May 2008

Here are the sort of political/economic thinkers whose substantive views I find most congenial: Friedrich Hayek, Milton Friedman, James M. Buchanan. If I tell most highly-educated people that these are the thinkers whose views of desirable institutions are most like mine, they might infer that I am some kind of rabid libertarian ideologue. But when I actually defend something like the arguments for an economic safety net each of these giants of libertarian thought actually set forth, lots of libertarians accuse me of not really being libertarian at all. And many liberals act surprised, as if I’m being saucily iconoclastic by wandering so far off the reservation. I can tell them that Hayek was actually in favor of a guaranteed minimum income and that Friedman basically invented the idea behind the EITC, but they’ll still think I’m some kind of congenial squish. But what I am is a market liberal just like Hayek, Friedman, and Buchanan — the same intellectual role models who make me a rabid libertarian ideologue. So, which is it?

Frankly, “liberaltarianism” and “progressive fusionism” don’t really amount to much beyond what Hayek, Friedman, and Buchanan thought anyway. So the fusionism here isn’t really a fusion of anything. It’s just seeing our way back to a pre-existing economically literate political liberalism.

Here’s my conjecture about why this now looks more like an attractive position than it might have a few years back.

The 20th century libertarian-conservative alliance was based on anti-communism/socialism. The reasonable, sophisticated consequentialist pragmatism of the great 20th century market liberals seemed an insufficient bulwark against the slippery slope from the liberal, capitalist welfare state to full-on illiberal, totalitarian socialism. (Indeed, Hayek himself made the slippery slope argument powerfully, though unsoundly.) So there was a good deal of motivation for radical anti-socialists to coordinate around strongly categorical prohibitions against state coercion.

Misean economics, disinfected of the open-minded empirical consequentialism of Mises’ Liberalism, and filtered through Ayn Rand and Murray Rothbard’s peculiar views of rights and coercion delivers a powerfully moralized brief for capitalism that calls into question even taxation for the purpose of financing genuine public goods. That Rothbardians and Randians have wasted so much time fighting with each other on the question of the minimal state versus anarcho-capitalism obscures their unity on a rights-based bulwark against the slide from the welfare state to socialism. Sadly, “libertarianism” has become identified rather strongly with this ideology — an ideology some of the thinkers most strongly identified with libertarianism, like Hayek and Friedman, never shared.

The death of socialism as a viable competitor to the liberal-capitalist welfare state makes continued slippery-slope-to-socialism thinking look densely anachronistic. Other liberal welfare states, like the UK, Sweden, Denmark, Australia, New Zealand, etc., have moved in a rather more market-liberal direction, becoming rather less of a soft-socialist middle-ground between the American model and full-on economic socialism. The question these days is whether the U.S. will have the good sense to adopt more rational market-based old-age pension policies, like Sweden or Australia, or lower corporate tax rates to a level more in line with the rest of the wealthy world. Slightly higher personal tax rates and slightly more redistribution is a possibility, but a slide into socialism just isn’t on the table. In this context, the negative income tax looks much less like a dangerous concession to the world-historical forces of evil.

Meanwhile, with the obsolescence of the anti-communist alliance with conservatives, many libertarians have sloughed off much of their previously tactically useful sympathy for socially conservative initiatives. Freed to be full-on social liberals, many libertarians are left sensing a much deeper cultural affinity for the left than the right. And this leads naturally to seeing more clearly their ideological affinities with welfare liberals. And then you read thinkers like Hayek, Friedman, and Buchanan, and you think: Oh, yes. This is extremely sensible. And now that the welfare-liberal elite has become rather more economically literate and is no longer sighing over five year plans, there is no reason to think they cannot find this sensible, too.

So that’s where I’m at. An old-fashioned market liberal who thinks Hayek, Friedman, and Buchanan get it right, and who thinks Rawlsian welfare liberals should be able to recognize themselves in these thinkers.

1) Libertarians and many conservatives often talk about lower taxes as a matter of liberty. But a higher tax isn’t more coercive than a lower one. You’re either being coerced or you’re not. A guy who mugs five people with thin wallets is no less guilty of coercion than a guy who mugs five people with thick wallets. The harm from coercion might be greater if more is taken, but there is no more or less coercion. But if you don’t think that the size of the opportunity set is a matter of liberty, then you should not think of lower taxes as a gain in liberty, but just as a reduction in harm. Yet libertarians and conservatives don’t tend to talk this way. Why not?

2) The average citizen of Singapore has fewer politically recognized rights but is freer than the average citizen of India.

Discuss.

Skepticlawyer reports on a Tyler Cowen talk in which he divulges several “libertarian heresies,” one of which Skepticlawyer records as follows:

Next, he argued for a form of positive liberty. This is not the positive liberty of Isaiah Berlin, with its totalitarian tendencies and desire to tell others how to live - something that has plagued the political left for many years and arguably persists to this day. Rather, Cowen’s positive liberty is closer to Amartya Sen’s account of ‘capabilities’ - people should be able to do certain things, and the most successful society is one where the most people can do the most things. Then - and this is where there was an audible gasp around the room - he argued that roughly 70% of the liberties worth having fall into this ‘ability’ version of positive liberty.

