Month: September 2019

The new Catholic illiberals

A few of you have asked me what I think of this movement, surveyed here (possibly gated for you), or try this coverage.  If you would like the whole thing in one tweet, maybe try this one from Sohrab Ahmari:

What I’d say to liberal friends who are men and women of goodwill: “Persuade your comrades to ease up and back off while there’s yet time. You don’t want to pit your ideology against forces much older and more potent than liberalism, which is thin civilizational gruel, indeed.”

Other than disagreeing with this group, here is my general impression.  They have not managed to produce a deep, compelling illiberal book comparable say to the works by James Fitzjames Stephens, Carl Schmitt, Burke (not actually an illiberal in my view, but the comparison remains relevant), Jean Bodin, or others from that tradition.  I’m not sure they could beat the arguments of Thomas Mann’s liberal caricature Settembrini in The Magic Mountain.

They have not attached themselves to any great social movement or revolution, either as leaders or followers, unless you count the Church itself, but that is hardly new news.

They do not have a signature policy proposal (at the end of the article behind the first link, the big policy proposal unveiled at the end is “restrictions on share buybacks” — Cliff Asness, telephone!  Are they kidding?)

Do they have a T.S. Eliot or an Emil Nolde or for that matter a J.S. Bach, who probably was not a Millian liberal?

So I believe they are part of the same “thin civilizational gruel” as the rest of us.  They are too embedded in liberalism and its presuppositions to get very far with their own programme.  That said, I am fine with them coexisting within the froth of a liberal order, insisting correctly that the heritage of “the Church” is essential to western civilization, in the meantime allowing their intuitions to be muddled by a confusion of rates of changes and levels when it comes to liberalism in the West today.

A few comments to close, returning to the tweet presented above:

1. Is all gruel thin?

2. Would thick gruel be better or worse?

3. Is Karachi haleem a form of thick gruel?

4. Isn’t the key word here “civilizational”?  It is liberalism that produced, nourished, and sustained the world’s first truly admirable societies.  There is nothing in the arguments of these new illiberals which seriously contradicts that.

5. Many people have longed for gruel, which I take to be underrated.

Do they object to dividends as well?

From the comments — the power of professors

The PhD is a credential that graduate students need, and which the supervising professor uses to hold power over them. Doing away with the PhD as a valuable credential takes power away from professors. That may not bother Tyler, but most professors covet and zealously protect whatever institutional and personal power they can grasp.

That is from Tom Meadowcraft, commenting on my proposal to limit economics graduate study to three years.

Premature Imitation and India’s Flailing State

Walking around one of the tonier districts of Mumbai I came across a sign, “Avoid Using Plastic Carry Bags.” The sign would not have been out of place in Portland or Berkeley but less than a block away cows and people were sleeping on the street. The incongruity motivated my new paper, Premature Imitation and India’s Flailing State (with Shruti Rajagopalan). We argue that one reason that India passes laws which are incongruous with its state of development is that Indian elites often take their cues about what is normal, good and desirable from Western elites. There’s nothing wrong with imitation, of course. We hope that good policies will be imitated but imitation in India is often premature. Premature because India does not have the state capacity to enforce the edicts of a developed country.

India has essentially all the inspections, regulations, and laws a developed country such as the United States has, but at approximately $235 of federal spending per capita the Indian government simply cannot accomplish all the tasks it has assumed. Consider: U.S. federal government spending per capita was five times higher in 1902 than Indian federal government spending per capita in 2006 (Andrews, Pritchett, and Woolcock 2017, 58). Yet the Indian government circa 2006 was attempting to do much more than the U.S. government did in 1902.

Premature imitation doesn’t simply mean that proportionately less is done it results in tensions that lead to corruption and a flailing state, a state that cannot implement its own rules because it is undercut by the incentives of its own agents. Premature imitation amplifies a development trap.

What then is to be done? We argue that the ideal policy regime for a government with limited state capacity is presumptive laissez-faire.

