For a few years now, a number of you have been asking me where Tyrone, my evil twin brother, has gone. The truth is a sad one: I have had to put him away, because in these especially fractious times his particular brand of malfeasance is less funny than before. His wisecracks cut too close to the bone, and so many matters on MR have become more somber — no more dating advice either!
Nonetheless, is there a stable equilibrium to be had? If Tyrone receives little or no surplus, he becomes all the more…unruly. And so, risking punishment, he snuck out this message to Alex T., and I agreed to print it, for fear that further transmissions would occur (I do respect the Laffer Curve, and at an optimal punishment level I still can get away with some editing of his words). Here is the ridiculous nonsense that Tyrone reports this time around, and you can see he is gaming the message to encourage his own liberation:
Tyler and his media friends keep on reporting that political polarization has gone up. But that’s wrong: it has radically fallen. Just look at economic issues. As of 2011, many Republicans were for some ostensible Tea Party version of economic liberty, or at least they pretended to be. Now both parties are very bad on economic issues. For instance, you’ll find protectionist ideas all over the political spectrum.
The wonderful thing about polarization was this: it forced people who didn’t really believe in economic liberty to act as if they did. The resulting gridlock was better than letting people’s real instincts come out.
Trump of course used to be a Democrat, and our president himself draws bad ideas from both sides of the aisle. Which party again was campaigning against NAFTA? What is they say?: Look into trade as an issue. and you see a man’s soul.
What about abortion, that (supposedly) most polarizing of issues? As Matt Yglesias noted:
About a third of Republicans are pro-choice and about a third of Democrats are pro-life.
Yes that is a real difference, but it hardly sounds like two worldviews, standing irrevocably cleaved and apart. And a lot of those positions are in actuality fairly nuanced in their details.
According to Larry M. Bartels, about a quarter of the Democrats on cultural issues stand closer to the Republican party than to the average position of their own party. And talking through the poll data on Christian black women — often Democrats but on average not exactly “progressives” — would require a lengthy missive of its own.
Nor do I see either party speaking up for free speech on campus, except in the most opportunistic terms. Republicans are pushing bills to crack down on left-wing protests against conservative talks, while the left is trying to limit those same conservative talks. Distinction without a difference, your Tyrone says, and he should know. I yearn for the “good ol’ days” when the New Left was for free speech and the conservatives were largely more skeptical. At least someone was for it, and in an oppositional kind of way.
Contrary to standard reports, the urban-rural divide has not really been growing.
Trump wants to change various governmental rules and norms to cement his own power, such as dumping the filibuster and perhaps reinterpreting the emoluments clause and expanding executive authority of trade and immigration. Democrats talk of dumping the electoral college or, right now, bringing back FDR’s “court-packing” plan.
It is widely granted that traditional political parties are blowing up (NYT). Plenty of people wanted Trump and Sanders to run together as a ticket. And in just about every European country, immigration and terrorism poll as the major issues, neither of those being the traditional territory for previous polarization.
The thing is, when people really believe in something, they end up polarized. Of course they don’t agree on everything, and so polarization ensues along the dimensions of difference. Less polarization is a symptom of believing in less more generally, and don’t confuse the resulting obnoxious fractiousness with greater polarization. Instead, it is a sign that ideas are no longer ruling the day. And indeed, religious participation is down in America and the secularization thesis is finally beginning to bite. Polarization, however unpleasant it may have felt at the time, meant order.
What can I say people? Tyrone now opposed to obnoxious fractiousness? In spite of his periodically reasonable tone this time around, don’t believe it for a moment — he hasn’t changed. Nor is polarization down. Polarization between Tyler and Tyrone clearly has gone up as of late, thus his enforced silence. Tyler believes in free speech, and he knows that freedom from harm for others requires the silence of Tyrone. And so is freedom realized, and to thunderous applause.
Who knows when you will hear from Tyrone again? Maybe I’ll let him do a restaurant review instead.
People, I just received the following Linkedin message from Tyrone which I reproduce here verbatim (apparently Tyler’s been really cracking down on poor Tyrone):
It’s a good thing Tyler wasn’t an influential blogger back in the 1770s. We’d all still be British subjects.
In 2016 he’s blogging Brexit and unsurprisingly, he’s again come out against change.
The end result he concedes would be good but the path rocky and “the path is everything”.
This from a man who believes the social rate of discount should be zero!
