Fairfax City Public Library

by  Tyler Cowen in

For many moons I have been looking forward to the opening of a new library building in Fairfax.  I’ve been going to the old location for eighteen years, so surely progress is a good thing?  I noted:

1. The apex of the ceiling is now four or five times higher.
2. The space for computers is now four or five times greater.
3. The space to sit and read is now four or five times greater.
4. It now takes seven or eight minutes to park and get into the new fortress-like building, as opposed to one minute for the old building.
5. The space for parking is about ten times greater, much of it underground in a complex garage.
6. The space for books does not appear to be greater at all.
7. The shelves for the "New Books" section are slightly more squat, which means that about a quarter of the new books cannot be shelved with the spine and title facing outwards.

John DiNardo against Freakonomics

by  Tyler Cowen in

Here is John DiNardo’s review of Freakonomics, and here, and here are all three reviews he has written; one version was just published in the Journal of Economic Literature.  These reviews struck me as grumpy and unfair, ultimately citing few contrary facts and boiling down to the complaint that the authors have not disproven all competing theories, or that the authors do not have a complete account of what a good explanation would look like.  Three separate reviews of one book?  And a popular book at that?  What is going on?  DiNardo is not some guy in his pajamas, rather he is a tenured professor at the University of Michigan with presumably a high opportunity cost.  I am reminded of Einstein’s rejoinder.  Upon being presented with a book of essays called something like "The critics against Einstein" (that is a paraphrase) he replied with something like "If they were right, one would have been enough."  The point is not that Freakonomics is infallible (on most particular issues I genuinely do not know exactly how robust their results are and to know would take a good bit of study), but rather that factual criticism on a single point is usually the best way to make critical progress.  Now I would like to read a philosophy of science critique of Stephen Hawking’s A Brief History of Time.

What I’ve been reading

by  Tyler Cowen in

1. Forgotten Continent: The Battle for Latin America’s Soul, by Michael Reid.  A good treatment of the region’s recent history; it is best for its balanced assessment of what market-oriented reforms have managed or not.

2. Where Have All the Soldiers Gone?: The Transformation of Modern Europe, by James J. Sheehan.  Blah, blah, blah, blah, Europe has fewer soldiers than it used to, blah.  Blah.  Sheehan is a first-rate historian, but there’s not much to this book.

3. Architecture of Authority, by Richard Ross.  This book is nothing more than photos of jail cells, parole hearing rooms, Mary Boone Gallery, and the like.  Thought-provoking.

4. Due Considerations: Essays and Criticism, by John Updike.  Scattered essays on just about everything.  Completely apart from his fiction, Updike is simply one of the smartest and most impressive people out there.  It is amazing how many topics he knows so much about and how well he writes about them.

5. Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You With the Bill), by David Cay Johnston.  This is quite a good compendium of different ways that government screws us over, written from a mixed populist/libertarian point of view.  Recommended.  I expected not so much but the substance here held my attention.  I’d now like to know the total welfare cost of all these bad policies.

John McCain on the economy

by  Tyler Cowen in

Matt Yglesias writes:

…these would be my sober-minded, non-psychic points about John McCain and the economy:

All of this leads me to conclude that John McCain would not govern very well on economic policy issues…

On policy, I am heartened if he realizes he does not understand economics.  Are the other Republican candidates equally self-aware? 

I don’t put much weight on what the Republican candidates say about economics one way or the other.  In the current situation a Republican should favor whichever candidate would be most popular in office.  That candidate would have the best chance to check a Democratic Congress or perhaps put forward some alternative agenda.  Furthermore national interest-minded Presidents tend to favor better economic policies than does Congress, especially if that President is of your party persuasion.  A Democrat should favor, on economic issues at least, whichever Republican is most vain and most likely to seek fame in office.  That means lots of legislation passed and working with a Democratic Congress on issues such as health care. 

Two points: a) I don’t have strong views on which particular candidates fit these descriptions, and b) foreign policy is in any case more important for evaluating a candidate overall. 

Here Matt discusses McCain’s economic advisors.  Here is Dave Leonhardt on McCain and the economy.  I assume, by the way, that McCain’s invocation of Kemp and Gramm is an attempt to build a right-wing coalition, not an actual statement of his preferences.

Prediction markets as bribery?

by  Tyler Cowen in

Harald, a loyal MR reader, writes to me:

What would happen if some famous rich person walked into a presidential prediction market and said: "Hello, I’m selling shorts for candidate A, to the value of a hundred million dollars if he should win. I’m not doing this because I don’t believe candidate A will win, indeed, I want her to win. I hope everyone who can help candidate A win, by campaigning, talking to friends, or even just voting, will buy a short from me (I’m practically giving them away!) and go out and do it with a healthy economic self-interest in their hearts!"

