Political Science

That is the new and notable book by Jacob T. Levy.  Here is one overview bit:

…the book is not a defense of pluralist liberalism, except as against the pretensions of some rationalist liberals that it should be ignored altogether.  It is rather, ultimately, an argument for that claim of irresolvability.  A full understanding of liberal freedom would draw on truths from both the rationalist and pluralist traditions; it would recognize that states and intermediate groups alike can oppress.  And yet we cannot compromise between or combine the two accounts in a wholly satisfactory manner.

In this “contrast between pluralism and rationalism, Montesquieu is the crucial figure,” to quote Jacob.

Overall I am myself inclined to side with rationalism over pluralism.  We can use rationalism to judge a rationalism-pluralism blend to be acceptable, but pluralism cannot play a comparable role.  Mostly we like pluralism because we have a good empirical sense of which plural entities will survive and flourish in a modern capitalist democracy; hardly anyone likes a pluralism where their favored groups would absolutely lose out in terms of influence and status.  In this sense the debate is rarely about pluralism per se.  Jacob is I think skeptical that we can have a good answer as to how much plural groups (e.g., churches, mosques, Boy Scouts) should be regulated by the state.  I nonetheless think that a) public choice theory suggests over-regulation is far more likely than under-regulation of such groups, and b) rationalism can broadly identify some political and economic conditions which will tend to lower the costs of exit from such groups, and perhaps that is enough to make a case for those conditions.  In these ways I end up as more of a classic Nozickian — on “utopia” — than Jacob does.

In any case, as might be expected, this book cements Jacob’s place as one of the leading thinkers in today’s liberal tradition.

In order:

1. Barack Obama

2. Pope Francis

3. Bill Clinton

4. Rev. Billy Graham

5. George W. Bush

6. Ben Carson

7. Stephen Hawking

8. Bill Gates

9. Bill O’Reilly

10. Benjamin Netanyahu

11. Vladimir Putin

The source is here.  If I understand the ranking system properly, #6-11 are basically tied.

Given who is on the list, what should we infer about America as a nation?  About human nature?

From Harvard’s Kennedy Center:

…see the related article “Addressing Vaccine Hesitancy,” by report co-chairs Barry R. Bloom of the Harvard School of Public Health, Edgar Marcuse of the University of Washington and Seth Mnookin of MIT.

The beginning of this misinformation problem, researchers say, dates back to 1998, when a now-discredited scientific paper was published in Britain linking vaccines to autism, a link that was proven entirely false and even labeled “fraudulent.” A number of activists and some celebrities have adopted prominent anti-vaccine positions, and media and entertainment outlets have provided a platform for some of their views.

Despite the importance of this issue, little research has been done on how newer forms of technology and communication, including social media or video-sharing sites, influence health decision-making. And there are basic questions about the effectiveness of traditional public health campaigns. One of the most important studies to date is a 2014 paper in the journal Pediatrics, “Effective Messages in Vaccine Promotion: A Randomized Trial.” The researchers — Brendan Nyhan of Dartmouth College, Jason Reifler of the University of Exeter, Sean Richey of Georgia State University and Gary L. Freed of the University of Michigan — analyzed the results of a Web-based national survey of nearly 1,800 parents. After asking respondents about their own family health situations and beliefs, researchers then tested common public health communications strategies to promote vaccination: “(1) correcting misinformation, (2) presenting information on disease risks, (3) using dramatic narratives, or (4) displaying visuals to make those risks more salient or accessible.”

The study’s findings include:

  • The data indicate that “pro-vaccine messages do not always work as intended and that the effectiveness of those messages may vary depending on parental attitudes toward vaccines.” In fact, there was “little evidence that messages emphasizing the risks of vaccine-preventable diseases were effective in promoting vaccination intent.”
  • Further, the data show that a “dramatic narrative about measles and images of sick children” actually ended up increasing misperceptions about MMR.
  • The study’s conclusion was unequivocal regarding traditional messaging: “None of the pro-vaccine messages created by public health authorities increased intent to vaccinate with MMR among a nationally representative sample of parents who have children age 17 years or younger at home. Corrective information reduced misperceptions about the vaccine/autism link but nonetheless decreased intent to vaccinate among parents who had the least favorable attitudes toward vaccines.”

By the way, Werner Troesken at the University of Pittsburgh will be publishing a new book on how American freedoms have allowed infectious diseases to spread, or so sounds the description.  It is from University of Chicago press, due out in May.

