April 2008

Jim Manzi graciously answers Josh Patashnik’s reply at the TNR Environment and Energy blog to my optimal carbon tax post. I find Jim extremely convincing. Is he missing something?

The Economist Intelligence Unit ranks Denmark the best place in the world to do business. The actual Hong Kong is ranked 7th. These United States finish just under Sweden. If only we could adopt the Nordic model and have a less fettered capitalism!

[Via Nordophile Justin Fox]

Some thoughts relevant to general issues about kids raised on isolated compounds by religious fanatics…

There’s nothing wrong with false consciousness explanations, as long as they are actually explanatory. You’ve just got to specify actual mechanisms. Political freedom loses much of its point in the absence of psychological freedom. Rationality and the capacity for moral agency develop. That’s why we do not think children have the same rights and responsibilities as adults: they haven’t developed the requisite capacities. But this development can be retarded, creating adults with little more than a child’s capacities, reinforcing childlike dependency. If you don’t worry about this, then I wonder in what sense you care about human freedom.

It is tyrannical for parents to attempt to reproduce their ideologies and prejudices in their children, especially when this requires social isolation and emotional coercion. Liberals who worry about religious home schooling are not wrong to worry. I defend home schooling not because parents have a moral right to indoctrinate their children. Indeed, parents have a moral obligation not to. They just have a political right to not be stopped, within bounds. Many parents, though they intend the opposite, are in fact guilty of wrongful disregard for the development of their children’s psychological freedom. They deserve condemnation and ostracism, not interference from the state. I defend their political right to potentially behave immorally — to harm their children’s capacity for the full exercise of their rightful freedom — in part because I appreciate how accommodating pluralism reduces social conflict. But, perhaps more importantly, because I think that full-fledged competitive diversity in education will help erode superstitious thick identities, that it will help fosters a sense of contingency in inherited identities that make it easier to slough them off, or at least easier to wear lightly. But, even then, the scope of liberal pluralism has its limits, and it is neither right nor desirable to avoid the conflict inherent in debating and enforcing those limits.

I agree with Kerry in being a bit perplexed by what seems to me unreflective anti-gubmint reactions of libertarians to the FLDS imbroglio. It seems clear enough to me that these kids are basically brainwashed, isolated, and made dependent in a way that makes it all-but-impossible for them to freely choose this way of life or ever to have the capacity to exercise their liberty in a meaningful way. Individuation and the minimal conditions for self-government don’t develop all by themselves, but we each have legitimate moral and political claims against our parents for their development. The state should step in if parents violate their kids’ basic rights, because protecting rights are what states are for.

I understand the slippery slope argument here. But this is child abuse and evangelical homeschooling isn’t, and it’s important to be able articulate the difference. If you can’t figure out how to articulate the difference, then you don’t infer that child abuse is OK. You infer that evangelical home-schooling is child abuse, too — so you’d better be able to articulate the difference. If the government has overstepped its legal powers in this particular case, then they’ve overstepped their legal powers. But that might just mean that it needs to be easier for the state to protect children against brainwashing and rape. Apologizing for it doesn’t seem to me a coherently libertarian position.

The libertarian point is that the illegality and attendant marginalization of polygamy pushes it into isolated, authoritarian, quasi-state cult compounds where these kinds of crimes are most likely to take place.

I’ve been complaining for a while now about Robert Frank’s insistence on using the contingent house-school link to make his positional externalities argument. Tim Lee catches the latest instance in Frank’s recent WaPo piece. Tim nails it:

This is an eloquent indictment of our perverse system of linking schools to real estate. We don’t generally limit access to hospitals, libraries, or colleges by geography, and there’s no good reason children’s schools should be determined that way either.

[...]

The most important thing to note, though, is that the scarcity of good schools Frank identifies is not an inherent fact about the universe, but a consequence of the public school monopoly. In a competitive education market, a shortage of good schools in a given area would spur people to either start new schools or expand the best of the existing ones. But the public school system has few mechanisms for doing either of those things (charter schools are a very limited mechanism for starting innovative public schools). Which means that the supply of good public schools is artificially limited, leading parents to bid up their price. The way to alleviate the shortage of good schools is not to re-regulate the mortgage market, but to reform the education system so that it’s easier to start and expand high-quality schools. Few things would do that as effectively as a robust program of school choice.

