The author of this new and excellent book is my colleague Peter T. Leeson and the subtitle is Why Self-Governance Works Better Than You Think.  Here is one excerpt:

Twenty-two of thirty-seven street gangs Jankowski (1991: 78-82) studied have written constitutions.  Sicilian Mafiosi follow a largely unwritten code of rules, and recently police found a written set of “ten commandments” outlining the Mafia’s core laws…Kaminski (2004) identifies extensive (yet unwritten) rules dictating nearly every aspect of Polish prisoners’ lives, from what words are acceptable to use in greeting a stranger to how and when to use the bathroom.  And the National Gang Crime Research Center considers constitutions so central to criminal societies that the use of a constitution is one of the defining characteristics it uses when classifying gangs…

Peter of course does not favor criminal gangs, rather he seeks social principles for voluntarism and yes perhaps you could call these views a kind of anarchism.  My stance, however, differs from his.

I accept the reductionist argument that government too is a kind of anarchy, since it must rely on norms and internally polycentric and perhaps even ultimately intransitive mechanisms for maintaining order.  There is no “final court of authority” in the practical sense, but rather a series of overlapping constraints which give rise to a spontaneous order of rules and governance, for better or worse.  In this sense anarchy is not an absurd idea at all, and we can imagine many varieties of orderly anarchy, including those in a more libertarian direction.  That said, while I often favor smaller government, when it comes to political philosophy I do not seek to move toward “more anarchy.”  In fact I often admire the relatively centralized governmental structures of Great Britain and New Zealand, with their clean and sharp lines of accountability.

I think modern anarchy would indeed be “orderly,” but I also think that private protection agencies would end up colluding and re-evolving into a form of coercive government (pdf), furthermore in a form that libertarians would find objectionable.  I would much rather have the West’s current democratic governments, for all their imperfections, than a for-profit “shareholder state,” not to mention the transition costs and the uncertainties along the way.  The best thing you can say about a shareholder state is that it might have a better immigration policy.  In the meantime, we are seeking to rebuild the history we have.

The subtitle is An Unexpected Guide to Human Nature and Happiness, and the author is Russ Roberts.  The focus is on Adam Smith’s Theory of Moral Sentiments and why that is an important book.  This is Russ’s best book in my opinion, so you should consider buying it here.  My favorite section is the discussion of the Chilean maid, definitely recommended.

Moral Effects of Socialism

by on July 19, 2014 at 7:25 am in Books, Economics, Philosophy | Permalink

Dan Ariely and co-authors have an interesting new paper looking at moral behavior, specifially cheating, in people who grew up in either East or West Germany.

From 1961 to 1989, the Berlin Wall divided one nation into two distinct political regimes. We
exploited this natural experiment to investigate whether the socio-political context impacts
individual honesty. Using an abstract die-rolling task, we found evidence that East Germans
who were exposed to socialism cheat more than West Germans who were exposed to
capitalism. We also found that cheating was more likely to occur under circumstances of
plausible deniability.

…If socialism indeed promotes individual dishonesty, the specific features of this socio-political
system that lead to this outcome remain to be determined. The East German socialist regime
differed from the West German capitalist regime in several important ways. First, the system
did not reward work based to merit, and made it difficult to accumulate wealth or pass
anything on to one’s family. This may have resulted in a lack of meaning leading to
demoralization (Ariely et al., 2008), and perhaps less concern for upholding standards of
honesty. Furthermore, while the government claimed to exist in service of the people, it failed
to provide functional public systems or economic security. Observing this moral hypocrisy in government may have eroded the value citizens placed on honesty. Finally, and perhaps most
straightforwardly, the political and economic system pressured people to work around official
laws and cheat to game the system. Over time, individuals may come to normalize these types
of behaviors. Given these distinct possible influences, further research will be needed to
understand which aspects of socialism have the strongest or most lasting impacts on morality.

It’s interesting that Ariely et al. try to explain cheating as a result of socialism. My own approach would look more to the virtue ethics of capitalism and Montesquieu who famously noted that

Commerce is a cure for the most destructive prejudices; for it is almost a general rule, that wherever we find agreeable manners, there commerce flourishes; and that wherever there is commerce, there we meet with agreeable manners.

See Al-Ubaydli et al. for a market priming experiment and especially McCloskey on The Bourgeoise Virtues for more work consistent with this theme.

*The Falling Sky*

by on July 15, 2014 at 2:06 am in Books, Education, Medicine, Philosophy | Permalink

The subtitle is Words of a Yanomami Shaman, and the shaman is Davi Kopenawa from the Amazon, with transcription and assistance from French anthropologist Bruce Albert.  Imagine 487 pp. of a highly intelligent, articulate shaman telling you what he thinks, and perhaps more importantly telling you what he thinks about.  Here is one bit:

As children, we gradually start to think straight.  We realize that the xapiri [spirits] really exist and that the elders’ words are true.  Little by little, we understand that the shamans do not behave as ghosts without a reason.  Our thought fixes itself on the spirits’ words, and then we really want to see them.  We take hold of the idea that later we will be able to ask the elders to blow the yakoana into our nostrils and give us the xapiri’s songs.  This is how it happened for me a long time ago.  The spirits often came to visit me in dreams.  This is how they started to know me well.