Once people had cleared up that he wasn’t riffing on a notion of ‘ve vill give u zees because vee think it vill be gooood for you’, some of the grounds for the audible gasp drained away. Cowen’s and Sen’s ‘positive liberty’ has a modesty absent from Berlin’s account, and lacks the obsession with inequality that - later in the address - Cowen dismissed using Hayek’s words: as a ‘category mistake’.

This is pretty much what I think, too. And the fact that some libertarians find it so annoying is one reason I am likely to classify myself simply as a liberal. Of course, most liberals don’t want me, because I’m such a libertarian, so what can you do?

Anyway, in the comments of Tyler’s post pointing to Skepticlawyer’s account of his talk, Dan Klein writes:

Two points on Tyler’s talk (as summarized by skepticlawyer blog):

1. It might be good for Tyler to speak of positive capabilities as “positive liberty,” but I think that, nonetheless, his doing so is bad for humankind (as compared to his just speaking of positive capabilities).

2. The expansion of positive capabilities enhances liberty ONLY by the channel that it reduces the coerciveness of restrictions. The coerciveness of a restriction ranges in magnitude, and a restriction is less coercive the less important to you it is. Expanding positive capabilities reduce the importance of any particular restriction. But it is only through this channel that the expansion of positive capabilities enhances liberty. Thus, “negative” liberty remains primary. Positive capabilities figure in only through the channel of negative liberty. Robinson Crusoe, alone on a desert island, is perfectly free, even though his positive capabilities are piss poor.

I don’t really follow Klein’s first point, since I find that it is perfectly good English to say things like “Now that Chad is making a bigger salary, he is at liberty (or, more naturally, free) to travel more often.” I’m all with Dan about the misuse of language when it comes to “libertarian paternalism,” but I think he’s acting in something like the revisionist spirit of Sunstein and Thaler on this one: he thinks we’ll be better off if we stop using “liberty” in one of its perfectly ordinary, widely accepted senses. I don’t mind prescriptive semantics, but revisionist prescriptive semantics seems a waster of energy.

I think I just straightforwardly disagree with Klein’s second point, though I’m not certain I understand it. An individual’s feasible set of options can be bigger or smaller. There is an obvious, conventional sense of ‘freedom’ and ‘liberty’ in which people with more options have more freedom or greater liberty. Coercion is one way to limit the size of that set — it takes away the individual’s liberty to choose some elements of the set in an especially salient way. Coercion is such a salient and dangerous threat to the availability of our options (to our ability, our freedom, to choose) that there is a perfectly good sense of ‘liberty’ that focuses exclusively on its presence or absence. Norms against aggression and theft are very important, and so it very important that we always remain jealous of our liberty in this sense. But isn’t the point of reinforcing norms of non-coercion maintaining the openness of the alternatives that would otherwise be foreclosed by violence or the threat of violence? Robinson Crusoe strikes me as the perfect illustration of why it is that positive liberty — the size of the substantive opportunity set — is primary. He’s got total negative liberty and it’s good for bupkis.

Crispin Sartwell writes:

do me a favor?: cut and paste this everywhere. it’s a…marketing ploy. but it’s sincere.

A Philosophical Challenge

My irritating yet astounding new book Against the State argues that

(1) The political state or government rests on force and coercion.
(2) Force and coercion are always wrong if they can’t be morally justified. (That is, the use of force is wrong if it lacks a moral justification.)
(3) The arguments for the moral legitimacy of state - for example those of Hobbes, Locke, Rousseau, Hume, Hegel, Rawls, and Habermas - are unsound.
(4) Hence, state power has not been shown to be morally defensible.
Until you show me otherwise, I conclude that government power is in every case illegitimate.

Not only are the existing arguments for the legitimacy of state power unsound; they are pitiful. They are embarrassments to the Western intellectual tradition.

So I issue a challenge: Give a decent argument for the moral legitimacy of state power, or reconstruct one of the traditional arguments in the face of the refutations in Against the State.

If you can’t, I insist that you are rationally obliged to accept anarchism.

Henceforward, if you continue to support or observe the authority of government, you are an irrational cultist.

We’re all anarchists now, baby, until further notice.

I may agree with Sartwell about legitimacy, depending on what he means by it. But I detect a missing premise or two. For example, that in the absence of a decent argument for the legitimacy of state power, you are rationally obliged to accept anarchism. Aren’t you rationally obliged to accept the social system that does best relative to the values you care about? So what if human flourishing, not legitimacy, is your greatest concern. You can still accept that all states are illegitimate. But suppose the path to the best feasible anarchy leaves people worse off in terms of flourishing than in the best illegitimate states. It seems, in that case, you would be rationally obliged to support states that do better for people than anarchy, despite their illegitimacy. In which case, it would be irrational cultlike behavior to endorse anarchy just because it is not illegitimate.

Now, some people would say that doing better for people than the relevant non-state alternatives is all it means to say government is legitimate or coercion is justified in the relevant sense, but I don’t think so. It seems perfectly coherent to me to say both that an instance or pattern of coercion is morally unjustified and that it leaves its victims better off than they would be in the nearest anarchist possible worlds. In that case, you just have to choose between flourishing and legitimacy.