Regulators aside, could such a scheme work?  It is best done as a contingent claims market, rather than in the InTrade format.  You buy insurance for a penny, and you get a payout of a thousand dollars if candidate X wins.  Claim holders may then support and talk up candidate X.  Of course people who won’t change their votes for a thousand dollars also will try to buy up the contingent claims.  So the sponsor might restrict purchases to people who live in swing states or who can prove independent voting affiliation or an absence of previous campaign donations [TC: I’ve edited this section a bit for clarity]. 

How about giving away assets that pay off if some important social problem is solved?  How much would it cost to mobilize a strong enough army of voters to oppose farm subsidies?   

Book forum

by  Tyler Cowen in

Our next installment on Tim Harford’s The Logic of Life will pop up Sunday night or Monday morning.  Guest blogger Fabio Rojas will be (re)joining us to discuss chapter two, which covers among other things the game of poker.  Save up your book comments for then!

Liberal Fascism

by  Tyler Cowen in

Here is Henry Farrell on the book.  Here is Matt Yglesias.  Here is Fred Siegel.  Here is Arnold Kling.  Here is another review.  Here is Megan McArdle on the BloggingHeads version.  Here is the Amazon link.  I am closest to the CrookedTimber commentator who wrote:

Jonah’s book, at its heart, is geared toward popularizing the arguments of smart intellectuals/academics, from John Patrick Diggins to A.J. Gregor to Hayek to Erik Von Kuehnelt-Leddihn.

Or try this excellent book, or for that matter John T. Flynn’s As We Go Marching.  I divide the arguments of Liberal Fascism into three categories:

1. The oft neglected but obviously true: For instance Mussolini really was a precursor of the New Deal and he was initially regarded with fondness by many on the American left.  This sort of claim is the core of the book and it does stand up after you take all the criticisms into account.  I am pleased to see it upend traditional "feel good" narratives of politics.

That said, a "who cares?" response might be in order from a social democrat.  Good people can have bad ideas, so can’t bad people — namely the fascists — have had some good ideas?  After all, George Lucas borrowed from Leni Riefenstahl.

2. The false claims: Contrary to what Goldberg argues, it simply isn’t true that Hitler and Nazism were essentially left-wing phenomena.  Not all right-wing ideas are Burkean, and the mere fact that the Nazis were "revolutionary" does not make them left-wing.  Furthermore the Nazis busted labor unions and used right-wing emotive tricks for their racism and authoritarianism.  When all those old Nazis popped up in South America, where did they all find themselves on the political spectrum?  Overall fascism has much stronger roots in the Right than Goldberg is willing to emphasize.

I also would have put more weight on the aestheticization of politics than did Goldberg.  That would help us see why supporters of the War on Drugs, while they favor very violent and possibly unjust means, should not be regarded as fascists.

3. The true but possibly misleading claims.  Goldberg writes for instance that Hillary Clinton is not a fascist.  OK, but simply to write that she isn’t a fascist is reframing the terms of the debate, and not in a way I am fully comfortable with.  I’m sure it bothers many Clinton supporters more than it bothers me.

Goldberg insists he only wants to stop the slander of the Right and its long-standing identification with fascism.  I am fully behind this goal of tolerance, and I might add I recall fellow Harvard econ grad students calling Martin Feldstein (and perhaps me!) a fascist on a regular basis.  That simply shouldn’t happen.  The problem is that Goldberg’s book will be interpreted by its buyers and readers as a call to do the same to the left.  Take a look at the cover and the title, both of which Goldberg distanced himself from on Comedy Central (I can no longer find the YouTube link).  But they’re on the book nonetheless.

Is Goldberg "to blame" for how his book will be interpreted, especially if he requests an interpretation to the contrary?  That’s a moot point.  But it gets to the core of why I don’t like the book more than I do. 

The bottom line: As Arnold Kling recommends, all parties involved should read Dan Klein’s "The People’s Romance," and start the debate there.

Addendum: Some of the critical web reviews admit they have not read the book, but they rely heavily on Goldberg’s (apparently controversial) web writings.  I’ve never read Goldberg before, so I am coming at this book "fresh."

Michael Shermer’s Mind of the Market

by  Tyler Cowen in

This book is the latest attempt to justify freedom and the market economy by reference to the knowledge of science and biology.  Here is my review, in Washington Post Book World.  Excerpt:

I’m sympathetic to Shermer’s conclusions, but I fear his standard of evaluation is too blunt an instrument. If the options are capitalism and the Khmer Rouge, no doubt capitalism wins hands down. But to what extent should we restrain capitalism to fund a social safety net? Should our government place heavy taxes on beer and potato chips to fund the National Science Foundation at higher levels? Most broadly, to what extent is it morally permissible to interfere with freedom, or can we even use freedom as a concept in a world where we do social science by hooking people up to brain scanners?

