Political Science

It’s well known that bees dance to convey where useful resources are located but how do bees convey the quality of the resource and what makes this information credible? Rory Sutherland and Glen Weyl argue that the bees have hit upon a key idea, quadratic dancing or as I like to put it, square dancing.

Seeley’s research shows that the time they spend on dances grows not linearly but quadratically in proportion to the attractiveness of the site they encountered. Twice as good a site leads to four times as much wiggling, three times as good a site leads to nine times as lengthy a dance, and so forth.

Quadratic dancing has some useful properties which can be duplicated in humans with quadratic voting.

Under Quadratic Voting (QV), by contrast, individuals have a vote budget that they can spread around different issues that matter to them in proportion to the value those issues hold for them. And just as with Seeley’s bees, it becomes increasingly costly proportionately to acquire the next unit of influence on one issue. This approach highlights not only frequency of preferences but also intensity of preferences, by forcing individuals to decide how they will divide their influence across issues, while penalising the single-issue fanatic’s fussiness of putting all one’s weight on a single issue. It encourages individuals to distribute their points in precise proportion to how much each issue matters to them.

They offer a useful application

Consider a firm that wants to learn whether customers care about particular product attributes: colour, quality, price, and so on. Rather than simply ask people what they care about — which leads to notoriously inaccurate results, often where people affect strong views just to maximise their individual influence — a business, or a public service, could supply customers with budgets of credits which they then used to vote, in quadratic fashion, for the attributes they want. This forces the group of respondents, like the swarm of bees, to allocate more resources to the options they care most about.

Weyl’s paper with Eric Posner is a good introduction to quadratic voting and here are previous MR posts on quadratic voting.

Getting a speeding ticket is not a feel-good moment for anyone. But consider Reima Kuisla, a Finnish businessman.

He was recently fined 54,024 euros (about $58,000) for traveling a modest, if illegal, 64 miles per hour in a 50 m.p.h. zone. And no, the 54,024 euros did not turn out to be a typo, or a mistake of any kind.

Mr. Kuisla is a millionaire, and in Finland the fines for more serious speeding infractions are calculated according to income. The thinking here is that if it stings for the little guy, it should sting for the big guy, too.

…The fines are calculated based on half an offender’s daily net income, with some consideration for the number of children under his or her roof and a deduction deemed to be enough to cover basic living expenses, currently 255 euros per month.

Then, that figure is multiplied by the number of days of income the offender should lose, according to the severity of the offense.

Mr. Kuisla, a betting man who parlayed his winnings into a real estate empire, was clocked speeding near the Seinajoki airport. Given the speed he was going, Mr. Kuisla was assessed eight days. His fine was then calculated from his 2013 income, 6,559,742 euros, or more than $7 million at current exchange rates.

The full story is here, and in a much earlier MR post I argue against the practice.  Wealthier people have a higher value of time, and it is probably efficient to allow them to speed more.

Financial Post: Canada is now the first country in the world to require that for every new regulation introduced one of equivalent burden must be removed.

C-21, has been operating as policy for several years already, which means that the costs of new rules must be quantified and equal or greater costs removed. It essentially caps the cost of rules coming directly from regulations.

This is not quite as radical as it sounds. As I understand it, the law applies only to new bureaucratic rules and regulations not to legislation. Nevertheless, it’s reasonable to force regulatory bureaucracies to operate within a budget so that new rules are promulgated only when the new rule is expected to be an improvement over existing rules taking into account all costs.

Joseph Heath has written an interesting and thoughtful comment on my review of his excellent book Enlightenment 2.0 (fyi, we have never communicated but it turns out that Heath is a long time reader of MR.). Samuel Hammond concisely summarized on twitter part of Heath’s response:

In reply to @, Joseph Heath shares the dire Straussian reading of his own book: The US is Rome burning

Quite accurate but I want to focus on a different point.

Finally, Tabarrok suggests that I am “too sanguine about the role of politics.” I thought I was being fairly pessimistic about politics. I think the nub of the disagreement between Tabarrok and myself on this point – and certainly the basis of our major differences of political ideology – is that I am much more sanguine about the role of the state than he is. This is not the same as being sanguine about democratic politics. For example, he points out that:

In a large electorate, no individual’s vote is likely to change the outcome of an election. As a result, it doesn’t pay to be informed about politics nor to think about politics in objective and rational terms. Consider an individual who spends time and effort to be informed about politics. What does this individual receive in return for their investment? The same thing as the uninformed individual. Since better information doesn’t lead to better consequences, it doesn’t pay an individual to be informed.