I think moral and political philosophers have a bad tendency to make all normative vocabulary line up. So you can retrofit all moral language so that “justified” just means “best for flourishing.” But I think that we in fact have multiple conventional moral vocabularies that are orthogonal to one another, which relate messily, and sometime incoherently. In the absence of a revisionist account of moral terms that gets them all to march in a single direction, you just have to accept that sometimes its best (according to one conventional moral conception) to do the wrong thing (according to another conventional moral conception) and there is nothing internal to reason or morality, as such, to tell you which conception generally carries overriding force.

Anyway… The point is: Showing that the state is not legitimate does not deliver anarchy because “If the state is not legitimate, then it is not morally defensible” is a false premise. The existence of a moral justification, in terms of flourishing, say, doesn’t entail final moral justification, since there is no fact of the matter about the final authoritative moral vocabulary. And the language of “legitimacy” may have its own internal logic that is at some level indifferent to flourishing. So showing that the state is not legitimate need not entail that it is morally indefensible.

Note: I am not sure whether I agree with myself.

Great stuff in today’s WSJ from Cato executive veep David Boaz on the collectivist blowhards running for president.

Messrs. Obama and McCain are telling us Americans that our normal lives are not good enough, that pursuing our own happiness is “self-indulgence,” that building a business is “chasing after our money culture,” that working to provide a better life for our families is a “narrow concern.”

They’re wrong. Every human life counts. Your life counts. You have a right to live it as you choose, to follow your bliss. You have a right to seek satisfaction in accomplishment. And if you chase after the almighty dollar, you just might find that you are led, as if by an invisible hand, to do things that improve the lives of others.

Right on. So why the nonsense? Arnold Kling says it’s Hansonian altruistic signaling. Sure, there’s some of that. But why does this get a grip on us? Why are people such suckers for the idea that collective sacrifice is a source of meaning.

Here’s a question. Is sacrifice for grand collective projects really meaningful? Probably it is. But the reward, the compensation for sacrifice, is indifferent to the content of the project. Probably genocide is meaningful for those who devote themselves to it. Religion is meaningful, too. But it’s a pack of lies. Meaningfulness is too promiscuous, justifies too much. I suspect there’s little sense in mounting an argument against meaning, per se. Everybody wants it, even if we badly overestimate how much we need it. But I think we’re obliged to do better in discriminating between sources of meaning and their effects. We tend to indulge people’s irrational fixations when they claim that they find them “meaningful.” But why? That it is “meaningful” to X may be a reason to be especially hard on X, if X is dangerous and meaning is really so attractive. Collectivism is meaningful, but it is mindless, pathetic, and the essential fuel for the greatest cruelty. That it does feel sublime to submit to the will of the whole, to lose oneself in something bigger, that it is a special kind of bliss to transcend the small grubby thing that is one’s own small life, is why human beings will so cheerfully slaughter one another. This should probably be discouraged.

I’ve been feeling a bit under the weather, so have fallen behind in my Bloggingheads TV self-promotion duties, but if you haven’t already, please check out this week’s chat featuring wunderkind Aaron Swartz, inventor of RSS and co-founder of Reddit.

Say you think the falsehood of the homo economicus model provides some kind of special basis for a new kind of paternalism. Does that mean you think people up to now have been making a hash out of their lives? Maybe you do, which is why you think people continue to smoke or get really, really fat. But, look: lots of people manage to live a long time, save enough money for retirement, and even get along with their kids. How do they ever do it? It seems to me that strict rational choice assumptions are false and, also, most people do a fine job of living their lives. So, yeah: false theories of behavior tend not to do a very good job of accounting for lives well-lived. If you had thought that lives could not be well-lived unless some theory was true, then the persistence of good lives after the death of that theory ought to put the thought to rest, shouldn’t it?

I am not excited. Nor would I have been excited had Mary Ruwart taken. Mike Gravel? Now that would have excited me. I just like that guy, and I think he has a much better claim to being libertarian that Bob Barr, who voted for the PATRIOT Act oh so many years ago. And Wayne Allyn Root struck me as a first-class tool at the Reason event. So my LP enthusiasm meter remains, as always, pegged close to zero. But since I insist on expressively voting in presidential elections, finding nothing preferable on my ballot, I may well vote Libertarian, as is my habit.

Tim Lee is not enthused.

John Cassidy’s philosophically half-baked exploration of neuroeconomics a couple years back in the New Yorker inspired me to write an essay-length reply. I suspected then that he really liked what he erroneously saw as the paternalistic upshot of behavioral and neuro- economics, and was deliberately reading the results in a way that would seem to empower our benevolent stewards in government. Now, with his new NYRB review of Sunstein and Thaler’s Nudge, his command-and-control inclinations are in plain view. Cassidy is visibly annoyed that Sunstein and Thaler don’t embrace full-throttle paternalism and behaviorally-enhanced Keynesian economic planning! Toward the end, he writes:

Once you concentrate on the reality that people often make poor choices, and that their actions can harm others as well as themselves, the obvious thing to do is restrict their set of choices and prohibit destructive behavior. Thaler and Sunstein, showing off their roots in the Chicago School, rule out this option a priori: “We libertarian paternalists do not favor bans,” they state blankly.