But that would make sense!

That’s “appearing on” not “talking about”. This week on Free Will, I chat with philosopher Geoffrey Sayre-McCord about the nature of metaethics in general and moral realism in particular. Since metaethics was, at one point, my academic specialty (I went into the Ph.D. program at Maryland with a mind to work on the nature of moral concepts), I really, really enjoyed this chat. I hope to have Geoff back on to talk about issues of naturalism and evolutionary thinking in moral philosophy.

Carbon emissions aren’t a negative externality of energy consumption. Global warming isn’t a negative externality, either. Warming will have some positive effects, too. It’s the damage or harm from global warming that’s the negative external effect of energy consumption. But that’s not quite right, either. Because it’s not clear that all the warming is the effect of human activity. Some warming might have been in the cards anyway, in which case, we’re just exacerbating the trend. So in order to estimate the optimal pigouvian tax, we not only need a solid estimate of the net harm of warming, but we also need a good estimate of how much of that is the external effect of human activity. I don’t think there exists a good estimate, which I think gives us good reason to worry about proposed carbon taxes. Any tax, unless we are very lucky, will either be too low or too high. If it is too low, we’ll get too much carbon emission. But if it’s too high, we’ll get too little and I think that’s likely the more worrying scenario, especially if it slows growth for poor countries. And I worry that harm could turn out be larger than the harm the tax is meant to prevent.

This whole area confuses me a lot because I see a lot of smart people who seem to be acting like they have a good idea about what the optimal tax rate is, but I am pretty certain no one does.

Tyler and Alex’s son give their impressions of the party at Robin Hanson’s lovely home yesterday afternoon. It’s a special kind of relief to be able to spend a few hours with a whole house full of people with whom one does not have to be defensive about thinking rationally (i.e. “reductively”, “autistically”, “soullessly”) about tough questions. This is a party where you’re the weird one if you don’t think it’s appropriate to apply cost-benefit analysis to the choice to have kids, or if you don’t think it’s more or less obvious that open immigration is welfare-enhancing, or that robots are awesome. Good times. Here’s some pics.

When Tyler says to shout something from the rooftops, I comply. From Zubin Jelvah’s summary of a new paper from Christian Broda and John Romalis [pdf]:

Instead of focusing purely on what’s produced outside of the country, Broda and Romalis turn their attention to an interesting but obvious relationship between imports and consumption within our border: The goods exported by poorer countries are typically consumed by lower-income Americans. Our typical methods of quantifying inequality, however, don’t take this into account.

At the same time, inflation in the price of these goods has fallen behind inflation in services, which make up a greater portion of what wealthier people buy. Taken together, these trends imply that official measures may be overstating the rise in inequality.

Looking at trade data between 1994 and 2005, Broda and Romalis construct inflation rates for different income groups and find that rates for the richest outpaced rates for the poorest by about 4 percent over the period. Since income inequality between the top and bottom 10 percent of earners grew by about 6 percent, the different inflation rates among income groups wipes out about two-thirds of the rise in inequality.

China’s role in this new way of analyzing inequality is large, accounting for about 50 percent of the total reduction.

(A very interesting aside. Broda and Romalis also find that the poor are more likely than the rich to buy newer goods. Because of the lag in how quickly the CPI tracks new products, the researchers argue that once this “new goods bias” which serves to keep official inflation rates higher than they actually are since newer goods are typically cheaper, is factored out, inequality between the rich and the poor between 1994 and 2005 may not have changed at all.) [emphasis mine]

When I talked to Jeffrey Sachs briefly (at the Economist debate) about my project on thinking clearly about inequality, he suggested that constructing inflation indices for different income groups would be a good idea, and I said I wish I had the wherewithal to do that. I’m thrilled to see someone has done it.

In all the dust of last month’s prostitution debate, I somehow missed philosopher Martha Nussbaum’s excellent op-ed, in which she espouses a view almost identical to the Howley-Wilkinson line.

Why are there laws against prostitution? All of us, with the exception of the independently wealthy and the unemployed, take money for the use of our body. Professors, factory workers, opera singers, sex workers, doctors, legislators — all do things with parts of their bodies for which others offer them a fee. Some people get good wages and some do not; some have a relatively high degree of control over their working conditions and some have little control; some have many employment options and some have very few. And some are socially stigmatized and some are not. However, the difference between the sex worker and the professor — who takes money for the use of a particularly intimate part of her body, namely her mind — is not the difference between a “good woman” and a “bad woman.” It is, usually, the difference between a prosperous well-educated woman and a poor woman with few employment options.

