Category: Philosophy

What Danny Glover and I have in common

In a kind of a weird back-door way, I also support Hugo Chavez. Or put another way, and going a little Hegelian, as Tyler likes to say, I think Chavez is an historical necessity, and a richly deserved one at that.

Venezuela has relatively high levels of income inequality (a gini coefficient in 2000 of around .44 compared to .36 for the US according to the UN) from a relatively low base and was run by a corrupt elite class who swallowed up oil wealth while the economic standing of the country plummeted. In 1957, Venezuela’s GDP per capita was 51% of the US, in 2003 it stood at 18.5% of the US.  Existing institutions had no credibility with a very large
portion of the population and simply could not continue to exist as they had.

Don’t get me wrong here, I’m NOT endorsing Hugo. Do I think that Chavez and his policies are going to serve the long term economic interests of Venezuela? NO. Do I think Chavez is a charming guy? NO. Would I be sad if Chavez lost power? NO. If George Bush and Chavez were in a burning building and I could only save one would it be Chavez? NO.

I am just saying that Venezuela was run into the ground by its ruling class and Chavez is the (I hope only temporary) result of their short sighted, poor governance.

A similar analysis applies to Evo Morales. Bolivia has even higher income inequality (year 2000 gini of .60) from an even lower base, and has fallen even more precipitously in economic standing relative to the US, From 25% of US per-capita GDP in 1951 to 8.7% in 2003. That is just a disaster. The ruling elite of Bolivia had Evo Morales coming and I hope he gives it to them but good.

I am not sure whether this type of path is inevitable in Latin America. Lula was a populist firebrand but has governed quite moderately.  Brazil though, did not suffer nearly the same fall in its relative living standards. Their peak of per-capita income relative to the US occurred in 1980 at 31% and it "only" declined to 21% by 2003. Income inequality though is very high (2003 gini of .58).  Will Brazil avoid a Chavez, or is that yet to come for them?

Note that the GDP figures used here are from the Penn World Tables 6.2 and are adusted for deviations from purchasing power parity (the variable I use is "CGDP relative to the United States" and it is available from 1950 – 2003).

How to debate with one’s wife

Even if I can debate with the devil himself, I cannot debate with my wife.  She has, namely, only one syllogism, or rather none at all…The consequence of this is that all my skill in debating becomes a luxury item for which there is no demand at all in my domestic life.  If I, the experienced dialectician, fairly well exemplify this course of justice, which according to the poet’s dictum is so very long, my wife is like the royal Danish chancery, kurz and bΓΌndig [short and to the point], except that she is very different from that august body in being very lovable.

That is again Kierkegaard, from Prefaces.

Will bad things get better?

Jane Galt, who is (was?) down, later argued:

So probabilistically, the chances that something good will happen to me right now are, I assume, about the same as they always were.

Holding quality of type constant (an important qualification, as some people are simply prone to bad events, and receiving another bad event signals as such), I more readily expect reversion to the mean.  Good economies grow rapidly after wartime, often because they find it easier to reassemble preexisting pieces than to press forward from full employment.  Much of the human capital is still there and rebuilding can occur quickly once in motion.  The personal analogy is that once you start recovering from (some) catastrophes, the process is speedy.  You already know where you need to go, and you might sample more randomness to court additional good events.

There is also a "naive" evolutionary argument for bad things getting better.

When things go badly, your body borrows resources from the future.  It pumps adrenalin, eats stores of fat, in some views it mobilizes the (only temporarily available) placebo effect, etc., all of which restore better states of affairs and make up lost ground.  More psychologically, a setback may cause a person to try harder.  If a computer crashes and wipes out a page I wrote, I can write it again at an especially high speed and with the energy of anger and adrenalin.

Of course those short-run compensations can herald a problem for the longer-run future, a’la Long and Plosser.  You are digging into your capital stock.  At some margin pumping more adrenalin brings a long-run health cost.  The computer crash means that I write lots today but tomorrow I feel a bit burnt out, and so on.

So if there is anything to worry about, it is the day after tomorrow.  The immediate future appears quite bright.