The obvious thing for whom to do? One of the great merits of Nudge is that Sunstein and Thaler grasp and largely avoid the fallacy of assymetric idealization. Cassidy obviously just doesn’t get it. So here you go… It is equally obvious that we ought to restrict the choices of people in government, since those people are people, and people so often make poor choices. Moreover, the harm from error in government policy is not limited to the ones choosing it, but instead affects millions. Indeed, the most destructive behavior in history has been that of governments, and so, obviously, we must prohibit it. Cassidy can escape this bind only if making bad choices is something done only by people other than the ones that vote for politicians, appoint bureaucrats, and actually set policy. Anyway, it’s pretty rich to see him slamming Sunstein and Thaler for not being as stupid as he is.

Cassidy goes on:

If you start out with the preconceptions about free choice of John Stuart Mill or Friedrich Hayek, it is difficult to get very far in the direction of endorsing active government. …

A refusal to accept that individual freedoms sometimes have to be curtailed for the general good is an extreme position even for a neoclassical economist to take, and it is alien to the traditions of the Democratic Party.

If Cassidy made it all the way to the end of Nudge, he will have noticed that the authors pretty clearly admit that they’re not against all bans — not against all good old-fashioned paternalism. They really really aren’t wild-eyed libertarians, which is why they forget to suggest rolling back existing paternalistic laws. But they are liberals of a certain stripe. Cassidy sounds like he just can’t stand the fact that the Democratic Party stands firmly inside the liberal tradition, which just is the tradition of John Stuart Mill. If anti-paternalism is alien to the Democratic Party, then genuine liberalism is alien to the Democratic Party, which would be too bad for the Democratic Party. Pretty much everyone agrees that “individual freedoms sometimes have to be curtailed for the general good.” The argument of Nudge is precisely that that “endorsing active government” need not be the same thing as thinking, like John Cassidy, that respect for individual freedom is a load of crap that necessarily gets in the way of a better technocracy.

And I can’t leave you without this:

Behavioral economics, by demonstrating how people often fall victim to confusion, myopia, and trend following, provides another convincing ratio-nale for Keynesian policies, but you wouldn’t realize that from reading Thaler and Sunstein.

Anyway, the gist here is that John Cassidy is the guy Jonah Goldberg is trying to warn you about.

Freeman Dyson’s excellent review of William Nordhaus’ excellent A Question of Balance: Weighing the Options on Global Warming Policies in the New York Review of Books is a must-read. Here’s the nut of Nordhaus’ analysis:

The main conclusion of the Nordhaus analysis is that the ambitious proposals, “Stern” and “Gore,” are disastrously expensive, the “low-cost backstop” is enormously advantageous if it can be achieved, and the other policies including business-as-usual and Kyoto are only moderately worse than the optimal policy. The practical consequence for global-warming policy is that we should pursue the following objectives in order of priority. (1) Avoid the ambitious proposals. (2) Develop the science and technology for a low-cost backstop. (3) Negotiate an international treaty coming as close as possible to the optimal policy, in case the low-cost backstop fails. (4) Avoid an international treaty making the Kyoto Protocol policy permanent. These objectives are valid for economic reasons, independent of the scientific details of global warming.

This “low-cost backstop” sounds promising. Is it? Dyson thinks so:

At this point I return to the Keeling graph, which demonstrates the strong coupling between atmosphere and plants. The wiggles in the graph show us that every carbon dioxide molecule in the atmosphere is incorporated in a plant within a time of the order of twelve years. Therefore, if we can control what the plants do with the carbon, the fate of the carbon in the atmosphere is in our hands. That is what Nordhaus meant when he mentioned “genetically engineered carbon-eating trees” as a low-cost backstop to global warming. The science and technology of genetic engineering are not yet ripe for large-scale use. We do not understand the language of the genome well enough to read and write it fluently. But the science is advancing rapidly, and the technology of reading and writing genomes is advancing even more rapidly. I consider it likely that we shall have “genetically engineered carbon-eating trees” within twenty years, and almost certainly within fifty years.

Carbon-eating trees could convert most of the carbon that they absorb from the atmosphere into some chemically stable form and bury it underground. Or they could convert the carbon into liquid fuels and other useful chemicals. Biotechnology is enormously powerful, capable of burying or transforming any molecule of carbon dioxide that comes into its grasp. Keeling’s wiggles prove that a big fraction of the carbon dioxide in the atmosphere comes within the grasp of biotechnology every decade. If one quarter of the world’s forests were replanted with carbon-eating varieties of the same species, the forests would be preserved as ecological resources and as habitats for wildlife, and the carbon dioxide in the atmosphere would be reduced by half in about fifty years.

How about bounties for carbon-eating tree technology?

Lane Kenworthy kindly responds:

We should care about inequality of income not simply because it contributes to inequality of well-being, but also because it contributes to inequality of capability.

