Is federalism unfair to urbanites?
Ed Glaeser writes:
Poor people come to cities because urban areas
offer economic opportunity, better social services, and the chance to get by
without an automobile. Yet the sheer numbers of urban poor make it more costly
to provide basic city services, like education and safety, and those costs are
borne by the city’s more prosperous residents. Taking care of America’s poor
should be the responsibility of all Americans. When we ask urban residents to
pick up the tab for educating the urban poor, then we are imposing an unfair
tax on those residents. That tax artificially restricts the growth of our
dynamic cities.
It is fair to say that urban dwellers receive higher positive and negative externalities from their neighbors, relative to suburbanites. I’m not sure why the bundle as a whole is unfair, least of all to the wealthier city residents (or why there is so much talk of unfairness to the wealthy in the first place), or for that matter why it is a significant marginal distortion. The net value of the externalities is surely positive for people who live in cities and pay the higher rents. All taxes involve some distortions but it seems like what is essentially a tax on city land does not involve a higher distortion than the average tax, if anything the contrary. What’s really the case for lower property taxes and higher federal income taxes, combined with a move against federalism?
If there is any unfairness, maybe it is toward the people can’t afford to live in desirable cities but would like to. If we lower the property tax burden in cities, rents will rise and this problem will become worse rather than better. The more general point is that urban land owners, not all residents, benefit disproportionately from good policy changes. Urban improvements have unfair distributional effects by the very nature of city land.
If there is a case for federalizing urban education and welfare, surely it refers to what will help the poor (if indeed that would), not what will help the urban non-poor. And are city residents even a meaningful class of people to which the concept of fairness applies in a significant way? Glaeser is very very smart but frankly I found most of this piece puzzling; perhaps I have misunderstood him.
Are there countercyclical cultural trends?
In other words, which trends or tendencies flourish when the economy is underperforming? This source makes a (weak) case for facial hair. In 1926 George Taylor claimed that hemlines went up with strong economies; presumably skirts become longer when times are bad. This post and chart suggest that dystopian science fiction movies go away in bad times.
Which of these tendencies — if any — are the most reasonable to actually believe?
Paul Krugman on trade and wages
Here is his new paper, but start first with this Mark Thoma summary, and two graphs from Brad DeLong. The main point is that some U.S. imports may be more labor-intensive and less skill-intensive than previous classifications had indicated. Here is one key paragraph (p.20):
But what are we to make of NAICS 334, Computer and Electronic Products? In U.S. data it ranks as the most skill-intensive of industries, yet it is also an industry in which more than three-quarters of imports come from developing countries, especially China.
If these sectors count as "importing labor," we can find that trade is creating more downward pressures on U.S. wages than we had thought.
I don’t think Krugman is quite right to claim: "the apparent sophistication of imports from developing countries is in large part a statistical illusion." I would sooner say that China and some other Asian countries are specializing in new (and sophisticated) techniques of cooperation, made possible by long-term historical investments in human capital and social norms. At least in certain sectors, they are combining complementary labor inputs, with complementary capital inputs, more effectively than before; it’s hard to explain that change in the impoverished vocabulary of the substitution-obsessed Heckscher-Ohlin model. The skill is in the combination not in the people themselves. "Capital-intensive" vs. "labor-intensive" or "skilled" vs. "unskilled" are not simple either/or questions.
So I think Krugman is confused on the semantics, but in the final analysis this perspective supports and perhaps even strengthens his point. If the paper looked at wages and employment in northern Mexico, following the move of China onto the world stage, the revisionist conclusions would fall more easily into place. On one hand Chinese competition hit Mexico (a home of unskilled but relatively cooperative labor) very hard; on the other hand northern Mexico responded successfully by moving up the value chain rather than by folding and losing. Both developments suggest that the Chinese competition is not just a simple example of skill-intensive labor.
You might say: "Chinese competition with northern Mexican textiles and plastics isn’t at all like Chinese competition in the hi-tech sector." I would sooner say: "The Chinese are applying common production techniques across the board." Of course the phenomenal Chinese levels of both personal savings and labor migration to urban areas also support the overall interpretation of complementarity.
Addendum: Here is a good paper on the changing nature of Chinese exports.
Ron Bailey
Here is the story, via Megan McArdle; an excerpt:
“On global warming, the problem is
ideologically I suspect it did cause me to …discount evidence which cut
against the way I wanted it to be in that case. My justification to my
self would be that I had seen [the environmentalists] be so wrong so
many times before, why should I trust them this time?” he says.But when the science appeared irrefutable, Bailey changed.