Can one add by subtracting?

When a man applies for a permit to go into business as an innkeeper and the application is turned down, this is not comic.  But if it is turned down because there are so few innkeepers, it is comic, because the reason for the application is used as the reason against it.  For example, there is a story about a baker who said to a poor woman, "No, mother, she does not get anything; there was another one recently who didn’t get anything, either.  We can’t give to everybody."  The comic aspect lies in his appearing to arrive at the sum total "everybody" by subtracting.

That is from Kierkegaard’s Concluding Unscientific Postscripts.  I will ponder this question as I fly to Denmark…

Contingency

On my first trip to adopt in China, I happened to sit at a table
next to another adopting couple from the United States. They were
older, with no prior children, and had been assigned a three- or
four-year-old girl. If memory serves me correctly, the father was a CEO
of a large firm in New Jersey. They seemed like very nice people. The
child that was assigned to them was very headstrong. She did not want
to go with her adoptive parents and proceeded to throw tantrums,
screaming, throwing things and spitting on and punching them for
several days. They decided they couldn’t go through with it, and the
girl was returned to the orphanage. My understanding is that she would
not be eligible for adoption (at least, not internationally) in the
future.

The next day, the couple told me, another three-year-old was brought
over from an orphanage. The first thing she did when she met them was
say, in English, “I love you, Mommy. I love you, Daddy.” The person
who had transported the child from the orphanage had taught her the
words. She had no idea what she was saying, but it didn’t
matter. Needless to say, this little girl went home with them to New
Jersey.

That is from Steve Levitt, in one of his best posts.

Is the minimum wage coercive?

Over at CatoUnbound, Dan Klein writes:

In 2006 there appeared a “raise the minimum wage” statement signed by 659 economists. I wanted to know why they favored the minimum wage, so I wrote up a questionnaire and sent it to them. But I also used the occasion to get their views on a very important matter: Did they view the minimum wage law as coercive?

Ninety-five graciously completed the survey. Very few of them simply accepted that the minimum wage law is coercive. More than half said the law is not coercive in any significant sense.[1]

But the minimum wage law (and concomitant enforcement) threatens the initiation of physical aggression against employers who pay less than the minimum wage. It threatens physical aggression against people for engaging in certain kinds of voluntary exchange. To me, that is coercion. Just imagine if your neighbor decided that he would impose a minimum wage law on us. Wouldn’t we all agree that he was coercing us? If it is coercion when he does it, why isn’t it coercion when the government does it?

Coercion is not always bad, all things considered, but surely Dan is correct.  Ed Glaeser, Richard Epstein, and others are due to respond.

Trade and the Moral Community

Much of the recent trade debate between Rodrik, Mankiw, Tyler and others (see Tyler’s excellent post for links) is primarily not about positive economics but about the relevant moral community. Rodrik, for example, hasn’t argued that trade does not increase aggregate wealth he has argued that trade is not guaranteed to increase national wealth – something quite different.  I consider three moral communities and the case for trade.

Peter wishes to trade with Jose.  The individualist says the relevant moral community is Peter and Jose and presumptively no one else.  Trade, the right of association, is a human right and on issues of rights the moral community is the individual.  When Jose offers Peter a better deal than Joe it’s wrong – a moral outrage – for Joe to prevent Jose at gun point from trading with Peter.

The more common view expressed implicitly by Dani Rodrik, but by many others as well, is the nationalist view, the moral community is Peter and Joe.  Joe gets a vote on Peter’s trades.  Peter should be allowed to trade only if both Peter and Joe benefit, otherwise too bad.  Jose counts for less.

A third view, that of the liberal internationalist, says that Peter, Jose and Joe count equally and are together the moral community.

Now how does the positive economics apply to these three cases?  Peter and Jose presumptively are better off from trade otherwise they wouldn’t trade so the individualist economist (the economist who takes Peter and Jose as the relevant moral community) will support free trade.  The liberal internationalist will also support free trade because there is a strong argument from positive economics that trade increases total wealth (comparative advantage, specialization, competition etc.).