Even if consumption inequality has increased only a little, the rise in income inequality has produced a noteworthy increase in inequality of capability. The rich aren’t forced to purchase goods and services whose prices have increased more rapidly; they could switch to the same consumption bundle as the poor if they wished.

I feel like maybe we’re speaking a different language or something here. I’m not sure what Kenworthy means by “inequality of capability.” It sounds to me like he is using a currently popular term to repeat the not-contested because self-evident fact that people with a bigger budget have a bigger budget. And I’m not clear on the source of Kenworthy’s preference for thinking about what people can do with their money (capability) over what they do do with it (consumption), since it seems to me to come to pretty much the same thing, unless you think people really do systematically tend to act against their interests. No one disputes the fact that wealthier people have more options. That’s basically what it means to be wealthier. But isn’t the issue at hand the size of the difference in real quality of life once the wealthy and the poor have taken their best options? Anyway, that’s what I think the question is. If the best a poor person’s budget can buy improves faster than the best a rich person’s budget can buy, then that means the poor person’s quality of life has become more like the rich person’s even if the rich person’s budget expanded at a faster rate than the poor person’s. The analysis applies mutatis mutandis to capabilities. Isn’t this absolutely central to the question of economic inequality? Isn’t this in fact the central question of economic inequality — the gap in the quality of the lived experience of the rich and poor?

Kenworthy goes on:

In my view the Broda and Romalis analysis is important for our understanding of (absolute) poverty, rather than inequality. They find that the prices of goods poor Americans tend to purchase have risen less rapidly than the overall inflation rate. I can’t assess whether they’ve accurately analyzed the data and how much measurement error the data contain. But if the finding is correct, it suggests that the trend in living standards for America’s poor was more favorable (or less unfavorable) between 1994 and 2005 than income data imply.

I don’t get it. If living standards for the poor are better than we had thought, doesn’t that mean that the difference in living standards between the poor and the rich is smaller than we thought?

In this morning’s Marketplace commentary, I argued nature needed a helping hand to wreak as much human damage as it did recently in Burma and China. The upshot:

Economic growth creates roofs that don’t blow away, walls that don’t crumble, hospitals to tend the sick, and generators to keep to the ventilators on. The self-dealing thugs that botch the institutions of growth don’t just keep their people poor. They keep them vulnerable, exposed.

Marketplace now has a space for listener comments on the website. I thought I’d reply to a couple of them here. At the beginning of the commentary I say:

Back in the early 1950’s, Burma was the wealthiest nation in Southeast Asia. But today, after a half-century of socialism and authoritarian rule, it’s one of the poorest countries in the world.

Mention of socialism elicited this response from Ken Germanson of Milwaukee:

To blame these awful disasters on socialism is truly a stretch. Wilkinson, of course, is correct to say that corruption and dictatorial policies may have exacerbated these the tragic results. Corruption and dictatorships are not restricted to socialistic societies. You’d hardly see the traditionally socialistic nation of Sweden falling into such a disaster. Why indeed would Wilkinson even mention socialism as an issue other than to further the Cato Institute’s goals of permitting unfettered capitalism? And, why even use Cato materials without a disclaimer as to its ongoing bias?

To not blame a good deal of the poverty in Myanmar and China in particular on socialism would be to a monstrous denial of reality. In the early 1960s the regime implemented an economic program called the “Burmese Way to Socialism,” which successfully transformed Burma from an emerging regional economic power into an economic basket case. If you can’t pin the the failure of avowedly socialist economic schemes on the failure of avowedly socialist countries on socialism, then what can you pin it on? And, of course, Chinese communism — history’s largest experiment in actually existing socialism — was responsible for the deaths of tens of millions through famine alone. China has begun to develop economically precisely by relaxing their adherence to socialist economic policy. For its part, Sweden is a liberal capitalist welfare state, much like the United States, and is wealthy precisely because of its relatively free-market policies. It is among the most economically free countries in the world. It is a common mistake to confuse a country’s level of redistribution with its system of economic organization, but it is a mistake.

Dan Ness of Leucadia, CA writes:

Mr. Wilkinson makes his point clear that natural disasters are made worse by poor human planning, especially in corrupt self-dealing economies. It’s tragic what’s happened in China and Burma/Myanmar. However, I’m surprised Mr. Wilkinson didn’t cite Hurricane Katrina in New Orleans. After all, in that tragedy roofs did blow away, hospitals were unprepared, and generators failed. We don’t need to point afar to find examples of botched institutions or systemically vulnerable people.

I thought about this, but thought the American audience would be distracted by the domestic politics surrounding Katrina. That’s why I compared the Sichuan earthquake to the 1995 Kobe earthquake. But Katrina strongly supports my general contention. The loss of life from Katrina is estimated at about 1800. But, if I understand the system for rating the intensity of hurricanes and cyclones correctly, Katrina was a more powerful storm than Nargis, which is now responsible for about over 80,000 fatalities. That’s an enormous difference.