(and, just to hammer on this, if the discount rate is zero, the path is the opposite of everything)
Tyler’s against Scottish Independence, Catalan Independence, Brexit. I somehow feel like he’s even against Grexit (the path! the path!).
Apparently, change is bad.
People, I’m here to tell you Brexit is a no-brainer. The EU is a utility killing machine exponentially ratcheting up dumb regulations while ignoring or actively worsening the real problems that the group suffers. When I solve for the equilibrium I see a place where everything is either mandatory or banned.
Consider refugees as an example of idiotic EU policy. Now that Kenya and Niger have seen that the EU is paying for poor countries to house refugees, they have quite rationally closed their existing camps and put out a call for bids. Niger has opened by asking for a cool billion or so to keep refugees off Europe’s beaches.
The UK’s per capita income is currently about 2/3 that of the US. They and most EU countries have been falling further and further behind the wealth frontier in the last decades. The EU hasn’t exactly been a huge success story for them. In the long run, they will do much better on their own (better policies, closer relation to their former settler colonies, less regulatory crushing) and since the social discount rate really should be zero, the path, while perhaps rocky, is temporary while the new equilibrium is rosy and permanent.
This is Tyler again…Tyrone sent me his own message on LinkedIn, and he reminded me of this old Tyler post from 2006, “Would I have supported the American Revolution?“:
These modal questions are tricky. Which “Tyler” is doing the choosing? (If I were an elephant, would pink be my favorite color? Living in 1773, have I at least still read Jonathan Swift? Would a modern teenage Thomas Jefferson have a crush on Veronica Mars?)
But think about it, wasn’t it more than a wee bit whacky? “Let’s cut free of the British Empire, the most successful society the world had seen to date, and go it alone against the French, the Spanish, and the Indians.” [TC: they all seemed more formidable at the time than subsequently]
Taxes weren’t that high, especially by modern standards. The British got rid of slavery before we did. Might I have concluded the revolution was a bunch of rent-seekers trying to capture the governmental surplus for themselves?
Tyrone, of course, wishes we had sold off the entire North American British empire to the Spanish crown…
I know that Tyrone, my evil twin brother, has been fairly silent in 2015, but that’s only because he’s been so busy whispering things in my ear. He’s also been spending his profits from having shorted the Chinese stock market. And having shorted the Democrats.
Can you imagine his latest? Electoral politics once again, his weakest area (not nearly as good as Tyrone the neo-Fisherian). Well, I scribbled down some notes on a napkin, over lunch, so this is an imperfect rendition of what he really said. Tyrone in fact didn’t want me to write this post, fearing people would take it the wrong way. Here goes, here is Tyrone at his mischievous worst:
Tyrone: It is obvious that intellectual Democrats, especially those concerned with climate change, should vote for Donald Trump for President. Furthermore they should welcome his ascent, as should intellectual Republicans.
Let’s accept the commonly argued premise that climate change, if not quite an existential risk, can drastically lower the quality of life on earth for generations to come.
There is some chance that Trump will in fact support some kind of comprehensive climate change legislation. After all, he used to be a liberal, but perhaps more importantly he wants to think of himself as a savior. The chance of this is higher than that of any other Republican, and he is hardly beholden to the standard lobbies.
Most importantly, the chance of Trump “going Nixon” is higher than Hillary’s chance of selling meaningful climate change legislation to an oppositional Republican Congress. She’ll be unpopular from day one, and the salaries of Dutch kunstmatige land consultants will skyrocket; that would bring a new Dutch disease, not just the one you get in those pretty Amsterdam shop windows.
OK people, let’s say Trump sticks to the mainstream Republican position. What will happen then? Won’t greedy capitalists rape the earth, not to mention building that energy-consuming wall?
Well, in the short run, maybe. (Don’t forget Lennon on the omelette and those broken eggs!) But we all know how disastrous Trump’s economic ideas would be in practice. They would lower the growth rate of gdp and impoverish the masses. Even if you read Trump as a policy moderate, just imagine what his volatile temperament would do to the equity risk premium. (Then they would have to give Robert Barro a Nobel prize!) And so, four or maybe eight years later, — or is it two? — what we could expect to find? A fully Democratic Congress and White House. (And dear reader, is there any other way to get there?) And thus would arrive comprehensive climate change legislation, just as we got Obamacare post-2008. Voila! That’s way more important than maintaining America’s status as a nice, well-respected, and tolerant country, isn’t it?