In between, we have the nationalist economist for whom it depends.  The case for trade for the nationalist economist is pretty good – after all the individuals involved benefit and the world benefits – so the case is reasonably strong that Peter and Joe taken together will also benefit especially if we consider many trade pacts on some of which Joe benefits directly.  Nevertheless, Rodrik is correct that when you exclude Jose it is possible to come up with examples where Joe’s losses exceed Peter’s gains.

I would argue, however, that economists are too quick to take the nation as the relevant moral community.  It is quite possible, for example, for Peter to benefit from trade but for Peter’s city to be harmed, for Peter’s state to benefit but for his region to be harmed, for his country to benefit but for his continent to be harmed.  Why should we cut the cake in one way, excluding some from the moral community, but not in another?  Indeed, geography is not the only way we can define the moral community.  Why not ask whether English speakers benefit from free trade or Christians or left handed people?  Each of these is just as valid as asking whether the collection of people called the nation benefit from free trade.

I understand individual rights and I understand counting everyone equally but I see less value in counting some in and some out based on arbitrary characteristics like which side of the border the actors fall on.

The Liberty not to be Subordinate

I once asked a wise professor of mine what the best thing about being a professor was.  He replied, "The fact that I can go into the office of the department chair, tell him he’s an #*$!%! and there’s not a damn thing he can do about it."  Shocked, I said, "but you’re a level headed, nice guy, you would never want to do that."  He replied "yeah, I never would, but the thought that I could if wanted to is worth a huge amount."

The lesson?  Liberty is not always an instrumental value subordinate to positive capabilities.   

Tom Palmer on positive and negative liberty

My view, simply put, is that "Libertarian Liberty" (to be specific with the terminology) is for the most
part an instrumental value subordinate to the enhancement of positive
capabilities.  When the two conflict, I opt for the capabilities, and
in that sense I admire the philosophical premises of many contemporary
American liberals.  I also believe in a governmental safety net, unlike many of the people at Cato, and partly for this reason.

On the other hand, I favor zero taxation of capital income, deregulation of the medical sector, cuts in government spending, no special privileges for labor unions, and I reject the philosophy of egalitarianism.  So I’m not quite ready to be writing for The American Prospect and competing down the wages of Matt and Ezra.

Jean Baudrillard has passed away at 77

Here is a bio.  Here are obituaries.  It is easy enough to attach his apparently outrageous claims and paint him as a postmodern nihilist.  Looking past the surface, virtually all of his books have at least five startling and insightful sentences.  Here is one:

“Seduction is always more singular and sublime than sex and it commands the higher price”

Or try this:

“At male strip shows, it is still the women that we
watch, the audience of women and their eager faces.  They are more
obscene than if they were dancing naked themselves.”

Here are many others.  I always read him as a moralist.  None of the summaries do him justice.  Baudrillard was a major thinker of our age, and I am sad I can no longer look forward to new books from his hand.

Wise words from John Quiggin

Suppose you wanted to establish whether children’s height increased with age, but you couldn’t measure height directly.

One way to respond to this problem
would be to interview groups of children in different classes at
school, and asked them the question Don suggests “On a scale of 1 to
10, how tall are you?”. My guess is that the data would look pretty
much like reported data on the relationship between happiness and
income.

That is, within the groups, you’d find that kids who
were old relative to their classmates tended to be report higher
numbers than those who were young relative to their classmates (for the
obvious reason that, on average, the older ones would in fact be taller
than their classmates).

But, for all groups, I suspect you’d
find that the median response was something like 7. Even though average
age is higher for higher classes, average reported height would not
change (or not change much).

So you’d reach the conclusion
that height was a subjective construct depending on relative, rather
than absolute, age. If you wanted, you could establish some sort of
metaphorical link between being old relative to your classmates and
being “looked up to”.

But in reality, height does increase
with (absolute) age and the problem is with the scaling of the
question. A question of this kind can only give relative answers.

Here is the link.

Addendum: Here is Will Wilkinson on same.