That said, I think Dan’s comment raises a great point. Americans have been intensely critical of the American government’s response to Hurricane Katrina, implying that government actors may be held responsible for the consequences of natural disasters. And this is true, though the policies that really matter are the policies that affect the growth of wealth, not the policies of emergency response (which are themselves largely determined by the society’s wealth). But when it comes to less developed countries, the media seems far less willing to ascribe agency and responsibility to government policy, even though in these cases the ruling elites bear even more responsibility for the tragedy. I consider this a kind of ugly, morally blind condescension.

Lane Kenworthy writes:

I’m not sure why Broda and Romalis, or Levitt and Wilkinson, think this should alter our assessment of the trend in inequality. Do they mean to suggest that the revealed preference of the poor for cheap goods is exogenous to their income? In other words, people with low incomes simply like buying inexpensive lower-quality goods, and they would continue to do so even if they had the same income as the rich. Likewise, the rich simply have a taste for better-quality but pricier goods, and they would continue to purchase them even if they suddenly became income-poor. If this is the assumption, I guess the conclusion follows. But I can’t imagine the authors, or anyone else, really believe that.

Maybe I’m missing something, but it seems as though Kenworthy’s response might be based on some kind of conceptual misunderstanding. I’m not sure that this is it, but is the idea here that there is a single, standard, uniform price index, perhaps kept in a vault in Paris next to that famous platinum-iridium bar, the standard meter? But there is no standard index with which to determine the one true rate of inflation, or one true rate of change in real wages, because there is no one true standard consumption basket.

It seems that Kenworthy thinks there is something suspect about looking at the typical consumption basket of people at one part of the income distribution, looking at the typical consumption basket of people at another part of the income distribution, and then determining separately the change in rate of actually experienced inflation for people at those points in the distribution. I don’t see how this requires any weird assumptions about the exogeneity of preferences to income. All it requires is that we take seriously what different kinds of people tend to buy.

Think about it this way. Suppose you’ve got a country with only poor people and a country with only rich people. In each country, their version of the BLS creates something like the CPI. We find that price inflation is lower in the poor country. Then the rich country annexes the poor country. Does calculating separate CPIs suddenly become a kind of mistake?

As I noted in my first post on this paper, when I talked very, very briefly to Sachs about my paper on inequality, looking at the change in price of the typical consumption baskets of the rich and poor was the one thing he suggested one might try to do to get a better sense of what’s happening in terms of the trend in real consumption inequality. I said I didn’t have the technical wherewithal to do that. But Broda and Romalis do. I’m not convinced that they or Sachs or Levitt is confused.

I’ve posted on this paper once already, but it really, really, really deserves more attention. And people pay attention to Steven Levitt, so listen to him:

According to two of my University of Chicago colleagues, Christian Broda and John Romalis, everyone is wrong.

Inequality has not grown over the last decade — at least not very much. What we think is a rise in inequality is merely an artifact of how we measure things.

As improbable as it may seem, I believe them.

Their argument could hardly be simpler. How rich you are depends on two things: how much money you have, and how much the stuff you want to buy costs. If your income doubles, but the prices of the things you consume also double, then you are no better off.

When people talk about inequality, they tend to focus exclusively on the income part of the equation. According to all our measures, the gap in income between the rich and the poor has been growing. What Broda and Romalis quite convincingly demonstrate, however, is that the prices of goods that poor people tend to consume have fallen sharply relative to the prices of goods that rich people consume. Consequently, when you measure the true buying power of the rich and the poor, inequality grew only one-third as fast as economists previously thought it did — or maybe didn’t grow at all.

Why did the prices of the things poor people buy fall relative to the stuff rich people buy? Lefties aren’t going to like the answers one bit: globalization and Wal-Mart!

With the recent rise in food and energy prices, I wouldn’t be surprised if inflation is now rising more quickly for the poor. But it’s just huge if everyone has been so wrong about rising inequality over the last decade. If you think economic inequality matters, that’s because you think relative economic well-being matters.  If you think economic well-being matters, then what you care about is consumption, not income. So what you’re worried about, my egalitarian friend, is consumption inequality. If the trend in consumption inequality is flat, will you please make a note of it? Indeed, will you please communicate to your friends that, despite the outsized income gains of the wealthiest, America has become scarcely more unequal because capitalism has done so much of specific benefit to the poor?  Of course you will.

In this week’s Free Will, I chat with Jeff Sharlet, author of the shocking new book The Family: The Secret Fundamentalism at the Heart of American Power. I’m prone to skepticism about shadowy cabals, but I found this book both believable and upsetting. Jeff (a contributing editor to Harpers and Rolling Stone) was apparently a bit worried about talking to a Cato suit, but it seems to have turned out okay:

When Bloggingheads TV, the website that produces those video “diavlogs” you see these days in the fold of the online NYT, told me they’d given my new book, The Family, to Will Wilkinson of the conservative libertarian Cato Institute , I was a little concerned. The elite fundamentalists about whom I write are particularly passionate about what some call “biblical capitalism,” a literally religious devotion to free markets. Wilkinson, as you can imagine, is a big believer in free markets, too, and for that reason I thought he and I might have a very contentious conversation.

