Reynolds’ Law, by Mark J. Perry

Reynolds’ Law, by Mark J. Perry

Postby admin » Wed Dec 28, 2016 5:02 am

Reynolds’ Law
by Mark J. Perry @Mark_J_Perry
aei.org
June 30, 2013

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In 2010, Philo of Alexandria coined the term Reynolds’ Law: “Subsidizing the markers of status doesn’t produce the character traits that result in that status; it undermines them.”

Reynolds’ Law was based on this remark by Instapundit’s Glenn Reynolds:

The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.


Philo of Alexandria explains:

It’s easy to see why [Reynolds’ Law works]. If people don’t need to defer gratification, work hard, etc., in order to achieve the status they desire, they’ll be less inclined to do those things. The greater the government subsidy, the greater the effect, and the more net harm produced.

This law is thus a relative to Murray’s third law in Losing Ground, the Law of Net Harm: “The less likely it is that the unwanted behavior will change voluntarily, the more likely it is that a program to induce change will cause net harm.” But Reynolds’ Law rests on a different and more secure foundation. It focuses on character as fundamental.

Since the time of Woodrow Wilson, Democrats—but not only Democrats—have fretted that the middle class is shrinking due to the power of large corporations, and that only government action to “level the playing field” can save the middle class. The “middle class is being more and more squeezed out by the processes which we have been taught to call processes of prosperity.” Obama? Hillary? No, that’s Woodrow Wilson in 1913 (The New Freedom). It’s striking to realize that progressives have been playing the same tune for a century, no matter what’s actually taking place in the economy—indeed, in the midst of the greatest expansion of affluence in the history of the world—with the same set of proffered solutions: greater government power, regulations, higher taxes, and subsidies for the markers of affluence.

Reynolds’ Law thus strikes at the heart of progressivism as a political ideology. Progressivism can’t deliver on its central promise. In fact, it’s guaranteed to make things worse in exactly that respect. It’s not that it sacrifices some degree of one good (liberty or prosperity, say) to achieve a greater degree of another (equality). That suggests that the choice between conservatism and progressivism is a matter of tradeoffs, balances, and maybe even taste. Reynolds’ Law implies that progressivism sacrifices some (actually considerable) degrees of liberty and prosperity to move us away from equality by undermining the characters and thus behavior patterns of those they promise to help.

Not coincidentally, progressives accumulate power for themselves, not only by seizing it as a necessary means to their goals but by aggravating the very social problems they promise to address, thus creating an ever more powerful argument that something has to be done.


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Comments:

Discussion: (36 comments)
Tom E. Snyder June 30th, 2013
Mind-blowing!

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Benjamin Cole July 1st, 2013
Yes—but does anyone really want to wipe out the biggest homeowner subsidy of all: The homeowner’s mortgage interest tax deduction?

Odd that Glenn Reynolds fails to even mention that.

Canada has no such deduction And no collapse in Canadian home prices, either.

Hmmm.

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Duracomm July 1st, 2013
It would take a good sized paper to list the subsidies housing receives.

It is completely unrealistic and gratuitous nit picking to expect Glenn Reynolds to provide a detailed list of specific subsidies in a short blog post when the the word subsidy in general is sufficient to describe the problem.

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Ken July 1st, 2013
but does anyone really want to wipe out the biggest homeowner subsidy of all: The homeowner’s mortgage interest tax deduction?

Yes. I do.

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Jess1 July 2nd, 2013
“Odd that Glenn Reynolds fails to even mention that”

Odd that one commenting on an issue fails to do the most basic research.

(yes, Insty has questioned the HMD. Sorry to burst your bubble)

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Jake W. July 1st, 2013
The correlation vs. causality problem rears its ugly head yet again.

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Benjamin Cole July 1st, 2013
The feds also subsidize flood insurance for homeowners. I wonder why Reynolds did not mention that?

The National Flood Insurance Program (NFIP) is a program created by the Congress of the United States in 1968 through the National Flood Insurance Act of 1968 (P.L. 90-448). The program enables property owners in participating communities to purchase insurance protection from the government against losses from flooding. This insurance is designed to provide an insurance alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods.[1] As of April 2010, the program insured about 5.5 million homes, the majority of which were in Texas and Florida.[2]

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JMRinPR July 1st, 2013
Ask the folks in NJ and NY affected by Sandy what they think of the program.

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PeakTrader July 1st, 2013
Some degree of government is needed for security and stability, e.g. a safety net.

If Congress began to slowly tighten lending standards when the Fed began to tighten the money supply, in the 2000s, the housing crash could’ve been averted.

Government can move an economy towards optimization, rather than allow a suboptimal economy, to a large extent, like in the 19th century. There are good policies and bad policies.

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geoih July 1st, 2013
“Government can move an economy towards optimization, …”

And how would the “government” possibly know what an optimal economy is?

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PeakTrader July 1st, 2013
Ever hear of “macroeconomics?”

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Ken July 1st, 2013
Yes. It’s typically the pretense of knowledge and a fantasy that aggregate (macro) statistics somehow live independently of the individual acts, the micro economics. Much of it is backwards causality.

