Links of Interest

Calculated Risk on the housing recovery

Some tributes to the late Armen Alchian from David Henderson and David Glasner.

Josh Barro on “Conservatives’ Self-Defeating Hatred of Chris Christie”

Before Greed?

Mark Thoma, at Economist’s View, points us toward an interesting essay by Richard White called “Before Greed: Americans Didn’t Always Yearn for Riches.” In it, White tells how Abraham Lincoln accumulated only modest wealth, during an era in which “great wealth was an aberration” and the very idea that the accumulation of great riches was a foreign concept.

One gets the sense that people “back then” were more noble, more high-minded, and more public-spirited.  At least they seem to be more easily satiated, yearning only for “progress from poverty to competency.”  According to such a narrative, we have degenerated into money-obsessed creatures whose public-mindedness has been considerably damaged in the process.

White goes on to claim, without presenting any evidence, that “Most Americans have come to think of the American dream not as a competency but rather as the accumulation of great wealth.” It’s not clear how “great wealth” is defined, so this claim is certainly open to interpretation; however, evidence from the General Social Survey (GSS) suggests that people still consider non-monetary factors to be important reasons why they do what they do. When asked to list the characteristics of a job they most preferred, 48 percent of respondents said the most important to them was that their work was important and they felt a sense of accomplishment from doing it.  We have to be careful in interpreting survey data like this in general, but it does not suggest that desire for “great wealth” is the only factor.

Despite the survey data, perhaps we have come to put far too much emphasis on accumulating “great wealth.”  But even if that’s true, it’s certainly not a new feature of human nature. Except that White tells us that it is new – and that the shift occurred in the 1890s.  That idea is without foundation, as Deirdre McCloskey succinctly summarized in her impressive work on Bourgeois Dignity:

People have indulged in the sin of greed, for food or money or fame or power, since Eve saw that the tree was to be desired, and took the fruit thereof. Soviet Communism massively encouraged the sin of greed, as its survivors testify. Medieval peasants accumulated no less “greedily” than do American corporate executives, if on a rather smaller scale. Hume declared in 1742 that “Nor is a porter less greedy of money, which he spends on bacon and brandy, than a courtier, who purchases champagne and ortolans [little song birds rated a delicacy]. Riches are valuable at all times, and to all men.”

And McCloskey reminds us what the great sociologist Max Weber had to say on the subject:

“The notion that our rationalistic and capitalistic age is characterized by a stronger economic interest than other periods is childish.”  The lust for gold, “the impulse to acquisition, pursuit of gain, of money, of the greatest possible amount of money, has in itself nothing to do with innovation. This [greedy] impulse exists and has existed among waiters, physicians, coachmen, artists, prostitutes, dishonest officials, soldiers, nobles, crusaders, gamblers, and beggars. One may say that is has been common to all sorts and conditions of men at all times and in all countries of the earth, wherever the objective possibility of it is or has been given.”

Quote of the Day

From a great Washington Post profile of Stanley Fischer:

Around the same time, Fischer tackled John Maynard Keynes’s “The General Theory of Employment, Interest, and Money.” “I was immensely impressed,” he said, “not because I understood it but by the quality of the English.”

(ht: Greg Mankiw)

Unintended Consequences

Via Tim Taylor, bans on plastic grocery bags seem to have some nasty unintended consequences, as Jonathan Klick and Joshua Wright explain:

San Francisco typically experiences about 12 deaths per year from intestinal infections, and that the restrictions on plastic bags probably let to another 5-6 deaths per year in that city–plus, of course, the personal and social costs of some dozens of additional hospitalizations. With these costs taken into account, restrictions on plastic bags stop looking like a good idea.

Quote of the Day

From Adam Smith’s Theory of Moral Sentiments:

We suffer more, it has already been observed, when we fall from a better to a worse situation, than we ever enjoy when we rise from a worse to a better. Security, therefore, is the first and the principal object of prudence. It is averse to expose our health, our fortune, our rank, or reputation, to any sort of hazard. It is rather cautious than enterprising, and more anxious to preserve the advantages which we already possess, than forward to prompt us to the acquisition of still greater advantages. The methods of improving our fortune, which it principally recommends to us, are those which expose to no loss or hazard; real knowledge and skill in our trade or profession, assiduity and industry in the exercise of it, frugality, and even some degree of parsimony, in all our expences.