and one-time level increases. All we have are distortions that change the level of GDP per capita.
The big question remains: how bad are the distortions? Which ones have large effects and which are tolerable small effects? Endogenous growth theory still suggests that distortions which interfere with idea production, including embodiment of new ideas in productivity-raising businesses, will have much larger effects than, say, higher sales taxes on tacos. Just why is the correlation between bad government and bad economies so strong? My essay just suggested getting rid of all the distortions we could find.
Part IV. Needless politicization
As I hope this extensive post shows, these questions are not political, and the subject of much deep current research.
Noah chooses to make this political. The quote again,
...I want to focus on one bad argument that Cochrane uses. Most of the so-called growth policies Cochrane and other conservatives propose don't really target growth at all, just short-term efficiency. By pretending that one-shot efficiency boosts will increase long-term sustainable growth, Cochrane effectively executes a bait-and-switch."Bad argument" may just mean that Noah is unaware of Jones' and related work. "Cochrane and other conservatives" is telling. Look at my profile. You don't find that word. Open borders, drug legalization, and so forth are not well described as "conservative." I emailed Noah last time he used the word, so his inaccuracy is intentional.
"Pretending" "bait-and-switch" are unsubstantiated charges of intentional deception. And to call permanent increases in efficiency "short-term" is itself a bit of a stretch.
Even the New York Times, and many respectable "liberal" economists use the words "growth" to describe what has happened in China and to describe what "short-term" level effects could do for the US. From the Hilary Clinton Campaign website,
Hillary understands that in order to raise incomes, we need strong growth, fair growth, and long-term growth. And she has a plan to get us there.No, that's not my essay, nor the Bush 4% growth website. There is the word "growth," all over the place, but only the scientific research might count as raising growth in the Noah Smith classificiation. Yet he does not include her among "conservative" economists displaying "bad arguments," "pretending," or "bait and switching."
Strong growth
Provide tax relief for families. Hillary will cut taxes for hard-working families to increase their take-home pay...
Unleash small business growth. ..She’s put forward a small-business agenda to expand access to capital, provide tax relief, cut red tape, and help small businesses bring their goods to new markets.
...Hillary’s New College Compact will invest $350 billion so that students do not have to borrow to pay tuition at a public college in their state. ..
Boost public investment in infrastructure and scientific research. ... Hillary has called for a national infrastructure bank... She will call for reform that closes corporate tax loopholes and drives investment here, in the U.S. And she would increase funding for scientific research at agencies like the National Institutes of Health and the National Science Foundation.
Lift up participation in the workforce—especially for women...
Enough. Shoehorning interesting economics into partisan political "conservative" vs. "liberal" categories is not a useful way to understand the issues here.
Zoning and inequality
I am always pleased when economists normally thought of on different ends of the political spectrum come to the same conclusions. So it is with zoning laws; traditionally a target of free-market and libertarian thinkers. Now joined by Jason Furman, Obama administration CEA chair. From a recent speech,
Moreover,
The differences across places are large and growing:
All of this is familiar where I live in Palo Alto. Like most places in the bay area, my city council is agonizingly green, progressive, and anti-inequality Yet it presides over a rigid zoning system that produces exactly the opposite result: poor people are excluded, young techies who want to live in apartments commute from San Francisco. Granny flats are forbidden. Horrible traffic flows by single family houses on large lots, costing two to three million dollars and more just for the land.
The speech was nice until the "solutions" part, for example,
Oh and of course more cheap credit. Hmm, how can that go wrong
And his silence on "affordable housing" mandates is doubly praiseworthy. One might have expected an Administration speech on this topic to cheer that morass. Silence is, sometimes, golden.
So let's cheer the common ground: Free markets have strong forces that reduce inequality. Much inequality is the result of restrictions -- many state and local, and many undertaken by the most well-meaning people, unfortunately unburdened by a sense of the proper limitations of government action and the value of property rights.
Markets also have forces to get around heavy restrictions. The golden goose can leave; to LA or to Austin TX.
..excessive or unnecessary land use or zoning regulations... impede mobility and thus contribute to rising inequality and declining productivity growth.How?
...zoning regulations and other local barriers to housing development allow a small number of individuals to capture the economic benefits of living in a community, thus limiting diversity and mobility. ...
Zoning and other land use regulations, by restricting the supply of housing and so increasing its cost, may make it difficult for individuals to move to areas with better-paying jobs and higher-quality schools. Barriers to geographic mobility reduce the productive use of our resources and entrench economic inequality.and later
High-productivity cities—like Boston and San Francisco—have higher-income jobs relative to low-productivity cities. Normally, these higher wages would encourage workers to move to these high-productivity cities—a dynamic that brings more resources to productive areas of the country, allows workers in low-productivity areas to earn more, improves job matches and competes away any above-market wages (another type of economic rents) in the high-productivity cities. But when zoning restricts the supply of housing and renders housing more expensive—even relative to the higher wages in the high productivity cities—then workers are less able to move, particularly those who are low income to begin with and who would benefit most from moving. As a result, existing income inequality across cities remains entrenched and may even be exacerbated, while productivity does not grow as fast it normally would.
