Category: Political Science
Which changes in economic policy are actually going to happen?
That is the topic of my latest Bloomberg column, here is one excerpt:
A second pattern from U.S. history is that the federal government generally likes to hand out benefits perceived as “free.” This dates at least as far back as the establishment of Social Security in the Great Depression, when the initial benefit recipients weren’t paying taxes into the system.
I therefore expect federal government action on subsidized child care, preschool programs and paid family leave, all financed by increases in budget deficits rather than higher taxes. Such policies would hand out goodies to millions of families, and appeal to women in particular.
Again, ask the basic questions. Is there “pro-family” rhetoric emanating from both left and right? Yes, whether it is the socialist proposals from Matt Bruenig or paid family leave bills introduced by congressional Republicans. Can you imagine members from both parties claiming these issues as their own? Yes. Is there the possibility of free goodies being handed out? Again, yes, as the national debt held by the public is now over $16 trillion.
I consider also tech regulation, trade issues, immigration, Medicare for All, and the Green New Deal, with only the first of those likely to see big changes.
Indian and Pakistani stock markets
Right now the Indian market is up a small amount for the week, of course that may change.
I know you all love to yelp that markets don’t predict well (not what markets do!…that word “predict” is loaded) and that stock markets did not predict WWII, etc. The lack of an Indian market reaction here is fully consistent with the fact that prediction is very hard. Investors might simply be unsure which priors to update, and thus prices haven’t changed much. That is consistent with the work of Philip Tetlock, also indicating that prediction is very hard. So this kind of market result does not have to conflict with the best knowledge we have from political science and the other social sciences.
The Pakistan stock exchange, by the way, is down a few percentage points but not seeing massive carnage.
Venezuela is in large part the fault of socialism
Here is my Bloomberg column on that topic, excerpt:
…rates of change are important. The Venezuelan figure of about 40 percent [govt. spending/gdp] is up from about 28 percent in 2000, a very rapid increase. By boosting government spending so quickly, the Venezuelan government was sending a message that the key to future riches is courting government favor, not starting new businesses.
Or consider exports, which for most developing economies play an especially critical role. They bring in foreign exchange, provide contacts to foreign markets, and force parts of the economy to learn how to compete with the very best foreign companies. Yet over 90 percent of Venezuela’s exports are oil, and those resources are owned and controlled by the government. For this all-important growth driver, Venezuela comes pretty close to full socialism — to its detriment.
…nationalizations under Chavez were numerous — encompassing much of the oil sector plus parts of the agriculture, transport, power, steel, telecommunications and finance industries. Even though many of those nationalizations were small in scale, the threat of further encroachments on private property rights discouraged investment and sent the wrong signal about where the nation was headed.
There is much more at the link, including a discussion of the all-important dimension of ideas. And here is the essential Kevin Grier on Venezuela.
What will Singapore do with its NIRC?
‘NIRC’ – it’s a uniquely Singaporean economic abbreviation that stands for net investment returns contribution…
The total size of Singapore’s total reserves is a state secret, but estimates by most analysts put it at well above S$500 billion (US$370 billion)…
The Temasek Holdings chief executive wrote about how returns from the firm she leads, as well as GIC Private Limited, and the foreign reserves held by the central bank were the “single largest contributor” to the Singapore budget.
“Without tapping on the dividends or returns from GIC, [the Monetary Authority of Singapore], and Temasek, the government would have had to raise taxes long ago for social spending,” Ho wrote.
Without the NIRC, the Pioneer Generation Package – a S$9 billion programme unveiled in 2014 to help cover the health care costs of citizens born before 1949 – would probably have been funded by “higher taxes or cuts to other essential programmes”, according to Ho.
Here is the full story, via a loyal MR reader. If you wish to understand Singapore’s relatively low rates of taxation, you also need to understand NIRC. Here is my earlier post Singapore as financial corporation.
The political culture that is China
News from the Middle Kingdom seems to be coming out systematically worse than what you might have been expecting, at least these days. Here is an update on censorship and content control:
The platform has been designed with a built-in “Xi Study Points” system (学习积分系统) that allows users to accumulate points on the basis of habitual use of the platform, from reading and viewing of content to the posting of comments and other forms of engagement. It has been widely promoted by local governments and ministries and departments across China, and there have also been reports that some work units have ordered employees to attain specified point levels, with disciplinary measures to be imposed for those who fail to comply…
The app defines several periods of activity as “lively intervals,” or huoyue shiduan (活跃时段), during which users engaging with the platform can earn double points — 0.2 for each article or video, 2 points for a full 30 minutes of use, and so on. The intervals are Monday through Friday from 8:30 PM to 10 PM, and on Saturdays and Sundays from 9:30 AM to 10:30 AM, and 3:30 PM to 4:30 PM. The system, then, incentivises Party members, once home from the office and done with family dinner, to spend golden hours of otherwise discretionary personal time engaging with “Xi Jinping Thought.”