So Democrats, if you really care about Bangladesh and Vietnam, and don’t just have this silly mood affiliation fancy that Tyler has fabricated, you should promote the candidacy of Donald Trump. The more Democratic you are, the better. The more worried about climate change you are, the better. Your man has arrived on the national scene. Finally.
Remember the take of Borges on Judas? He made the real sacrifice of his reputation, so that the rest of us could be saved by Christ. It is time for you too to be like Judas…[TC: At this point the absurdities piled up so high I just had to cut Tyrone off.]
Tyler again: Readers, I am so sorry for this. I receive numerous requests for more Tyrone, but usually I resist. The only reason I occasionally oblige is to show you all, once again, how crazy he is. How unreasonable he is. How subject he is to his own mood affiliations, foibles, and quirks. How little heritability can explain, once you look get past superficial sibling similarities and look more closely at the details of the intellect.
Tyler’s view — my view — is that good Democrats in fact should support…[at which points Tyrone cuts Tyler off, and the two tumble over the proverbial cliff]…
James Surowiecki writes:
Of seventeen hundred stocks on the Shenzhen Exchange, only four have fallen this year, and more than a hundred have seen their shares rise more than five hundred per cent. The Shenzhen Index as a whole has doubled since January, and is up more than two hundred per cent in the past year. The action on China’s other major stock exchanges—in Shanghai and Hong Kong—hasn’t been quite as torrid, but they’ve had their share of extraordinary winners. The Shanghai Composite Index has risen a hundred and forty per cent since this time last year. In Hong Kong, Jicheng Umbrella Holdings (which makes, yes, umbrellas) went public in February: its shares are up almost seventeen hundred per cent.
Tyrone, Tyler’s evil twin, says buy, buy buy! Borrow to buy, and then borrow to borrow! Tyrone has read so many people in the last week calling the Chinese stock market a bubble, so the contrarian in him thinks you simply need to take the plunge as soon as possible.
Direct foreign investment has been allowed only as of late 2014:
The Shanghai-Hong Kong Stock Connect program will allow all investors to buy shares on the Shanghai Stock Exchange, while also permitting wealthy investors in mainland China to buy stocks listed in Hong Kong. The move allows investors access to companies with an overall market value of roughly $2 trillion.
“We think it is very significant. We plan to participate,” said Gary Greenberg, head of emerging markets at Hermes Investment Management in London, which managed $46.9 billion in assets as of June 30.
That’s a lot of foreign capital to push up the value of Ma and Pa Tofu, and indeed that flood of capital will validate your early investment. And who amongst us is not tempted to diversify just a wee bit into the world’s second largest economy, indeed the very largest by PPP measures? Surely the coming tidal wave of foreign liquidity will push aside all present minor worries.
On the domestic front, Chinese savings are currently real-estate intensive, and over time those funds be shifting into equities, especially as Chinese graduate students carry the lessons of Mehra and Prescott back home. As prices fluctuate, the market is assessing how significant these effects will be, just as it once did with subprime.
Besides, the market went up 4.6% on Monday alone, and that is at a time when Chinese manufacturing seems to be slowing. The Chinese government itself proclaimed the stock market to be “healthy,” and indeed many different parts of the government, including the media, have seconded this verdict. Why bet against all of them?
Did you not know that the Chinese debt-equity ratio is too high? Well, higher equity prices will help lower that ratio, as the government intends; new stock issues are being used to buy back corporate debt, some of it dollar-denominated.
If nothing else, return back to some patriotic context. Was it not a good idea to buy American stocks when our country had a per capita gdp of 6-7k, and headed up? With a 20-30 year time horizon, was it not a good idea to buy American stocks even in 1929?
To be sure, the forthcoming liquidity-based, foreign investor-driven price movements imply a non-horizontal demand curve for those stocks, and thus violate the stricter forms of EMH. But who said a demand curve should be perfectly flat anyway? Weren’t the Marxists referring to perfectly flat demand curves when they said competitive capitalism is the absolute loss of freedom? And hasn’t China been moving away from Marxism? Q.E.D. So Tyrone says it is time to borrow to buy. Someone out there — maybe even you — won’t regret it.
Tyrone, my evil twin brother, was in town visiting the other day, after a long absence. He was upset that I gave so little space to the recent machinations in Washington, and that I assigned the events so little importance, so he asked if he could offer his own coverage in a guest post. Since Tyrone is occasionally a lunch guest of ours, against my better judgment I said yes, so here is my dictation of his midnight sermon:
Tyrone: I read what a strategic disaster the fracas has been for the Republican Party and for the Tea Party movement in particular, but I don’t see it. Where I grew up, this counts as a successful stare-down. Most of the time, the pit bull does not in fact lunge for your throat, but it is hardly a mistake for him to snarl, even if that raises his borrowing rates.
