Category: Political Science

Strategic CEO Activism in Polarized Markets

by  Tyler Cowen in

CEOs are increasingly making public statements on contentious social issues. In this paper, we examine what motivates CEOs to engage in social activism. We show that CEO social activism is a strategic choice and not necessarily an expression of the CEO’s own political views. Republican-donor CEOs are three-times more likely to make social statements with a liberal-slant. They are also more likely to make social statements when their firm’s operating environment is politically polarized, and when their employees are Democrat-leaning. Such statements are associated with a 3% increase in consumer visits to a firm’s stores in Democrat counties without significantly reducing them in Republican counties. CEO activism is also associated with a 0.12% gain in firm value, increased quarterly sales turnover, and a reduced likelihood of shareholder activism on social issues. Our results suggest that corporate actions that appear to be stakeholder-driven can be motivated by economic concerns.

That is on SSRN by Shubhashis Gangopadhyay and Swarnodeep HomRoy, here is the final published version for JFQA.  Via the excellent Kevin Lewis.

Differential fertility makes society more conservative on family values

by  Tyler Cowen in

“Family values” conservatives in the United States have more children and more siblings than their compatriots. These patterns reflect the tendency of the more religious and less educated to have larger families and more conservative views on the family. Among Protestants, denominational differences play a role, with fundamentalist groups exhibiting larger families, less education, and greater conservatism. The causal pathways are unclear, but the patterns reshape society: Traditional-family conservatism is more prevalent than it would have been if each person had the same population share as his or her parents. This demographic phenomenon raises opposition to same-sex marriage and abortion by 3 to 4 percentage points. It accounts for 7.9 million of the nation’s 54.8 million opponents to same-sex marriage.

That is a new paper by Tom S. Vogl and Jeremy Freese, from brandonrox.

Immigration Backlash

by  Alex Tabarrok in

In a new paper Ernesto Tiburcio (on the job market) and Kara Ross Camarena study the effect of illegal immigration from Mexico on economic, political and cultural change in the United States. Studying illegal immigration can be difficult because the US doesn’t have great ways of tracking illegal immigrants. Tiburcio and Camerena, however, make excellent use of a high-quality dataset of “consular IDs” from the Mexican government. Consular IDs are identification cards issued by the Mexican government to its citizens living in the United States, regardless of US immigration status. Consular IDs are used especially, however, by illegal immigrants because they can’t easily get US IDs whereas legal migrants have passports, visas, work authorizations and so forth. Tiburcio and Camarena are able to track nearly 8 million migrants over more than a decade.

Our main results point to a conservative response in voting and policy. Recent inflows of unauthorized migrants increase the vote share for the Republican Party in federal elections, reduce local public spending, and shift it away from education towards law-and-order. A mean inflow of migrants (0.4 percent of the county population) boosts the Republican party vote share in midterm House elections by 3.9 percentage points. Our results are larger but qualitatively similar to other scholars’ findings of political reactions to migration inflows in other settings (Dinas et al., 2019; Dustmann et al., 2019; Harmon, 2018; Mayda et al., 2022a). The impacts on public spending are consistent with the Republican agenda. A smaller government and a focus on law-and-order are two of the key tenets of conservatism in the US. A mean inflow of migrants reduces total direct spending (per capita) by 2% and education spending (per child), the largest budget item at the local level, by 3%. The same flow increases relative spending on police and on the administration of justice by 0.23 and 0.15 percentage points, respectively. These impacts on relative spending suggest that the decrease in total expenditure does not simply reflect a reduction in tax revenues but also a conservative change in spending priorities.