Moreover,
zoning restrictions are not distributed randomly but instead tend to be more prevalent in high-income communities... This fact, coupled with the income gains for the rich over the past four decades, have worked toward pricing middle- and lower-income families out of the communities with the best schools.The speech reviews a good deal of academic evidence. For example:
An indirect way to gauge the impact of land use restrictions and other supply constraints for buildable land, including the local topography, is to compare the sales price of houses to the cost of materials and labor to build the structure. ... As Figure 1 from Gyourko and Molloy (2015) shows, the gap between real house prices and construction costs has grown over time,
The differences across places are large and growing:
Gyourko et al. (2013) shows how the real home price distribution has widened over the last several decades, coinciding with increased variation in land use restrictions....The answer to lots of people who want to live in the same space, especially urban environments, is to build up. Indeed,
A variety of changes...have led to growing demand for multifamily, rental, shared occupancy, and home modifications.but alas,
multi-family housing units are ... most often the target of regulation...Another limit: In most places the ironclad rule is one family per lot, meaning one structure per lot. No granny flats. Then granny has to move in to a nursing home, paid for by medicare or medicaid.
As the Baby Boomer generation ages into retirement, many more elderly Americans will require modifications to the homes they currently live in or may opt for shared occupancy with another family, often their own. Both of these practices would benefit from changes in zoning policies in some areas of the country so as to make home modification and shared occupancy feasible for a larger number of seniors"The consequences of zoning are much broader and include:"
• Greater environmental damage: when strict zoning policies cap a city’s density, they ensure that the city’s residents must on average occupy more land than they otherwise would and travel greater distances to and from work as well, both of which increase carbon production, all else equal (Glaeser, 2011)To say nothing of horrible traffic, need for more roads, and all the other pollutants as well as carbon, plus pointless waste of time.
All of this is familiar where I live in Palo Alto. Like most places in the bay area, my city council is agonizingly green, progressive, and anti-inequality Yet it presides over a rigid zoning system that produces exactly the opposite result: poor people are excluded, young techies who want to live in apartments commute from San Francisco. Granny flats are forbidden. Horrible traffic flows by single family houses on large lots, costing two to three million dollars and more just for the land.
The speech was nice until the "solutions" part, for example,
First, the Department of Housing and Urban Development (HUD) instituted substantially greater transparency through its Affirmatively Furthering Fair Housing (AFFH) rule,...I didn't make that one up. Daffy Duck should apply to head this initiative.
The Fair Housing Act of 1968 required any group receiving federal housing funds, as well as federal agencies overseeing such programs, to actively work toward increasing fair housing and equal opportunity. ...the new HUD rule, finalized this year, will give communities new tools to quantify the remaining inequities in local housing markets and achieve greater clarity in setting goals for the future. As a central part of this initiative, HUD will provide publicly open data and mapping tools to community members and local leaders, so that they can assess conditions in their housing markets.I'm not holding my breath. Palo Alto's strict zoning did not occur because nobody has zillow and google maps and so can't figure out what's going on. And they have a slew of programs that are "actively" "working toward" "increasing fair housing."
Oh and of course more cheap credit. Hmm, how can that go wrong
The Multifamily Risk-Sharing Mortgage program, a partnership between HUD and the Treasury,...This is not a criticism of Jason. He is, after all, CEA chair, so his job is to finish speeches with what great stuff the Administration is doing. That the result is almost a parody of ineffective nanny-state bureaucratic paper shuffling is not his fault.
And his silence on "affordable housing" mandates is doubly praiseworthy. One might have expected an Administration speech on this topic to cheer that morass. Silence is, sometimes, golden.
So let's cheer the common ground: Free markets have strong forces that reduce inequality. Much inequality is the result of restrictions -- many state and local, and many undertaken by the most well-meaning people, unfortunately unburdened by a sense of the proper limitations of government action and the value of property rights.
Markets also have forces to get around heavy restrictions. The golden goose can leave; to LA or to Austin TX.
Selasa, 01 Desember 2015
Be prepared for Year End
Welcome to December! I always loved December because I would get excited to see how the practice did for the year, how it compared to the previous year, and start setting goals for the next year. It is kinda like “A Christmas Carol” for the dental practice . . . past, present, and future. Hopefully you don’t have too many scary ghosts haunting your office numbers.I want to help you be as prepared as possible for year end. With that in mind, Dentrix put together a great info sheet for you to reference when the time comes to close out your year.
CLICK HERE to access the Dentrix Year End info sheet
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