Shermer is famous for founding the Skeptics Society and editing the magazine Skeptic, which debunks claims of the supernatural. His monthly column for Scientific American is a regular plea that reason should govern human affairs. But his book raises very real questions about just how far skepticism should extend. Should we also be skeptical about using moral judgments of right and wrong to address the tough questions of politics? For instance, can we make normative judgments about who deserves to pay how much of the tax burden to finance the U.S. government, or as to whether somebody’s job should be protected from foreign trade?
Shermer either needs to dismiss moral philosophy as an illusion and a mere byproduct of human evolution, and thus display skepticism, or he needs to grant it credence and take his own moral stance. Descriptive science doesn’t tell us whether it is fair to allow kidneys to be bought and sold, even if it helps explain why some people find the practice repugnant. Judgments of right and wrong cannot be avoided, and thus we tread away from the realm of familiar natural science.
There are really two books within "The Mind of the Market." The science book is finished and polished, yet it does not present fundamentally new results. The book on capitalism discusses important questions, yet it is unfinished and unpolished. Shermer does promise us an entire new book to fill in the missing pieces here. He already has earned the right to our attention; the next question is whether he will give his philosophic and romantic side the greater rein that it deserves and requires. This East African plains ape is optimistic.

Why is Tide so popular?

by  Tyler Cowen in

Eli Lehrer informs me that Tide has a high market share even though it is more expensive than most other brands.  This source says the market share of Tide is about forty-four percent, with the sum total of all Proctor and Gamble products (Gain and Cheer are two others) accounting for about two-thirds of the market.  Is Tide so good?  Does Tide really "know fabric best"?  I couldn’t name one supposed feature of the product and I’ve been buying detergent my whole life.  I couldn’t even tell you what brand I buy.  Maybe it is Tide.  This is the kind of question that Wikipedia isn’t much good for. 

The Law of Unintended Consequences

by  Alex Tabarrok in

Dubner and Levitt have an article in the NYTimes with three examples of the law of unintended consequences, the Americans with Disabilities Act made it more costly to hire people with disabilities and reduced their employment, ancient Jewish sabbatical law intended to help the poor has made them worse off, and the endangered species act has resulted in habitat destruction.

In light of this Andrew Gelman asks a deep question, What kind of law is the "law of unintended consequences?"

The law of unintended consequences is what happens when a simple system tries to regulate a complex system.   The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives.  Society in contrast is a complex, evolving, high-feedback, incentive-driven system.  When a simple system tries to regulate a complex system you often get unintended consequences.

Unintended consequences are not restricted to government regulation of society but can also happen when government tries to regulate other complex systems such as the ecosystem (e.g. fire prevention policy that reduces forest diversity and increases mass fires, dam building that destroys wet lands and makes floods more likely etc.)  Unintended consequences can even happen in the attempted regulation of complex physical systems (here is a classic example involving turbulence).

The fact that unintended consequences of government regulation are usually (but not always or necessarily) negative is not an accident.  A regulation requiring apartments to have air-conditioning, for example, pushes the rental contract against the landlord and in favor of the tenant but the landlord can easily push back by raising the rent and in so doing will create a situation where both the landlord and tenant are worse off.

More generally, when regulation pushes against incentives, incentives tend to push back creating unintended consequences.  Not all regulation pushes against incentives, some regulations try to change incentives but incentives are complex and constraints change so even incentive-driven regulations can have unintended consequences.

Does the law of unintended consequences mean that the government should never try to regulate complex systems?  No, of course not, but it does mean that regulators should be humble (no trying to remake man and society) and the hurdle for regulation should be high.

Bargaining theory

by  Tyler Cowen in

Bryan Caplan says:

When the bachelor gets married, he almost certainly starts doing more housework than he did when he was single.  How can you call that shirking?

Megan McArdle says:

I’m no neatnik, but this is . . . daft…Does Mr Caplan think that "person with the lowest standards wins"
should be a general rule for marriage? Can women unilaterally quit
their jobs because they’re content with a lower standard of living, or
spend the retirement fund on shoes because they don’t mind spending
their golden years in penury?

I believe there is no simple Coasian answer to this problem.  Even if bargaining were possible the final deal would depend on the initial allocation of the property right.  That’s a sign that an apparently "small thing" (after all, how much do you spend on a maid, relative to family wealth?) is treated as having large symbolic importance.  And what does economics tell us about symbolic goods?  Symbolic goods usually have marginal values higher than their marginal costs of production; Americans for instance love the idea of their flags but the cloth is pretty cheap, especially if it comes from China. 

Going back to marriage, the theory of symbolic goods means the man should take the woman’s most irrational requests (flowers?  the placement of the toilet seat?) and go to the greatest lengths to satisfy them.  Expand output where marginal cost is low, which in this case refers us back to the gestures not the real efforts.  That’s part of the Nash bargaining solution, namely to make concessions where it costs the conceding party the least.  If there is a case for the man not cleaning more, it’s that greater net gains may be had from satisfying other, less rational demands of the complaining party, in this case the wife.

In other words, it is OK not to clean more, provided you insist on the contrary on your blog.

Oops.  Time to go clean up.