Grasping Reality on TypePad, by Brad DeLong

A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.

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Steven Pearlstein has a great piece in today’s Washington Post slamming Michael Steele’s moronic op-ed from earlier this week. Still, it seems to me that from an institutional perspective when you publish a nonsense Michael Steele op-ed and then publish a strong rebuttal to the op-ed you are, on net, detracting from the American people’s understanding of the issues. It’s the same as when you let George Will mislead people about climate science and then publish various rebuttals. In general, a serious publication doesn’t host “debates” about totally worthless ideas. The fact of the debate is meant to suggest the existence of some debatable issue. The back-and-forth between Steele and Pearlstein indicates that there’s a debate about Steele’s ideas. That’s a win for Steele—the guy who’s basically making up BS. Which means that the Post is contributing to the creation of an ever-more-BS-full debate in years to come.

Courtesy of Chris Blattman

That so many Americans are so ready to rally around the most vile, most obviously illegitimate arm of the American state is evidence for the proposition that patriotism is a tool for rendering a people ready to torture and kill at the state’s behest, or to tolerate it. I am disgusted that people who pretend to care about liberty are not disgusted. Rep. King said that we (who exactly? The American people, the CIA?) must ”do whatever we have to do,” must pursue a “scorched earth policy” on behalf of the secret police and their unchecked discretion to torture those in its custody. Do we have to wait for the scorched earth before calling this thing for the terrorists?

The premise is correct, employee compensation comes out of wages.  The subtle mistake is to forget that this is only true in equilibrium.  Imagine that a single employer was able to buy for his employees equal quality health insurance at a lower price. Would wages at that firm rise?  No, an employer only has to pay workers what they could earn in another job.  If other firms aren't paying more then this firm need not raise wages even though its costs have fallen.  Thus an employer that reduced health insurance costs while keeping real compensation the same could pocket the savings as profit.  It's only when other firms follow suit--also in an attempt to cut costs and earn excess profits--that wages at all firms rise, eliminating the excess profit everywhere. The process produces the equilibrium.  You can't have one without the other.