Month: March 2018

How can families afford children?

by  Tyler Cowen in

Collin asks:

Answer me the riddle: The richer the society becomes the less families can afford children? (Note look at India being at replacement level fertility and it is the rich areas bringing the average down.)

I have three boys and wonder how they are ever going to be able to afford a family of more than 1 children in 2030.

“Afford” is a tricky word here.  If the goal is simply to avoid bankruptcy, at the expense of the life satisfaction of the main child rearer (usually the wife), that isn’t so difficult for most Americans and Europeans.  But of course people wish to maximize utility.  And so here are some trends operating against having large numbers of children:

1. Jobs for women are higher-paying and more satisfying than ever before, and that raises the opportunity cost of having large families.

2. Divorce is these days socially imaginable, and for many people desirable if feasible.  The larger the number of children, the harder it is to take advantage of the divorce option, and so that too encourages smaller families.

3. Living space has become especially costly in so many of the major Western cities and suburbs.

4. Given the connection between where you live and your public school system, the very best neighborhoods have become very costly positional goods, in part because of their school systems and the embedded social peers for your kids (even if they bus away to private schools.)

5. Child care is subject to some version of the cost disease, as is higher education.  Those services have risen in relative prices and some would say they also have decreased in reliability.

6. These days, there is much more you can do for your single kid (or two), including fancy SAT tutors and unending extracurricular activities.  You thus are less likely to arrive at the “I can’t do any more for this kid, let’s summon up another to keep me busy” point than formerly was the case.  In Beckerian language, you always have the option of a greater investment in quality, in lieu of boosting quantity.

7. Daughters are no longer less popular than sons and arguably they have become somewhat more popular (NYT).  So the notion that you must keep on having kids until a son arrives is weaker than it used to be.  The first child is already a “quality child,” no matter what the gender.

8. Most Westerners are on the whole less religious, and this too diminishes the motives for having a larger number of children, for whatever reasons.

9. The decline of the extended family, with babysitting grandparents, is hardly new news.  Still, I suspect both work and leisure opportunities for the elderly have improved, which lowers their desire to babysit.  Some prefer watching those same babies on Facebook.

That’s a lot of weight operating against multiple children — praise to those who manage nonetheless!

A radical solution to the occupational licensing mess

by  Tyler Cowen in

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

My radical proposal is therefore for the federal government to pre-empt as much occupational licensing as is possible. That’s right, these functions would be taken away from the state and local governments.

Unfortunately, I don’t expect the federal bureaucracy to usher in the reign of Milton Friedman’s Chicago School economics. But the federal regulatory process would likely pay less heed to local special interests, and it would produce a more homogenized and less idiosyncratic body of regulatory law more geared toward the most important cases, such as medicine and child care. The federal government is less likely than many state and local governments to obsess over licensing rules for fortune tellers, florists and athletic trainers.

A federal approach to these regulations would also bring standardization and uniformity across state lines, making it easier to move from one part of the country to another, and helping restore the great American tradition of mobility. As it stands now, imagine yours is a military family and you are transferred every few years or so, and your spouse works in a profession that would require relicensing. What justification could there be for such a hardship and inconvenience?

I consider how legally difficult this would be, and toward the end I argue:

If my idea sounds too ambitious, a smaller first step against anti-competitive licensing would have state governments pre-empt requirements at the city level, as Tennessee did last year. That doesn’t raise major constitutional issues, and at least it limits the possibility that American cities become a crazy patchwork of mobility-limiting interventions.

Keep in mind that the alternative to my suggestion is not the status quo but rather a regime where occupational licensing becomes progressively worse at multiple levels of government.

Do read the whole thing.

The cinematic culture that is Mexico

by  Tyler Cowen in

If Mr. del Toro wins the best director award at the Oscars, it will be the fourth time a filmmaker from Mexico has taken the prize in five years, all with unconventional films. Alejandro G. Iñárritu won in 2015 for “Birdman,” the bizarrely hilarious tale of an aging superhero actor trying to get serious on Broadway, and he did it again in 2016 with “The Revenant,” a radically different western focused on a quest for revenge in subzero temperatures. Alfonso Cuarón triumphed in 2014 with “Gravity,” a sci-fi story that many said was impossible to make, before it made over $723 million at the worldwide box office.

Referred to as “The Three Amigos,” the title of a book about their transnational cinema, these directors are not the only Mexican filmmakers who have won recent accolades in Hollywood. There is also the cinematographer Emmanuel Lubezki, who has three Oscars; Rodrigo Prieto, who shot “The Wolf of Wall Street,” “Argo” and “Brokeback Mountain”; and another Oscar winner, the production designer Eugenio Caballero.