Look where we stand. In real terms government spending has been falling. Sequestration appears to be permanent, or it will be negotiated away by Republicans in return for preferred changes in tax and spending policy. Leading Democratic intellectuals are talking about future fiscal bargains with no new taxes. The American public polls as increasingly conservative.
With this sequence of events, combined with 2011, the Republicans convinced some of their opponents that they are crazy and irresponsible, without actually being crazy (though they were irresponsible, but that is the whole point). I peaked once into Tyler’s Twitter feed, and I found several accomplished Democratic economists — yes brilliant economists, as all economists are — suggesting that any day now markets are going to notice the truly crazy character of the Republican House and price that into interest rates and stocks. Oh what a tale! (A more accurate reading of the more radical Republicans would in fact be more cynical and ordinary than most of the pablum served up by their critics.) Imagine that you control only the House and can manage to convince your opponents that you are stronger and more dedicated to your cause than in fact you are. Only the truly strong and dedicated can pull such a caper off!
Someday, if the Democrats wanted to raise the exemption level for the payroll tax, and pull in a lot of new revenue, what kind of opposition could they expect? Probably they will shy away from that battle altogether, for fear of another Ted Cruz filibuster.
Yes, Virginia (literally), protecting the brand does sometimes mean going down with the ship.
In the longer run the Republicans will have changed the Doug Overton window on most of these issues. (Tyler interjects: My apologies loyal MR readers, Tyrone has no Ph.d., not even a Masters, and thus he misuses terminology as would a mere child.) Even if most Americans do not agree, it is now considered common to believe and to argue publicly that Obamacare represents the end of freedom in our time. If Obamacare turns out to fail in the eyes of the public, that condemnatory view is being held in the back of people’s minds, whether they admit it or not, whether they agree or not. They will start to agree more and more, the less generous their Medicare benefits look as time passes. The future counterrevolution in redistribution is going to have to come from somewhere and it is a major victory to cement the word “Obamacare” as a hypostatized “thingie” in people’s minds, for future reference.
The Republican tactics understand the importance of skewed pay-offs. In an age of political gridlock, the goal is not to maximize the expected value of your image, any more than you would do the same on a date. Rather the goal is to maximize the chances of moving your agenda forward, conditional on the existence of world-states where that might be possible. The harder it is to pull off change, the stupider your strategy will look in most world-states, but hey that is the price of admission to this game. Capital is to be periodically run down, and if in politics, as in management more generally, if you always look good you are doing something badly wrong.
Another fallacy is that no DC crisis would have focused more attention on the failings of the Obamacare exchanges in a useful manner. People, that is small potatoes. No one is going to repeal or even modify ACA because of a few weeks’ bad publicity at the opening. (Recall the Medicare prescription drug bill, which took weeks to get off the ground but now is beloved and is part of the permanent furniture of the universe, like Supersymmetry or quantum gravity.) If Obamacare is really going to do poorly, it is better if we build up high or least modest expectations for it. Imagine the Christmas present of learning you don’t really have insurance coverage after all. Or the New Year’s resolution that after you have been billed three times for the same policy, you vow to pay for only one of them and live with the bad credit rating until it gets straightened out. How about extreme adverse selection into the exchanges, resulting in 50-100% premium hikes in the first year of operations? (The lower premia are now, the better! Bread, peace, land! Ach du grüne Neune!) That’s what will get further traction for the Tea Party on Obamacare, not a bunch of bad reviews on opening day, as if the policy were no more than a mid-tier Jennifer Aniston movie (I can no longer refer to Sandra Bullock in this context), to be swatted down by mild tut-tuts of disapproval and inconvenience.
The very best victories are often described as ignominious retreats.
Tyler again: Readers, I am sorry to subject you to such rants. But Tyrone insisted. In fact he threatened that, if I did not comply with his request, he would write a lengthy review of Average is Over, for which outlet I am not sure, perhaps an average outlet. He threatened to shutter our common household. He prophesied that cats would lie down with dogs. He even threatened to default on our joint credit card bill, ruining my credit rating forever. And people, you now all know just how powerful such threats can be.
Pee Wee’s Big Adventure
Faster, Pussycat! Kill! Kill!