Interesting and frightening throughout, via Comrade Balding.
My Conversation with Jordan Peterson
Here is the transcript and audio, here is the summary:
Jordan Peterson joins Tyler to discuss collecting Soviet propaganda, why he’s so drawn to Jung, what the Exodus story can teach us about current events, his marriage and fame, what the Intellectual Dark Web gets wrong, immigration in America and Canada, his tendency towards depression, Tinder’s revolutionary nature, the lessons from The Lord of the Rings and Harry Potter, fixing universities, the skills needed to become a good educator, and much more.
Here is one bit:
COWEN: Your peers in the Intellectual Dark Web — the best of them — what is it they’re wrong about?
PETERSON: Oh, they’re wrong about all sorts of things. But at least they’re wrong in all sorts of interesting ways. I think Sam Harris, for example — I don’t think that he understands. I don’t think that he’s given sufficient credence to the role that religious thinking plays in human cognition.
I think that’s a huge mistake for someone who’s an evolutionary biologist because human religious thinking is a human universal. It’s built into our biology. It’s there for a reason. Although Sam is an evolutionary biologist, at least in principle, with regards to his thinking, he’s an Enlightenment rationalist when it comes to discussing the biology of religion, and that’s not acceptable.
It’s the wrong time frame. You don’t criticize religious thinking over a time frame of 200 years. You think about religious thinking over a time frame of 50,000 years, but probably over a far greater time span than that.
COWEN: So if that’s what Sam Harris doesn’t get —
PETERSON: Yeah.
COWEN: If we turn to senior management of large American companies, as a class of people — and I know it’s hard to generalize — but what do you see them as just not getting?
PETERSON: I would caution them not to underestimate the danger of their human resources departments.
Much more than just the usual, including a long segment at the end on Jordan’s plans for higher education, here is one bit from that:
Universities give people a chance to contend with the great thought of the past — that would be the educational element. To find mentors, to become disciplined, to work towards a single goal. And almost none of that has to do with content provision. Because you might think, how do you duplicate a university online? Well, you take lectures and you put them online, and you deliver multiple-choice questions. It’s like, yeah, but that’s one-fiftieth of what a university is doing.
So we’ve just scrapped that idea, and what we’re trying to do instead is to figure out, how can you teach people to write in a manner that’s scalable? That’s a big problem because teaching people to write is very, very difficult, and it’s very labor intensive and expensive. So that’s one problem we’d really like to crack. How can you teach people to speak? And can you do that in a scalable manner as well?
Definitely recommended, even if you feel you’ve already heard or read a lot of Jordan Peterson.
Women in Economics: Elinor Ostrom
Our first episode in the Women in Economics series is an introduction to Elinor Ostrom, the first woman to have won the Nobel Prize in Economics. Elinor Ostrom and Vincent Ostrom have long been a part of the intellectual foundations of “Masonomics”. Both the Ostroms were past presidents of the Public Choice Society, for example, as were Jim Buchanan, Gordon Tullock and Vernon Smith. The Mason Economics department was thrilled when Ostrom won the Nobel as there has been and continues to be fruitful interaction between public choice, experimental economics and institutional analysis.
At the Women in Economics website you can also find Ostrom’s Nobel Prize address, more on the tragedy of the commons, and other resources.
Especially valuable for in-depth research are Vlad Tarko’s biography of Elinor Ostrom and Paul Dragos Aligica and Peter Boettke’s introduction to The Bloomington School.
What does a Twitter-driven politics look like?
That is the topic of my latest Bloomberg column, here is the final bit:
But what does this new, more intense celebrity culture mean for actual outcomes? The more power and influence that individual communicators wield over public opinion, the harder it will be for a sitting president to get things done. (The best option, see above, will be to make your case and engage your adversaries on social media.) The harder it will be for an aspirant party to put forward a coherent, predictable and actionable political program.
Finally, the issues that are easier to express on social media will become the more important ones. Technocratic dreams will fade, and fiery rhetoric and identity politics will rule the day. And if you think this is the political world we’re already living in, rest assured: It’s just barely gotten started.
Strict ID Laws Don’t Stop Voters: Evidence from a U.S. Nationwide Panel
U.S. states increasingly require identification to vote – an ostensive attempt to deter fraud that prompts complaints of selective disenfranchisement. Using a difference-in-differences design on a 1.3-billion-observations panel, we find the laws have no negative effect on registration or turnout, overall or for any group defined by race, gender, age, or party affiliation. These results hold through a large number of specifications and cannot be attributed to mobilization against the laws, measured by campaign contributions and self-reported political engagement. ID requirements have no effect on fraud either – actual or perceived. Overall, our results suggest that efforts to reform voter ID laws may not have much impact on elections.