The main reason for this, however, appears not to be economic losses such as job losses or wages declines–these are mostly zero or small with some exceptions for highly specific industries such as construction. Rather it’s more about the salience of in and out groups:

We study individuals’ universalist values to capture preferences for redistribution and openness to the out-group. Universalist values imply that one is concerned equally with the welfare of all individuals, whether they are known or not. By contrast, people with more communal values assign a greater weight to the welfare of ingroup members relative to out-group members. We find that counties become less universalist in response to the arrival of new unauthorized migrants. A mean flow of unauthorized migrants shifts counties 0.06 standardized units toward less universalist, i.e., more communal (Panel B, Column 5, std coeff: -0.16). This result is the most direct indication that some of the shift to the political right occurs because migrants trigger anti-out-group bias and preferences for less redistribution. Although this evidence is based on a smaller subset of counties, the impact is large. The change toward more communal values is consistent with theories that hinge on out-group bias. Ethnic heterogeneity breaks down trust, makes coordination more difficult, and reduces people’s interest in universal redistribution (Alesina et al., 1999).

These results are consistent with the larger literature that finds “Across the developed world today, support for welfare, redistribution, and government provision of public goods is inversely correlated with the share of the population that is foreign-born and diverse.” (Nowrasteh and Forreseter 2020). Similarly, one explanation for the smaller US welfare state is that white-black salience reduces people’s interest in universal redistribution.

Contra Milton Friedman, it is possible to have open borders and a significant welfare state but it may be true that the demand for a welfare state declines with immigration, especially when the immigrants are saliently different.

World War II R&D and the Takeoff of the US Innovation System

by  Tyler Cowen in

That is the article subtitle, the title is “America, Jump-Started:,” and the authors of this new AER piece are Daniel P. Gross and Bhaven N. Sampat.  Here is the abstract:

During World War II, the US government’s Office of Scientific Research and Development (OSRD) supported one of the largest public investments in applied R&D in US history. Using data on all OSRD-funded invention, we show this shock had a formative impact on the US innovation system, catalyzing technology clusters across the country, with accompanying increases in high-tech entrepreneurship and employment. These effects persist until at least the 1970s and appear to be driven by agglomerative forces and endogenous growth. In addition to creating technology clusters, wartime R&D permanently changed the trajectory of overall US innovation in the direction of OSRD-funded technologies.

This is very important work, and among other things it may help explain the productivity slowdown starting in the early 1970s (that is my speculation, not from the authors).  Recommended, for all those who follow these topics.

Here are earlier, less gated copies.

Markets in everything those new service sector jobs

by  Tyler Cowen in

The video, posted by the 39-year-old Tampa resident under her stage name Roxie Rae, is one of dozens on Clips4Sale, an adult-video-sharing website where content creators cater to all types of sexual fetishes, including one that is rarely discussed outside of niche kink circles: political humiliation. There are people who get turned on by the idea of having their political views mocked, usually (but not always) by members of the opposing political group. Liberals desire being dominated by conservatives and called pejoratives that imply they are weak and unintelligent, while conservatives want to be mocked for supporting former president Donald Trump, among other perceived transgressions, according to those who participate in this subculture.

Here is the full Washington Post article by Hallie Lieberman.

My excellent Conversation with John Gray

by  Tyler Cowen in

I had been wanting to do this one for a while, and now it exists.  Here is the audio and transcript, here is the episode summary:

Tyler and John sat down to discuss his latest book, including who he thinks will carry on his work, what young people should learn if liberalism is dead, whether modern physics allows for true atheism, what in Eastern Orthodoxy attracts him, the benefits of pessimism, what philanthropic cause he’d invest a billion dollars in, under what circumstances he’d sacrifice his life, what he makes of UFOs, the current renaissance in film and books, whether Monty Python is still funny, how Herman Melville influenced him, who first spotted his talent, his most unusual work habit, what he’ll do next, and more.

Excerpt:

COWEN: Do you think that being pessimistic gives you pleasure? Or what’s the return in it from a purely pragmatic point of view?

GRAY: You are well prepared for events. You don’t expect —

COWEN: It’s a preemption, right? You become addicted to preempting bad news with pessimism.