[...]

What should trouble us [about prostitution] are things like this: The working conditions for most women in sex work are extremely unhealthy. They are exploited by pimps, and they enjoy little control over which clients they will accept. Police harass them and extort sexual favors from them. Some of these bad features (unhealthiness, little control) sex work shares with other job options for low-income women, such as factory work of many kinds. Other bad features (police extortion) are the natural result of illegality itself.

In general we should be worried about poverty and lack of education. We should be worried that women have too few decent employment options and too little health and safety regulation in those that they do have. And we should be worried if men force women to do things sexually that they do not want to do. All these things are worth worrying about, and it is these things that sensible nations do worry about. But the idea that we ought to penalize women with few choices by removing one of the ones they do have is grotesque, the unmistakable fruit of the all-too-American thought that women who choose to have sex with many men are tainted, vile things who must be punished.

It’s great to see one of the world’s most important public intellectuals getting it right.

Let me emphasize that I’m not trying to discourage anyone from having kids, or another kid. I’m just really genuinely interested in the real net cost of kids to their parents in terms of lifetime happiness, consumption, status, etc. I think people should make hugely significant choices, like how many kids to have, with accurate information about those costs. If people want a bunch of kids anyway, despite the costs, then that’s just evidence other considerations matter to them. And I’m a pluralist, so that’s cool. But if people are rushing into these kinds of choices on the basis of bad or incomplete folk information, and they end up worse off than they might have been, by their own lights, then that’s not good at all.

Let me expand on a comment I left on one of Bryan’s blog posts… I think I’m finally homing in on the argument between Bryan and me about kids. As far as I can tell, Bryan’s hypothesis is one of these two propositions:

(a) Given any (non-silly) number of children greater than zero, there IS on average a net benefit to each parent from having one more child.

(b) Given any (non-silly) number of children greater than zero, there WOULD BE on average a net benefit to each parent from having one more child, if they applied the econo-strategies Bryan suggests.

I suspect Bryan’s hypothesis is (b). In that case, finding out that (a) is false, as I suspect it is, would be suggestive but not dispositive. But I’m still not sure what evidence would help Bryan actually establish the counterfactual in (b).

It seems like Bryan needs to establish (a) in order to have a strong, Good Morning America-friendly starting point. Something like: “Science says kids are great, more kids are better, and here’s how to make more kids better still!” But if he can’t establish (a), he’ll have to admit that in the normal case, having another kid is negative or neutral for one or both of the parents. So generally there is no selfish reason for the next kid unless you are able to successfully commit to and apply Bryan’s clever economist strategies. That just feels a lot less exciting and bookworthy, even if true. But is it?

If ever there was an issue where one ought to expect the effects of Darwinian false consciousness, it would be the value kids. So, if this is supposed to be something like social science, it seems purely anecdotal evidence has to be taken with stiff skepticism. But then what non-anecdotal evidence does Bryan have in support of his counterfactual: that parents would selfishly benefit from the marginal kid were they to apply Bryan’s strategies? And if you need to apply the strategies to make the selfish-meter tick upward at all, couldn’t you get an even bigger upward tick by applying the same strategies to a smaller number of children?

And then there is the issue of the ability of ordinary people to successfully apply those strategies. How good are most couples at effective Coasean bargaining? (Why aren’t they already doing more of it?) Can conservative, Christian middle-American women actually get away with outsourcing a lot more of their childcare without facing social ostracism from their mom-peers? And so on. I remain concerned that Bryan so far has established little more than an argument to the effect that it is possible to make an additional child suck less if you can manage to apply certain principles. I think this is both indisputable and boring.

Now, it is always open to Bryan to argue in terms of the non-monetary, non-happiness, non-revealed preference value of the next kid. I think we all agree that having kids are meaningful, for example. But I’m not aware of good measures of meaningfulness, and I’d be surprised to find evidence that, say, people with three kids have more meaningful lives than people with two. There is of course always the route of the sentimental moralist, who can appeal to our powerful gut conviction that children (and America and Jesus) are simply WONDERFUL, but that is where even broad-minded economists, like Bryan, rightly fear to tread.