I couldn’t agree more….Indeed, the sort of considerations that motivate Tabarrok’s enthusiasm for making decisions through betting markets are, I would guess, quite similar to the ones that motivate my own enthusiasm for cost-benefit analysis. The key difference is that Tabarrok (and Bryan Caplan) tend to assume that democracy gives “the people” much greater control over the behaviour of the state than it actually does. In the background there is, I suspect, a somewhat public-choicy picture of legislation as a complex process of preference-aggregation. By contrast, I follow Ian Shapiro in thinking that we need to get past these sorts of “general will” theories of democracy.

There is one point in the last chapter where I say what I really think, but again, it might easily be overlooked. So let me just say, for the record, that I was also dead serious when I wrote the following paragraph (and that it comes closest to summarizing my considered view):

It is important to recognize that modern democratic political systems involve a delicate compromise between, on the one hand, the desire for public control of decision-making and, on the other hand, the need for rational, coherent policy. Democracies need to be democratic, but they also need to work, in the sense that they need to produce a state that effectively discharges its responsibilities. Thus they have a variety of institutional features that allow them to function even when the democratic public sphere is completely degraded. They do so largely by shifting power and control away from elected representatives toward experts. Even in the United States, where this is difficult to do, one can find examples all over. The most obvious example is the enormous role that the Supreme Court has played in making decisions that, in most other democracies, would be left to the legislature. But one can see it in other areas as well, such as the amount of autonomy that government agencies have or the increased use of cost-benefit analysis in public decision-making (338).

So if you want to know what I really think, it’s that we are not going to be able to fix the problem of increased irrationalism in politics — at best we will be able to limit its most toxic effects. As a consequence, the legislature will increasingly become a sideshow, with the two other branches of the state assuming more and more of the responsibility for actually governing.

Heath has hit on an important similarity and difference in our views. We are both skeptical about democracy as a way of making rational, coherent policy. But in response to the defects of democracy I want to devolve more decisions to the individual and the market while Heath wants to centralize more decisions to the state and expert bureaucracies.

One of the reasons that I oppose the extension of democratic politics into every aspect of modern life is precisely that in trying to do too much, democracy delivers incoherence, gridlock and frustration, forces that eventually undermine its own legitimacy. I worry about democratic legitimacy because I see democracy as a check and balance on Leviathan (while Heath sees it as a check on government by experts).

The legislature has become a sideshow. But I worry, because the more Congress is held in contempt the greater the support for a bold executive that takes charge, makes decisions and gets things done. Under these pressures, executive power has grown not just in the United States but also in Canada and Great Britain (on this theme see F.H. Buckley’s The Once and Future King.) But for all its faults, the legislature and the rule of law are more conducive to liberty than the executive and the administrative state. Legislators are satisfied with reelection and a bit of pork but executives hunger for greatness and in so doing they promote the real dangers, idolatry, the centralization of power and war.

In short, I worry that the pathologies of democracy drive the demand not for rational, technocratic government but for Caesarism.

Jonathan Chait writes:

At a growing number of campuses, professors now attach “trigger warnings” to texts that may upset students, and there is a campaign to eradicate “microaggressions,” or small social slights that might cause searing trauma. These newly fashionable terms merely repackage a central tenet of the first p.c. movement: that people should be expected to treat even faintly unpleasant ideas or behaviors as full-scale offenses.

Read his whole discussion, but he more or less disapproves.  I’ve long wanted to disagree with Chait “from the left,” and it seems this is my chance, I had better grab it while I can.

While teaching Law and Literature this year, I attached very gentle, low key “trigger warnings” to a number of items on the syllabus, namely those dealing with extreme violence, rape, and some other very unpleasant situations.  I am glad I did this.  I told students that if they preferred to do a substitute assignment, I could arrange that.  Is that so unreasonable?  There were no takers, but I don’t see it did anyone harm or limited free speech in the classroom (or outside of it) to make this offer.  If anything, it may have eased speech a slight amount by noting it is OK to feel uncomfortable with some topics, or at least serving up that possibility into the realm of common knowledge.  That struck me as better and wiser than simply pretending we were studying the successful operation of the Coase theorem the whole time.

I don’t doubt that trigger warnings may be misused in some situations by some professors, but overall they seem to me like another small step to a better world.  I do agree we need to liberate trigger warnings from the strictures of the PC movement, no argument there.

Addendum: I am pleased to see that GMU was moved into the highest category for university free speech, according to FIRE.

This passage shook me up, bravo to the author:

…although nonviolence was crucial to the gains made by the freedom struggle of the 1950s and 1960s, those gains could not have been achieved without the complementary and still underappreciated practice of armed self-defense.  The claim that armed self-defense was a necessary aspect of the civil rights movement is still controversial.  However, wielding weapons, especially firearms, let both participants in nonviolent struggle and their sympathizers protect themselves and others under terrorist attack for their civil rights activities.  This willingness to use deadly force ensured the survival not only of countless brave men and women but also of the freedom struggle itself.