Ms Merkel is familiar with Mr Putin’s psychological operations. In 2007, he played on her well-known fear of dogs by allowing his black Labrador, Koni, into a meeting with her in his summer residence in Sochi. Photos show her tight-lipped as the Labrador buried its head in her lap.

Berlin officials say the chancellor does not allow Mr Putin to get to her through such displays or, for example, by turning up hours late for a meeting, as he did the night before the summit in Milan. Instead, she turns it to her advantage, treating the Kremlin chief’s bad manners as a sign of weakness.

From the FT, there is more here, interesting throughout.  File under still an important relationship.

Symposium co-sponsored by the Mercatus Center:

Economists on the Welfare State and the Regulatory State: Why Don’t Any Argue in Favor of One and Against the Other?

The symposium Prologue suggests that among economists in the United States, on matters of the welfare state and the regulatory state, virtually none favors one while opposing the other. Such pattern is a common and intuitive impression, and is supported by scatterplots of survey data. But what explains the pattern? Why don’t some economists favor one and oppose the other?

Contributors address those questions:

Dean Baker:
Do Welfare State Liberals Also Love Regulation?

Andreas Bergh:
Yes, There Are Hayekian Welfare States (At Least in Theory)

Marjorie Griffin Cohen:
The Strange Career of Regulation in the Welfare State

Robert Higgs:
Two Ideological Ships Passing in the Night

Arnold Kling:
Differences in Opinion Among Economists About Government and Market Efficiency

Anthony Randazzo and Jonathan Haidt:
The Moral Narratives of Economists

Scott Sumner:
Moral Differences in Economics: Why Is the Left-Right Divide Widening?

Cass Sunstein:
Unhelpful Abstractions and the Standard View

The home page for the issue is here.

Nonetheless it is considering tolerating them, as we are told by Air Genius Gary Leff.  Here is one short bit:

The tourism minister says that even though the Greek Prime Minister is attacking all-inclusive resorts as it identifies problems with the country’s economy, it has no plans to make crackdown on these properties ‘its mission’.

How reassuring.  Greece needs some Very Serious People in charge!  Right now it doesn’t have them.  And as you know, one thing worse than the Very Serious People is…the Not Very Serious People.  I think someone told them that all-inclusive resorts might drain off domestic aggregate demand (p.s. investment matters too, including for demand).

Oh, had I mentioned that tourism provides 15% of Greek gdp? (higher by some estimates, perhaps up to 20%).  I’m all for debt forgiveness in this context, but right now the Greeks need to get serious or they will tumble off the cliff and soon.

In addition to my earlier pick of Chile, I now must nominate Sweden and Norway for this honor.  Both are wonderful countries, and in absolute terms very likely to remain strong performers.  But I think a good deal of that old Nordic magic is slipping away, and this has become more evident in the last few years.

Let’s start with Sweden and maybe I’ll get to Norway another time:

1. The average product of their education system seems to have declined rather rapidly, as measured by test scores.  On PISA they have gone from #4 to #21.

2. Arguably the basic Swedish economic social model is inconsistent with their level of immigration, and I don’t see them switching to a different economic and social model anytime soon.  You can be pro-immigration, and still not think Sweden is honing in on the right mix of domestic policy and immigration policy.

3. Swedish manufacturing seems to be deindustrializing at a faster than expected pace.  And some of Sweden’s most successful sectors are exposed to a lot of competition from emerging markets, in particular because they rely heavily on engineering talent.  Sweden also has a significant presence in financial services, but they are not an obvious future winner in that area.  And do timber, hydropower, and iron — their main commodity exports — have such a promising future?  There are probably few disasters lurking here, but lots of question marks.

4. Sweden doesn’t seem to have a lot of low-hanging fruit left.  Female participation in the labor force already is high, and they already have done lots of liberalization, privatization, and deregulation.  It is not clear where the next generation of policy improvements will come from.  The McKinsey report recommends “increasing government productivity” as a major source of potential gains, but that is hardly easy, even for the Swedes.

5. The Swedish central bank seems to have scored an “own goal” by engaging in premature tightening, coming out of the earlier recession.  They’ll make much of that up over time, but still it is a sign the country has lost some mojo.

6. Sweden’s household to debt ratio is about 170%, one of the highest in the world.  This is not only troubling in its own right, but arguably it is a sign debt is being used to make up for a slow accumulation of underlying economic deficiencies, as was the case in the United States.  Furthermore “Four in 10 mortgage borrowers in Sweden are not paying off their debt, according to data collected by Reuters, and those that are repaying the principal are doing so at a rate that would on average take nearly a century.”  They are probably still in the middle of a housing bubble.