The Indian state does not have enough capacity to implement all the rules and regulations that elites, trying to imitate the policies of developed economies, desire. The result is premature load bearing and a further breakdown in state capacity….At the broadest level, this suggests that states with limited capacity should rely more on markets even when markets are imperfect—presumptive laissez-faire. The market test isn’t perfect, but it is a test. Markets are the most salient alternative to state action, so when the cost of state action increases, markets should be used more often.Imagine, for example, that U.S. government spending had to be cut by a factor of ten.Would it make sense to cut all programs by 90 percent? Unlikely. Some programs and policies are of great value, but others should be undertaken only when state capacity and GDP per capita are higher. As Edward Glaeser quips,“A country that cannot provide clean water for its citizens should not be in the business of regulating film dialogue.” A U.S. government funded at one-tenth the current level would optimally do many fewer things. So why doesn’t the Indian government do many fewer things?

Presumptive laissez-faire is not an argument that laissez-faire is optimal but an argument that state capacity is a limited resource that must be allocated wisely. The idea runs against the “folk wisdom” of development economics. The folk wisdom says that developing countries today can leap over the laissez-faire period  that most developed countries went through and instead move directly to the middle way.

In the alternative view put forward here, relative laissez-faire is a step to development, perhaps even a necessary step, even if the ultimate desired end point of development is a regulated, mixed economy. Presumptive laissez-faire is the optimal form of government for states with limited capacity and also the optimal learning environment for states to grow capacity. Under laissez-faire, wealth, education, trade, and trust can grow, which in turn will allow for greater regulation.

Read the whole thing.

Dining out in Karachi

The general standard is very high, though trying to chase after “the best place” does not seem worth the effort — it is more about choosing the best dish to order.  As in India, the hotel restaurants are excellent, and you can sample everything you might want without leaving a single restaurant, if you find the dust and heat too daunting (I do not, but you might, please do believe me on that one).  The crowning glories in Karachi are the biryanis and the lassi.  A randomly chosen lassi here seems to match the very best Indian lassis in quality.  The karahi dishes come alive like nowhere else.  Qorma sauces too.  Vegetables are hard to come by, especially greens — the restaurant version of Karachi cuisine is quite meat-heavy, and the overall selection of dishes is not so different from what you find in the Pakistani restaurants in Springfield, Virginia.  That said, the greens and herbs that accompany the meat dishes are fresh and vibrant.

One secondary consequence of the meat emphasis is that Karachi Western fast food is much more like the Western version than you might find in India.  Hamburgers carry over very well to the Pakistani context, as does slopping together meat and bread in various ways, a’ la Subway.  There is Movenpick chocolate ice cream in various shopping malls and hotels.  Reasonable Chinese food can be found, can you say “One Belt, One Road”?

Golub Jamun, typically an atrocity in the United States, is marvelous in Pakistan.

How strong is the evidence that the EITC boosts labor supply?

New work from Henrik Kleven:

This paper reconsiders the impact of the Earned Income Tax Credit (EITC) on labor supply at the extensive margin. I investigate every EITC reform at the state and federal level since the inception of the policy in 1975. Based on event studies comparing single women with and without children, or comparing single mothers with different numbers of children, I show that the only EITC reform associated with clear employment increases is the expansion enacted in 1993. The employment increases in the mid-late nineties are very large, but they are influenced by the confounding effects of welfare reform and a booming macroeconomy. Based on different approaches that exploit variation in these confounders across household type, space and time, I show that the employment effects align closely with exposure to welfare reform and the business cycle. Single mothers who were unaffected by welfare reform (but eligible for the EITC) did not respond. Overall and contrary to consensus, the case for sizable extensive margin effects of the EITC is fragile. I highlight the presence of informational frictions, widely documented in the literature, as a natural explanation for the absence of extensive margin responses.

Via A. Dube.  The effectiveness of EITC used to be a consensus view, so if this result holds up, it would require some substantial revisions in how we think about both welfare and job incentives.

What should I ask Henry Farrell?

I will be doing a Conversation with him, no associated public event.  As you read blogs, you might know Henry’s longstanding work over at CrookedTimber, and also his role in Monkey Cage.  Henry is also professor of political science at George Washington University, has with Abraham L. Newman recently published a path-breaking book on the increasingly important concept of weaponized interdependence, is an expert on comparative labor relations, and is an all-around polymath, including on fiction, science fiction, and the politics of Ireland, his home country.  Here is his home page.

So what should I ask Henry?

We had Nash and Schelling — who did the Soviets have?