GRAY: No, no. When something comes along which contradicts my expectations, I’m pleasantly surprised. I get pleasant surprises. Whereas, if you are an adamant optimist, you must be in torment every time you turn the news on because the same old follies, the same old crimes, the same old atrocities, the same old hatreds just repeat themselves over and over again. I’m not surprised by that at all. That’s like the weather. It’s like living in a science fiction environment in which it rains nearly all of the time, but from time to time it stops and there’s beautiful sunlight.

If you think that basically there is beautiful sunlight all the time, but you’re just living in a small patch of it, most of your life will be spent in frustration. If you think the other way around, as I do, your life will be peppered, speckled with moments in which what you expect doesn’t happen, but something better happens.

COWEN: Why can’t one just build things and be resiliently optimistic in a pragmatic, cautionary sense, and take comfort in the fact that you would rather have the problems of the world today than, say, the problems of the world in the year 1000? It’s not absolute optimism where you attach to the mood qua mood, but you simply want to do things and draw a positive energy from that, and it’s self-reinforcing. Why isn’t that a better view than what you’re calling pessimism?

And:

COWEN: Under what circumstances would you be willing to sacrifice your life? Or for what?

GRAY: Not for humanity, that’s for sure.

Recommended, interesting throughout.  John is one of the smartest and best read thinkers and writers.  He even has an answer ready for why he isn’t short the market.  And don’t forget John’s new book — I read all of them — New Leviathans: Thoughts After Liberalism.

*Everyday Freedom*, by Philip K. Howard

by  Tyler Cowen in

This is very much a book that needed to be written.  Here is one short excerpt:

Powerlessness has become a defining feature of modern society. Americans at all levels of responsibility feel powerless to do what they think is needed. The culture wars, sociologist James Davison Hunter explains, stem from institutional impotence: A “growing majority of Americans believe that their government cannot be trusted, that its leaders . . . are incompetent and self-interested, and that as citizens, they personally have little power to influence the . . .institutions or circumstances that shape their lives.”

Feeling fragile, and buffeted by forces beyond our control, many Americans retreat to online groups defined by identity and by distrust of the other side as “a threat to [our] existence.” It’s hard to identify what’s wrong amid the clamor and conflict in modern society. But a clue can be found in remembering what makes us proud. America is where people roll up our sleeves and get it done.

The ability to do things in our own ways activates the values for which America is well-known: self-reliance, pragmatism, and loyalty to the greater good—what Alexis de Tocqueville called “self-interest, rightly understood.” For most of American history, the power and imperative to own your actions and solutions—the concept of individual responsibility—was implicit in the idea of freedom.

Americans didn’t abandon our belief in individual responsibility. It was taken away from us by post 1960s legal framework that, with the best of intentions, made people squirm through the eye of a legal needle before taking responsibility. Individual responsibility to a broader group, for example, was dislodged by a new concept of individual rights focused on what’s best for one person or constituency. The can-do culture became the can’t do culture.

At every level of responsibility, Americans have lost the authority to do what they think is sensible. The teacher in the classroom, the principal in a school, the nurse in the hospital, the official in Washington, the parent on the field trip, the head of the local charity or church . . . all have their hands tied by real or feared legal constraints.

And yes he does propose concrete solutions, most of all at the level of the law.  The whole thing is only 84 pp., and this is one of the books that comes closest to diagnosing what is wrong with our country.  The subtitle is Designing the Framework for a Flourishing Society.

Jimmy Carter is underrated, Thomas Schelling edition

by  Tyler Cowen in

“In the US protocol you have to rehearse the entire process every four months….The French, they never rehearse. And their logic is that if you start rehearsing with the president, people are going to start to know how he thinks and they’re going to be able to influence him.”

