Political Science

In a previous column on India, and how it suffered under colonialism, I mentioned:

If you are looking for the upside of British colonialism, you are more likely to find it in the wealthier and better-treated Singapore or Malaysia.

Why might this have been true?  Part of India’s colonial curse was its high population, which meant the British viewed it as a source of soldiers, and a captive market for goods, rather than an area whose value could be internalized through direct economic development.

When it comes the British history in India, I think of “letting the interior fester” as a big part of the core problem.  Most of India was and still is interior.  You might look at the coastal regions, but given that British policy forced India to accept free trade for British goods, without receiving the same privileges in return, the coastal regions became rent-seeking imperial clusters more than possible rivals to Hong Kong or for that matter Manchester.

Singapore, in contrast, was built around its port, and the British encouraged further developments in that direction, even as early as Raffles in the 1820s.  The city didn’t/doesn’t have much of an interior or for that matter much population (about 1,000 when the British took over).  Keeping the people servile didn’t seem worth the trouble, because they could neither fight nor buy in great numbers.  Instead, you can think of British policy as trying, selfishly, to maximize the value of Singaporean land to the British.  But that wasn’t such a nasty process, as the British Navy made Singapore more focal as a trade center, with a later boost from the opening of the Suez Canal.  Note that as late as the mid-1960s, just before independence, about 20 percent of Singaporean gdp was British defense spending.

Singapore as port and entrepot developed “the entire nation,” all the more as the induced spirit of enterprise later spread to manufacturing.  This in turn gave the territory the possibility of a relatively inclusive and egalitarian future.  Unlike with India, the British rulers never imagined a future where Singapore might threaten them economically, or politically, and so they could just let matters rip.  The British felt, more or less correctly (until the Japanese invasion), that improvements in the value of Singapore would be captured by them.

So it was “keeping an option on captive buyers and fighters” (India) vs. “maximizing the value of the land for Empire” (Singapore).  Both were selfish strategies, but the latter did better for the colony in question.  Hong Kong seems to fit comfortably into this framework, though other cases might be considered (Barbados vs. Guyana?  Ghana vs. Uganda?).

Singapore also benefited from having most of its relevant colonization come later, whereas India had a damaging East India Company period in the 17th and 18th centuries, when imperialism often was more brutal and less sophisticated.

Non-Singaporean Malaya/Malaysia would require a post of its own.  In that case, and also with Singapore more narrowly, an evaluation of British rule cannot be separated from major changes in the exports and also corresponding changes in the ethnic composition of the territory.  The Singaporean national anthem is still a song written in Malay, and by law it must be sung as such.

That is the topic of my latest Bloomberg column, here are a few bits, these are all highly imperfect metrics:

For much of the 18th and early 19th centuries, under British rule, Indian economic performance was mediocre at best. It has been estimated that the yearly agricultural wage was higher in 1810 than in 1946. It’s difficult to prove how much of that decline was because of the British, but it is hardly a ringing endorsement.

And:

Another way to make the historical comparison is to consider which Southeast Asian economy never fell under colonial rule. That would be Thailand, which has a per capita income in the range of $16,300 by World Bank estimates, compared with India’s $6,100. Again, that single comparison is not dispositive, but it hardly favors the British record in India.

And:

Another possible comparison is between British-ruled India and India’s “native states,” namely the numerous territories and principalities where British involvement in direct rule was minimal. To be sure, those regions still were embedded in a broader nexus of British control, and there is no comprehensive database. Nonetheless, historian Jon Wilson, in his recent book “India Conquered: Britain’s Raj and the Chaos of Empire,” offered this assessment: “Economic growth and institutional dynamism occurred in the places that were furthest from the rule of British bureaucrats.” For instance, Tata Steel Ltd. put India’s first modern steel plant in Jamshedpur, a tributary area outside of British rule. Another study found that the independent areas had better performance in terms of education and health care during the post-colonial era.

Maybe you can twist all of those back to neutral, but the data make it surprisingly hard to make a case for British rule in India.

Patrick is co-founder and CEO of Stripe, based in San Francisco.  I recently told a reporter he was one of the five smartest people I have known; he is so smart, in fact, that he asked to interview me rather than vice versa, and so he and I created a new episode of Conversations with Tyler (transcript and podcast at that link, alas no video, and note that was recorded in January so on a few points the timeline may feel off).

We discuss whether macro is underrated, what makes Silicon Valley special, optimal immigration policy, whether Facebook is beneficial for society, whether I might ever vote for Donald Trump, how to start a new religion, Peter Thiel, Brian Eno, where I differ from Thomas Schelling, Michel Houllebecq, how to maintain your composure in an age of Trump, the origins of this blog, how I read so much, why Twitter is underrated, and the benefits of having a diverse monoculture, among many other topics.