It is important to distinguish two claims. The first is that a revenue-neutral carbon tax is, in expected value terms, a good idea. If nothing else, we cannot emit accelerating rates of carbon forever.
The second and more dubious claim is "a carbon tax is likely to solve the problem." That’s not so clear. China and India may not follow suit, the oil may be pumped and used anyway, and the elasticities may be working against us. I give the carbon tax about a thirty percent probability of significantly ameliorating global warming and that is assuming that we engage China in a constructive manner. A pessimistic view, however, does not refute the case for trying.
Addendum: Here is an interesting post on whether more information about global warming causes people to worry about it less.
The real estate bubble, local government style
Over the last year, percentage increase in the tax assessment value of the land beneath our Fairfax house: > 50 pct. The new valuation arrived yesterday.
If the real estate markets gets any worse, our tax bill may not be able to stand it. Fortunately reassessments may be in order. The lesson is that when revenue is at stake, the rule of law is fragile indeed.
Why I am not a Rawlsian
The Difference Principle is not so much excessively risk-averse as excessively jerry-rigged. OK, we can’t aggregate as utilitarians but then we resort to some notion of primary goods with intersubjective validity. OK, the size of the worst-off group is itself endogenous to the contractarian process. But just how big is that group supposed to be? Can it be 99 percent of society? OK, people behind the veil don’t know their particular identities, but just how "thin" is their knowledge supposed to be? And must their choices be purely self-interested? All these criticisms are well-known. You might try to shore up Rawls on any one of these points but the entire apparatus is simply too wobbly.
The bottom line is that you can’t get lexical orderings out of a moral theory unless you build them in upfront. And without lexical orderings, well, Rawls, like many illustrious minds before him, does not succeed in
sidestepping the dirty mess of aggregation. The critical moral question is how we should compare the interests of some people to others in a real world setting; don’t expect to find an easy way out of that one.
Rawls’s Principle of Equal Liberty is if anything on weaker ground than the Difference Principle. Equal Liberty? Who says? At what margin? At what cost? Lexicality can’t plug all the leaks in this shaky boat, and no it can’t save Robert Nozick either.
The biggest problem is simply why the imaginary agreement behind the veil of ignorance should have moral force. Now I like preferences as much as the next guy, but imaginary preferences take me only so far. That is just one piece of information in a much broader comparison of plural values. I’m not even sure that imaginary preferences should override the very real preferences of very real people in very particular situations. Why should they? "Fairness" is just one value of many.
I read Rawls as a very very smart and intellectually honest guy, determined to resurrect Kant, avoid the aggregative problems of consequentialism, and move at least one step beyond Sidgwick. He knew how hard it was to even attempt such a success and he makes all the requisite moves to get us there, albeit without, in the final analysis, squaring the circle.
Matt Yglesias adds commentary; he notes, correctly, that for the current Left Rawls doesn’t offer such an inspiring vision. I’ll put it this way: if you have to work that hard to establish "Sweden is great," you should be spending more money on plane tickets.
Just to clarify, there are at least three Rawls doctrines: "Justice as Fairness," TJ, and Political Liberalism. I like the first one best, but won’t cast my lot with any of the three. At the end of the day I come away thinking that it is Sidgwick (and
maybe Kierkegaard?) who is the central moral theorist of the last two
centuries.
Assorted links
1. A new way of learning history of economic thought
2. Tim Harford recommends ten books
3. How to breed callousness: send a doctor to school
4. Via Greg Mankiw, tax rates on the middle class are falling
5. Dan Ariely says we are predictably irrational on Obama
6. Rate busters?
Which work of American liberal political thought has held up best?
Having said A, one must say B. Ezra Klein poses this question and receives many responses. I’ll nominate William Appleman Williams’s The Tragedy of American Foreign Policy, Karl Polanyi’s The Great Transformation, Richard Rorty on cruelty, Michael Walzer’s Spheres of Justice, and Harold Cruse’s Crisis of the Negro Intellectual. Martin Luther King’s Letter from Birmingham Jail deserves consideration although it does not exactly fit the category. Rachel Carson wrote an important book but not really a good book. Carol Gilligan is an interesting dark horse selection.
Jane Jacobs, by the way, might win either prize if you are allowed to count her as either a conservative or a liberal. But which is she? John Dewey and Walter Lippmann are two other figures who could be nominated for either prize.
If you think this list beats the conservative one, you are right. Note, however, that the conservative list excluded economics (and libertarians), which is where most of the contributions have come on the Right over the last fifty years. Plus the all-important Chicago School focused on ideas and articles, not books. So the comparison is not as lopsided as these posts, taken alone, might indicate.