For those who are willing to swerve in the direction of the mystical, I recommend this strongly, read the Amazon reviews at the first link above.  Here is a brief excerpt from one: “This is an astonishing book, a gripping story, and a poetic revelation of an entirely different world view than our own. Every single page sparkles with provocative meditations on the impact that industrial societies have on the environment and the role of Yanomami shamans in protecting it for the sake of all humanity.”  You won’t find cost-benefit analysis here.  Here are some selections from the book.  Here is one blog review from LSE.  Google is not turning up too many other reviews, but this came out in late 2013 and it is a truly significant work deserving of further attention and it is rather dramatically under-reviewed.

1. From 1964: “Eleven-year-old Harriet M. Welsch is obnoxious. She dresses like a boy, throws temper tantrums, swears at her parents and thinks terribly unkind thoughts. She refuses to eat anything but tomato sandwiches for lunch. She even invents her own middle initial.”

2. She also keeps a notebook, spies on everyone, and writes down the truth about them.  Her notebook is made public and she is disgraced, until making a comeback as the elected editor of the school newspaper (though see below).  At the end she learns that some lying is necessary.

3. One message of this book is that writers, and journalists in particular, are neurotics.  And liars.  A more core message is that heroines are allowed to be nasty and tell the truth.  Harriet throws a pencil in the face of Beth Ellen.  Compare this with the goody two-shoes Nancy Drew.

3b. “Harriet…Are you still writing down mean things about people?” “No. I am writing my memoirs.”  When I first read this book at age ten or so, I didn’t get the jokes.  Note also the phallic wurst joke on p.105.  Food/sex references run throughout, and there is a running contrast between Harriet’s duty to be an onion (hard, gets cut down the middle) with her desire to instead do nothing but munch on tomato sandwiches.

4. The opening of the book makes Harriet sound like an macroeconomist: “Harriet was trying to explain to Sport how to play Town.  “See, first you make up the name of the town.  Then you write down the names of all the people who live in it.  You can’t have too many or it gets too hard.””

5. Harriet the infovore announces her intention to know “everything in the world, everything, everything.”

6. On p.278 author Fitzhugh indicates to us that she is not herself telling us the entire truth about growing up.  It is yet more brutal than this book is allowed to let on.  After that page, everything which happens in the text is a lie, designed to make the casual reader feel better and to sell more copies.  Harriet is not in fact voted editor of the school newspaper and not allowed to publish her critical rants to general acclaim with only a few retractions.  This is a Straussian text and it makes fun of the reader’s willingness to believe in happy endings.  The opening “make believe” scene mirrors these later deceptions.

7. This short essay compares Harriet to To Kill a Mockingbird.  Other commentators stress that Louise Fitzhugh, the author, was a lesbian and perhaps Harriet is a budding lesbian too (she dresses like a boy and has a tomboyish haircut).  I view Sport’s father, who is obsessed with getting a $$ advance for his book, as the stand-in character for Fitzhugh (start at p.260 and see also p.52 on the obsession with writing and money).  Luxury is portrayed as corrupting and leading to indolence, so becoming a successful writer is a self-destructive process, noting that Fitzhugh herself stagnated after this hugely successful book.

8. In this book parents are typically indifferent, brutally indifferent I would say, toward their children.

9. In the movie version “…Harriet competes against Marion Hawthorne to see who has a better blog.”

10. This is a deep work, rich in jokes, and more than worthy of its iconic status.  I am very glad to have reread it.

Here is my previous post on Catcher in the Rye.

Arrived in my Twitter feed

by on July 9, 2014 at 12:25 pm in Books, Philosophy | Permalink

Notice of:

How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness

By Russ Roberts, now available for pre-order.

That is a new website from Daniel Klein and the Adam Smith Institute, “A review of the changes 1880-1940 to the central semantics of liberal civilization.”

Ilan Mochari reports:

4. Depersonalize the key questions. Yeh suggests approaching your employees by saying something like this: “It’s my job to help you overcome bottlenecks and all the things that are in your way. What things are preventing you from accomplishing your mission, and how can I solve them?”

Phrasing the question this way enables you to emphasize the mission, rather than the employee himself. It allows the employee to describe what’s wrong with his job, without feeling like he’s critiquing his own performance or ability to adapt to challenging circumstances.