Here is one bit:

COLLISON: …You’ve written a lot about how the study of economics has influenced your appreciation for the arts, and for literature, and for food, and all of the rest. You haven’t written as much about the influence in the reverse direction. How has your appreciation for and study of the arts influenced your study of economics? And is this a version of that?

COWEN: This is a version of that. Here would be a simple example: If you think about Renaissance Florence, at its peak, its population, arguably, was between 60,000 and 80,000 people. And there were surrounding areas; you could debate the number. But they had some really quite remarkable achievements that have stood the test of time and lasted, and today have very high market value. Now, in very naive theories of economics, that shouldn’t be possible. People in Renaissance Florence, they didn’t produce a refrigerator that we’re still using or a tech company that we still consult.

But there’s something different about, say, the visual arts, where that was possible, and it was done with small numbers. So there’s something about the inputs to some kinds of production we don’t understand. I would suggest if we’re trying to figure out, like what makes Silicon Valley work, actually, by studying how they did what they did in the Florentine Renaissance is highly important. You learn what are the missing inputs that make for other kinds of miracles.

Ireland and writing would be another example.

…COWEN: And I worry now that people in Ireland hear too much American English, too much English English, and that style of writing, talking, joking, limericks, is becoming somewhat less distinct. Still many wonderful writers from Ireland, but again, it’s like an optimal stock depletion problem, and maybe we’ve pressed on the button a little too hard.

COLLISON: The transaction costs should be higher?

And here is another:

COLLISON: Do we just need a sufficiently obfuscated version of the UBI and then we’re fine?

COWEN: We call it “disability insurance.”

And:

COWEN: Well, I voted on each of these hires. I voted for them. For a lot of them, I was on the hiring committee. Robin Hanson’s a good example. When we hired Robin, he was much older than a typical assistant professor would be. And of course, we don’t practice age discrimination, and neither does anyone else, but . . .

[laughter]

COWEN: Robin was going to have a tough time being hired. And I gave Robin some of my papers to read. He came in. He was a little, actually, obnoxious to me. Though he’s one of the nicest people you’d ever want to meet. He sent me back comments on my papers, that they were all wrong.

[laughter]

COWEN: There was no preliminary politeness: ‘I thought this was interesting, but…’ I thought this was great. So I thought, “We need to hire Robin. Robin is different.” And Robin wrote papers I thought were crazy, but he clearly also was a genius. I pushed very hard to hire Robin, and he made a good impression on a lot of other people. He’s been with us ever since.

COLLISON: Were the papers in fact all wrong?

COWEN: Robin’s criticisms were all good points.

[laughter]

COWEN: But they weren’t entirely wrong.

Self-recommending!

Here is from a new research paper by Christina Starmans, Mark Sheskin, and Paul Bloom:

…despite appearances to the contrary, there is no evidence that people are bothered by economic inequality itself. Rather, they are bothered by something that is often confounded with inequality: economic unfairness. Drawing upon laboratory studies, cross-cultural research, and experiments with babies and young children, we argue that humans naturally favour fair distributions, not equal ones, and that when fairness and equality clash, people prefer fair inequality over unfair equality.

As I said in a talk at Harvard Business School a few days ago, “if you hear the word “inequality,” the chance that what follows will be wrong is at least 3/4.”

For the pointer I thank Michelle Dawson.

The subtitle of this new and fascinating volume is How Pessimists, Partisans, and Plutocrats are Transforming the Marketplace of Ideas.  Think of this as an update of Richard Posner’s work on public intellectuals, but explaining where a world of social media and higher income inequality and greater polarization has put us.  Wisely, Drezner does not idealize the milieu of Susan Sontag and the Commentary crowd, but still some things have become worse, due largely to the lack of trusted gatekeepers.  For one thing, current superstar status encourages shortcuts and pandering and the evolution of thoughtful “public intellectuals” into evangelizing “thought leaders.”  On the macro level, we are in an equilibrium where every position is argued, verification in the eyes of the reader is doubtful, and the level of trust keeps falling.  That in turn lowers quality, which causes trust to fall further yet, and that also has feedback onto the kind of superstars that rise and persist.

And yes, individual offenders are named!  (You’ll have to buy the book for that.)

