You will find the report here, and I thank John B. Bryant for the pointer.
Next Wednesday night, Bryan Caplan will debate Karl Smith on that topic at GMU. For background, here is a relevant short essay by Karl.
From the perspective of “common sense morality,” the poor, in wealthy countries at least, are responsible for quite a bit of their difficulties. I believe Bryan stresses this factor, although I am less sure how he treats common sense morality when he disagrees with it.
Yet other perspectives must be brought to bear. There is determinism, at differing levels, ranging from “it’s tough to come from a broken home” to “lead poisoning is bad for you” to “what if the universe is a frozen four-dimensional Einsteinian/Parmenidean block of space-time?” (Ethics does look different when you are traveling at the speed of light.)
There is the view that desert simply is not very relevant for a lot of our choices. We still may wish to aid the undeserving. Matt Yglesias adds relevant comment.
What about utility? Corrupt societies are inefficient, frustrating, and infuriating, but is more meritocracy utility-enhancing at all margins? I doubt it. Chess is a relative meritocracy, with clear standards for performance and achievement, but I am not sure that chess players as a whole are happier for this. Some ambiguity in one’s level of achievement can be socially useful and somewhat of a relief at the personal level. Life in a sheer meritocracy would be psychologically oppressive.
What about multiple equilibria and self-fulfilling prophecies (pdf, very interesting paper at first glance I have not read it yet)?
The goal of discussions of desert is to improve on common sense morality, without straying so far from it that the proposed reforms are unworkable or unsustainable. Views on merit and desert are also incentives, and they must slot into *someone’s* common sense morality if they are to be applied and carried forward.
In this area, it is easy to stomp on the views of other people. It is harder to synthesize these factors, and others, in a way that is defensible or even explicable in terms of a coherent approach. Where does the commensurability across the different factors come from? How much room or slack does common sense morality give us to operate at all?
What if we turned out not to deserve meritocracy? What would then be the meritocratic thing to do?
We like to think of ourselves as an innovation nation but our government is a warfare-welfare state. To build an economy for the 21st century we need to increase the rate of innovation and to do that we need to put innovation at the center of our national vision. Innovation, however, is not a priority of our massive federal government.
Nearly two-thirds of the U.S. federal budget, $2.2 trillion annually, is spent on just the four biggest warfare and welfare programs, Medicaid, Medicare, Defense and Social Security. In contrast the National Institutes of Health, which funds medical research, spends $31 billion annually, and the National Science Foundation spends just $7 billion.
That’s me writing at The Atlantic drawing on Launching the Innovation Renaissance. Here is one more bit:
Our ancestors were bold and industrious–they built a significant portion of our energy and road infrastructure more than half a century ago. It would be almost impossible to build that system today. Could we build the Hoover Dam today? We have the technology but do we have the will? Unfortunately, we cannot rely on the infrastructure of our past to travel to our future. Airports, an electricity smart grid that doesn’t throw millions into the dark every few years, ubiquitous Wi-Fi — these are among the important infrastructures of the 21st century, and they are caught in the regulatory thicket.
Putting innovation at the center of the national vision is not simply about spending more, it’s about how we approach all problems. Read the whole thing for more discussion of regulation and other issues.
Kevin Outterson writes of “Hand Sanitizers as Agent Orange”:
Over at CommonHealth, Aayesha rounds up the literature on the limits of hand sanitizers, but fails to mention the collateral damage to the skin microbiome. Alcohol-based hand sanitizers kill many bacteria, viruses and fungi, but they don’t selectively target pathogens. They kill a wide swath of the microbial life on your hands, including little-understood non-pathogenic species. For an ecological analogy, think of using Agent Orange to kill a couple weeds.
A good introduction to the skin microbiome is a recent article in Nature Reviews Microbiology by Elizabeth A. Grice and Julia A. Segre (9, 244-253 (Apr. 2011)). From the abstract:
“The skin is the human body’s largest organ, colonized by a diverse milieu of microorganisms, most of which are harmless or even beneficial to their host. Colonization is driven by the ecology of the skin surface, which is highly variable depending on topographical location, endogenous host factors and exogenous environmental factors. The cutaneous innate and adaptive immune responses can modulate the skin microbiota, but the microbiota also functions in educating the immune system.”
As I’ve said before, our relationship with microbes should also be evaluated as an ecological issue. Completely germ-free environments are not necessarily the goal.