Then again, maybe Bryan does have evidence for (a). But he’s already conceded that the evidence isn’t there in the happiness data. And there is an obvious downside to an extra kid in terms of lifetime consumption, especially given the income penalty for moms. So what else does he have in mind?

Today on Marketplace, a love letter to my home state, which was once the breadbasket of the world, but is now in the business of starving poor people. Oh, it’s not really about you, Iowa. It’s about how politics starves poor people. You just got caught in the middle, Iowa, and I’ll always love you.

Bryan Caplan and I continue our intra-libertarian cage-match about the benefits of birthing. Am I crazy? Or is Bryan?

I read Kevin Phillips cover article [$$$] in this month’s Harper’s, and thought he was completely crazy. First of all, I was amazed that they printed an article largely about one of my pet interests, the methodology of the Consumer Price Index, which I thought was a bit too esoteric for a general readership. But I was really baffled by Phillips’ claim that the CPI massively underestimates inflation. Phillips thinks the Boskin revisions were a big mistake, despite the fact that they were very conservative, and most economists who know about this that I have talked to think the problem goes in the opposite direction. Tyler is his usual ambassadorial self in his blog review of Phillips’ book Bad Money when he says:

Either the current market estimate of inflation is the best estimate available, or you know that it is wrong and you will be a very rich man.  I find the former scenario more plausible.

But thankfully he really lays it out there in his comments:

A lot of the Phillips book is simply economically illiterate. For sure America has its economic problems, but they are not the ones identified in *Bad Money*

Perhaps it is time to convene an Overcoming Bias colloquy about how it is that estimates of the trend in real wealth can be so massively divergent.

In this week’s Free Will, I chat with Clay Shirky about his new book Here Comes Everybody: The Power of Organizing Without Organizations. Clay’s a really interesting guy, and this was a lot of fun.

For text-based Shirky action, try Tim Lee’s smart review and interview at Ars Technica.

I’m trying to get clear on what Sunstein and Thaler mean, and it’s not easy, since they basically make up their own private language, and then act puzzled by the idea that some people might be a little confused by what they have in mind.

So a “choice architect” is basically anyone that organizes “the context in which people make choices.” This is so immensely broad as to be almost useless.

If you design the form that new employees fill out to enroll in the company health plan, you are a choice architect. If you are a parent, describing possible educational options to your son or daughter, you are a choice architect. If you are a salesperson, you are a choice architect.

And if you invite people to a party where alcohol is available, the music is bumpin’, and the lights are low, you are choice arcitecht. Everyone is a choice architect some of the time.

So what’s the relationship between ‘choice architect’ and ‘paternalist’? Is everyone a paternalist, too? It looks like it. According to S&T:

The paternalistic aspect [of libertarian paternalism] lies in the claim that it is legitimate for choice architects [i.e., everybody] to try to influence people’s behavior ino order to make their lives longer, healthier, and better. … In our understanding, a policy is “paternalistic” if it tries to influence choices in a way that will make choosers better off, as judged by themselves. [Emphasis theirs.]

The designers of the user-friendly iPod, whom S&T tag as “choice architects,” presumably leave iPod users better off by their own lights, and therefore count as nudging libertarian paternalists. And who’s against usable interface design?! And if the host of a party turns down the lights, that’s paternalistic choice architecture if it influences some of the guests’ behavior in a way that makes them better off, as judged by themselves.  This all very weird.

First, this has nothing to do with ‘paternalism’ as English speakers use the word. On their definition, giving someone accurate and easy-to-follow directions to the nearest gas station is paternalistic. But it isn’t, so they are using words wrong. To put it another way, S&T imply that it is not possible to provide helpful guidance to another person without being paternalistic. But it is possible. So they’re speaking literal nonsense. QED.

Another tack… They express a sufficient condition for paternalism here. They don’t say a policy or action isn’t paternalistic if it doesn’t makes people better off by their own lights, but the suggestion of an “only if” hangs out there, and I think they want it hanging out there. Paternalism is nice! Paternalism cares about getting people’s buy-in. Except… it doesn’t. The attempt to make you better off by my lights, not yours, is what a competent English speaker has in mind if she accuses me of being “paternalistic” — and that’s whether or not she assumes paternalism necessarily involves coercion, an assumption S&T call a “misconception”, despite the fact that most dictionaries and the history of Western thought generally insists on conceiving it that way. If you open up the little box that is the concept ordinarily expressed by the English word ‘paternalism’, you will find indifference to the endorsement or buy-in of those “influenced” by paternalistic efforts. But if you learned the meaning of the word from S&T, you’d think that was wrong!