In my conversation with Dan yesterday, we pondered whether a high water mark of sorts, for the quality of public intellectual discussion, might have been reached in the late 1980s (e.g., Fukuyama, Nye, Huntington, Friedman, but just a hypothesis, I am not attributing this view to him).  Ultimately I still prefer the present day, having become addicted to freedom of entry and large audiences and a higher percentage of weirdos on the content side.  Yet the larger audiences (yes, you!) are a mixed blessing, and the desire to pander to them, and to give them a voice on social media, ultimately may lead to lower quality feedback being passed along to elites.  The ongoing polarization and exaggeration of discussion is hard to stop, for instance one of the most famous and highest status public intellectuals covered by Dan — Paul Krugman — only a few days ago on Twitter called Trump a “corrupt Russian puppet.”  Krugman is not even one of the figures Dan criticizes.

Going back to Dan’s book, what he prefers is — to summarize it bluntly — TED talks with rebuttals and referee reports.  I am fine with the idea, but I wonder if it doesn’t just cement in the outcome where all comments and positions are staked out with both a vehemence and a lack of resolution.  And as Dan himself points out in other contexts, criticism itself cements in the superstar status of the targets in most cases, and a reasonable consensus may be as likely to recede as anything else.  Ideally Dan wishes to ease “idea exit” rather than restrict “idea entry,” but I am not sure you can have the former without some version of the latter.

There is a very interesting chapter on how this new world has boosted the relative status of economists amongst the social sciences, for instance relative to political scientists.  The first person observations about Dan’s own career are extensive and fascinating.

My take on all this is to prefer a higher-trust-in-experts equilibrium for its practical properties, yet without believing the trust actually is deserved, giving me again a slight affinity with Strauss.  Is there an equilibrium where a high level of trust can be maintained more or less forever?  Or is it like an optimal resource extraction problem, namely that most kinds of trust end up being cashed in, you just hope it was for some good purpose (public support for the bailouts to avoid another 1929?, to cite another of Dan’s books.)

Two topics I wish were discussed more were a) the corrupting influence of consulting, and b) the unwillingness of many intellectuals to address particular issues at all, rather than bias in what they do say.  Of course in both cases accountability is harder to enforce; on the former there are typically no public records, and on the latter it is rarely the responsibility of any particular individual to speak up (“I will pontificate on all sorts of things, but I don’t work on that topic.”)  The resulting lack of transparent, identifiable violations can make these problems all the more insidious.

Over coffee, or rather mineral water for me, I challenged Dan on the notion that social trust actually has gone down — not in businesses, I would say — and offered contrarian takes on Jared Kushner and the trajectory of American power, maybe you will hear more about those soon.  In the meantime, this is one of the thought-provoking books of the year, most of all for those who seek to better understand the world we are all swimming in.

That is by Ray Fisman and Miriam A. Golden, an excellent book, the subtitle says it all.  And yes it does also cover how to stop or at least limit corruption.

That is the topic of my latest Bloomberg column, here is one bit from it:

You can scold the sympathizers for their naivete or illiberal tendencies, but there is a deeper truth. Individuals have a mimetic desire to copy or praise or affiliate what is perceived as successful, and a lot of our metrics of success have to do with power rather than freedom or prosperity. So if there is a powerful system on the world stage, many of us will be drawn to it and seek to emulate it, without always being conscious of the reasons for those attractions.

This process is actually not so different from how neoliberalism attracted greater support during the 1990s, when it was perceived as the major victor on the world stage. We neoliberals liked to think that the rest of the world “finally saw the light,” but a more sober retrospective assessment is that much of the popularity boom of neoliberalism was temporary, to be wiped out by status-lowering developments, including the financial crisis and slower real wage growth.

These chains of ideological influence can be remarkably indirect. For instance, it is commonly believed that the collapse of Soviet communism led to a softening of positions within the Irish Republican Army. It’s not that anyone ever expected the Soviets to intervene in the Irish conflict, but rather a role model of resistance had been taken away, and this ultimately made the peace process easier.

There is much more at the link, none of it especially cheery.  By the way, I hope you know better than to read the piece as recommending authoritarian economic policy — stay awake!

For the oligarchs the greatest challenge has been getting Greater Appalachia into their coalition and keeping it there.  Appalachia has relatively few African-Americans, a demographic fact that undermined the alleged economic and sexual “threat” raised by black empowerment.  Borderlanders have always prized egalitarianism and freedom (at least for white individuals) and detested aristocracy in all its forms (except its homegrown elite, who generally have the good sense not to act as if they’re better than anyone else.)  There was — and still is — a powerful populist tradition in Appalachia that runs counter to the Deep Southern oligarchs’ wishes.

That is from Colin Woodard’s American Nations: A History of the Eleven Rival Regional Cultures of North America, a book worth rereading in light of recent events.

If the US capital would move to the West coast where would it be located? Would this make more sense as China/ India grow in power? How would US policy change if at all having a West coast perspective if such a thing exists? What if it had moved previously at some point in our history? Is there anything that would have played out differently?

