Double Evil!

From the always lovable Lew Rockwell:

Is everything evil along the DC subway's Orange Line? Well, no, but they all work for the regime, or are the regime, as Former Beltway Wonk points out. Here's his list: American Prospect; Andrew Sullivan; BATF, CATO, Homeland Security, Federal Reserve; FDA; IRS; IMF; Marginal Revolution; Matthew Yglesias; Megan McCardle; New Republic; OSHA; Pentagon (very close); Reason Magazine; State Department; Treasury Department; Volokh Conspiracy; White House; Will Wilkinson.

I am very flattered to be considered evil independent of the evil that is Cato, but, as I keep insisting, I live on the Green Line.

Anyway, the narcissism of small differences.

Richard Florida on Free Will

Today on Free Will on Bloggingheads TV, I chat with Richard Florida about his new book Who's Your City: How the Creative Economy Is Making Where You Choose to Live the Most Important Decision of Your Life.

This is a really fascinating book and I highly recommend it. First of all, it's really important to help people realize that where you live is important, that it is a choice, and you are responsible for it. Second, the importance of agglomeration to innovation and growth is I think one of the most interesting issues there is, and Florida does a great job of covering this work. But what I found most fascinating is new work Florida reports on that shows the relationship between place and happiness and place and personality. Did you know that extraverts are more likely to live in the midwest? That New York City is the capital of neuroticism? (Of yeah, you did!) That big coastal cities are most likely to be home to people high on openness to experience? Does your personality really fit the place you live? Fascinating stuff.

I read an early version of Who's Your City about two years ago and told Richard it would be really interesting to see if there is a relationship between place and personality. I was completely blown away reading the finished book to see that there is in fact some good data on this and also by how far Richard is pushing it. I hope the book does well, and I'm betting it does.

Unequal Democracy

I'm three pages into the first chapter of Larry Bartels' forthcoming Unequal Democracy: The Political Economy of the New Gilded Age and I have questions:

My examination of the partisan politics of economic in equality, in chapter 2, reveals that Democratic and Republican presidents over the past half-century have presided over dramatically different patterns of income growth. On average, the real incomes of middle- class families have grown twice as fast under Democrats as they have under Republicans, while the real incomes of working poor families have grown six times as fast under Democrats as they have under Republicans. These substantial partisan differences persist even after allowing for differences in economic circumstances and historical trends beyond the control of individual presidents. They suggest that escalating inequality is not simply an inevitable economic trend— and that a great deal of economic inequality in the contemporary United States is specifically attributable to the policies and priorities of Republican presidents.

Fascinating if true! But, congress writes the laws, not the president. So why not look at the party tilt of congresses rather than presidents? Or the alignments between the party controlling congress and the part in the White House. What happens under divided government, I wonder.

This is not to say that presidents don't have a lot of policymaking power, especially given the massive growth in the size and power of the bureaucracies under executive control. The cabinet agencies' considerable discretion in creating and enforcing regulations and their ability to selectively apply and enforce legislated mandates should be troubling — in itself and independent of issues of partisan slant — to those, like Bartels, who start with Dahl's “Who governs?” question.

Because growth effects, for good or ill, follow policy changes with a pretty long lag (in political time at least), I guess this effect is supposed to be largely a function of redistributive policy that can take effect within a president's term?

I'm looking forward to reading pages 4 – n. The book looks to me like Krugman for serious people. I find that I'm completely convinced by the main premise of the Bartels/Krugman line, which is that a great deal of the increase in inequality has been an effect of Republican approaches to taxation and redistribution. I'm simply not convinced that this is pernicious. I do think economic stratification is pernicious, but that has more to do with the Democratic Party standing in the way of fundamental structural reform in education as it has to do with Republican tax cuts for rich people, doesn't it? I have an inkling that Bartels thinks voters want more redistribution and less inequality, but aren't getting it. I think this is half right. Many people increasingly do want less inequality, but they want that to happen primarily through increased access to decent educational opportunities. (I have seen data to this effect.) To really hit hard at nominal inequality through redistribution, we'll need to raise taxes on the middle class a lot. But I don't think there is unmet political demand for huge middle-class tax increases. We'll see. Page 4, here I come!