But, “When do you think Biden rehearses?” Cerf asks. This is another game he plays with students. “The answer is zero times — he never does it. He always says, ‘I’m going to send someone else instead. Not a good time for me…’ What about Trump? How often do you think Trump did it? And the answer is zero. We said, ‘OK, so let’s not [be] partisan. How often Obama?’ ” He didn’t either, according to Cerf. Presidents, Republican and Democrat, are always far too busy. “The last person to have done it is Carter in the Seventies,”

…The keyholes for this are set 18ft apart on either side of the room, he says. “They have to turn the keys at the same time…The whole arrangement requires two people, so that one serviceman having a bad day cannot decide to blow up the world. “The one thing that they all do at some point is they spend time figuring out how they would do it alone if they needed to,” Cerf says. “They’re not supposed to… [But] they said, ‘Every person in this shift at some point figured out that if they connect the broom to the teapot and hold it like this, they can actually turn the two keys together.’ So they all said, at some point, that they play this mental game of, ‘OK, I can actually start a nuclear war.’ ”

Here is the full Times of London article, gated but very interesting throughout.  Via Jason Dunne.

The Geert Wilders victory, and more

by  Tyler Cowen in

Wilders won resoundingly in the Netherlands, and polled much stronger after October 7.  Yesterday there were anti-immigrant riots in Dublin, typically a relatively open city (most likely an Algerian migrant stabbed several people).  The “far right” party in Austria is very popular, AfD is doing well in Germany, and France could flip.  Italy already is there, noting that actual governance has not been so different under Meloni.   The Sweden Democrats are part of the ruling coalition.  That is a lot of the core EU group, plus Ireland and Sweden.  And maybe I have forgotten somebody.

Note to media: Since they keep winning elections, or at least placing well, you can’t call them “far right” any more!  How about “deep center”?

In the New World, Milei won in Argentina, Bukele is extremely popular in El Salvador, and Trump is ahead of Biden in most polls.  Even the Kiwis moved to the right, albeit in a mild-mannered way.  Chile rejected a far left constitution, and Australia voted down one version of indigenous rights, not wanting to put them in the constitution.  Petro is unpopular in Colombia and may not finish out his term.

A few observations:

1. If you can’t talk about/think about/write about these developments without perpetually moralizing, it is hard to be an intelligent commentator today.

2. If your main theory here is “racism,” your contribution to the discourse probably is negative.  That said, I strongly feel that the events of the last ten or so years should cause us to upgrade our estimates of how much racism is in the world, and in a highly unfortunate manner. That is still a bad dominant explanation for what is going on in the [new] “deep center.”

3. For all the talk of why Biden’s position in the polls is so weak, I don’t see enough talk of “much of the world is moving in a right-wing direction, and global sweeps in ideology are difficult to counter” as a critical explanation.  If true, that makes it much harder for Biden to mount a comeback.

4. For the most part, these movements are not “my kind of right-wing.”

5. These trends still carry a lot of momentum.  And given that immigration is not about to turn into a political winner, you should be all the more concerned about the pending fertility crisis.

6. I was right when I argued a few years ago that “Wokeism has peaked.”

The Indian Challenge to Blockchains: Digital Public Goods

by  Alex Tabarrok in

In my post, Blockchains and the Opportunity of the Commons, I explored the potential of blockchains to create new commons:

Blockchains and tokenization are a way to incentivize the creation of a commons. A commons is an unowned place, platform, or protocol that helps people to meet, communicate and transact. Commons underlying modern life include TCP/IP, SMTP, HTTP, GPS and the English language. We don’t see these commons clearly because they are free, ubiquitous and, like air, taken for granted. What we do see are platforms like Airbnb, Uber and the NYSE and places to meet and communicate like OkCupid, Twitter, Facebook and YouTube. What blockchain and tokenization offer is the possibility of creating commons to replace all of these services and much more.

For the most part, the potential has not been realized. But the core idea of substituting a protocol for a firm has been taken in a different direction in India. Instead of blockchains, India has been experimenting with digital public goods. A digital public good is open source software with open data and open standards–available for use or even modification and adaption by anyone. The blockchain community, for example, has long aspired to develop a blockchain-based Uber, connecting drivers and riders without a corporate intermediary. India has achieved this through digital public goods instead.