Oh me of little faith in the wisdom of Bloggingheads. Wilkinson turned out to be an ideal respondent — indeed, he may have understood aspects of the book better than I did when I wrote it. Most importantly, he recognized that biblical capitalism uses the veneer of free markets as a cover for the cronyism of the anointed. It’s dishonest libertarianism, “self-interest by proxy,” in Wilkinson’s brilliant phrase — the exact opposite of the responsible, transparent libertarianism championed by Wilkinson.

I’m glad that came across!

In Arthur Brooks’ Gross National Happiness, he makes a great deal of the effect of religiosity on happiness. And there is no disputing the data: in the United States, religious participation is positively correlated with higher levels of self-reported happiness. But he makes rather too much of it, I think, largely because he has decided not to take into account international comparisons but rather stick exclusively with evidence from the U.S. I think this is a huge mistake.

In the AEI forum Thursday, Brooks responded to my criticism by correctly pointing out that cross-country comparisons can be muddied by various cultural differences. Sure. But if you are more or less thoroughly satisfied with the general validity of survey measures, as Brooks claims to be, then there is really no principled reason not to compare results between the United States and Western Europe, which aren’t all that different. Indeed, the differences that do show up in the data are very telling, and they cut strongly against both the substance and rhetoric of Brooks’ strongly pro-religion argument.

I think Brooks is rather too willing to slide from local individual-level correlations — for example, that other things equal, religious folks in the United States say they are happier — to macro-level generalizations — for example, that more religious cultures are generally happier ones. At one point, Brooks implies that the ACLU is hurting national happiness by fighting against public displays of religion.

What you do not learn in the chapter on religion in Gross National Happiness is that countries with some of the lowest levels of religious participation in the world, such as Denmark, Norway, or Finland show up again and again in international rankings as some of the world’s happiest places, usually ahead of the U.S. Moreover, many of the most religious places on Earth are deeply miserable.

You’d think this would be relevant. But Brooks just doesn’t bring it up. He seemed to me to encourage the idea that the relationship between religiosity and happiness is deep, perhaps universal. But it just isn’t. According to a 2007 paper by Lisbeth Snoep in the Journal of Happiness Studies, there is no significant individual-level correlation between religiosity and happiness in the countries she looked at: Denmark and the Netherlands — both among the happiest countries. In his concluding chapter, one of Brooks’ “Happiness Lessons for our Leaders” is “America must defend it’s tradition of religious faith.” But it’s really hard to see why.

Please compare these two charts (click for full size):

That’s from Ronald Inglehart and Pippa Norris, Sacred and Secular: Religion and Politics Worldwide.

And that’s from Betsey Stevenson and Justin Wolfers, “Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox“[pdf].

Secularization has been rapid in much of Europe over the last several decades. But according to Stevenson and Wolfers’ recent paper, happiness has been steadily increasing there all the while — unlike in the U.S., where the measured trend has been flat. It doesn’t take an econometric wizard to eyeball the relationship: religion down, happiness up. Doesn’t this fact simply devastate Brooks’ strong implication that secularization is antagonistic to national happiness? Yes it does.

Note that you don’t have to believe in cross-country happiness comparisons to take this seriously. All you have to note is that average happiness rose while rates of religious participation fell here, here, here, here, and here, etc. And then, given that fact, Brooks may owe us a special story about why he doesn’t think that relationship would hold in the United States, too.

So what are we left with? Brooks rightly points out that in the U.S. a great number of community organizations are anchored in religion. And sociality and community are key to happiness. So, sure, non-religiosity in the U.S. is likely to be a socially alienating and stigmatized kind of non-conformism. I’m trying to track down a paper I think is in the Diener and Suh collection, Culture and Subjective Well-Being, which I recall as saying something to the effect that a good individual fit with prevailing cultural values predicts self-reported happiness. So, for example, people with collectivist values are more likely to be happy in a collectivist society than are people with individualist values in collectivist cultures. But, overall, individualist societies tend to be happier. It seems to me that Brooks has simply found that America has a religious culture, and therefore it’s less trouble to be religious in the U.S., not that religiosity has some kind of deep connection to happiness.

But Brooks writes:

You may not go to church — you may be an atheist. But if you enjoy living in a happy country, you can thank — well, you can thank your lucky stars–that so many of your American compatriots are religious.

Looking at the data, this strikes me as conservative bluster. Almost all the countries that consistently score higher than the U.S. in happiness are much less religious. While conservatives and the religious are indeed more likely to say they are happy in the U.S., it would be a simple error to infer that “gross national happiness” would be damaged were the culture to become less conservative or religious. In fact, cross-national data seem strongly to suggest the opposite. Perhaps we should thank our lucky stars for the salutary influence of Dawkins, Hitchens, and Harris!