7. There is an erosion of support for mainstream Swedish political parties.  You don’t have to approve of those parties to see this as a symptom of a very slight underlying political rot setting in.  The “extreme Right” party has seen a rapid rise in support.

8. A rampaging Putin probably won’t harm them directly, but still recent Russian events raise geopolitical risk in their neighborhood.

Don’t worry, the Swedes will do fine, but they have arrived at officially overrated status.  I was more sanguine about their prospects a few years ago than I am today and I would not invest in their stock market.  If you wish to count their pluses however, they still have a very good system of government, a strong ethic of trust and cooperation, a good ability to change course when necessary, high productivity, a strong presence in information technology, a wonderful export capacity, low public debt, and first-rate proficiency in English, among other virtues.

That all said, the Swedish currency is actually down against the euro since the beginning of the year.

The new far-left government in Greece dropped a bombshell on its first day in office by abjuring an EU statement on Russia.

There is more here, via Anders Aslund.  I guess they don’t have any other European issues they need to spend their political capital on…

“Dear Tyler,

I read with obvious interest your post (and the paper itself) about the endogeneity of institutions. Leaving aside my issues with the IV literature, I decided to take the bait regarding Jeff Sachs’ challenge to, “Go back to 1960 and choose any measure of institutional quality you want. Then see how well it predicts cross-national growth since then.”

Ok, I will.

The Economic Freedom of the World (EFW) index was first published in the mid 1990s, and the first year of data is 1970. So I’ll have to start in 1970 instead of 1960.

Here is a regression with growth from 1970-2010 on the lhs, and EFW and GDP per capita in 1970 on the rhs.

Growth1970-2010 = -1.62 + 0.75*EFW1970 – 0.13* GDPPC1970 R^2=0.18
(2.90) (3.17)

This regression adds the change in EFW from 1970-1980 to the rhs.

Growth1970-2010 = -1.69 + 0.84*EFW1970 + 1.00*chEFW70-80 – 0.15*GDPPC1970 R^2=0.32
(3.54) (3.39) (3.86)

A one-unit higher EFW score in 1970 correlates to 0.84 percentage points in higher annual growth over the next 40 years. A one unit EFW score improvement during the first decade, 1970 to 1980, correlates to a 1.00 percentage point higher annual growth rate over the 40 years.

I don’t know if that satisfies Jeff Sachs’ challenge, but it works for me.

Looking forward, I’ve constructed a back-of-the-envelope indicator that combines each country’s EFW rating in 2000 and with its change from 2000-2010. The top 20 (combined highest level & most positive change) versus the bottom 20 (combine lowest level & most negative change) countries are:

Top 20 – Bottom 20
Hong Kong – Haiti
Romania – Cameroon
Rwanda – Senegal
Singapore – Guinea-Bissau
Bulgaria – Mali
Cyprus – Bolivia
Unit. Arab Em. – Algeria
Chile – Guyana
Mauritius – Gabon
Lithuania – Ecuador
Slovak Rep – Burundi
Albania – Cote d’Ivoire
Jordan – Chad
Switzerland – Togo
Bahamas – Congo, Rep. Of
Malta – Central Afr. Rep.
Taiwan – Argentina
Korea, South – Myanmar
Finland – Zimbabwe
Estonia – Venezuela

I’m willing to bet anyone $100 (up to 10 people) that the Top 20 group will outgrow the Bottom 20 group by at least 1 full percentage point per year (on average) over the the next 20 year period (2015-2035).

Bob”

American Sniper is one of the best anti-war movies I have seen, ever.  But it shows the sniper-assassin, and his killing, to be sexy, and to be regarded as sexy by women, while the rest of war is dull and stupid.  (Even the two enemy snipers are quite attractive and fantastic figures, and there is a deliberate parallel between the family life of the Syrian sniper and the American protagonist.  The klutziness of the non-assassin soldiers limited how many African-Americans and Hispanics they were willing to cast in those roles, as it is easiest to make white guys look crass in this way without causing offense.)  By making the attractions of war palpable, this film disturbs and confuses people and also occasions some of the worst critical reviews I have read.  It also, by understanding and then dissecting the attractions of blood lust, becomes a quite convincing anti-war movie, if you doubt this spend a few months studying The Iliad.  (By the way, Clint Eastwood, the director and producer, describes the movie as anti-war.)  The murder scenes create an almost unbearable tension, the sandstorm is a metaphor for our collective fog, and they had the stones to opt for the emotional overkill of four rather than just three tours of duty.  Iraq is presented as a hopeless wasteland with nothing of value or relevance to the United States, and at the end of the story America proves its own worst enemy.  It is not clear who ever gets over having killed and fought in a war (can anything else be so gripping?…neither family life nor sex…), even when appearances suggest a kind of normality has returned.  The generational cycle is in any case replenished.  I say A or A+, both as a movie and as a Rorschach test.