The Amigos’ success shows the strength of an artistic circle; they are longtime friends who have encouraged one another to take risks.

Here is the NYT piece by Ioan Grillo, referred to me by Kevin Lewis.  Also from the NYT here is Veronique de Rugy on Trump and protectionism.

From the comments, on South Africa

by  Tyler Cowen in

I think the chances of a populist land grab in South Africa (never very high) have actually gone down over the past few months. Look at the ANC’s actions during its 24 years in power, not its rhetoric. Many bad policies for sure, but never anything close to radically populist, of the sort that would seriously scare the financial markets. Destruction of the (well entrenched and sophisticated) property rights system would certainly do that. So it’s unlikely to happen.

The only time there seemed to be a risk of edging in that direction was when Zuma and his faction started seriously losing support (2016-17). They responded by ratcheting up the populist and racist rhetoric (“white monopoly capital” etc), but ultimately it didn’t work. They lost, and power in the ANC has shifted back to the more market friendly centrists, typified by Ramaphosa.

That’s why I think the risks have gone down (since Zuma was ousted), despite the recent parliamentary vote to “expropriate without compensation”. The sound bite plays well to a certain audience, as other commenters have noted, but I agree it’s mostly just signaling. When you look at the details it’s not as scary as it sounds.

Firstly, they didn’t vote to do it, they voted to set up a committee to investigate doing it, subject to various caveats and constraints, e.g. must increase agricultural production and improve food security; there must be public and expert consultation; appropriate mechanisms, etc. It seems extremely unlikely that the ANC’s intention is to summarily expropriate all land without compensation, nor does it say that in the parliamentary motion or in any ANC policy statement (that is indeed the EFF’s position, but they have less than 10% electoral support). Far more likely is we’ll end up with some sort of watered down constitutional amendment that allows expropriation without compensation in certain defined and limited circumstances, but overall system of property rights remains intact for vast majority of land and other assets.

By the way, I suspect the most outsiders seriously underestimate the strength of South Africa’s constitution and supporting institutions. They have stood remarkably firm over the past few years in the face of concerted attempts by Zuma and his cronies to undermine them. Compared, for example, to a country like Turkey, whose constitution, judiciary, media and civil society have been crushed in the space of a few years by a similarly venal and power-deluded single politician.

That is from Greg.

The foreign culture that is Congolese

by  Tyler Cowen in

Two Burundi officials have been imprisoned after the African country’s president was allegedly “roughed up” in a football match they organised.

President Pierre Nkurunziza is a ‘born-again’ evangelical Christian who spends much of his time travelling Burundi with his own team, Haleluya FC. He travels with his own choir, “Komeza gusenga”, which means “pray non-stop” in the local Kirundi language.

On 3 February, his team faced a side from the northern town of Kiremba.

Normally, the opposition is well aware they are playing against the country’s president, and it has been said they go easy in the games, even perhaps allowing Nkurunziza to score.

But as the Kiremba team contained Congolese refugees who did not know they were playing against Burundi’s president, they “attacked each time he had the ball and made him fall several times”, a witness told AFP.

Kiremba’s administrator Cyriaque Nkezabahizi and his assistant, Michel Mutama, were imprisoned on Thursday, the news agency reports.

AFP cited a judicial source as saying they had been arrested on charges of “conspiracy against the president”.

Here is more, via Ray Lopez.

The hidden taxes that challenge women

by  Tyler Cowen in

That is the new and excellent Sendhil Mullainathan NYT column, here is one excerpt from many good points:

Corporate success has similar consequences: Women who become chief executives divorce at higher rates than others.

Another study found that the same is true in Hollywood: Winning the best actress Oscar portends a divorce, while winning the best actor award does not.

Of course, the divorce itself may be a preferred outcome, one that is better than enduring a poisonous relationship. Even then, I’d argue that the tax was exacted in the emotional toll and the time lost in a failed marriage.

Men react particularly negatively to their spouses’ relative success. Marianne Bertrand and Emir Kamenica, economists at the University of Chicago, and Jessica Pan, an economist at the National University of Singapore, examined the wages of spouses. Because women generally earn less in the work force, they generally earn less than their husbands, too.

What is more surprising in the data is that it is far more common for the husband to earn just a tiny bit more than the wife than the other way around. The fact that women on average earn less does not account for such a sharp asymmetry.

The piece is interesting throughout.