That is from the recent book This Nonviolent Stuff’ll Get You Killed: How Guns Made the Civil Rights Movement Possible, by Charles E. Cobb, Jr.  Also related is the 1962 book Negroes with Guns, by Robert F. Williams, Martin Luther King, Jr. and Truman Nelson, about the use of guns for protection against the Ku Klux Klan.  Martin Luther King of course did keep a gun in the house, and he relied on neighbors who, at times, protected his house by carrying guns.

Let’s say that you and a casual friend meet for lunch two or three times a year, but otherwise have little contact.  One day you would say to the friend “let’s become Batman and Robin and fight violent crime together in Gotham City, trusting our lives to each other along the way.  We’ve built up trust through these lunches, and besides if you say no I will yank the lunches away to your detriment.”

Hardly anyone would think that is a workable arrangement.  I would say there was not enough social capital built up in those lunches to make the larger cooperative venture sustainable.  Repeatedly citing the social benefits of a Batman-Robin alliance would miss the point of this critique.

I also read people arguing the global trade agreements should be used to enforce carbon emissions policy.  Similarly, I believe there is simply not enough political and social capital built into those trade agreements.  They are limited and rickety as it stands, and could not sustain the force of initiating what the Chinese would consider to be an act of economic warfare.

Now, let’s consider Greek default.  As Wolfgang Münchau suggests (and I think many agree), Greece should default to the IMF but stay inside the eurozone, or alternatively the IMF can just let Greece off the hook.  The economics of that argument make sense.  But does the IMF have enough embedded political capital to let Greece off the hook, when they deny credit to much poorer countries?  Does the IMF have enough capital and credibility to relieve Greece of that debt, and then return to its previous policies of simply not accepting any defaults?  What about the poorer countries in the eurozone — poorer than Greece — who do not receive comparable breaks?  How is this all supposed to work?  Or is it simply asking too much of the IMF?

We are about to learn how much embedded political capital is in the IMF.  I say 70-30 this cannot work, it is too late to suddenly turn the IMF into what it ought to be, one problem of many being that the United States simply has not cared enough.  Developing…and we’ll know more soon…

A conglomerate on the order of the old Gulf + Western, China National runs more than 160 cigarette brands, manufactured in about 100 factories across the country, and uses its earnings to invest in banks, luxury hotels, a hydroelectric plant, a golf course, and even drugmakers. Most of its money goes to its owner, the Chinese government; the tobacco industry accounts for about 7 percent of the state’s revenue each year [emphasis added], and China National controls as much as 98 percent of the market. All told, the industry in China employs more than 500,000 Chinese. They are among roughly 20 million people who get some income from tobacco, including members of 1.3 million farming households and workers at 5 million retailers, according to government figures. The extent to which the government is interlocked with the fortunes of China National might best be described by the company’s presence in schools. Slogans over the entrances to sponsored elementary schools read, “Genius comes from hard work. Tobacco helps you become talented.”

From Andrew Martin, there is more here.  Of course this helps explain why the Chinese government has such mixed feelings about conducting a successful anti-tobacco campaign.  By the way, do any of you know of a source on the 7 percent figure?

Joseph Heath’s Enlightenment 2.0 is one of the best books I have read in years. I offer an extensive review at the New Rambler. Here’s the opening:

Heath-Enlightenment-2Joseph Heath is a Canadian philosopher who is unusually conversant with economics and also unusually capable of writing sparkling prose for a popular audience. His earlier book Economics Without Illusions was split into 6 right-wing fallacies and 6 left-wing fallacies, and he did a commendable job on both sides. Heath has his own left-liberal point of view: the subtitle of Economics Without Illusions was Debunking the Myths of Modern Capitalism and in the original Canadian version, the book was subtitled Economics For People Who Hate Capitalism. However, I like capitalism and I still enjoyed it! Enlightenment 2.0 is Heath’s foray into political philosophy. Drawing on psychology, economics and political science, Enlightenment 2.0 is a brilliant defense of reason, an important call for a more rational politics, and a great read.

Heath is worried that the foundations of liberal society are being eroded by the cultural denigration of reason combined with ruthlessly competitive economic and political forces that exploit the biases and hooks of our unreasoning mind.

Although I admire Enlightenment 2.0, I answer the question of the post differently than does Heath and my review contains plenty of critical commentary. Ayn Rand, Idiocracy, mind viruses and other interesting characters make an appearance. Read the whole thing.