Two Days, One Night has some of the worst economics I have seen in a movie, ever.  It would be brilliant as a kind of Randian (or for that matter Keynesian) meta-critique of the screwed up nature of Belgian labor markets and social norms, and most of all a critique of the inability of the Belgian intelligentsia to understand this, except it is not.  It is meant as a straight-up plea for sympathy for the victim and as such it fails miserably, even though as a movie it embodies reasonably good production values.  Everything in the workplace of this solar power company is zero-sum across the workers and we never see why.  The protagonist campaigns to get her job back, but never asks or even considers how she might improve her productivity or attitude, asking only on the basis of need.  (And she is turned down only on the basis of need.)  At one point her employer states the zero marginal product hypothesis quite precisely, something like “when you took time off, we saw that sixteen people could do the work of seventeen.”  She never asks if there might be some other way she could contribute — but she does need the money — nor does the notion of a better job match somewhere else rear its head.  The depictions of financial hardship confuse wealth and income, basic survival and discretionary spending.  The rave reviews this movie has received represent yet another Rorschach test and one which virtually every commentator seems to have failed.

When I visited Santa Monica in January it struck me how much it reminded me of…Arlington.  Arlington is now essentially a part of Northwest, at least Arlington above Route 50 or so.  Arlington and Santa Monica have never been more alike, or less distinctive.

Parts of east Falls Church will meld into Arlington, and south Arlington will become more like north Arlington.  Real estate prices east/north of a particular line are rising and west of that line are falling.  Fairfax is definitely west of that line.

The Tysons Corner remake will fail, Vienna is not the new Clarendon, and the Silver Line and the monstrously wide Rt.7 will form a new dividing line between parts of Virginia which resemble Santa Monica and parts which do not.

Incumbents aside, no one lives in Fairfax any more to commute into D.C.  Why would you?  The alternatives are getting better and Metro parking became too difficult some time ago.  Fairfax is not being transformed, although some parts are morphing into “the new Shirlington.”  Most of it will stay dumpy on the retail side.  Annandale will stay with Fairfax, whether it likes it or not.

For ten years now I have been predicting various Fairfax restaurants will close — casualties of too-high rents — and mostly I have been wrong.  The good Annandale restaurants are running strong too.  Annandale won’t look much better anytime soon, thank goodness for that.

“Northern Virginia” is becoming two different places, albeit slowly.

Mostly, yes, although with some caveats (the headline of the piece doesn’t exactly capture this).  That is the topic of my latest column for The Upshot.  Here is one excerpt:

Niclas Berggren…and Therese Nilsson…have produced a fascinating series of papers on these questions, sometimes writing singly, sometimes together or with the collaboration of a variety of co-authors. Their most notable study is perhaps a paper they wrote together, “Does Economic Freedom Foster Tolerance?

…One of their most striking findings is that societies characterized by greater economic freedom and greater wealth do indeed exhibit greater tolerance toward gay people, a tendency suggesting that gay rights, including gay marriage, will spread globally as national economies liberalize and develop.

Some metrics of economic freedom count more than others:

This greater tolerance is strongly associated only with certain features of what has often been defined as economic freedom. For example, a smaller government, measured as a share of gross domestic product, is often included in so-called economic freedom indexes as an objective measure of freedom. But the data show that smaller government has a slight negative correlation with tolerance of gay people by heterosexuals. One implication is that many conservatives may be overly preoccupied with the size of government as a measure of how free societies actually are.

On the other hand, the data shows that when a society has impressive scores on property rights security and low inflation — two other components of economic freedom indexes — these characteristics are strongly and positively correlated with tolerance of gays. It’s possible that low inflation, and the behavior of a central bank, are stand-ins for the general trustworthiness of a nation’s government and broader institutions, and such trustworthiness helps foster tolerance.

