Political Science

That is the theme of my latest Bloomberg column, here is the concluding bit:

As for 2017, I have been concluding that I should raise my relative opinion of business and lower my view of government. I’m still waiting for millennials — a relatively left-leaning generation — to reach a similar position.

Sometimes we forget about companies, in part because it is the business of business that we don’t notice it too often for the wrong things. And don’t forget that most of the weird stories about Trump or politics refer to a pretty small slice of our world, further amplified by social media.

In a war between the boring and the weird, don’t be surprised if the weird commands the most notice. But the normal and the boring have enormous powers of inertia on their side, not to mention human goodwill, and they are doing better than it might at first seem. So if you think America is falling apart, give the corporate world another look.

I believe that right now we are all too entranced by the “news of the weird.” On the side of business, there are problems with productivity growth and perhaps excess monopoly, but arguably those are about the most normal problems you could have.  I suspect the world of American business is these days a bit too normal, and could use a marginal dose of some more Elon Musk.

As you might expect, they came up with a good photo for the column.

Here is the government’s own answer:

No.  The President’s clemency power is conferred by Article II, Section 2, Clause 1 of the Constitution of the United States, which provides:  “The President . . . shall have Power to grant Reprieves and Pardons for Offenses against the United States, except in Cases of Impeachment.”  Thus, the President’s authority to grant clemency is limited to federal offenses and offenses prosecuted by the United States Attorney for the District of Columbia in the name of the United States in the D.C. Superior Court.  An offense that violates a state law is not an offense against the United States.  A person who wishes to seek a pardon or a commutation of sentence for a state offense should contact the authorities of the state in which the conviction occurred.  Such state authorities are typically the Governor or a state board of pardons and/or paroles, if the state government has created such a board.

Solve for the equilibrium!

I thank J. for a relevant pointer.

I would like to see building deregulators pay more attention to this aspect of the problem:

The next step would be transferring ownership of these assets to what Detter and Fölster call an “urban wealth fund”. Ideally, all publicly owned assets in a given city would be placed in the fund, regardless of whether they technically belong to the county, the city, the school system, the state or some other entity. The local governments would each have shares in the fund proportionate to the value of the assets they contributed. These shares would be reported as assets on the municipal balance sheets.

Independent managers with experience in real estate and finance would be charged with maximising the value of the portfolio. Cities would receive dividends from their stakes in these commercial properties and have the option to borrow against or sell their shares if desperate for cash.

Public officials would then have to decide whether it makes sense to pay fair market rents to stay in their properties. Moving offices might be inconvenient for government workers but the potential gains for taxpayers and citizens who depend on government services would be far greater. Leasing space in subway stations to shops might detract from the “historic” character of the US’s barbarous public transit systems, but the revenues could fund needed improvements, such as ventilation, without the need for debt or higher passenger fares.

That is from Matt Klein at the FT.  Note that profit maximization does not have to be the sole goal of such funds.

Here is the abstract of a new paper by Davide Cantoni, Jeremiah Dittmar, and Noam Yuchtman:

The Protestant Reformation, beginning in 1517, was both a shock to the market for religion and a first-order economic shock. We study its impact on the allocation of resources between the religious and secular sectors in Germany, collecting data on the allocation of human and physical capital. While Protestant reformers aimed to elevate the role of religion, we find that the Reformation produced rapid economic secularization. The interaction between religious competition and political economy explains the shift in investments in human and fixed capital away from the religious sector. Large numbers of monasteries were expropriated during the Reformation, particularly in Protestant regions. This transfer of resources shifted the demand for labor between religious and secular sectors: graduates from Protestant universities increasingly entered secular occupations. Consistent with forward-looking behavior, students at Protestant universities shifted from the study of theology toward secular degrees. The appropriation of resources by secular rulers is also reflected in construction: during the Reformation, religious construction declined, particularly in Protestant regions, while secular construction increased,especially for administrative purposes. Reallocation was not driven by pre-existing economic or cultural differences.

For the pointer I thank the excellent Kevin Lewis.

Chad R. asks me:

Which of our public policy institutions are working well right now?

It seems there are plenty of takes about *why* our institutions are under extreme stress, but precious few about which are still working properly.

The Supreme Court comes to mind…

I say plenty of them are working well:

1. The CBO remains independent and effective, even though I think they are treating the health care mandate incorrectly and overestimating its impact.

2. As for the courts, they remain powerful and effective.  But note: while I strongly disagree with Trump’s travel ban, some of the lower courts overstepped their bounds by taking away too much power from the executive, relative to law.  It’s as if the courts have become too strong — perhaps optimally so — in a kind of overshooting model.

3. The Senate.  Even though one party controls all branches of government, a variety of bad health care bills have come to naught, and that is after many earlier votes to repeal Obamacare.  It is less clear to me how the House is working, but that’s why we have bicameralism.  I don’t care how stupid you might think the process is, so far it is generating acceptable results.  Yum, yum, yum, I just love that democracy!

4. The media as investigators have been excellent, though as summarizers of what is really going on I see their performance as much weaker, due to selective reporting.