The tone in Nudge is chummy and agreeable and sunnily ameliorist. Which makes you feel a bit like an axe-grinding killjoy bent on hair-splitting “semantics” when you insist on pointing out that they spend the entire book more or less inverting the normal meaning of certain politically-loaded words. But I really do insist on pointing it out, because these brilliant guys are native English speakers and they’ve got to know that the meanings of words matters. So you’re left wondering why they are so determined to play dumb about their own language.

The New York Times reports that a bunch of ex-military on-air “analysts” are in bed with both military contractors and the Bush administration:

Records and interviews show how the Bush administration has used its control over access and information in an effort to transform the analysts into a kind of media Trojan horse — an instrument intended to shape terrorism coverage from inside the major TV and radio networks.

Analysts have been wooed in hundreds of private briefings with senior military leaders, including officials with significant influence over contracting and budget matters, records show. They have been taken on tours of Iraq and given access to classified intelligence. They have been briefed by officials from the White House, State Department and Justice Department, including Mr. Cheney, Alberto R. Gonzales and Stephen J. Hadley.

In turn, members of this group have echoed administration talking points, sometimes even when they suspected the information was false or inflated. Some analysts acknowledge they suppressed doubts because they feared jeopardizing their access.

This is what governments do. Republican governments. Democratic governments. They spend their subjects’ money shaping their subjects’ opinions, so that they can spend more of their subjects’ money.

No doubt most of the talking head generals and colonels believe sincerely that they were acting in the best interests of the people they have devoted their lives to serving. It is simply that we “civilians” do not really know what we need to know in order to decide wisely for ourselves, and so public opinion needs to be massaged a bit to generate political support for policies that truly do protect us. If the well-meaning soft paternalism of concerted propaganda and financial self-interest happen to coincide, then all the better. Our guardians will only be better motivated to guard us! (And, really, after a lifetime of service, don’t they deserve to get theirs?) Crucially, no one here is forcing anyone to support the administration’s policies. It’s just a bit of a nudge, from people who know better.

Larry Arnhart states it well:

The folks at the Discovery Institute have made a big mistake in their production of this movie. The political rhetoric of the Discovery Institute’s “wedge strategy” depends upon hiding a fundamental contradiction. But this movie makes the contradiction so evident that any viewer can see it. On the one hand, the rhetorical strategy of the Discovery Institute is to say that “intelligent design” is not a creationist religious belief but pure science, and therefore teaching “intelligent design” in public high school biology classes does not violate the First Amendment’s prohibition on establishing religion. On the other hand, the popular success of the Discovery Institute’s rhetoric depends on appealing to Biblical creationists who assume that “intelligent designer” is just another name for God the Biblical Creator.

This contradiction–both affirming and denying that “intelligent design theory” is the same as Biblical creationism–became evident in the 2005 case in Dover, Pennsylvania. Leaders of the Dover Area Public School board wanted to teach Biblical creationism. They were warned that this would violate U.S. Supreme Court decisions declaring that teaching creationism as science violated the First Amendment separation of church and state. They then decided to teach “intelligent design theory” as a disguised form of Biblical creationism. The trial made clear their deception, and this also exposed the contradiction in the Discovery Institute’s rhetoric.

Rather than covering up this contradiction, this movie makes it hard for any viewer to ignore the contradiction. When Bruce Chapman–President of the Discovery Institute–is interviewed by Stein, Chapman says that journalists distort the true position of intelligent design by saying that it’s a creationist religious belief, because the “intelligent designer” is clearly God. Chapman vehemently denies this. But then for the rest of the movie, it’s asserted that anyone who denies “intelligent design” is therefore an atheist who denies the existence of God!

Read the whole thing. You can hear me ranting about intelligent design in this now-vintage America’s Future Foundation roundtable.