Why are cell phone taxes so high? In the United States we tax cell phones more than beer. The usual explanations for high taxes, negative externalities and low elasticity of demand don’t seem to apply to cell phones. Our colleagues Thomas Stratmann and Matt Mitchell offer an answer based in political economy.
…no single politician does choose to tax them that much. Instead, the high taxes that we pay on our cell phones are the sum of lots of little taxes imposed by several different political entities. Consider, for example, the tax bill of a typical New Yorker. It includes a federal USF fee, four state taxes, five city taxes, and a local 9-1-1 fee. Each of these is relatively small, but when you add it all up, the combined rate is over 22 percent.
…The mobile service tax base appears to suffer from a tragedy of the anticommons…numerous overlapping tax authorities seek to obtain revenues through wireless-service taxation, and this may lead to overexploitation of the tax base.
…We use state-level data from three years to examine the possible economic, demographic, and political factors that might explain the variation in these rates. We find that wireless tax rates increase with the number of overlapping tax bases.
Hat tip: Neighborhood Effects.
Justin Wolfers writes:
Predictably enough, I spent yesterday reading lefty blogs trumpeting Corak’s analysis, and right-leaning blogs who didn’t want to believe the inequality-mobility link, endorsing Winship. But both missed the bigger picture implications. Either you’re convinced by Corak that the data can be trusted, and that they show there’s a strong link between actual inequality and actual mobility. Or you believe Winship that the data are a pretty poor proxy for what’s really happening, and so there’s actually a very strong link that’s being disguised by imperfect data.
Here is Scott’s latest response, with links to various critics.
As for my take, Justin is painting himself into a corner here of his own making. Let’s step back for a moment. I see two big and very real problems: slow income growth for many income classes and a problem with excessively high returns to finance at the very top. (As an aside, both of these problems contain elements of both “left-wing concerns” and “right-wing concerns,” and both problems are deeper than any particular ideology can solve and they should make virtually everyone rethink their views).
Those are the problems and we should try to fix them.
If we could fix these problems, that would mean a smaller financial sector, less moral hazard, better allocation of capital, and for most/all income classes rates of income growth comparable to the 1948-1972 period, chop it up as you wish. Imagine that everyone’s income went up three percent a year, every year, and every generation was about twice as rich as the parents. Whether there then would be more or less marginal “churn” in the relative income rankings is not a matter of irrelevance but having somewhat more churn should not be viewed as a major social goal per se. It would depend on the reason for the immobility, and the real focus of our concern would be the reason (e.g., bad schools? some kind of unfairness?), and not the marginal change in the numerical churn per se.
Given that background, and those two very real problems, you can in fact create other “problems” by creating and manipulating more complicated statistics, based on the initial problems, and that can lead you to various measures of inequality and immobility. But not all inequalities are bad, or avoidable, and the same is true for immobilities. The valid problems, as embedded in the new complicated measures, still will boil down to the two simpler problems mentioned above. In the meantime, toying around with misleading and less transparent aggregate measures of inequality and immobility will bring confusion as to what is really at stake.
Focus on the two very real and fairly simple (as distinct from simple to fix) problems.
Addendum: If you are looking for Turing test fail, mood affiliation, unwillingness to recognize comparisons on the margin (as if I am defending hereditary aristocracy), and us vs. them thinking, here are John Quiggin, Brad DeLong, and Paul Krugman, as if I had staged a satirical interchange to illustrate and make fun of their occasional proclivities. The commentary of Matt Yglesias, also on the left, does not commit any of these fallacies and in fact deftly sidesteps them; perhaps they should drink from his water, or from that of his father, who apparently did not finish high school.
From David Galbraith, via Kottke:
I’ll bet if you asked every French politician where the web was invented not a single one would know this. The Franco-Swiss border runs through the CERN campus and building 31 is literally just a few feet into France. However, there is no explicit border within CERN and the main entrance is in Switzerland, so the situation of which country it was invented in is actually quite a tricky one. The current commemorative plaque, which is outside a row of offices where people other than Tim Berners-Lee worked on the web, is in Switzerland. To add to the confusion, in case Tim thought of the web at home, his home was in France but he temporarily moved to rented accommodation in Switzerland, just around the time the web was developed. So although, strictly speaking, France is the birthplace of the web it would be fair to say that it happened in building 31 at CERN but not in any particular country! How delightfully appropriate for an invention which breaks down physical borders.
It was funny when the first Greek bond hit a yield of 100 per cent, says investment editor James Mackintosh. But Greece may be the proud issuer of the first bond to yield more than 1,000 per cent outside periods of hyperinflation.