Another big problem is using accounting identities to come up with ridiculous theories, like the Keynesian “multiplier”.

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PeakTrader July 1st, 2013
The summation of individuals is the aggregate. That’s why you don’t see, and even if you looked, you don’t understand how they interrelate and interact, based on your prior comments.

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Ken July 1st, 2013
I understand far more than you. Aggregates, by definition, lose information. In fact, summation is a one way function. It is impossible to recover the original terms of a sum given just the sum. Given a sum, there is some things you can say about the summands, but very little. In fact, if I say X is the sum of 10 real numbers, this literally tells you nothing about the original 10 numbers. You can choose any 9 numbers and fit the tenth to make the sum come out. The solution set is the entire 9-dimensional hyperplane. When you’re talking about national statistics, you are talking about n-dimensional hyperplanes on the order of 8 magnitudes.

Pretending you know a lot about the summands are given a sum is the very pretense of knowledge that you pretend to when you say “summation of individuals is the aggregate”. That you fail to understand that almost nothing of value can be said of those individuals when all you have is the single aggregate number is the very reason why macroeconomics has failed so splendidly for decades. The very problem with macroeconomics is the implicit irrelevance of the individual once a macro statistics has been computed.

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PeakTrader July 2nd, 2013
Mainstream economists use rigorous models and scientific methods.

For example, a labor economist can build a sound empirical model and tested for multicollinearity, heteroskedasticity, autocorrelation, etc., using aggregate data sets (or actual data) to find a 10% increase in the minimum wage reduces teen employment 1% at the 95% confidence level.

And, mainstream economists often proved conventional wisdom wrong.

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BH July 2nd, 2013
“Mainstream economists use rigorous models and scientific methods”?

Nonsense.

Scientific method requires the ability to perform experiments over and over, and for other scientists to be able to reproduce the results. None of this is possible for an economy. So what passes for science in economics is not only under tested and under verified, it is based on unstated assumptions about the future. You can calculate the number of buggy whips necessary in 1950 based on 19th century data, but the results will not reflect the invention of the automobile.

There is a certain irony in your example. The precision of the calculation of by which we can predict the increase in teen unemployment due to increased minimum wage has not caused economists to universally stand up against such laws.

In particular, consider the current economic policies of the Federal Reserve. The combination of being the reserve (default exchange) currency, extreme money creation, and holding interests rates low, has never been attempted before. And the closest analogues from the past resulted in disaster. Yet Fed economists crunch numbers which tell them how much employment will increase through their efforts. Anyone paying attention knows that it isn’t working.

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Ken July 1st, 2013
Some degree of government is needed for security and stability, e.g. a safety net.

False. There is never a safety net. It’s a fantasy that people have made up in order to convince others to give over their hard earned money and hard won liberties. It’s also a dangerous fantasy as people think they are wealthier and safer than they actually are causing them to be more reckless with themselves and their wealth.

Government only shifts responsibility and never to itself. For example, my 65 year old self is being made poorer in order for 13% of my salary go to wealthy older people today. Government is creating a wealth shortage for the elderly of the future because the elderly today don’t give a wink about them.

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LarryG July 1st, 2013
home ownership is a “marker” I agree.

But education, including college does have most who graduate become midldle class or better.

using the phrase “LAW” with some of this blatant ideological blather is amusing..

progressives don’t “seize” power in a representative govt – they essentially win the free market in free speech by convincing a majority of the correctness of their views.

they “seize” power by getting a majority of votes.

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geoih July 1st, 2013
It would appear that the huge number of college graduates that are under or unemployed, with massive amounts of debt, is significant evidence that a college education doesn’t make you middle class.

There is no free market in politics. That’s like saying there is free trade in crime.

Politics is force and coercion. Democracy is simply a way of establishing a majority that will then use force and coercion to take what they want.

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morganovich July 1st, 2013
geo-

you have hit upon the weird disconnect in peak’s mind.

he thinks individuals do not make/do not have enough information to make good choices for themselves, even about things they personally experience.

yet he also thinks that when these same people vote, they suddenly acquire the wisdom to elect governments that can make the choices that they cannot despite not having anyhting like the information.

it’s pure sleight of hand.

the argument is basically that markets work around elections, but not around consumption and production choices, which is absurd and false, particularity given that elections are NOT markets in a true sense as they have extremely perverse coercive incentives.

if i want to get paid at work, i have to work, if i want to buy a car, i have to spend money, but in an election, i can vote for you to pay me and subsidize my car.

this set of incentives make the process of electing these totalitarian economic managers that peak posits do deeply flawed that even if in the perfect imaginary world of perfect knowledge to allow such management, the citizens would never elect such people (even assuming they existed) preferring cronyism and patronage.

markets do not work in the presence of coercion. if geo and i can vote that peak pays for lunch, well, that’s going to lead to some pretty big lunches.

pure democracy is simply a particularly nasty and self justifying form of tyranny.

social and economic liberty comes from rights, not suffrage.

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Paul July 1st, 2013
“pure democracy is simply a particularly nasty and self justifying form of tyranny.”