That is a request from George, a loyal MR reader.

It has become increasingly clear that the D.C. bureaucracy and policy world will be able to thwart most of what the Trump administration might have been thinking of doing.  In this particular case I see much upside in that, but still it is a dangerous precedent.  The political culture of the ruling capital city should not always hold such sway.

The longer-run problem, of course, is that putting the national government in a city makes that city “more professional” in a way that also will turn the city more toward the Democratic Party, noting that many cities in America are fairly Democratic to begin with.

Increasingly, I am a fan of the idea of distributing our government across various cities and regions of the country. so here are a few suggestions, focusing on the West:

1. The agencies concerned with economic regulation would go to Salt Lake City, Utah.

2. The offices concerned with science policy, including the NIH and NSF, would be relocated in or near Silicon Valley.  I believe the ability to absorb the dynamism would outweigh the rent-seeking problem.  There is already plenty of venture capital in the Bay Area, and the lure of government funds is relatively non-corrupting there.  Rents are high but the total number of staff is not enormous, so give them each a big raise.

3. The Department of Agriculture would go in Honolulu, Hawaii.  It would be harder to get to, and once you were there you might just go swimming.  An alternative would be Twin Falls, Idaho “…near the site where Evel Knievel attempted to jump across the Snake River Canyon in 1974 with a rocket-powered motorcycle.”

4. The National Endowment for the Arts would be put in southern California, so as to be reminded that America’s heritage is one of popular culture.  This would be one of the agency moves easiest to pull off.

5. The defense establishment would be clustered near Los Angeles as well, where there has long been a military connection and also a talented pool of engineers and numerous airports and access to the ocean.

6. I see New York City capture of the Treasury as an overrated issue, so if it must go out West I am fine with Denver, Dallas, or Houston, cities with a fair number of direct flights to back east.  San Francisco would work in the abstract, but rents are too high there.

7. The presidency goes to Sacramento, which is already a major capital and has enough space for something larger and better-guarded than the White House.  It is also not too close to the other parts of the federal government, and it would lower the relative status of the governor and legislature of California, to the benefit of America’s largest and richest state and bellwether of our future.

It is hard to predict how big a change all this would make, or how much of the change would be due to decentralization per se, rather than the movement westward.  Maybe those living in the western part of the country would feel less like outsiders, while those marooned in the East simply would go insane.  New England would be the new Rust Belt, and in some ways it already is the current Rust Belt.  Foreign policy would be more Pacific-oriented, mostly a good thing if believe in doing something rather than nothing, but that could backfire as well.

Virginia real estate would be worth less.

As for moving the federal government out West earlier in American history, I don’t see how one might run a bureaucracy where a professional major league baseball team cannot be supported.  So we’re talking 1950s or later, and even up through the 1960s.  Probably the main effect would have been to ruin California even more quickly than turned out to be the case.

One of the best things about Cass Sunstein as a writer is that his goal is to inform us.  Here is his opening bit:

Contrary to numerous reports, President Donald Trump’s executive order on climate change does not come even close to eliminating President Barack Obama’s legacy with respect to greenhouse-gas reductions. Most of that legacy, involving dramatic emissions cuts in the transportation sector and from household appliances, remains intact.

Nonetheless, the order is massively important and, in some respects, reckless. In addition to mandating reassessment of the Clean Power Plan, which regulates coal companies, Trump jettisoned, all at once, the Obama administration’s “social cost of carbon,” which has been the linchpin of national climate policy since 2009. But he did not say what the Trump administration will replace it with. On that count, he punted — which is not the worst thing, and which leaves some crucial decisions open for his staff.

Here is the full column, and it has much more of interest.  I feel bad about running such “remedial material” on MR, but overall I see reporting on Trump as continuing at very low standards, even in some otherwise very good outlets.

Cuban president Raúl Castro is preparing to step down next year, Venezuela has cut millions of dollars in aid and Donald Trump’s election has cast a shadow over the nascent US-Cuba detente. Unnerved by the changes, Havana has allowed its domestic reform drive to grind to a halt as the Communist party battens down the hatches. Marino Murillo, the senior official leading Cuba’s reforms, has not been heard in public for almost a year.

And:

The slowdown in domestic reforms suggests the orthodox wing of the Communist party is strengthening, says Carmelo Mesa-Lago, professor emeritus of economics at Pittsburgh University and a long-time Cuba watcher.