The Cable Guy, Ace Ventura, The Nutty Professor
Tyrone barely knows enough technical macroeconomics to bark out an opinion, much less defend it or specify coherent policies. Nonetheless he suggested that I pass the following along to Ben Bernanke:
It seems there is not enough lending. People would lend more if interest rates were higher or at least I think I learned that in Econ 101. So let’s raise interest rates. I’ve also heard we have banks buying T-Bills and the Fed and government buying claims to real businesses. Can that be true? Isn’t that backwards? If they aren’t working properly, why not just recall all the T-Bills? (Didn’t General Motors do something like this once? It seemed to work out for them.) Then the banks would have to invest somewhere. Give a bonus to any bank that does something real. Let the others rot. (Tyrone then called up Trudie, who told him: "Have the Fed announce it will go massively short in the T-Bill futures market, sometime in the near future and without further warning. That would scare people out of government assets.")
What about that guy who set up the phony investment company? Can the Treasury make a new one of those, only bigger? He took money away from people and gave it to charities and the needy and the arts and higher education. That sounds like stimulus so why are we sending him to jail? Wasn’t he ahead of the curve?
Why don’t we increase the tax deduction for donations to any charity which manages to expand its spending on overhead or is the word infrastructure? For every dollar given, let the donor deduct more than a dollar from taxes. That’ll get the money out of the banks of those rich people and into the hands of real Americans. Still, it’s not as good as the phony guy who’s been doing this for twenty years. I guess we’re all trying to catch up to him. It seems he had help from his family but Bernanke does not. Makes all the difference.
Tyrone tells me, by the way, that soon he will try his hand at a restaurant review. It can’t be any worse than this.
I was sitting here peacefully, weeping, when I received the strangest email from Tyrone:
Tyler, cheer up! The decline in housing prices is a godsend. Isn’t it a standard line — from both left and right — that we are spending too much on the elderly and not enough on the young? Isn’t lack of upward mobility, for the generation on its way into the world, the new problem? Aren’t the American poor to expect an even greater squeeze in the future? There’s a simple remedy for all of these problems at once — lower housing prices! Lower stock prices too! You don’t even have to get a bill passed through Congress, or overcome AARP, and we all know how hard that is these days. The housing stock is still there, the relatively established homeowners are a bit poorer, and those poor strugglers on the way up can now buy their dreams at lower prices. Even better, lots of the laid-off construction workers are Mexican immigrants, who for years have been keeping wages down for low-skilled American workers. This is an economic nationalist’s wish list, no?
Poor, poor, deranged Tyrone. Isn’t this what you would expect from an abject failure who has never managed to buy a home? Tyrone isn’t even subprime.
Johan Almenberg, a loyal MR reader, asked me to ask Tyrone why rent control is a good idea. I walked over to Tyrone’s crawl space, knocked, and posed the query. He ridiculed me and told me the question was really not worth his while:
You Troglodyte, surely you know the happiness literature shows that better or larger living quarters don’t make people much happier. It’s one of the pleasures we most quickly get accustomed to. So if rent control pushes everyone into a lower price, lower quality equilibrium for residences, that’s for the better. If you want high cost living, go to Monaco or Aspen; low rents were what made New York City great. The greatest American city, during the highest cultural peak of its existence, had lots of binding rent control.
Rent control also encourages new or refitted buildings to have a greater number of smaller units. In other words, it brings more population to the city and we all understand the external benefits from having more people around. Furthermore the external social benefits of cities are highest for the elderly poor, who can’t afford cars and would require external aid, and bagel-seeking young’uns, high in human capital, low in liquid wealth, and able to do great things for the world if only they are removed from the suburbs. That’s exactly who rent control puts into your city.
Johan himself offers an interesting argument:
…if rent control makes it
harder to live in a particular city temporarily, this encourages long-term
commitments. This, in turn, could increase the repeated-game character of that
city, which in turn could be good for cooperation. These sort of arguments –
admittedly vague – tend not to get mentioned.
Did I mention that Tyrone is biased, because he lives under rent control himself? That’s right, he lives upstairs in the crawlspace. It is the strongest force in the world that won’t let me charge him a price any higher than zero. And the resulting arrangement seems to work out just fine.
Tyrone wrote to me:
1. It is a mistake to focus on the survey evidence on happiness; maybe at first it shocks Americans that their country doesn’t come in a clear first, but America is bound to end up in the top tier and that will prove hard to counter. The Easterlin paradox, which turns purely on the meaning of words over time, is also weaker than is commonly believed and of course Tyler and Will were going to be ready for that.