Casnocha says he learned a great conversational tactic from Tyler Cowen, a professor of economics at George Mason University. The idea is another form of depersonalizing questions: Ask an employee what “most people” think of a certain situation. Usually, the employee will tell you what most people think. But in doing so, she will also provide a glimpse of her own personal feelings. Specifically, Casnocha suggests these conversational cues:

How is everyone feeling about what’s going on in the office?
What do you think people are frustrated about here at work?

These questions allow you, as a leader, to follow up on whatever topics arise. But you can do so delicately, without pouncing on the employee who–even in sharing what “most people” think–has just displayed a great deal of vulnerability.

93% of that country is satisfied with the degree of freedom in that country, ranking it #3 in the world (New Zealand is #1 by that standard).

There is more here.  U.S. is #36.

Happy Fourth of July!

Here is the latest in a rather long-standing debate:

Kang Lee et al.
Psychological Science, forthcoming

The classic moral stories have been used extensively to teach children about the consequences of lying and the virtue of honesty. Despite their widespread use, there is no evidence whether these stories actually promote honesty in children. This study compared the effectiveness of four classic moral stories in promoting honesty in 3- to 7-year-olds. Surprisingly, the stories of “Pinocchio” and “The Boy Who Cried Wolf” failed to reduce lying in children. In contrast, the apocryphal story of “George Washington and the Cherry Tree” significantly increased truth telling. Further results suggest that the reason for the difference in honesty-promoting effectiveness between the “George Washington” story and the other stories was that the former emphasizes the positive consequences of honesty, whereas the latter focus on the negative consequences of dishonesty. When the “George Washington” story was altered to focus on the negative consequences of dishonesty, it too failed to promote honesty in children.

The pointer is from the excellent Kevin Lewis.

…my reading of the available evidence convinces me that a social policy that channels benefits through work and thereby encourages paid employment has important advantages over a UBI [universal basic income] in helping the disadvantaged to live full, happy, productive, and rewarding lives.

What evidence? Let’s start with the well-established finding that unemployment has major negative effects on well-being, including both mental and physical health. And the effects are remarkably persistent. A study using German panel data examined changes in reported life satisfaction after marriage, divorce, birth of a child, death of a spouse, layoff, and unemployment. All had predictable effects in the short term, but for five of the six the effect generally wore off with time: the joy of having a new baby subsided, while the pain of a loved one’s death gradually faded. The exception was unemployment: even after five years, the researchers found little evidence of adaptation.

Evidence even more directly on point comes from the experience of welfare reform – specifically, the imposition of work requirements on recipients of public assistance. Interestingly, studies of the economic consequences of reform showed little or no change in recipients’ material well-being. But a pair of studies found a positive impact on single mothers’ happiness as a result of moving off welfare and finding work.

There is more here.  And Ross Douthat offers related remarks on whether it really is possible to encourage work — how well have previous welfare reforms succeeded in this end?

I interviewed him.  You will find the full version here, the edited version here.  Not surprisingly, I prefer the full version.  Here is one excerpt:

TC: If I look back at your career, I see you’ve been fighting various kinds of wars or struggles against a lot of different injustices. If you look back on all those decades, during which time you’ve been right about many things, what do you think is the main thing you’ve been wrong about?

RN: Oh, a lot of things. Nobody goes through these kinds of controversies without making bad predictions. I underestimated the power of corporations to crumble the countervailing force we call government. We always knew corporations like to have their adherents to become elected officials; that has been going on for a long time. But I never foresaw the insinuation of corporatism as a policy in one agency after another in government. Franklin Delano Roosevelt foresaw some of this when he sent a message to Congress when he started the temporary national economic commission to investigate consecrated corporate power. That was in 1938. In his message he said that whenever the government is controlled by private economic power, that’s facism. Now, there isn’t a department or agency in Washington where anyone has more power—over it and in it, through their appointees, and on Congress, through lobbyists and political action committees. Nobody comes close. There’s no organized force that comes close to the daily power to twist government in the favor of Wall Street and corporatism, and to disable government from adequately defending the health, safety and economic well-being of the American people.

TC: Let’s say we look at the U.S. corporate income tax. The rate on paper is 35 percent, which is quite high. When you look at how much they actually pay after various forms of maneuvering or evasion, maybe they pay 17–18 percent, which is more or less in the middle of the pack of OECD nations. So if corporations have so much political power in the United States, why is our corporate income tax still so high?

…Sweden, a country you cited favorably, taxes capital income much more lightly than the United States does—not just on paper but in terms of what’s actually paid.

I also ask him about the Flynn effect, whether America needs a new kind of sports participation, and how much American churches have resisted corruption through corporatization, among a variety of other topics.  I tried to avoid the predictable questions.

By the way, you can buy Nader’s new book, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State.  I very much enjoyed my preparation for this interview, which involved reading or rereading a bunch of his books and also a few biographies of him.

Does any sentence better illustrate the human condition in all its political, social and biological complexities than this sentence?