And:

Some US businesses have scaled back their initial euphoria about opportunities in Cuba. Although 615,000 Cuban-Americans and US tourists visited the country last year — of a total 4m foreign visitors — Frontier Airlines and Silver Airways cancelled scheduled US flights on March 13, citing lack of demand and market saturation. American Airlines and JetBlue have also reduced their schedules.

Here is the full FT piece by Marc Frank and John Paul Rathbone.  Here is my earlier Bloomberg column on Cuba.

Here is part of Ezra’s description:

I had a simple plan: ask Cowen for his thoughts on as many topics as possible. And I think it worked out pretty well. We discuss everything from New Jersey to high school sports to finding love to smoked trout to nootropics to Thomas Schelling to Ayn Rand to social media to speed reading strategies to happy relationships to the disadvantages of growing up in Manhattan. And believe me when I say that is a small sampling of the topics we cover.

We also talk about Tyler’s new book, “The Complacent Class,” which argues, in true Cowenian fashion, that everything we think we know about the present is wrong, and far from being an age of rapid change and constant risk, we have become a cautious, even stagnant, society.

This as information dense a discussion as I’ve hosted on this podcast. I took a lot away from it, and I think you will too.

Here is the link.

The specific thinkers cited for ‘cyclical models of history’ are Vico, Spengler, and Toynbee, in that order.

With that triple-burst trigger pull, the race to a second, Straussian reading begins.

Taking a cue from those statements, consider that the book itself might be a cycle. Read forwards, it is a series of slightly overcooked thinkpieces that ends on a surprisingly bold note. Read backwards, one finds it hides a thrilling call to arms.

This is a contrarian reading; one I make no claim should actually be attributed to Cowen himself. Nonetheless, the coherences pile up too neatly to simply be ignored once seen.

There is much more of substance at the link.  That is from Thomas Barghest, via Justin.  By the way, someone else did a long “Alt Right” take on the book and emailed it to me, and I meant to link to it, but I misplaced the email somehow.  If you email it to me, or leave it in the comments, I’ll put it into Links tomorrow.  And here is just a wee bit more:

Cowen shows us that if we had the courage of immigrants and foreigners to ignore contemporary mores and treat our strengths as something to take pride in rather than something to hide, we might restore our culture to a dynamic greatness. Such honest pride in ourselves and our abilities was ours only a half-century ago, before the 60’s, he implies. It is not so long gone.

However, a proper neoreactionary, he doesn’t pretend we can simply wish ourselves there. Americans’ current complacency is not pure timidity. The transcendent is not something we’ve simply lost. It was crushed, stolen, and turned against us.

Overall, you guys crack me up, and I do mean “guys.”

But it is also a question of history and, more specifically, of how welfare states in the rest of the world developed alongside warfare. European welfare states began in Prussia at the end of the 19th century, when war with France required the mobilisation of a large number of civilians. Britain’s welfare state has its origins in the discovery that many of the men who presented themselves to recruiting offices during the Boer war were not healthy enough to fight. Before the second world war, British liberals would have seen the creation of a government-run national health service as an unwarranted intrusion of government into private life. After 1945 it seemed a just reward for a population that had suffered.

In America this relationship between warfare and health care has evolved differently. The moment when the highest proportion of men of fighting age were at war, during the civil war (when 13% of the population was mobilised), came too early to spur the creation of a national health system. Instead, the federal government broke the putative link between war and universal health care by treating ex-servicemen differently from everyone else. In 1930 the Veterans Administration was set up to care for those who had served in the first world war. It has since become a single-payer system of government-run hospitals of the kind that many Americans associate with socialised medicine in Europe. America did come close to introducing something like universal health care during the Vietnam war, when once again large numbers of men were being drafted. Richard Nixon proposed a comprehensive health-insurance plan to Congress in 1974. But for Watergate, he might have succeeded.

That is from The Economist.

Here is part of the book summary:

This book examines SEZs from a political economy perspective, both to dissect the incentives of governments, zone developers, and exporters, and to uncover both the hidden costs and untapped potential of zone policies. Costs include misallocated resources, the encouragement of rent-seeking, and distraction of policy-makers from more effective reforms. However, the zones also have several unappreciated benefits. They can change the politics of a country, by generating a transition from a system of rent-seeking to one of liberalized open markets. In revealing the hidden promise of SEZs, this book shows how the SEZ model of development can succeed in the future.

Here is my blurb:

‘What do Special Economic Zones actually accomplish? And what are their drawbacks and limitations? Lotta Moberg’s The Political Economy of Special Enterprise Zones mixes theory and empirics to offer the very best available answers to these questions.’ ― Tyler Cowen, Professor of Economics, George Mason University, USA

Here is Lotta Moberg’s home page.  Here is a related article of hers on special economic zones.  Here is the Amazon link.