2. Start with the disproportionately large number of Americans in prison. They are not happy. Furthermore they don’t get to answer most questionnaires.
3. Then ask: given how rotten prison is, why did those Americans take the chances that might put them in prison? How many people were just as unhappy, or nearly as unhappy, but didn’t chance a crime or end up in prison? What does the distribution of the process have to look like, and what are the implied levels of unhappiness, to place so many people in prison? The answer to those questions will be ugly.
4. Then move to race and cite those studies showing that many white people say they wouldn’t want to be black for a million dollars. There are a few different ways to interpret those answers, but none of them are favorable for the pursuit of happiness in America.
5. Cite statistics on how many Americans are obese. Some of this is genetic variation, but still the happiness-generating process has to be pretty badly skewed to generate so many pounds. Ask Tyler whether he thinks that most truly obese women are happy.
6. Ask Will to provide a running stream of consciousness of what runs through his mind when he visits a K-Mart in rural West Virginia.
7. Paint a convincing portrait of Americans as the people most prone to self-deception, self-puffery, and the most likely to lie about their own levels of happiness. Attack the reliability of happiness studies.
8. Present moderation as a prerequisite of happiness, and argue that America is anything but a land of moderation.
9. Cite the millions of Americans — now one out of every ten women — who take Prozac or other anti-depressants. Yes, there is strong evidence that Prozac makes people happier. But surely such people can be said to have "failed in their pursuit of happiness." They didn’t start off wanting to be happy by taking a drug.
10. Don’t push income volatility or poverty too hard. It will collapse into "things aren’t perfect" and allow the other side to focus on America’s very considerable economic achievements. Nor put too much blame on America’s relatively weak welfare state. That is a symptom of American social illness, not a cause, and more fundamental is that the poor themselves don’t care enough about their own fate (so why then would anyone else either?).
11. And why do European women seem so much more self-assured than do American women?
Yes, that is what Tyrone thinks. Poor, poor Tyrone. No wonder he is so unhappy. He thinks he is surrounded by so many other unhappy people. That makes him contrarian by nature.
Some people say that the debates between Tyler and Tyrone are the most interesting of all. But I know better. When such debates end, Tyler is always happy, and Tyrone always unhappy. Doesn’t that alone show that Tyler usually has the better of it?
Tyrone just sent me the following, I added in the link:
Tyler, you had a good point that the demand for immigrant labor is often the demand for illegal immigrant labor, but you didn’t take it far enough. We too frequently conflate illegal labor with unskilled labor, when instead this dichotomy should be challenged. We need to make illegal labor more highly skilled and thereby restore its good name.
Toward that end I have a modest proposal. The federal government should allow, by default, any northern European to work in the United States illegally. The labor would be legal in the sense that the employer would face no criminal penalties. But the worker would collect no social security or Medicare benefits, receive no OSHA protections, and the worker would never be sure how long this grace period would last.
Hi-tech employees, especially for short projects, would receive many offers very quickly. So would many medical professionals.
Who would come? It is obvious — those from high marginal tax rate countries. That means France and Sweden, etc. In essence our government would be engaging in tax arbitrage by not paying these people benefits. Those are the optimal illegals.
Transient communities of Swedes would congregate on the shores of the Minnesota Lakes, sharing lutefisk, waiting for rides (a lot of them come from Stockholm and thus can’t drive), and exchanging rumors about where hi-tech work is available.
These people would never fully integrate with the capital stock of the United States. But the program would attract people who already had high levels of human capital from their native Sweden.
Don’t charge them admission for a visa, that would give the gains to our rapacious and spendthrift government, rather than to the people of this fine land.
Do let them own pets.
But don’t make them legal, that just means higher wages for them and lower net gains for all right-thinking, baseball-loving Americans.
All the legal spots should be reserved for Mexicans.
Poor, poor Tyrone. His mind never recovered from that military ambush he faced in the Congo. That is why he talks of giving free entry to all Venezuelans, or at least the women. He wants to set up an artificial American island just off the shores of Cuba, with lighted beacons along the way. He wants to give "the Puerto Rico deal" to Trinidad, or indeed to any individual citizen of Trinidad who wishes to take it. He thinks that free citizenship should be offered to any person who can score in the 80th percentile on GREs.
Poor Tyrone has no idea of the cultural foundations of democracy.