New York state lawmakers have passed a bill banning residents from taking “tiger selfies” — a rising trend on dating websites in which single men post photos of themselves posing with the ferocious felines in hopes of impressing potential mates.

Dissertations are waiting to be written.

I was disappointed but not surprised by this passage by Gary Silverman:

What I like about Obamacare is that it shows some respect for “those people” – as Hudson called them in Giant – who are good enough to work the fields and mow the lawns, and build the roads and sew the clothes, and diaper the babies and wash the dishes, but somehow aren’t good enough to see a doctor from time to time to make sure there is nothing wrong inside.

That is in fact what most of politics is about, namely debates over which groups should enjoy higher social status and which groups should receive lower social status.  Of course critics of Obamacare have their own versions of desired status reallocation, typically involving higher status for the economically productive.

Here is another example of the argument from sympathy, by Norman Podhoretz, applied to a very different field of discourse:

Provoked by the predictable collapse of the farcical negotiations forced by Secretary of State John Kerry on the Palestinians and the Israelis, I wish to make a confession: I have no sympathy—none—for the Palestinians. Furthermore, I do not believe they deserve any.

I am not in this post seeking to adjudicate ACA or U.S. policy in the Middle East.  The easy target is to go after these two authors, but I am interested in different game.  The deeper point is that virtually all of us argue this way, albeit with more subtlety.  A lot of the more innocuous-sounding arguments we use all the time come perilously close to committing the same fallacies as do these quite transparent and I would say quite obnoxious mistaken excerpts.  One of the best paths for becoming a good reader of economics and politics blog posts (and other material) is to learn when you are encountering these kinds of arguments in disguised form.

There is a new Martin and Pindyck paper on this topic, “Averting Catastrophes: The Strange Economics of Scylla and Charybdis”:

How should we evaluate public policies or projects to avert or reduce the likelihood of a catastrophic event? Examples might include a greenhouse gas abatement policy to avert a climate change catastrophe, investments in vaccine technologies that would help respond to a “mega-virus,” or the construction of levees to avert major flooding. A policy to avert a particular catastrophe considered in isolation might be evaluated in a cost-bene fit framework. But because society faces multiple potential catastrophes, simple cost-bene fit analysis breaks down: Even if the benefi t of averting each one exceeds the cost, we should not avert all of them. We explore the policy interdependence of catastrophic events, and show that considering these events in isolation can lead to policies that are far from optimal. We develop a rule for determining which events should be averted and which should not.

The ungated version is here, I do not at the moment see the link to the gated NBER version I printed out and read.  The main point is simply that the shadow price of all these small anti-catastrophe investments goes up, the more of them we do, and thus we cannot do them all, even if every single investment appears to make sense on its own terms.

I think of this paper as providing a framework for assessing the debates between modern Progressives and pessimistic old school conservatives (not exactly the main debate we are seeing today by the way).  The Progressive states “here is a potential or real catastrophe, let us fix it.”  The pessimistic conservative says in response “there are far greater and less visible catastrophic dangers.  We need to address those instead.”  The pessimistic conservative usually is ignored, and so at the relevant margin it appears the Progressive is correct.  Maybe in a sense the Progressive really is correct.  But in another, more systemic sense the Progressive is walking a dangerous path.  Society is losing the resources it may need to avert the more catastrophic catastrophes.

For the pessimistic conservative of course these often involve foreign policy threats, or they may involve “barbarism” more generally.  I find also that pandemics are popular causes of concern with pessimistic conservatives.

Each time one of these Progressive remedies is adopted, the calculus looks even worse for the pessimistic conservative, as there are fewer resources left to address his causes for concern.  Yet the danger of which the pessimistic conservative warns is greater each time, the longer we ignore it, and the more we devote our resources to other endeavors.

It is an interesting question whether optimistic libertarians or pessimistic conservatives have better (as opposed to more persuasive) arguments against Progressives.  The optimistic libertarian can try “we have a better way of solving this problem!”  The pessimistic conservative is still believing “we must neglect this issue so we can prepare for the even greater doom which may await us.”  The Progressive prefers to argue from general grounds of benevolence, rather than debating which potential catastrophes to confront and neglect, and thus a quest for “free lunch” arguments ensues.

Some sophisticated Progressives may think they are in fact the best friends of the pessimistic conservatives.  They may think the choice under consideration is not “which catastrophe to address?” but rather how we can build up our overall willingness to invest in preventing catastrophes.  In this sense the Progressive may be presenting a valuable warm-up exercise, a bit like flexing the muscles for later combat.  Imagine for instance if ACA were to also later help us monitor and confront a pandemic.  Or if it gave us the political will to make other, later sacrifices.  In that case Progressivism could well be right but only as the handmaiden of pessimistic conservatism and the Progressives would become the true Straussians, achieving one view under the guise of another.