Namma Yatri is an open-source, open-data Uber-like protocol with 100% of the commission flowing directly from rider to driver. Namma Yatri is built on the Beckn Protocol, a product of the Beckn Foundation which is backed by Infosys co-founder Nandan Nilekani (Tyler and I had the opportunity to talk with many people behind the project including Nandan on a recent trip to India). Namma Yatri has booked over 15 million trips in just one year of operation, mostly in one city, Bangalore. I expect it will expand rapidly.

Namma Yatri is only one example of a digital public good in the India Stack, a collection that includes identity (Aadhaar), payments (UPI) and digital data sharing (e.g. digital lockers). Since its launch in 2008, for example, India’s Aadhaar system has created a digital identity for over 1.2 billion people allowing them to open some 650 million bank accounts. This has enhanced financial inclusion and facilitated direct government payments of pensions and rations, reducing corruption. Likewise, the UPI system built modern payment rails which are then leveraged by banks and firms such as Google Pay and WhatsApp. The resulting payments system does some 10 billion transactions a month and is one of the fastest and lowest cost in the world.

Challenges remain. The development of digital public goods relies on funding from non-profits, governments, and private consortiums, raising questions about long-term sustainability. These goods need regular maintenance and updates, and some require backend support. Namma Yatri began as a completely free app for drivers and users but if there is a problem who do you call? To support the back-end office, and to pay for updated inputs (such as maps) the service has started to use a subscription fee. Nothing wrong with that but it’s a reminder that firms are not so easily dispensed with. Privacy is another concern. While blockchains offer privacy at the technology layer, privacy for digital public goods depend on legal and normative frameworks. For instance, India’s Aadhaar system is legally restricted from police use, a smart balance that needs to be maintained in changing times.

Despite these challenges, there is no denying that India has built digital public goods at scale in a way that demonstrates an alternative pathway for digital infrastructure and a challenge to blockchains.

Freer Indian reservations prosper more

by  Tyler Cowen in

Several disciplines in social sciences have shown that institutions that promote cooperation facilitate mutually beneficial exchanges and generate prosperity. Drawing on these insights, this paper develops a Reservation Economic Freedom Index that classifies institutions on a sample of Indian reservations concerning whether these intuitions will enhance the prosperity of Indians residing on these reservations. The development of this index is guided by the research of political scientists, economists, other social science disciplines, and research in law. When correlating this index with Indian incomes, the evidence shows a statistically significant positive correlation between reservations with prosperity-enhancing institutions and their economic prosperity.

That is from a recent article by my colleague Thomas Stratmann, recently published in Public Choice.  Here is the SSRN version.  Here is the index itself.  Here is a related Op-Ed.

Classical liberals are increasingly religious

by  Tyler Cowen in

Not too long ago, I was telling Ezra Klein that I had noticed a relatively new development in classical liberalism.  If a meet an intellectual non-Leftist, increasingly they are Nietzschean, compared to days of yore.  But if they are classical liberal instead, typically they are religious as well.  That could be Catholic or Jewish or LDS or Eastern Orthodox, with some Protestant thrown into the mix, but Protestants coming in last.

The person being religious is now a predictor of that same person having non-crazy political views.  Classical liberalism thus, whether you like it or not, has become an essentially religious movement.

Many strands of libertarianism are being left behind, and again this is a positive rather than a normative claim.  It is simply how things are.

Aayan Hirsi Ali announces she is now a Christian.

Here is comment from Aella:

The neo trad movement gets ayaan 🙁 But seriously this seems to be a real trend – lots of otherwise smart, successful, secular people I know have been going religious, but it’s not in the same way people used to go religious. It’s much more *cultural* now, and less about belief

Seconded.  You may recall my earlier prophecy that the important thinkers of the future are going to be religious thinkers.  I believe that will prove true outside of classical liberalism as well.