Tyrone, like many other people, enjoys reading Instapundit. Today he sent me the following by IM, or was it Google Talk?:
Global warming is easy to stop. Is a carbon tax costly? No way. Didn’t we already agree that stopping global warming is wealth-maximizing for the world as a whole? Then we just have to work out the right set of transfers. As a first-order oversimplification, global warming benefits North Dakota but harms Bangladesh by a greater amount. North Dakota cuts a deal with Bangladesh. The two state Senators will support a carbon tax in return for FREE CALL CENTRES FOR FIFTY YEARS. Or whatever is needed. After all, a bargain is there. We might even use the UN, or a revamped Kyoto agreement, to support and organize the deal.
You can see this agreement is self-enforcing, right? If payment is not made, we can always take the carbon tax away. Or do something even nastier with those silos up there in the Peace Garden State. Obviously America could turn a profit on this whole carbon tax deal. This might sound unfair, but surely it is less unfair than ignoring the problem altogether…
Sadly, Tyrone is still waiting for a response from Tyler. Tyler thinks Tyrone is a nasty, nasty man, who has grasped only the worst of Edgeworth and understood none of the best…
Tyler, you are always so optimistic. But your own "dismal science" offers neither empirics nor analysis to back this attitude up.
The standard economic arguments about resources focus on the margin, while the real problem is infra-marginal. Don’t be misled by all that talk of prices and substitution. We are running out of resources and soon.
Think about eating your beloved dark chocolate, Tyler. Let’s say you have only four squares left of Lindt in the cupboard. Yes, as you eat more the shadow price of each remaining square goes up. Big deal. You are still going to eat all the chocolate before dinner. Economics tells us only that you will end up on the Pareto frontier, but that frontier still has some pretty miserable points. We are about to approach them. Who cares if prices mean that we meet our doom while equating private first-order conditions? We are simply too voracious for the resources at our disposal.
Market signals and property rights do not work for the globe as a whole, unless you have monopoly ownership of the entire world (hmm…). Property rights work best for local problems, such as fishing in a single lake or who should wash the dishes. Private property won’t cure the problems of bad air, poisoned oceans, global warming, or the overall carrying capacity of the planet. We will get doom, doom, and more doom.
The real question is empirical: are global demands for resources big enough so that the problem resembles you with your four squares of chocolate? Yes. The environment is toast, sooner or later and probably sooner. And it is doomed precisely because capitalism is such a wonderful productive machine. Do you really think you can fill the planet with so much rapacious human biomass without significant and indeed overpowering external effects? Our only hope is that we all become plugged-in machines who don’t need much of an environment any longer.
It is true that resources prices have been falling, on average, for some time now. But the Industrial Revolution is a remarkably recent development and we are just getting started. Mankind’s current productive powers truly are unprecedented, a fact which you libertarians love to stress in other contexts, just not this one.
It would be mere luck if energy-saving technologies outraced nature-destroying ones. And even if this were the case for a while, energy-saving technologies, in the long run, simply encourage us to raise our rapaciousness up another notch. The infra-marginal becomes even more infra- than we ever dreamed.
Now let us get speculative. Did I mention that in the economics of the future — once we are in exponential growth modes — the concept of price will hardly matter? It will be more like an engineering problems where 10x of today’s gdp is produced every week, and we have to see whether this wrecks the globe in ten or rather twenty years’ time. Don’t even bother recycling. Furthermore all you futuristic nerds out there should downgrade the relevance of price theory, given the size of the changes you have in mind.
My parting shot: Maybe you think I am a pessimist. But it probably is better if resource pessimism is true. Life as a hunter-gatherer is still life. And those Pygmies produced some pretty good vocal music. If the price of energy were to keep falling, that would mean everyone could, within a few generations time, own the destructive power of a nuclear weapon in his or her iPod. Now that’s scary.
As I have said in the past, Tyrone really is a pessimistic fellow. If that dark chocolate is gone, it is usually because I ate it in advance, knowing he would otherwise steal my supply. There are only so many cupboards in the kitchen, and Tyrone has learned all my hiding places. And why didn’t I buy more at the store in the first place? It is simple: I had to take Tyrone to his Zen Buddhism class; this sad sack doesn’t own a car.
"Any dummkopf can see we should value human life at replacement cost, not willingness to pay in a market setting. (If P > MC, due to monopoly, MC is the correct measure of value, especially if we can produce more of the stuff.) And what is the replacement cost required to get another baby into the world? A pittance. We should spend half as much on health care as we are doing now, perhaps less.
