Month: January 2008

Liberal Fascism

Here is Henry Farrell on the book.  Here is Matt Yglesias.  Here is Fred Siegel.  Here is Arnold Kling.  Here is another review.  Here is Megan McArdle on the BloggingHeads version.  Here is the Amazon link.  I am closest to the CrookedTimber commentator who wrote:

Jonah’s book, at its heart, is geared toward popularizing the arguments of smart intellectuals/academics, from John Patrick Diggins to A.J. Gregor to Hayek to Erik Von Kuehnelt-Leddihn.

Or try this excellent book, or for that matter John T. Flynn’s As We Go Marching.  I divide the arguments of Liberal Fascism into three categories:

1. The oft neglected but obviously true: For instance Mussolini really was a precursor of the New Deal and he was initially regarded with fondness by many on the American left.  This sort of claim is the core of the book and it does stand up after you take all the criticisms into account.  I am pleased to see it upend traditional "feel good" narratives of politics.

That said, a "who cares?" response might be in order from a social democrat.  Good people can have bad ideas, so can’t bad people — namely the fascists — have had some good ideas?  After all, George Lucas borrowed from Leni Riefenstahl.

2. The false claims: Contrary to what Goldberg argues, it simply isn’t true that Hitler and Nazism were essentially left-wing phenomena.  Not all right-wing ideas are Burkean, and the mere fact that the Nazis were "revolutionary" does not make them left-wing.  Furthermore the Nazis busted labor unions and used right-wing emotive tricks for their racism and authoritarianism.  When all those old Nazis popped up in South America, where did they all find themselves on the political spectrum?  Overall fascism has much stronger roots in the Right than Goldberg is willing to emphasize.

I also would have put more weight on the aestheticization of politics than did Goldberg.  That would help us see why supporters of the War on Drugs, while they favor very violent and possibly unjust means, should not be regarded as fascists.

3. The true but possibly misleading claims.  Goldberg writes for instance that Hillary Clinton is not a fascist.  OK, but simply to write that she isn’t a fascist is reframing the terms of the debate, and not in a way I am fully comfortable with.  I’m sure it bothers many Clinton supporters more than it bothers me.

Goldberg insists he only wants to stop the slander of the Right and its long-standing identification with fascism.  I am fully behind this goal of tolerance, and I might add I recall fellow Harvard econ grad students calling Martin Feldstein (and perhaps me!) a fascist on a regular basis.  That simply shouldn’t happen.  The problem is that Goldberg’s book will be interpreted by its buyers and readers as a call to do the same to the left.  Take a look at the cover and the title, both of which Goldberg distanced himself from on Comedy Central (I can no longer find the YouTube link).  But they’re on the book nonetheless.

Is Goldberg "to blame" for how his book will be interpreted, especially if he requests an interpretation to the contrary?  That’s a moot point.  But it gets to the core of why I don’t like the book more than I do. 

The bottom line: As Arnold Kling recommends, all parties involved should read Dan Klein’s "The People’s Romance," and start the debate there.

Addendum: Some of the critical web reviews admit they have not read the book, but they rely heavily on Goldberg’s (apparently controversial) web writings.  I’ve never read Goldberg before, so I am coming at this book "fresh."

Michael Shermer’s Mind of the Market

This book is the latest attempt to justify freedom and the market economy by reference to the knowledge of science and biology.  Here is my review, in Washington Post Book World.  Excerpt:

I’m sympathetic to Shermer’s conclusions, but I fear his standard of evaluation is too blunt an instrument. If the options are capitalism and the Khmer Rouge, no doubt capitalism wins hands down. But to what extent should we restrain capitalism to fund a social safety net? Should our government place heavy taxes on beer and potato chips to fund the National Science Foundation at higher levels? Most broadly, to what extent is it morally permissible to interfere with freedom, or can we even use freedom as a concept in a world where we do social science by hooking people up to brain scanners?