5. Think tanks: the lack of Trump infrastructure at this level has raised my estimate of think tank importance.  That said, I am not sure how many think tanks are influencing policy right now, but if nothing else the inability to have or assemble a good think tank is indeed important.

6. The bureaucracy, for the most part, including the Fed.  Admittedly, some parts of the bureaucracy, such as the State Department, are being throttled by the Executive branch.

What’s not working well?

I say the executive branch and the White House.  Destroying or limiting the value of alliances is one of the easiest things for a blundering president to do.  I also see a significant opportunity cost from not having a legislation-oriented, detail-savvy White House.  Still, they are doing a good job on regulatory reform and an excellent Supreme Court appointment has been made.

Most of all, the appointments process is not working well, some of that being the fault of the Senate too.

The main lesson?  American government isn’t quite the train wreck you might think, and I haven’t even touched on the states, counties, and cities.

On a recent episode of the popular podcast Chapo Trap House, co-host Will Menaker used a memorable metaphor in addressing calls for unity on the left. “Republicans in control of politics, that’s the problem,” he began. “However, to the pragmatists out there and the people who don’t like purity in politics, yes, let’s come together. But get this through your fucking head: You must bend the knee to us. Not the other way around. You have been proven as failures, and your entire worldview has been discredited. You bend the knee to us and then let’s fucking work together to defeat these things, not with fucking means testing or market-based solutions but with a powerful social democratic message.”

That is reported by Jeet Heer at The New Republic.

I will be having a Conversation with him on Sept.6, locale and time to be announced.  In the meantime, what should I ask him?

I thank you all in advance for your sage and balanced judgments.

When was the Golden Age of Conservative Intellectuals? It is easy to say when the Golden Age began; April 1947 at the first meeting of the Mont Pelerin society. Among those in attendance were:

  • Maurice Allais, Paris
  • Aaron Director, Chicago
  • Walter Eucken, Freiburg
  • Milton Friedman, Chicago
  • F. A. Harper, Irvington-on-Hudson, New York
  • F. A. Hayek, London
  • Henry Hazlitt, New York
  • Bertrand de Jouvenel, Chexbres, Vaud
  • F. H. Knight, Chicago
  • Fritz Machlup, Buffalo
  • Ludwig von Mises, New York
  • Felix Morley, Washington, D.C.
  • Michael Polanyi, Manchester]
  • Karl R. Popper, London
  • William E. Rappard, Geneva
  • Leonard E. Read, Irvington-on-Hudson, New York
  • Lionel Robbins, London
  • Wilhelm Ropke, Geneva
  • George J. Stigler, Providence, Rhode Island
  • C. V. Wedgwood, London

(Full list here). It’s more difficult to say when the Golden Age ended. If I had to pick a date I’d say at a moment of triumph, November 9, 1989.

Here is a new interview with Gladwell, much of it focusing on the Brown vs. Board of Education decision.  Here is one excerpt:

I was more than interested to discover how much of the work on these effects—which in education they call “same race effects”—has been done by economists. If I’m a social psychologist, the economists are eating my lunch. They’re doing very persuasive, very elegant studies using these data sets that come out of the education reform movement. The economists are the first to jump on it. I feel like that is rich hunting ground for social psychologists as well, and they can bring a perspective to the analysis of that data that the economist can’t.

I’m not criticizing the work that’s been done by economists, but if you read it, you will notice that there is a beat that’s missing—they’re economists, so they come at it from a different perspective. I would love to see social psychologists go over that same data and interpret it their way. And that again would be something that would be insanely useful to the conversation we have in this country about how to make schools better.

And here is Malcom on his next book:

MG: Yes. I’ve started a new book, and it very explicitly comes out of the world of psychology. There was a paper that Lee Ross wrote 50 years ago, maybe 45 years ago, called “Shortcomings of the Intuitive Psychologist.” It’s a famous paper, and I’m tearing off a little, tiny piece of that argument and having fun with it.

DN: And what piece is that?

MG: I’m interested in how we deal with strangers. How good are our intuitive ideas about dealing with strangers? I haven’t thought it through entirely, but I’m fascinated by what it means to deal with someone who you don’t know and, most importantly, whose credibility you cannot assess easily. Strikes me as a very contemporary problem, and from a psychological perspective, super interesting. There’s just so much fantastic psychology on that question.

The brief discussion on rock and roll vs. country music was interesting as well.

Here is the Behavioral Scientist web site, it looks interesting.  Here are their most popular articles.

There is a new Mercatus study by Eileen Norcross and Olivia Gonzalez, here is the bottom line:

TOP 5 STATES:
1) Florida
2) North Dakota
3) South Dakota
4) Utah
5) Wyoming

BOTTOM 5 STATES:
46) Maryland
47) Kentucky
48) Massachusetts
49) Illinois
50) New Jersey

My own state, Virginia, comes in above average at #18.

Probably not, or so I argue in my latest Bloomberg column.  Here is the closing bit:

It is again time for the West to learn from China. The emotional force of nationalism is stronger than we had thought, stability is not guaranteed, and the Western democratic status quo ex ante is less of a strong attractor than many of us had believed or at least hoped for.