Let’s institute rationing, and yes nationalization of either insurance or service provision are possible means to that end. Let’s give everyone access to basic preventive care but limit or perhaps even ban all expensive life-prolonging procedures. At the same time, our other policies should be pro-natalist, and that includes a favorable environment for religion and restricted vacation time, not just dollar bonuses for kids and free public education. No good utilitarian can resist that conclusion.
Yes, that treats human lives as interchangeable, but if you don’t buy that, you have no business defending the economic approach to human life in the first place. (The Devil in Goethe’s Faust: "Warum machst Du gemeinschaft mit uns, wenn Du sie nicht durchfuehren kannst?")
By the way, let’s drive down pharmaceutical prices. Subsidizing babies is a cheaper way of producing more years of life.
Yup, it’s all about churning out those Quality-Adjusted Life Years. Current unborns may feel hypothetical or contingent to you, but I tell you, they are just as real as I am. And when those people come into existence — if they come into existence — they will be more real than I am.
At best, even assuming away the usual market failure issues, market-driven health care allows people to invest too many real resources keeping themselves alive. You can kick and scream all you want, but at the end of the day you cannot escape this obvious overinvestment. The problem is that the market works, in the sense of getting people what they want. And if government involvement can save on insurance company overhead at the same time, or alleviate adverse selection, so much the better."
Tyrone is so depressed, and so unhappy with who he is, that he comes up with drivel like this. Why did I even pass on the request? After jotting down these notes, Tyrone told me that if push ever came to shove, I should not spend more than $8000 keeping him alive. Of course I refused to agree; what would I do without him? What would my wife do without him? And what kind of person would you think I am, to sell him for mere dollars and cents?
Addendum: Here is Will Wilkinson’s health care plan.
Just last week Tyrone told me the following:
The traditional debate pits determinists against voluntarists. The determinists believe that man is caught up in the grand causal nexus. The voluntarists believe you somehow break free of cause and effect. You are able to spew forth "uncaused events" more or less at will. You are a truly special being, rather than just another toad.
As for the compatibilists, I say ugh. I am sorry, but you can’t believe A and non-A at the same time.
The voluntarists just don’t cut it. What strange theory of physics do they hold? At what moment in the evolution of man (or monkeys) did cause and effect cease to apply to brains? Plus neuroscience shows that subconscious brain activity, in the relevant parts of the brain, precedes the moment of conscious decision.
Furthermore I doubt if the voluntarist vision of free will is so fun. How sad to have to stand apart from the causal nexus. How alienating. How totally gauche. Isn’t the causal nexus what makes sex so fun?
My vision of free will starts with the problems in defining the self. You know: Parfit, Hume, time-slices, and the fact that I cannot remember what I did last night (fyi, I don’t remember what my wife and I discussed on our first date but I do remember what she ordered).
If you are nothing but a time-slice, the free will "problem" goes away. There is no "you" freely choosing, but there is also no "you" caught up as a prisoner of the causal chain. Instead you are your choice. At least "that you" was your choice at the time. No more and no less.
You are identical to your choice. What more dignity or freedom could you possibly expect? Surely that is better than the voluntarist notion of exogenously originating autonomous control.
This view allows us to maintain that human beings are ruled by the same natural laws which govern the behavior of stones. Physics remains monistic. At the same time, you are not reduced to a mere puppet. Ha! There’s not even a "you" to be subject to reduction!
To up the ante just a bit, dare I mention multiple worlds quantum mechanics, David Lewis’s modal realism, and inflationary cosmology? These views are distinct but all lead us to the conclusion that many possible universes, perhaps all possible universes, exist in some fashion. They will give you lots of time-slices and lots of bits of you walking around. Who cares in what order the deck is shuffled, or where the different cards lie spatially? The time-slice you, temporary as he or she may be, is connected to an infinite or very large number of other time-slices. A very large number of those time slices will be very close to the "you" that constituted your choice. Furthermore some other time-slice will get to experience some almost identical version of your choice, sooner or later. Being a solitary fellow, I like that better than voluntarism.
In some versions of these views, literally everything is removed from the causal nexus. In fact there is no causal nexus in the first place. Surely that should make you feel better and restore your underlying pantheism. No self. No reduction. No causal nexus. Just lots of you, you, you. Better than having your own TV show.
Tyler, of course, is a determinist. He thinks I had to write this post. More to the point, this post is who Tyrone really is.
Tyrone is really quite a sad fellow. Many of you believe in free will, but I know determinism applies to me and to my choices. I feel the pull of those causal chains, day in and day out.