The bi-polar confrontation between the Soviet Union and the USA involved many leading game theorists from both sides of the Iron Curtain: Oskar Morgenstern, John von Neumann, Michael Intriligator, John Nash, Thomas Schelling and Steven Brams from the United States and Nikolay Vorob’ev, Leon A. Petrosyan, Elena B. Yanovskaya and Olga N. Bondareva from the Soviet Union. The formalization of game theory (GT) took place prior to the Cold War but the geopolitical confrontation hastened and shaped its evolution. In our article we outline four similarities and differences between Western GT and Soviet GT: 1) the Iron Curtain resulted in a lagged evolution of GT in the Soviet Union; 2) Soviet GT focused more on operations research and issues of centralized planning; 3) the contemporary Western view on Soviet GT was biased and Soviet contributions, including works on dynamic stability, non-emptiness of the core and many refinements, suggest that Soviet GT was able to catch up to the Western level relatively fast; 4) international conferences, including Vilnius, 1971, fostered interaction between Soviet game theorists and their Western colleagues. In general, we consider the Cold War to be a positive environment for GT in the West and in the Soviet Union.

That is from a new paper by Harald Hagemann, Vadim Kufenko, and Danila Raskov, via Ilya Novak and Beatrice Cherrier.  And via Kevin Vallier, here is a new paper on how Schelling’s game-theoretic notion of stability may have come from his very early work on macroeconomics.

Why do rates of entrepreneurship vary?

Why do societies vary in their rates of entrepreneurship and organizational founding? Drawing on the largest available longitudinal sample comprising 192 countries over 2001-2018, I examine the evidence in relation to several explanations, including variation in the density of established organizations, national investment in research and development (R&D), technology transfer to new companies, the quality of science, technology, engineering and math (STEM) education, venture capital (VC) availability, and governmental support and policies for entrepreneurship. Contrary to prevailing theories, there is limited empirical support for these explanations. Rather, the evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding. This study further examines the relationship between norms and societal culture and finds that more gender-egalitarian societies and societies that value and reward performance and endorse status privileges had on average higher rates of organizational founding, net of differences in national income and economic growth. The paper discusses the implications of these findings in relation to research on the social determinants of entrepreneurship and organizational founding.

That is from a new paper by Valentina Assenova.  Let me just repeat one sentence in there, as it is one of the most important sentences in all of economics:

Rather, the evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding.

Recommended.  Here is Assenova’s other new paper, showing entrepreneurship is correlated with higher innovation.

Via the excellent Kevin Lewis.

How much does advertising matter anyway?

Our results reveal substantially smaller advertising elasticities compared to the results documented in the extant literature, as well as a sizable percentage of statistically insignificant or negative estimates. If we only select products with statistically significant and positive estimates, the mean and median of the advertising effect distribution increase by a factor of about five.

That is from a new paper by Shapiro, Hitch, and Tuchman, via Paul Novosad.

The ho-hum of environmental politics

For better or worse, it is not the source of so much political romance or glamour:

The public influences government policy primarily through elections. Elections affect policy largely by determining which party controls the government. We show that a majority of the public supports policies to protect the environment. But the environment is rarely the most important issue for voters, and thus the environment usually does not have a large impact in elections. Moreover, there are increasingly large divisions between Democrats and Republicans, which incentivizes politicians from both parties to embrace extreme positions. Democratic and Republican elected officials are increasingly polarized on environmental issues, with Democrats staking out much more liberal positions than Republicans in Congress. At the state level, Democratic control of legislatures and governorships leads to more stringent environmental policies. Democratic control of state government seems to have smaller effects, however, on environmental outcomes, such as air pollution emissions.

That is the abstract of a new working paper by Parrish Bergquist and Christopher Warshaw.

Canadian markets in everything but they need a British person too

One brave outdoorsman will finally take a special shot of whiskey at a bar in Canada’s Yukon Territory containing his amputated, now-dehydrated big toe, which he donated to the establishment for their signature “Sourtoe Cocktail” after losing it to frostbite in February 2018.

Nick Griffiths of Greater Manchester, England, lost three toes to frostbite while competing in the intense Yukon Arctic Race two winters ago.

That is not even the strangest part of the story.  Via the excellent Samir Varma.