And it’s particularly dangerous in our society full of low-information voters. We are far from the “well informed citizenry” founders like Jefferson warned were vital.

http://www.youtube.com/watch?feature=pl ... gXOV_XWJck

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Ken July 1st, 2013
“Sequester what? I don’t know. I just voted for him because he’s black.”

Racist blacks voting for someone just because he’s black. Don’t blacks think racism is a problem? Or is it only a problem if a non-black person votes for someone because they’re not black?

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PeakTrader July 1st, 2013
Morganovich, your comment sounds like a bartender, who had too many vodka-marijuana-LSD cocktails.

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morganovich July 2nd, 2013
and yours sounds like a hack, unable to even keep up with the discussion.

nice try.

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docqbsc1972 July 1st, 2013
“In general, the art of government consists of taking as much money as possible from one party of the citizens to give to another.” Voltaire

“The great enemy of the truth is very often not the lie – deliberate, contrived and dishonest – but the myth, persistent, persuasive and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought.” John F. Kennedy, 35th President

“The free market punishes irresponsibility. Government rewards it.” Harry Browne

“This idea that the government has services or goods that they can pass on is a complete farce. Governments have nothing. They can’t create anything, they never have. All they can do is steal from one group and give it to another at the destruction of the principles of freedom.” Ron Paul

“Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.” Frederic Bastiat

“How fortunate for governments that the people they administer don’t think.” Adolf Hitler

“Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity.” Dr. Martin Luther King

“Give me control over a nation’s currency and I care not who makes its laws” Baron M.A. Rothschild (1744 – 1812)

Agree or disagree……these will make you think…at least a little.

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Ken July 1st, 2013
progressives don’t “seize” power in a representative govt

Of course this is complete nonsense. Obama won roughly 28% of the voting age vote, but gets to enact laws and write executive orders that affect 100% of Americans. To say that 28% is representative is absurd. Congressmen and senators get voted into office with an even lower percentage.

they “seize” power by getting a majority of votes.

Exactly, which is not a majority of adults, much less a majority of the population. In other words, these people are not representative of a majority. Our system of government, where the constitution is routinely ignored (leftists actually celebrate this) is about a minority oppressing a majority.

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morganovich July 1st, 2013
ken-

don’t feed the troll.

larry has long since demonstrated that he is impervious to basic logic and argument and excellent at being inflammatory and annoying.

i invite you to join our boycott of responding to him. it seems only to encourage him and clog thread after thread with repetitive foolishness.

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Ken July 1st, 2013
It’s fun to talk with this troll. Inevitably, its response is “STFU!” because it can’t present a coherent argument for what it really really wants to be true.

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Seattle Sam July 1st, 2013
Progressives have created for themselves a program with an endless “do-loop” .

Step 1. Identify a problem.
Step 2. Devise a government solution to the problem.
Step 3. Discover that Step 2 has actually exacerbated the problem.
Step 4 Go to Step 2

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morganovich July 1st, 2013
reynolds law is basically a restatement of cargo cult thinking.

polynesian natives who craved more trade goods from european ships would build their own fake ships to put in the bay assuming it would make goods appear.

they thought it was the image of ships, not europeans arriving that would provide trade.

these polices are much the same.

they are mistaking the images and trappings of middle class life for middle class life.

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bob July 1st, 2013
Remember the push to give poor folks books, because middle and upper class folks had books, hence if you had books you would be middle class. The sad part is they really believe they are doing good.

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Rick July 1st, 2013
Or to give each new baby a CD of Classical music because people that listen to Classical drive nice cars and wear glasses with round lenses.

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PeakTrader July 2nd, 2013
The reality is education generates income and income generates education.

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Jess1 July 2nd, 2013
“education” =/= markers & certifications

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Maxim July 2nd, 2013
Once everyone earns a college degree, then poverty will be wiped away from the face of the Earth… Right? And everyone will at least be in the middle class. So then we won’t need any more stinking government programs because they will have been rendered archaic since everyone now has an education (government subsidized) that affords himself to live in a middle class life style.

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Alan Reynolds May 19th, 2014
I have a 1996 trademark on Reynolds’ Law (which was a clarification of Hauser’s Law):

“Ever since 1951, the individual income tax has collected almost 10 percent of personal income, plus or minus 1 percentage point. The individual income tax never was lower than 9 percent of personal income, nor higher than 11.2 percent. And that has been true every year, regardless of whether the highest tax rate was 91 percent or 28 percent, and regardless of whether loopholes were cavernous or stingy. The individual income tax briefly touched 11 percent on only two occasions (1969 and 1981), but the economy quickly crumbled both times, bringing revenues back down to the 9 to 10 percent norm.

The American people, in their wisdom, appear unwilling to tithe to the federal government more than 10 percent of their income. Few things in life are as predictable as this. Indeed, the regularity is so striking that we just have to put a name on it. After much reflection, I have reluctantly decided, with characteristic humility, to call it “Reynolds’ Law.” That way, if it ever fails, you can blame me.”

(I later changed it to ~9 percent of GDP, because people are more familiar with that than personal income).

Alan Reynolds, “Doing a numbers job on our taxes,” Washington Times, April 9, 1996.
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