The results for race are not nearly as strong, namely both freedom and prosperity are less clearly associated with higher levels of racial tolerance, although the correlation is still a positive one.

And there is this:

We are often told that education is an important remedy, yet it does not register as a meaningful factor in the cross-country data in this paper. Higher levels of education simply have not correlated significantly with higher levels of tolerance across countries.

Do read the whole thing.

Kerin Hope from the FT reports:

A reluctance to pay taxes was much criticised by Greece’s creditors as one reason why the country needed a big international bailout. Now many Greeks are again avoiding the taxman as they bet the radical left Syriza party will quickly loosen fiscal policy if it comes to power in Sunday’s general election.

A finance ministry official confirmed on Friday that state revenues had collapsed this month. “It’s normal for the tax take to decline during an election campaign but this time it’s more noticeable,” the official said, avoiding any specific figures on the projected shortfall.

However, two private sector economists forecast the shortfall could exceed €1.5bn, or more than 40 per cent of projected revenues for January.

File under “In case you had not been paying attention…”  And here is Antonio Fatás with a Grexit scenario.  That is still not what most people expect, however.

SNB tweets to ponder

by on January 21, 2015 at 11:20 am in Economics, Education, Political Science | Permalink

It’s funny how faculty who work at universities with large endowments can’t understand the decisions of the Swiss National Bank…

That one is from me.  In this kind of status-driven, bureaucratic environment, the incentive is to extend your cushion, not run it down and have to print up new money to replenish it, thereby receiving egg on your face and appearing dependent and outside the rules of the game.  You’ll do better understanding the SNB by reading Pierre Bourdieu on social capital than portfolio theory or the literature on optimal seigniorage.

I will note that university endowments are somewhat of a puzzle too (pdf) — for instance why don’t schools spend them down more, as a kind of crude political business cycle theory might suggest?

(On the other hand, just try dropping your items into a Swiss recycling bin on a Sunday.)

There is at least one big difference here: the SNB doesn’t want a balance sheet which is as large as possible, because that means both assets and liabilities.  Colleges and universities are far more likely to wish to maximize their endowments, which do not (one hopes) come with offsetting liabilities.  The “endowment” of a central bank has more to do with political chits, favors, and public impressions, backed by extreme solvency but not too big a target either.

Paul Krugman makes some good and interesting points about the comparison with Hong Kong; in my view influence capital in Hong Kong has been (ultimately) determined externally for a very long time, first Britain now China.  That gives the territory some special feasibility properties for a wide variety of issues.  Krugman is falling into a kind of sophisticated “public choice” mistake that is more frequently committed by libertarians.

In none of these cases am I suggesting that the current incentives are optimal from a social point of view.  And here is an earlier post on central banks and capital.  It is not that a partially privately-owned, cantonally owned SNB is maximizing raw seigniorage, a view which has come in for some rebuttal as of late.  Rather the partial private ownership helps account for what kind of legitimacy needs to be produced and what kinds of rules that legitimacy requires.

C’mon people, read your Gramsci!

Tom VanAntwerp looks at political donations by the staff of the top-ten think tanks. Some findings:

Think tank employees overwhelmingly give to Democratic causes. Nearly 78% of all political contributions from think tank employees went to Democrats. 208 think tank employees gave a total of  $452,589 to Democrats in 2012;

Discussions of bias via donor base don’t match actual employee partisanship.Comparing the most obviously ideological think tanks, employees of both Heritage Foundation and Center for American Progress gave vastly more to political groups than did employees of Cato Institute. While the Wikipedia discussion of Cato’s funders was over three times longer than the same discussion for either Heritage or CAP, only 3.5% of Cato’s employees made partisan donations compared to 8.7% for Heritage and 8.2% for CAP. The total amount Cato employees gave was also dwarfed by Heritage and CAP employees: $10,200 versus $76,653 and $100,747.

In another post, VanAntwerp shows that even though the staff at Cato don’t give very much to politicians and are not especially partisan by other think tank standards, media discussion’s of Cato’s funding and funders are far more common and extensive than that of any other think tank. My guess is that conservatives give Heritage a pass, liberals give Brookings, CAP, and Pew a pass but both liberals and conservatives are suspicious of Cato. Liberals think Cato is in bed with the corporations, conservatives think Cato is in bed with gays and marijuana users. Both sides think Cato is with the opposition and, as a result, Cato generates lots of media discussion about funding “bias.”

chart2