The contributions of Rene Girard

by  Tyler Cowen in

Carl L asks: Address the scapegoating theory of René Girard in general, and its possible application to economics. Peter Thiel has repeatedly cited Girard as an important influence and has even said his theory was partly the reason he invested in Facebook.

From my idiosyncratic point of view, here are a few of Girard’s major contributions, noting that I am putting them into “stupid simple” language, rather than trying to communicate his nuances:

1. His understanding of Christianity as fundamentally and radically different from earlier religions, as it exalts the individual victim rather than the conqueror.  Here is one point from a summarizer: “Christianity is the revelation (the unveiling) of what the myths want to veil; it is the deconstruction of the mono-myth, not a reiteration of it—which is exactly why so many within academe want to domesticate and de-fang it.”

2. Seeing violence as a chronic problem of human societies, rather than as the result of a bug in rational choice or the collapse into a bad game-theoretic solution.

3. Understanding the import of “mimetic desire,” namely the desire to copy others, and also why this is not always an entirely peaceful process, due to scarcity.  The tech world, by the way, at least pretends to have found a solution to this in its extreme scalability of product; we’ll see how that pans out.

4. A theory of mediated and triangulated desire, not yet absorbed by behavioral economics, and partly summarized here: “Whereas external mediation does not lead to rivalries, internal mediation does lead to rivalries. But, metaphysical desire leads a person not just to rivalry with her mediator; actually, it leads to total obsession with and resentment of the mediator. For, the mediator becomes the main obstacle in the satisfaction of the person’s metaphysical desire. Inasmuch as the person desires to be his mediator, such desire will never be satisfied. For nobody can be someone else. Eventually, the person developing a metaphysical desire comes to appreciate that the main obstacle to be the mediator is the mediator himself.”

5. First and foremost approaching societies from an anthropological point of view, prior to the economic method.

6. Understanding various social situations in terms of the need of finding a scapegoat to sacrifice, if not violently with some kind of resolution and catharsis.  These days one of those victims would be the big tech companies, as it is remarkable how many weakly-argued critiques of them make the paper every day.  You’ll understand these writings through the eyes of Girard, not economic theory.  Girard is also one of the best lenses for understanding the writings of bad and manipulative pundits.

7. Girard is of great use for understanding literature.  Try any Shakespearean play with “doubles,” Merchant of Venice, Thomas Hardy’s Mayor of Casterbridge (an all-time favorite), or Coetzee’s Disgrace, all Girardian to the core and very much illuminated by familiarity with his key ideas.  These are perhaps his most underrated contributions.  Shakespeare, by the way, is Girard’s most important precursor, also throw in the New Testament, Hobbes, Tocqueville, and maybe Montaigne.

What should you read by him?: Violence and the Sacred, Things Hidden Since the Foundation of the World, Theatre of Envy.

Where is Girard weakest: His theory of language, his overemphasis on the destructive nature of mimesis, excess claims to have discovered universal mechanisms, just making lots of stuff up, and not knowing enough economics or empirical anthropology.

How important is he?: If you had to pick twenty thinkers from the latter half of the 20th century, he is definitely one of them.  By the way, Foucault and Baudrillard might be the other French writers on that list.

And you thought crypto-assets were strange…

by  Tyler Cowen in

A candidate in the race for a South Texas state House seat has reportedly received $87,500 in campaign donations — more than half of which is made up of deer semen.

The Dallas News reported Thursday that Ana Lisa Garza, a district court judge running a primary challenge against eight-term Democrat Ryan Guillen, has received $51,000 in in-kind donations to her campaign, listed as individual donations of frozen deer semen straws.

The containers are reportedly a common way for deer breeders in the state to donate to political campaigns. Garza’s campaign has valued the straws at $1,000 each.

Fred Gonzalez, a Texas deer breeder who serves as treasurer of the Texas Deer Association, told the Dallas News that the group’s political action committee has received more than $975,000 in deer semen donations since 2006, and has given more than $885,000 in the same period of time.

“Semen is a very common way for us to donate,” Gonzalez told the paper. “One collection on a buck could lead to 60 straws sometimes. If you have a desirable animal, it’s a way to bring value without breaking the bank.”

Straws from bucks named Bandit, Sweet Dreams and Gladiator Sunset were among the donations listed.

Here is the story, via Patrick and also Peter.

The Push

by  Alex Tabarrok in

The Push on Netflix is a deeply disturbing replication of the Milgram Experiment. The question it asks is whether someone can quickly be convinced to commit a murder? Spoiler alert: yes. British mentalist Derren Brown and a cast of confederates create an evil version of the Truman Show. By taking an individual from one seemingly minor moral deviation–labeling meat canapes as vegetarian–to another, to another, Brown puts people in a situation where by the end of one hour they are so emotionally disoriented and stressed that they will try to commit a murder to relieve their tension.