Just a few weeks ago, Bryan Caplan and I decided that Rawls’s Theory of Justice wins the prize for "least Hansonian book ever." For all the evident philosophic care, in the final analysis Rawls was just making stuff up.
What are your nominations?
Addendum: Thinking back, Wilson’s On Human Nature might be a good pick for the conservative prize, even though I do not believe Wilson is himself a conservative.
Who hates inequality?
Chimpanzees are highly sensitive
to inequity, and typically refuse to continue in interactions in which
they get less than a social partner. However, chimpanzees from stable social groups
do not respond negatively in situations in which their partners
received better rewards, whereas chimpanzees from less-established
groups show rejection rates as high as 60 percent.
Here is the full story, interesting throughout; the hat tip is to Mark Thoma.
Nazi Literature in the Americas
Part of Bolaño’s genius is to ask, via ironies so sharp you can cut
your hands on his pages, if we perhaps find a too-easy comfort in art,
if we use it as anesthetic, excuse and hide-out in a world that is very
busy doing very real things to very real human beings. Is it courageous
to read Plato during a military coup or is it something else?
That’s from one review of the newly translated Roberto Bolaño book. (Might it have been titled "Conservative Fascism"?) This work is not a structured narrative but rather a series of impressionistic portraits of how easy it is for some people to slip into being horrible and stay that way. Imagine a fictional bestiary of creepy aesthetes who are playing at human relationships, sleepwalking through their dreamlike yet trivial obsessions, and in the meantime pledging allegiance to tyranny. Literature is a "surreptitious form of violence" throughout.
Here are excerpts from other reviews. At this point it goes without saying that everything by Bolaño is essential reading; however you may find many parts baffling if you don’t have a strong background in things Latin American.
Forward markets in everything, restaurant edition
Jason Kottke relates:
The Riverdale Garden Restaurant in the Bronx is trying out a novel way of staying in business: they’re asking for their regulars to pledge $5000 in exchange for a year of free dinners.
The problem of course is obvious. First, you probably won’t get your money back. Second, if everyone paid up, the restaurant has a weaker incentive to serve good food. And which customers do you think will receive the best treatment? The ones who put up nothing per each meal?
Suicide fact of the day
Glen Whitman reports:
I went back to the original data source (imagine that!) and found that the stereotype is dead wrong: suicide rates are notably lower for teenagers than adults…Suicide rates do rise throughout the teen years, but they plateau at about age 20 and remain flat throughout the years 20 to 65. Then they jump again for the 65+ demographic.
In case you’re wondering, teen suicide rates have not been rising, either. They’ve been in decline since the late 1980s.
Yet these teens still take the most risks.
Which 20th century classic of American conservative political thought has held up best?
We discussed this question over a group dinner Tuesday night. I opined that none have held up particularly well, mostly because they underestimated the robustness of the modern world and regarded depravity as more of a problem than it has turned out to be.
By stipulation, this universe of books does not include Milton Friedman or pure economics. It does include Russell Kirk, John Flynn, Richard Weaver, Robert Nisbet, and William F. Buckley, among many others. You can nominate grumpy Brits and Europeans who settled in the United States, so yes Road to Serfdom is a contender, even though its main empirical point (socialism leads to loss of political freedom) would seem to be refuted. You can try Albert Jay Nock or Eric Voegelin but Rothbard and Rand do not count as conservatives. Your answer cannot come before the 20th century, so no Federalist Papers and no Tocqueville.
Leave your answer in the comments and also say why. At some point I’ll offer up my pick as well.
Why Plurality Rule is a Bad Voting System
- “Falling Slowly” from “Once”*
- “Happy Working Song” from “Enchanted”
- “Raise It Up” from “August Rush”
- “So Close” from “Enchanted”
- “That’s How You Know” from “Enchanted”
Discuss.
New roots for the Irish miracle?
By the turn of the century [2000], according to some reckonings, 70 percent of Irish manufactured exports were by US-owned firms…
This was, of course, encouraged by tax breaks and a form of industrial policy. But part of this process was a shift away from English investment:
Between 1960 and 1970 British-owned companies represented 22 percent of new industrial enterprises in Ireland. But by 1980 they accounted for less than 2 percent. Significantly, the proportion of exports to Britain from Ireland halved between 1956 and 1981.
In other words, Ireland found a more complementary economic partner, namely the United States. The Irish economic miracle is in part the American economic miracle.
That is from the often interesting Luck & the Irish: A Brief History of Change from 1970, by R.F. Foster. Here is a previous MR post on the Irish economic miracle.