By Enrico Cantoni and Vincent Pons. Rooftops, shout, mood affiliation, etc.
Paul Romer’s advice for the World Bank
First, outsource the bank’s research upon which it depends for identifying problems and proposing solutions. Diplomacy and science cannot both thrive under the same roof. One consequence of the bank’s commitment to diplomacy is its necessary embrace of the helpful ambiguity that makes it possible for multilateral institutions to allow “Chinese Taipei” compete in the Olympic Games without “Taiwan, China” having a seat in the UN. Dispassionate examination makes clear that what the bank does to maintain conformity on the diplomatic front is not compatible with scientific research.
All that matter in science are the facts. When complex political sensitivities are allowed to influence research by stifling open disagreement, it ceases to be scientific. For good reasons, the bank’s shareholders have chosen to protect its diplomatic function, at the expense of its research.
Outsourcing research would be a better, more efficient way for the bank to establish the facts needed to do its job. This would also be an investment in the universities that make the discoveries that drive human progress.
Here is the full piece. What do you all think?
Sentences to ponder — *Who Wants to Run?*
Incumbent polarization is also consistently below that of new candidate polarization.
That is from the forthcoming interesting book by Andrew B. Hall. He also argues that while voters can elect moderates, they cannot force more extreme candidates to govern as moderates. Furthermore, devaluing office leads to more extreme candidates being interested in running for office.
The book’s argument is that who runs for office helps determine the level of ideological polarization in the legislature.
Mood affiliation in everything should America give up the nuclear first strike option?
No, that is the topic of my latest Bloomberg column. Yet there is now a Democratic, Elizabeth Warren-sponsored bill to do just that.
The wealth tax and privacy — from the comments
Despite the unnecessary duplication (FATCA etc), I’m actually in favor of requiring banks to disclose how much income US taxpayers earn on ther accounts in the US and abroad. Unfortunately, if you are going to have an income tax system, you can’t simply rely on everyone voluntarily reporting. But, this also raises serious privacy concerns that need to be balanced. The wealth tax on all or most all assets would significantly alter the current balance between disclosure and privacy. As noted in the article, *everything* would need to be disclosed to the IRS *every year* much like an annual estate tax return. Expect substantial additional reporting requirements on all assets. Think that won’t apply to you? How else are they going to know you don’t have $50 million hidden somewhere? How are *taxpayers* going to know they don’t meet that (or some other) threshold ? Trust me, lawyers and accountants, (legitimately) worrying about their own potential liability, will insist that far more people undergo these audits internally just to make sure they are not above the limit.
These privacy issues also have potentially serious political implications. I suppose Bill and Hillary and Barrack and Michelle (add your own list) would be subject to these annual wealth tax returns. Annual audit by the IRS on everything? Do they really want the Trump administration (or some other) having access to all that? This sounds like a potential special prosecutor on steroids and one that is not always going to be politically neutral. I see the potential here for a lot of political abuse and not just from one side or the other.
That is from Vivian Darkbloom on MR and in the LOC, with other good points in the comment too.
What should I ask Raghuram Rajan?
I will be doing a Conversation with him, no associated public event, and note he has a new book coming out The Third Pillar: How Markets and the State Leave Community Behind. So what should I ask him?
The politics of a wealth tax
That is the topic of my latest Bloomberg column, here is the end sequence:
Besides which — a fact that is getting too little notice — the U.S. already has what is in essence a wealth tax: Tax rates on capital gains are not indexed for inflation. With this nominal-based tax system in effect, it is harder to accumulate wealth over time, and the nominal-based tax erodes the real value of the asset base.
Whether or not you think this capital-gains policy is a good idea (I do not), it is striking how few Americans understand that it serves as a wealth tax. It is not marketed or proclaimed as such. And I don’t expect Republicans or Democrats to counter Warren by saying, “Don’t worry, we already have a wealth tax.” Isn’t this a sign that voters simply are not yearning for a wealth tax?
The other major form of wealth taxation in the U.S. is of course the property tax, which is paid by large numbers of Americans and used to finance local services, rather than being primarily directed against the wealthy. It is seen as a way of making local government accountable to those who vote and pay for it, not as an engine of wealth redistribution. If anything, by maintaining the quality of school districts in wealthy communities, its net distributive effects are anti-egalitarian. That system seems to be a permanent part of the American political landscape.
Finally, think about politics in the broadest possible terms. What Americans really want is for their lives, their jobs, and society in general to get better — an admittedly ill-defined but nonetheless instantly familiar concept. Americans also want their leaders to deliver such outcomes with the considerable resources already at their disposal. Is that so unreasonable?
Anyone promoting a wealth tax is in essence saying that there aren’t many ways of improving society within current resource constraints. That is a brand of pessimism which Americans voters have not often rewarded.
File under: the Twitter reactions are self-refuting. But if you would like the opposing point of view, here is Eric Levitz.