The explanatory video is here.
The author is Daniel Klein and you can buy it here. My blurb reads:
The best book on Smithian economics, or for that matter Austrian economics, in many years.
Here is a thirty-minute presentation of some themes from the book. Here is an associated podcast with Dan and Russ Roberts. Here is the syllabus for Dan’s class on economics and philosophy (pdf); here is the syllabus for his class on Adam Smith (pdf).
Here is a very useful survey by Steven M. Davidoff, excerpt:
…in a separate paper, Steven Kaplan of the University of Chicago and Mr. Stromberg estimated that private equity-owned firms had a default rate of 1.2 percent a year from 1980 to 2002. That compares with Moody’s Investors Service’s reported default rate of 1.6 percent for all corporate bond issuers in the United States in the same time period.
Private equity-owned companies may have a lower general default rate because of the better debt terms that sophisticated private equity firms can negotiate. For example, Moody’s has found that an outsize number of companies owned by private equity firms avoided default during the financial crisis because they had so-called covenant-lite debt, which had fewer terms that could be violated.
Beyond default rates, evidence of the private equity industry’s ability to create value is still surprisingly uncertain, given that the industry has more than 30 years of history. One of the reasons is that private equity firms do not generally publicly disclose the performance of their buyouts.
…A new paper, however, finds evidence that private equity firms do add value. Adam C. Kolasinski and Jarrad Harford of the University of Washington examined 788 large private equity buyouts in the United States. They found that private equity-owned companies invested more efficiently than other companies, a fact the authors attributed to private equity firms’ greater access to capital. The authors also found that the payment of large dividends to private equity firms, a common practice, did not create future financial distress.
There is more of interest at the link. “Some positives, lots of uncertainty” would be a good description of the available evidence.
In The Coming Education Revolution I discussed Sebatian Thurn and Peter Norvig’s online AI class from Stanford that ended up enrolling 160,000 students. Felix Salmon has the remarkable update:
…there were more students in [Thrun's] course from Lithuania alone than there are students at Stanford altogether. There were students in Afghanistan, exfiltrating war zones to grab an hour of connectivity to finish the homework assignments. There were single mothers keeping the faith and staying with the course even as their families were being hit by tragedy. And when it finished, thousands of students around the world were educated and inspired. Some 248 of them, in total, got a perfect score: they never got a single question wrong, over the entire course of the class. All 248 took the course online; not one was enrolled at Stanford.
Thrun was eloquent on the subject of how he realized that he had been running “weeder” classes, designed to be tough and make students fail and make himself, the professor, look good. Going forwards, he said, he wanted to learn from Khan Academy and build courses designed to make as many students as possible succeed — by revisiting classes and tests as many times as necessary until they really master the material.
And I loved as well his story of the physical class at Stanford, which dwindled from 200 students to 30 students because the online course was more intimate and better at teaching than the real-world course on which it was based.
So what I was expecting was an announcement from Thrun that he was helping to reinvent university education: that he was moving all his Stanford courses online, that the physical class would be a space for students to get more personalized help. No more lecturing: instead, the classes would be taken on the students’ own time, and the job of the real-world professor would be to answer questions from kids paying $30,000 for their education.
But that’s not the announcement that Thrun gave. Instead, he said, he concluded that “I can’t teach at Stanford again.” He’s given up his tenure at Stanford, and he’s started a new online university called Udacity. He wants to enroll 500,000 students for his first course, on how to build a search engine — and of course it’s all going to be free.
The way it works now is you write a paper then you send it to a journal and they review it and decide whether to publish it. The basic unit is the paper. What if we made the author the basic unit? Instead of inviting submissions, Econometrica invites applications for the position of author. Some number of authors are accepted and they can write whatever they want and have it published in Econometrica. The term would be temporary, maybe 1 year.
Wouldn’t it be wonderful to just write the paper you want to write, not the paper that the referees want you to write? The quality of papers would unambiguously increase. After all, your acceptance is a done deal, anything you write will be published, why bother writing anything less than the most interesting idea that is currently on your mind.
Quality control is achieved by rotating in the authors currently writing the most interesting stuff. Once the current slate of authors is chosen, there is no need anymore for referees or editors. But if you want peer review, you can have that too. Anyone wishing to prepare a referee report is invited to do so, they can even do it anonymously if they want and even make it open to the public. The journal might even want to append the reports onto the published paper.
Come to think of it, these journals already exist: blogs…