From WSJ’s Wealth Report:

PNC Wealth Management recently polled about 1,500 Americans with $500,000 or more in investible assets and found that 69% of respondents made most of their fortune through work, business ownership or investments. Only 6% made their wealth by inheriting it, while 25% made it through a combination of inheritence and earnings.

What’s most interesting is that the survey found some major differences in the two groups’ attitudes about money — and their responses didn’t always break down along predictable lines:

[...]

LUCK — Fully 37% of earners agreed that “the money I have made so far has come from being at the right place at the right time.” Among heirs, the number was 25%. I guess the heirs don’t subscribe to Warren Buffett’s “lucky sperm” theory.

HAPPINESS– Fuly 76% of earners agree that “my financial success lets me feel less stress and worry,” compared to 50% of heirs. Half of all earners agree that “as I have accumulated more money in my life I have become happier,” compared to a third of heirs.

I especially like the luck result. It’s hard work getting born to the right parents.

[HT: Free Exchange]

On the issue of Thomas Jefferson’s loathsomely anti-libertarian credentials, please read Charles Johnson. I agree with everything he says here, probably even the part about my making a series of interrelated mistakes, and definitely the titular imperative.

Lane Kenworthy shows some evidence that when asked to choose one of five pictures that best represents their preference for their country’s income distribution, people tended to pick one of two options — options D and E:

D and E are identical in their population shares at the bottom. The difference between them is that D has a larger share in the middle, whereas E has a larger share at the top. Average income is higher in E. Inequality is lower in D.

[...}

I wouldn’t go so far as to conclude from this that people tend to value low inequality over high incomes. Other ways of posing the question might yield different results. But it does suggest that inequality matters to people.

I find these pictures a bit hard to interpret myself, and I think the idea that people have some kind of standing preference over the shape of the national income distribution is plain bizarre. The question embodies and encourages a nationalist orientation to economic patterns, as if this is the natural level at which to look at economic patterns, as if this is the natural level at which people will have preferences about such patterns. But why think people actually have prior preferences about such things? The national income distribution is not experienced. The local income distribution isn't experienced. Differences in local visible consumption may be experienced, and it seems plausible that people would have preferences about that. But that's not what the question was about. Anyway, this seems to me a bit like asking about my preference over the proportion of luxury to compact cars in the nearest parking garage. Why would I have one?

Anyhoo, if people really have these preferences then many of them are malicious. E is a world in which many people are better off than in D but in which no one is worse off. It's Pareto Awesome! If so many people really do like D better, does that tell us that there is latent support for egalitarian political institutions, that such support is based on a deep moral error, or both?

How about tackling the question a bit more rigorously? Will Ambrosini points us to Matthew Rabin and Gary Charness’s "Understanding Social Preferences with Simple Tests" [pdf], which tests plausible local preferences for equality, efiiciency, and reciprocity in a lab setting:

Our findings suggest that the role of inequality-reduction in motivating subjects has been exaggerated. Few subjects sacrifice money to reduce inequality by lowering another subjects’ payoff, and only a minority do so even when this is free. Indeed, we observed Pareto-damaging behavior more often when it increased inequality than when it decreased inequality. While this comparison is itself confounded by other explanations, our data strongly suggest that inequality reduction is not a good explanation of Pareto-damaging behavior.

My faith in humanity is restored. Sort of.

The general point remains that most discussions of global warming focus on prices and technologies alone, without incorporating realistic models of politics.

More here. The failure to incorporate realistic models of politics into one’s thinking is the reason many people are statist in the first place. When they are romantically statist, you know there is little hope in having a productive conversation.  When concerted political action based on this or that moral framework is conceived as a redemptive ideal, questioning its desirability just makes you a bad person. Tyler is right that “Being pro-science also means being pro-economic science.” But for many pushing large, immediate anti-warming action, there is exceedingly little interest in science per se, but a great deal of interest in the rhetorical and political possibilities of science. When you see Scientific American giving its pages over to English teachers to argue that economics is not a science, in order to clear the way for political action, you can be sure that the science of it all is not really the paramount concern.

David Park has data … data! on where bitter, god- and gun-clinging poor rural voters turn:

Park writes:

We can see a steady decline of Republican support among rural poor voters starting in 1972. Even with a big jump in 2000, support for the Republican presidential candidate was less than 50 percent. So, Obama, it looks like poor rural Americans have no problem voting for Democrats.

Guns, religion … and government transfers?