In a post titled “Inequality and Death,” Ezra Klein writes:

I guess this goes into the unsurprising category, but a new study shows that the risk of premature death plummets as you wander up the educational ladder. To make a meta-point, I post on these sorts of socio-health studies frequently for a reason: We tend to think of inequality in terms of some people having more stuff than other people. That’s true, to an extent. But the poor in our society are also sicker, in more everyday pain, and have a greater chance of dying young. We’re comfortable with inequality of stuff, but are we really very comfortable ignoring such gross inequality of pain, of illness, and of death? That’s not to suggest that we’ll ever have a society where everyone feels the same amount of pain, but it is to argue that the poor are not just different because they have less money, but because their lives are substantially worse, and worse in ways that better social policy could help alleviate.

Naturally, I share Ezra’s concern for the alleviation of illness, suffering, pain, and death and think better social policy would help. (We disagree about those policies, I’m sure.) But isn’t the problem here illness, suffering, pain, and death and not inequality? Don’t we have reason to worry about these things just because they are bad? Because it is possible to help? I accept that our standards for adequate health and our expectations about suffering are contextual. In a decent society, the acceptable minimum rises over time. But whether people have enough stuff or experience too much illness is not therefore a question of inequality.

That said, not having looked at the study Ezra cites, it seems natural that educational attainment and health will have a common cause: time preference. The causes of differences in dispositions to act now to gain distant future rewards are unknown to me. I guess it has a great deal to do with an early sense of the stability or volatility of one’s practical environment. If you come to feel that involved plans tend to be dashed and that resisting gratification leaves you with less than you could have had, you’ll learn not to form involved plans or defer desire. I think having consistently enough money is a major factor in developing the sense that long-term projects can be successfully carried through. But having enough is itself largely a function of being able to carry through long-term plans. Poverty can be so pernicious precisely because it carries with it the conditions for its own reinforcement.

For those of you in the greater Washington, DC metropolitan statistical area, I’ll be on a panel devoted to the discussion of Arthur Brooks’ new book Gross National Happiness. UVA’s Jonathan Haidt and AEI’s Sally Satel will also comment. You can register here.

I’m sympathetic to but ultimately must disagree with Seth Stevenson’s take on procrastination, a topic I sadly know a great deal about.

Why did I subject myself to so much stress, instead of starting my work earlier like “normal” people do? Well, you’ve no doubt heard all manner of theories regarding the root cause of procrastination. Fear of failure. Crippling perfectionism. Abnormally low type-2 phloxiplaxitus levels.

I’m here to tell you that it was none of these things. The root cause of my procrastination, in technical terms, is this: I’m lazy. Extremely lazy.

Don’t judge, pal—you’re lazy, too. It’s why you procrastinate. When there’s a difficult, disagreeable, or tedious chore that needs to get done, guess what? You don’t want to do it. So you don’t. Until you have to.

It’s just that simple, my slothful friend.

I’m sure I procrastinate as much as Stevenson, but the thing is, I’m not lazy! I am in fact super-industrious. It’s just that I am always motivated to do something other than the thing that most needs to be done. Stevenson mentions Da Vinci was a flaky, distractable procrastinator. OK.  But lazy? That’s retarded. Doing something else is not laziness; it’s misdirected industriousness.

No discussion of procrastination is complete with John Perry’s now-classic essay “Structured Procrastination.” You can even buy a “I’m not wasting time, I’m a structured procrastinator  t-shirt!”

If you’re interested, you can watch or listen to the Cato Forum on Cass Sunstein and Richard Thaler’s Nudge here. My comments are last, after Sunstein and Chorvat’s.

I hate it. I am terrible at it. As a consequence, I bought nothing in Turkey other than tickets to various things, room, food, and a poster of Ataturk. And I overpaid for all of these things, I’m sure, which has left me a bit bitter about the place. Surely this is inefficient overall, no? I understand the price discrimination argument for haggling, especially in a country with a lot of poverty and tourism. But probably hundreds of my dollars stayed in my pocket because I didn’t have good information about the quality of products and I knew the retailer is better at bargaining over the surplus than I am, so… there was no transaction and no surplus. Sure, there is a lot of successful gouging going on, but add up millions of instances of “I know you’re going to screw me,” and I suspect that the average retailer is doing worse rather than better under the haggling system. And how about the average native consumer? In competitive posted-price markets, the system basically pre-haggles the price down to the point where the consumer gets most of the surplus. This is why Wal-Mart is a humanitarian triumph, and a shining symbol of civilization. In the world of Wal-Mart, when it comes to divvying up the surplus from exchange, the retailer has very little freedom to try to take you to the cleaners, but profits by assuring you that you will win the argument.

We got back yesterday afternoon, after a layover in Vienna. Austrian efficiency turned out to be a refreshing contrast to the customary Turkish goat rodeo. I’ll have a few posts this week inspired by thoughts about Turkey.

Yesterday Kerry and I rented a ridiculously large boat with a crew of two in the little fishing village of Selimiye, near the point where the Aegean meets the Mediterranean. They took us around to little islands off the coast and to good swimming spots. The water, as you can see, is astonishingly clear and, in the shallows, is the color they paint the bottom swimming pools, I guess to make them look like the Aegean. The highlight of the trip was our time exploring a small island containing the ruins of a Greek Christian monastary, now inhabited only by a herd of goats and a lonely donkey.

Today, we’re in Pammukale, which is weird and awesome. Kerry’s got a pic.