Shermer is famous for founding the Skeptics Society and editing the magazine Skeptic, which debunks claims of the supernatural. His monthly column for Scientific American is a regular plea that reason should govern human affairs. But his book raises very real questions about just how far skepticism should extend. Should we also be skeptical about using moral judgments of right and wrong to address the tough questions of politics? For instance, can we make normative judgments about who deserves to pay how much of the tax burden to finance the U.S. government, or as to whether somebody’s job should be protected from foreign trade?
Shermer either needs to dismiss moral philosophy as an illusion and a mere byproduct of human evolution, and thus display skepticism, or he needs to grant it credence and take his own moral stance. Descriptive science doesn’t tell us whether it is fair to allow kidneys to be bought and sold, even if it helps explain why some people find the practice repugnant. Judgments of right and wrong cannot be avoided, and thus we tread away from the realm of familiar natural science.
There are really two books within "The Mind of the Market." The science book is finished and polished, yet it does not present fundamentally new results. The book on capitalism discusses important questions, yet it is unfinished and unpolished. Shermer does promise us an entire new book to fill in the missing pieces here. He already has earned the right to our attention; the next question is whether he will give his philosophic and romantic side the greater rein that it deserves and requires. This East African plains ape is optimistic.

Why is Tide so popular?

Eli Lehrer informs me that Tide has a high market share even though it is more expensive than most other brands.  This source says the market share of Tide is about forty-four percent, with the sum total of all Proctor and Gamble products (Gain and Cheer are two others) accounting for about two-thirds of the market.  Is Tide so good?  Does Tide really "know fabric best"?  I couldn’t name one supposed feature of the product and I’ve been buying detergent my whole life.  I couldn’t even tell you what brand I buy.  Maybe it is Tide.  This is the kind of question that Wikipedia isn’t much good for. 

The Law of Unintended Consequences

Dubner and Levitt have an article in the NYTimes with three examples of the law of unintended consequences, the Americans with Disabilities Act made it more costly to hire people with disabilities and reduced their employment, ancient Jewish sabbatical law intended to help the poor has made them worse off, and the endangered species act has resulted in habitat destruction.

In light of this Andrew Gelman asks a deep question, What kind of law is the "law of unintended consequences?"

The law of unintended consequences is what happens when a simple system tries to regulate a complex system.   The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives.  Society in contrast is a complex, evolving, high-feedback, incentive-driven system.  When a simple system tries to regulate a complex system you often get unintended consequences.

Unintended consequences are not restricted to government regulation of society but can also happen when government tries to regulate other complex systems such as the ecosystem (e.g. fire prevention policy that reduces forest diversity and increases mass fires, dam building that destroys wet lands and makes floods more likely etc.)  Unintended consequences can even happen in the attempted regulation of complex physical systems (here is a classic example involving turbulence).

The fact that unintended consequences of government regulation are usually (but not always or necessarily) negative is not an accident.  A regulation requiring apartments to have air-conditioning, for example, pushes the rental contract against the landlord and in favor of the tenant but the landlord can easily push back by raising the rent and in so doing will create a situation where both the landlord and tenant are worse off.

More generally, when regulation pushes against incentives, incentives tend to push back creating unintended consequences.  Not all regulation pushes against incentives, some regulations try to change incentives but incentives are complex and constraints change so even incentive-driven regulations can have unintended consequences.

Does the law of unintended consequences mean that the government should never try to regulate complex systems?  No, of course not, but it does mean that regulators should be humble (no trying to remake man and society) and the hurdle for regulation should be high.

Bargaining theory

Bryan Caplan says:

When the bachelor gets married, he almost certainly starts doing more housework than he did when he was single.  How can you call that shirking?

Megan McArdle says:

I’m no neatnik, but this is . . . daft…Does Mr Caplan think that "person with the lowest standards wins"
should be a general rule for marriage? Can women unilaterally quit
their jobs because they’re content with a lower standard of living, or
spend the retirement fund on shoes because they don’t mind spending
their golden years in penury?

I believe there is no simple Coasian answer to this problem.  Even if bargaining were possible the final deal would depend on the initial allocation of the property right.  That’s a sign that an apparently "small thing" (after all, how much do you spend on a maid, relative to family wealth?) is treated as having large symbolic importance.  And what does economics tell us about symbolic goods?  Symbolic goods usually have marginal values higher than their marginal costs of production; Americans for instance love the idea of their flags but the cloth is pretty cheap, especially if it comes from China. 

