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In response to this article that says paranoia is on the rise, I would like to say I’m being watched.

In the last two days, things I’ve been discussing with people have been blogged about by others whom I read. This wouldn’t be weird if something common had sparked them both. But I was discussing them for my own reasons.

The first on the list is from David Friedman: Was the Sexual Revolution a Mistake?

In a world where non-marital cohabitation is for most people not an option–roughly speaking, the U.S. prior to the 1960’s–the usual way of satisfying those desires is marriage. Because, in that world, marriage was seen as a very long term commitment, men and women were reluctant to engage in it without sufficient search to convince themselves that they had found the, or at least a, right partner. Sometimes they were wrong, but less often than if they had been willing to propose to the first even moderately plausible candidate. In the current world, cohabitation provides many of the same short term benefits as marriage without the long term commitment.

Once in such a relationship, however, both search and exit become harder than they were in the pre-marital state under the older system. If you have a nest to come home to, it can be hard to abandon it for the cold world outside and a renewed search. If you are fond of your partner, breaking up is hard to do even if an objective consideration persuades you that it is in the long term interest of both parties. Hence cohabitation may be continued, converted into marriage or the near equivalent, even if the parties are not as well suited to each other as would have been required for mutual assent to marriage under the old system.

At this point I am abandoning, or at least weakening, the assumption of rationality. Sufficiently rational partners would understand all this and choose between cohabitation and search accordingly. But rationality in this context is under pressure from two directions. Many of us are poor at making tradeoffs between short term and long term, as the usual state of my weight demonstrates. And the emotions associated with love, sex, and cohabitation may not be entirely conducive to rational thought. If so, the availability of an attractive short term substitute for marriage may result, in the long term, in ending up with the wrong person.

Interestingly enough, the night before I was having a very important conversation with the person with whom I cohabitate about exactly that (more the last paragraph, as opposed to the contrasting part).

Earlier today I was explaining to some coworkers that there are many educated people who have many misconceptions about economics. Specifically, I was discussing the trade deficit. A few years ago I was looking to fill some gen-ed requirements and chose some political science classes. One was an international relations course. It was mostly an intro, again just to knock out the requirement. The professor was a good guy: pretty bright, good at communication (something sorely lacking most of the time), and had a good background in international economic issues. I have a paper he wrote discussing certain aspects of the Mundell-Flemming framework.

However he still discussed balances of trade with the standard incorrect understanding: an imbalance of trade (towards the negative) increases our debt. Wrong.

This evening I read this letter from Don Boudreaux over at Cafe Heyek.

First, a higher trade deficit does not necessarily mean higher borrowing. If Mr. Morici pays $25,000 cash for a new Camry and Toyota then squirrels those dollars away in a safe, the U.S. trade deficit rises by $25,000 but Americans’ debt hasn’t risen by a dime as a result. Second, the largest portion of the U.S. trade deficit that today BECOMES debt consists of loans by foreigners to Uncle Sam. Contrary to Mr. Morici’s claim, this rising American indebtedness does not reflect too much American freedom to trade; instead it reflects too much irresponsible spending by the same agency - Uncle Sam - that Mr. Morici mysteriously trusts to restrict our trade and fix the economy.

Don’s right. I explained it to my coworkers in a different way. I’ll retroactively link my explanation after I post it separately.