Balancing Risks

I agree with Jim Manzi's position, as he lays it out in his smart reply to Jonathan Chait:

Carbon dioxide is greenhouse gas, and if you put more of it in the atmosphere, then all else equal the Earth will get warmer. The key unknown, because of the complexities of climate feedbacks, is how much warmer. The UN IPCC forecasts that Earth will get something less than 3C hotter within about a century, and further estimates that 4C of warming would cause the world to lose 1% – 5% of GDP; therefore the expected costs of global warming are on the order of 3% of GDP sometime well into the 22nd century. This is a huge amount of money, but not exactly consistent with Miami becoming an underwater theme park. Given that global consumption is projected to grow from about $6,600 per person per year today to about $40,000 per person per year over the next century, it’s pretty hard to justify massive sacrifice of wealth today for the purpose of preventing our descendants a hundred years from now being only 5.7 times, instead of 6 times, as rich as we are. The real risk is that science has radically understated the greenhouse effect. A carbon tax designed for the expected case can safely be avoided for decades, while a carbon tax high enough to ameliorate a low-odds disaster scenario would be insanely expensive. Relatively low-cost investments in specific technologies that would be useful if such a disaster scenario arose, on the other hand, are a smart insurance policy.

Why don't more people believe something like this?

Capitalism: It's Nice!

These findings have been rolling in over the last half-decade or so: democratic market cultures produce a tendency to cooperation.  Here's more:

Researchers use economic games to investigate how people cooperate in real-life. Now a team led by Benedikt Herrmann, at the University of Nottingham, have identified striking differences in the way university students from different countries play one such game known as The Public Goods Game. Compared with students from developed Western nations, students from less democratic countries like Saudi Arabia, Oman and Belarus tended to punish not only free-loaders, but also cooperative players, with the result that cooperation in their groups plummeted.


In a commentary on the findings, published in the same journal, Herbert Gintis of the Sante Fe Institute, said the results challenge the way people have tended to view capitalist democracies. “The success of democratic market societies may depend critically upon moral virtues as well as material interests, so the depiction of civil society as the sphere of 'naked self-interest' is radically incorrect,” he wrote.

All this should not be surprising. People in places that got rich by doing more than finding useful stuff in the ground got that way by getting good at cooperating.

Krugman on Immigration and Inequality

Because I want to be certain not to argue against a strawman in my inequality paper, I'm arguing against Paul Krugman, for the most part. So I've been reading The Conscience of a Liberal for the third time. This is not pleasant work. Reading a John Bates Clark Medal winner shouldn't feel this much like reading Ann Coulter. But it does. Liberal Fascism is a more intellectually evenhanded book, which says more about Krugman than it does about Liberal Fascism, I'm afraid.

But I digress before I even start. When Krugman talks about immigration, he has two points to make. One is that Republicans can't win by being racists forever, because that's sure to backfire once the Latin American population becomes large enough. The other point is that lots of low-skilled immigration makes it hard to politically mobilize the working class, since so few immigrants can vote. In Krugman's view, if the working class contains many members without the franchise, it is itself disenfranchised. So it is that Krugman pretty nearly celebrates one of the most shameful chapters in 20th century American politics: the progressive (read: “racist”) imposition of strict immigration controls to keep shifty Asians and dirty Italian anarchists off our shores.

Krugman says that “a more fully enfranchised population” was an “unintended consequence” of the Immigration Act, but the effect that Krugman celebrates was not at all unintended by Samuel Gompers and the AFL, perhaps the most powerful driving force behind the law. And it is an effect Krugman thinks we should consider intending: “The disenfranchisement effect is, however, something liberals need to think hard about when confronting questions about immigration reform,” he delicately puts it.

What Krugman never says about immigration is that it is the most powerful engine of economic mobility and equalization there is. This make it obvious that Paul Krugman is not especially concerned with poor people or with economic equality. He is evidently not even especially concerned with poor people in the United States if they can't vote. He seems to think it is at least worth considering keeping some of those people out of the country — keeping them poorer — if that would help achieve the redistributive politics he prizes. What kind of egalitarian is that?

Imagine a choice between two policies. Policy A would leave the level of redistribution just as it is, but would allow a much larger volume of immigration. Policy B would leave immigration as it is, but would increase the level of redistribution from rich to poor citizens. Which policy should a humanitarian favor? There can be no doubt: policy A. Which policy should an egalitarian favor? Well, Policy A will increase nation-level inequality by increasing the proportion of the population near the bottom of the income distribution. But why is this of any moral significance? If we take the set of people in the U.S. at time 2, and follow them all back in time to t1, when everyone is in whatever country he or she was in then, and see whether inequality has increased or decreased among this group of people, we will see that it has decreased a great deal, and that almost all of this decrease will have come from the poor becoming richer in real terms, and not from the rich losing income to taxes. If it were necessary to limit redistribution in order to make a greater volume of immigration politically feasible, then egalitarians and humanitarians ought to be for it.

Paul Krugman wouldn't be for it, which is not surprising, since he appears to be neither a thoroughgoing egalitarian nor a thoroughgoing humanitarian. He is a nationalist social democrat, largely indifferent to larger concerns about equality and welfare. At this late globalizing date, “20th century Western European nationalist social democracy in yet another country!” strikes me as both a useless and unmoving conception of America's ideal future.