If you had asked me yesterday whether I thought it would be ok to run the Milgram experiment again, I would have said yes, as science. Today, I am not sure. What Brown does to these people for our entertainment (?) is disgusting. I feel complicit in having watched. Yes, I know, I am writing about it. I’m not sure what to make of that either.

As far as I can tell, the experiment is real. I’d be happier if it were fake but the results are consistent with previous Milgram replications. But if it is real did we then watch attempted murder? I am reminded of Leo Katz’s, Bad Acts and Guilty Minds. If a man fires a gun aiming to kill but the gun is defective is it attempted murder? Surely, yes. If thinking it a deadly poison a man adulterates a drink with sugar is it attempted murder? What if a sincere believer in voodoo tries to kill by sticking pins in a doll?

Aside from the legal issues, what Brown does to the participants is awful. How will they live the rest of their lives? Jordan Peterson says that you cannot be a good person until you know how much evil you contain within you. Well the people Brown experiments on know the evil that they contain but will they become better people? Or will they break? Brown doesn’t seem to care.

In some sense, the subjects have consented. Months earlier they applied to be on a show but they were told that they had been rejected. Perhaps you think the participants figured it out. You will have to judge for yourself but it all happens so quickly that I don’t think that is plausible. Moreover, if you figured it out wouldn’t you want to be the hero rather than the prison guard directing the Jews to the ovens?

Does The Push have any socially redeeming value? I hope so. Phillip Zimbardo of the famous Stanford Prison Experiment was so upset by his research that he started the Heroic Imagination Project, (I wrote about it here). The Heroic Imagination Project attempts to turn the issue around by asking what helps people to resist authority? And how can we train people under stress to draw on their heroic reserves? Netflix has shown us that the Heroic Imagination Project is sorely needed. Maybe next time Netflix can devote some of their considerable resources to helping us resist the push.

Is the case for free trade still valid in a world of welfare states?

by  Tyler Cowen in

That is a request from dearieme, and the answer is yes, the case for free trade is still valid.

First, some welfare states, such as the United States and Denmark, are quite compatible with full employment, or could be compatible with full employment if say monetary policy were better.  The welfare state may still, through say tax rate effects, keep some family second earners out of the work force.  That is likely inefficient, but it doesn’t boost the case for protectionism.

Second, the actual second best problem comes when a welfare state (especially a poorly designed one, and there are some of those) interacts with job churn.  Given that some people are out of work, the welfare state may limit their incentive for job search, or the associated taxes and regulations may limit job creation on the employer side.  So some workers will lose their jobs due to foreign competition, and find reemployment difficult or not sufficiently desirable relative to the dole.

Overall, though, a lot of those jobs were going to disappear anyway, because of either automation or simply shifts in consumer demand.  In that sense free trade is simply the “messenger,” rather than a unique villain.  Are jobs more precarious in larger trade zones?  I can’t recall seeing a protectionist make that case, instead they simply rely on the superficial observation of the first-order, visible effect, namely that some jobs have gone away for trade-related reasons.  The possibility of importing intermediate goods makes many jobs more stable, as do exports.  There is no a priori reason to expect free trade to under-perform in this regard.

Free trade still gives an economy more wealth for dealing with transition problems, and it gives workers a better chance of finding a new job somewhere else.  To be sure, not all classes or regions of workers will benefit from this dynamism at any point in time.  But a welfare state will help protect those workers who do not.

For all of those reasons, the case for free trade is robust to having welfare states.

Alternatively, you might try a “race to the bottom” argument for thinking that free trade and welfare states may interact in counterproductive ways.  Let’s say that free trade causes governments to compete to lure or keep business activity.  That tends to encourage a social welfare state funded through consumption taxes (not corporate taxes), accompanied by a minimum of regulation.  That sounds like an OK enough race to me.  I’m not even sure there is a race to the bottom on the regulatory side, but at the very least there are incentives for regulation not to exceed a manageable level, again all to the better.

Markets in everything

by  Tyler Cowen in

“They do what they want,” she says. “After the earthquake you would see [foreign workers] asking to have sex in exchange for supplies. I never did it, but I saw some people who did.”

A UN report, published in May 2015, found that members of its peacekeeping mission in Haiti traded sex for aid with more than 225 women between 2008 and 2014.

That is from Joe Parkin Daniels at The Guardian.