Going back to marriage, the theory of symbolic goods means the man should take the woman’s most irrational requests (flowers?  the placement of the toilet seat?) and go to the greatest lengths to satisfy them.  Expand output where marginal cost is low, which in this case refers us back to the gestures not the real efforts.  That’s part of the Nash bargaining solution, namely to make concessions where it costs the conceding party the least.  If there is a case for the man not cleaning more, it’s that greater net gains may be had from satisfying other, less rational demands of the complaining party, in this case the wife.

In other words, it is OK not to clean more, provided you insist on the contrary on your blog.

Oops.  Time to go clean up.

Why are so many lawyers politicians?

Johan Richter, a loyal MR reader, writes to me:

As the primary elections are coming up is is interesting to note that so many of the contenders are lawyers, something that is also true of the members of Congress, where I believe half are lawyers. Why are so many US politicians lawyers? It seems odd considering that A) Legal training seems unnecessary for performing the main job of a politician, regardless of whether one takes that to be courting public opinion or governing the country. And there is hardly any deficit of lawyers in Washington to ask for advice if legal knowledge turns out to be needed. B) Being a lawyer isn’t very prestigious as far as I know. Being a military, doctor, police officer, businessman or perhaps even a academic would surely be regarded by many voters as more respectable professions than being a lawyer. C) Other countries don’t have nearly the same over-representation of lawyers in their parliaments as the US does.

I thought Google would yield a paper on this question but I can’t find it.  My guess is that lawyers are good at fundraising and good at developing personal contacts.  This helps explain why fewer politicians are lawyers in many other countries; money is more important in American politics.  A lawyer also has greater chance to exhibit the qualities that would signal success in politics, such as the ability to persuade and the ability to speak well on one’s feet.  Not to mention that many lawyers have ambition.

Natasha, who is a lawyer, adds that law generates an outflux of people to many other fields, not just politics.  There is also a path-dependence effect, by which a previous presence of politicians in law breeds the same for the future.  What else do you all know about this?

Addendum: I’ve posted a version of this query over at as well; I expect they will have something to say about the question.

Second addendum: Over at VC, Shawn says:

You will also find that Real Estate and Insurance agents are
disproportionately represented in politics, at least at the more local

These professions (along with practicing law) provide the career
flexibility for would be politicians to put their jobs on hold or scale
them down a few degrees while pursuing elected office or serving is
such an office.

This flexibility also is what attracts people who wish to be career
politicians, so that they have a job to fall back on between election
seasons that won’t trap them into long term obligations, keeping them
from the next election cycle or serving if elected.

These careers also give would be politicians a good place to get recognition and network within their communities.

Third addendum: Bob Tollison writes to me: "McCormick and I devote a chapter 5 to why lawyers
dominate legislatures in our book– Politicians, Legislation and  the
Economy, Martinus Nihoff, 1981. Lawyers are better at combining being in the
legisture with making outside income. Hence, lawyers dominate low legislative
pay states because seats have a higher present value. Women dominate high pay

The Lively and Logical Logic of Life

Boredom drives a lot of academic research.  After you’ve studied a subject for decades, it isn’t much fun to keep repeating the standard lessons, so you mischievously start looking for counter-examples and loopholes.  Unfortunately, when the mischievous academic talks to a broader audience, he often leaves the impression that the standard lessons are a waste of time.  Frankly, I think that a lot of recent popular economics books fall into this trap.

Tim Harford’s The Logic of Life is a welcome antidote.  Harford argues that the standard economic assumption of human rationality usually works.  In fact, it works in a lot of cases where you might think it doesn’t.

The best example in chapter 1 is condom use by Mexican prostitutes.  It’s easy to say "A prostitute would have to be a brain donor not to use a condom every time."  But Tim demurs.  By bargaining about condom use, instead of using every time, prostitutes raise their income by about 25%.  Still not worth it?  Think again:

In fact, the prostitutes know that while the risks are real, they are modest.  Only one in eight hundred Mexicans carries HIV, and even among prostitutes it afflicts just one in three hundred.  Even if a prostitute is unlucky enough that one of her unprotected jobs is with a man who is HIV positive, the risk that she will catch it is less than 2 percent if one of them is carrying some other sexual infection, and less than 1 percent otherwise…

As far as we can tell, the typical Morelian prostitute is acting as though she valued one extra year of healthy life at between fifteen thousand and fifty thousand dollars or up to five years’ income.