That is the new book by Daniel Tudor and James Pearson, the subtitle is Private Markets, Fashion Trends, Prison Camps, Dissenters and Defectors.  The basic message is that North Korea is far more (black) marketized — and more corrupt — than most outsiders realize.  Here is one representative passage:

Homes near the Sino-North Korean border are apparently quite expensive, since living there offers good business opportunities, and the ability to access Chinese cell phone networks.  There are reports of high-quality apartments changing hands for US$30,000 in the border city of Hyesan, for instance.  But this pales in comparison to the upmarket areas of the capital: a decent apartment in the central Pyongyang district of Mansudae (which is now jokingly referred to by expats as “Dubai” or “Pyonghattan”) will change hands for US$100,000 or more.  There are even those who talk of US$250,000 apartments.

A fascinating look at the hard to access part of the Hermit Kingdom, definitely recommended and as far as I know this book has no close substitute.

By the way, in Pyongyang, rain boots are seen as quite fashionable footwear.  And it can take up to a week to cross the (small) country by train.  In the border city of Hyesan, up to ten percent of the population may be involved in the meth trade.

Veronique de Rugy and Diane Katz have the scoop:

…the primary beneficiaries on the buyer side of the transactions are also very large firms.  Among the top 10 buyers, 5 are state-controlled and rake in millions of dollars from their own governments in addition to Ex-Im Bank subsidies.

Five of the top ten buyers are related to the production of oil or natural gas.  The other five top buyers are airlines.  Number one on the list is…can you guess it?  Pemex.  Clearly a company worthy of further subsidy, and from the American government too.

On the sell side, 80 percent of Ex-Im financing goes to support the exports of large American firms, note that the number one firm — Boeing — already receives plenty of implicit subsidy from DOD contracts.  Is there no limit to strategic trade policy?  And to the extent carbon emissions are important, how is the Ex-Im Bank doing on that scorecard?

Steven Quartz writes:

…our current Gilded Age has been greeted with relative complacency. Despite soaring inequality, worsened by the Great Recession, and recent grumbling about the 1 percent, Americans remain fairly happy. All of the wage gains since the downturn ended in 2009 have essentially gone to the top 1 percent, yet the proportion of Americans who say they are “thriving” has actually increased. So-called happiness inequality — the proportion of Americans who are either especially miserable or especially joyful — hit a 40-year low in 2010 by some measures. Men have historically been less happy than women, but that gap has disappeared. Whites have historically been happier than nonwhites, but that gap has narrowed, too.

In fact, American happiness has not only stayed steady, but converged, since wages began stagnating in the mid-1970s. This is puzzling. It does not conform with economic theories that compare happiness to envy, and emphasize the impact of relative income for happiness — how we compare with the Joneses.

Here is part of the answer, consistent with what I argued in my book What Price Fame?:

…social status, which was once hierarchical and zero-sum, has become more fragmented, pluralistic and subjective. The relationship between relative income and relative status, which used to be straightforward, has gotten much more complex.

…A new generation of ethnographers has discovered an explosion of consumer lifestyles and product diversification in recent decades. From evangelical Christian Harley-Davidson owners, who huddle together around a motorcycle’s radio listening to a service on Sunday mornings, to lifestyles organized around musical tastes, from the solidarity of punk rockers to yoga gatherings, from meditation retreats to book clubs, we use products to create and experience community. These communities often represent a consumer micro-culture, a “brand community,” or tribe, with its own values and norms about status.

The article is very interesting throughout, hat tip goes to Claire Morgan.

Note that the closing bit of this piece is…this: “Money may not buy happiness in the long run, but consumer choice has gone a long way in keeping most Americans reasonably content, even if they shouldn’t be.”

“There are individual US pilots that have had more carrier landings than the whole of the Chinese military,” says Mr Midgley. Gary Li, an independent defence analyst on Beijing, adds that having an aircraft carrier “does not equate to knowing how to use it. They are years away from being able to conduct carrier operations.”

I am not sure however that this is true:

The army will eventually have to get rid of troupes of dancers, opera singers and drivers who are more representative of a former era when ideological concerns were more pressing.

The FT article is interesting throughout.

Walmart critics embrace two moral standards: in the first, morality requires payment of high wages to 1.2 million people. In the second, morality can be achieved without employing anyone at all–that is, by paying zero wages. Most of us have chosen to live by the second standard, and from our lofty moral position we can criticize Walmart for not meeting the first standard. How convenient!
There is more here, from Ryan Decker, via Ben Southwood.

Mayor of a city or town – 9.3% are willing to consider

Member of Congress – 8.8%

President – 6.4%

That is from Jennifer L. Lawless and Richard L. Fox, Running From Office: Why Young Americans Are Turned Off to Politics, a fascinating and also readable book.