The Sound You Hear Is Your Paradigm Shifting

Please absorb this extremely important advance in economic methodology and basic intellectual rigor:

Income Per Natural: Measuring Development as if People Mattered More Than Places

by Michael Clemens and Lant Pritchett

It is easy to learn the average income of a resident of El Salvador or Albania. But there is no systematic source of information on the average income of a Salvadoran or Albanian. In this new working paper, research fellow Michael Clemens and non-resident fellow Lant Pritchett create a new statistic: income per natural — the mean annual income of persons born in a given country, regardless of where that person now resides. If income per capita has any interpretation as a welfare measure, exclusive focus on the nationally resident population can lead to substantial errors of the income of the natural population for countries where emigration is an important path to greater welfare. The estimates differ substantially from traditional measures of GDP or GNI per resident, and not just for a handful of tiny countries. Almost 43 million people live in a group of countries whose income per natural collectively is 50 percent higher than GDP per resident. For 1.1 billion people the difference exceeds 10 percent. The authors also show that poverty estimates are different for national residents and naturals; for example, 26 percent of Haitian naturals who are not poor by the two-dollar-a-day standard live in the United States. These estimates are simply descriptive statistics and do not depend on any assumptions about how much of observed income differences across naturals is selection and how much is a pure location effect. Our conservative, if rough, estimate is that three quarters of this difference represents the effect of international migration on income per natural.

The bottom line: migration is one of the most important sources of poverty reduction for a large portion of the developing world. If economic development is defined as rising human well being, then a residence-neutral measure of well-being emphasizes that crossing international borders is not an alternative to economic development, it is economic development.

The whole paper is here.

Note that this isn't an argument open to some kind of refutation. It's just a better way of measuring things — a way that makes the way the world works clearer. Seeing this alternative metric in action should help us realize just how much of profound moral importance is obscured by the economic nationalism at the foundations of conventional welfare economics. Soon enough, it simply won't be an option for honest intellectuals to ignore the perspective Clemens and Pritchett encourage us to adopt. Paul Krugman: hello!

Me Me Media

Oh no! I've fallen behind in self-promotional blogging! If you missed last week's episode of Free Will, I talked with Jeremy Lott about his new book The Warm Bucket Brigade: The Story of the American Vice-Presidency. This week, I chat with the estimable Kerry Howley about Obama, patriotism, and prostitution, among other things.

This morning on Marketplace, I argued that it's misguided to blame the last Fed chief, or this one, for our woes:

The problem here isn't that the guy in charge isn't smart enough. The problem is that there's a guy in charge at all. We've put a central planner at the beating heart of our market system, but we've known for decades that central planners rarely have the information they need, or the incentive to use it correctly.

If it all goes wrong for Bernanke, just remember: the problem isn't the quarterback. It's the rules of the game.

I'm off to the heart of the heartland for a few days, so blogging may or may not be light.

For Leaving the Community Behind

Richard Chappell says, “communitarianism creeps me out.” That makes two of us. More from his excellent post:

I'm so incredibly grateful to be where I am now, to have the opportunity to dedicate my life to the discipline of philosophy; I can't even begin to imagine being nearly so happy doing anything else. The academic philosophical community is the first to which I've felt that I truly belong. But if I had been born a Maori, if my skin were a darker shade, then suddenly I would have been obliged to remain with my ethnic community instead? *shudder*


So, count me in favour of meritocracy and the upward-mobility (though not the crass materialism) of “middleclassness”. Count me in favour of “elitism”, understood as the claim that some ways of life are better than others, tempered by the cosmopolitan insistence that the best forms of life not be closed to anyone merely due to the circumstances of their birth. (Sadly, this demand is yet to be met. Much more still needs to be done to enable humanity. But entrenching class divisions in the name of “solidarity” is not the place to start. We should want as many people as possible to join the creative classes — to vacate the working class and its culture, not hold people there and reinforce it.) Count me in favour of liberalism.

Richard emphasizes that one need not be some kind of egoist or a pinched individualist unable to value a common enterprise to think this. It's just generally better for people if they do not feel pushed to consider their parents' culture a cage within which life must be lived.

It's How You Spend It

One thing I'm constantly saying is that whether or not money helps make you feel better depends on what you do with it. This study says that it's nice to spend money on other people, which is, believe it or not, a way of spending money. But would spending money on other people make us happier if we didn't think it made them happier? Suppose we made a big circle with millions of people in it and everyone handed a $5 bill to the person on their left. Would we be happier?  Maybe that's why we like Social Security so much! (That's a joke. But how long before someone tries to use this study to argue that taxes make us happy?)