Tim may sound like a typical insensitive economist in this quote, but he’s firmly in the Alan Blinder "hard heads, soft hearts" tradition:

[A] rational world is not necessarily a wonderful one… Rational individuals can make choices that are bad news for others; risky sex is just a particularly clear example.  And when rational individuals face a miserable set of choices, as do the Morelian prostitutes, they cannot do better than pick the best of a bad lot.  We will not solve social problems if we pretend that they are caused only – or even mostly – by the mad, the stupid, and the morally degenerate.

As an academic, I’m tempted to immediately highlight a counter-example.  Morelian prostitutes value a year of healthy life at up to five times their annual income.  But what about Levitt and Dubner’s drug dealers who risk their necks for minimum wage?  Aren’t they irrational?

But for now, I’m going to resist the temptation to dwell on counter-examples.  You’ve got to learn to walk before you can learn to run.  And you’ve got to understand rational explanations for human behavior before you can understand irrational explanations.  The Logic of Life may well be the best introduction to the rational choice approach on the market.  Even better, it’s well-written enough to inspire even jaded academics to get back to basics.   Bravo, Tim.

Markets in Everything – Relief Pitcher Earnings

Randy Newsom, relief pitcher for the Cleveland Indians, is selling 4% of his future major league salary.  There are 2,500 shares in the IPO so each share gets you a claim to 0.0016% of his future salary including bonuses.  Shares sell for $20 each.

Hat tip to Mike Makowsky.   Mike, a rookie GMU PhD on the job market, is also entertaining offers for a share of his future salary.  Mike is feeling rather risk-averse so as an insider, I recommend you buy now.  Mike has a great career ahead of him and this opportunity won’t last long!

Suing your real estate agent

Ms. Ummel said in her deposition that Mr. Little had told them “many times that it was a very good buy.”

Here is the story, which should have pushed the point that the real estate agent usually works for the seller.  In another context, if an agent of the mortgage lender says: "Just put down an income of $150,000," even most of the so-called "stupid people" know they are engaging in some kind of fraud.  In reality it is complicity with fraud and a violation of federal law, and yes this is a federal law that should be a federal law.

A society that so blurs the ethic of individual responsibility is a society in trouble.  My notion of individual responsibility does not mean: "Sorry, it is just that you die for your mistake," so there is no need to knock down that straw man.  But a good notion of individual responsibility might start with: "We’re not going to label every "little guy" a victim, even when it supports our political narrative to do so."

New issue of Econ Journal Watch

Find it here, lots of goodies as always.  Here is a section called Sounds of Silence: "individuals who probably should have replied to the critique but didn’t."  Other topics include whether casinos cause crime, the Earned Income Tax Credit, suburbanization, usury, and Paul Krugman, all edited by my colleague Daniel Klein.

Elsewhere on the web, here is a long podcast with Austan Goolsbee.

Banana, by Dan Koeppel

You will never, ever find a seed in a supermarket banana.  That is because the fruit is grown, basically, by cloning…Every banana we eat is a genetic twin of every other.

It turns out, by the way, that the world’s supply of Cavendish bananas — the ones we eat — is endangered by disease (more here) and many experts believe the entire strain will vanish.  Most other banana strains are much harder to cultivate and transport on a large scale, so enjoy your bananas while you can.  The previous and supposedly tastier major strain of banana — Gros Michel — is already gone and had disappeared by the 1950s, again due to disease.  Today, European opposition to GMO is one factor discouraging progress in developing a substitute and more robust banana crop.

I liked this bit:

"Uganda doesn’t endure famine, and to a great extent that is because of bananas," said Joseph Mukibi…

And finally:

Most horrifying of all to Americans, the Indian banana is used as a substitute for tomatoes in ketchup.

I’ve grown tired of single topic foodstuff books, as they are now an overmined and overrated genre.  But Dan Koeppel’s Banana: The Fate of the Fruit that Changed the World is one of the best of its kind.  It is a seamless integration of politics, economics, history, biology, and foodie wisdom.  Here is one review of the book.  Here is Dan’s one-post banana blog.