In other words, we have our work cut out for us.

As I point out in the column, the world is getting richer but the number of democracies is shrinking.

Here is a good Tobin Harshaw interview with Jeffrey Lewis, here is one good bit, scary in more than one regard:

Nuclear-armed missiles are a 1950s-era technology.

And:

Well, there is a difference between the range the missile demonstrated last week, which was about 4,000 miles, and what the simulations we do at the Middlebury Institute suggest the missile may be capable of. My colleages, along with David Wright at the Union of Concerned Scientists, looked very closely at the launch of a new intermediate-range missile in May, as well as this one, trying to measure the missile and model its performance. It seems to me the North Korea cut the engines a bit early here, possibly so they did not overfly Japan. But they have been very clear their targets are in the continental U.S. — the Pacific Fleet in San Diego, Washington, and lately New York City — not Alaska. And our initial modeling of this missile suggests that it should be able to deliver a nuclear-weapon sized payload to most, if not all, those places. We’re still modeling away though.

And:

I don’t think the North Koreans are going to deliberately start a nuclear war, but I think they might use those weapons if they thought a war was coming and they needed to get a jump on the U.S. and South Korea. And, despite the poor track record of decapitation strikes, the idea really frightens the North Koreans. But instead of making them behave, I suspect it will lead them to do things that I really don’t like, such as releasing nuclear weapons to lower level missile units.

Food for thought, the interview is interesting throughout.

It is easier for populist politicians to mobilise along ethno-national/cultural cleavages when the globalisation shock becomes salient in the form of immigration and refugees. That is largely the story of advanced countries in Europe. On the other hand, it is easier to mobilise along income/social class lines when the globalisation shock takes the form mainly of trade, finance, and foreign investment. That in turn is the case with southern Europe and Latin America. The US, where arguably both types of shocks have become highly salient recently, has produced populists of both stripes (Bernie Sanders and Donald Trump).

That is from Dani Rodrik, there is much more at the link, via Kevin Lewis.  And here is a Peter Turchin review of Rodrik’s Economic Rules.

That is the topic of my latest Bloomberg column, here is one excerpt:

When an empire is crumbling, and the rulers are very bad, the libertarian approach to secession makes good sense. That said, it’s not a fully general principle.

Sometimes a region wants to leave a country because of differences of ethnicity, religion, language or background culture, as is the case with the Scottish independence movement and the Catalonian secessionists. In those instances, it’s not obvious whether a unified or a newly independent government would result in greater liberty and prosperity. And for all the strong feelings you will find, I am not sure there is an objectively correct moral answer as to whether there should be one nation or two.

We do know, however, that political tensions rise and emotions tend to flare as such secessions approach the realm of possibility. For instance, there is a chance the government of Spain would react aggressively to what it perceives as an unconstitutional Catalonian secessionist attempt. Madrid might institute legal sanctions against Catalonian leaders or, in an extreme case, send in troops. The final result could be no independence and less liberty in all parts of Spain.

The problem is that people are often overly passionate about political boundaries, and an extra dose of irrationality isn’t exactly what the world needs right now. To cite another example of this problem, the Brexit referendum seems to have lowered the quality of debate and governance within the U.K.

There is much more at the link, including a discussion of why the American Revolution might have nonetheless been a good idea, and also why the libertarian approach needs to be supplemented with conservative ideas.

The adoration has clearly gone to Macron’s already swollen bonce. He’s acting like a ‘liberal strongman’, says Politico, seemingly intending it as a compliment – he’s setting out to defend the so-called liberal order while garbing himself in the pomp and power of the old French monarchy. On Monday he summoned parliament to the Palace of Versailles, echoing ‘Sun King’ Louis XIV’s pronouncements to the nobility. And his team are talking up his ‘Jupiterian’ approach – a reference to the supreme Roman god, standing above the fray with thunderbolts in hand.

It’s not just the imagery that’s autocratic. In his Versailles speech, he laid out plans to streamline parliament. He wants to cut a third of MPs from the National Assembly, restrict representatives to two-term tenures, introduce a ‘dose’ of proportional representation, and cut back on unnecessary lawmaking. These tinkering policies may not seem much on the face of it. But as one academic pointed out, all of this will serve to shore up executive power – emboldening bureaucrats over representatives, and filling parliament with newer, less battle-ready MPs.

Macron has styled himself as the successor to de Gaulle, the father of the Fifth Republic who redirected power to the French presidency amid times of imperial crisis and parliamentary gridlock. Under the guise of ‘getting things done’, and pushing through his controversial labour-law reforms, Macron is similarly seeking to disempower the parliament and boost the executive, which already has far fewer checks on it than, say, the US presidency. And yet for all the media fearmongering over Herr Trump, Macron’s machinations seem not to have worried commentators or the global elite.

That is all from Tom Slater.  And here are brief remarks from Corey Robin.  Once you understand endogeneity, it should come as not a huge surprise that “the candidate you want” so often ends up resembling “the candidate you don’t want” more than you had expected.