Will we attack Iran?
Matt Yglesias links to some who see an imminent attack. Daniel Drezner offers commentary as well. Here is Seymour Hersh.
The core economic issue is this: in the midst of a "chicken" game, which verbal cues should lead you to conclude that things are going well (poorly) for your side? Alas, I don’t know a good treatment of this problem, whether theoretical or experimental.
Under one view, there is no correlation between rumors and real plans. Disregard the rumors.
Alternatively, you may view current rumors as orchestrated. But you might infer the probability of an attack as less likely. The rumors could be an attempt to scare Iran and thus they are a substitute for attacking. A true intent to attack might do better as a (relative) surprise. Of course Iran knows this reasoning also, so why should orchestrated rumors succeed?
Another scenario: perhaps our government is anti-rational, perhaps by the nature of bureaucracy. In this view, the rumors are orchestrated, we usually do what makes no sense, so that means an attack is coming.
How about this? We make lots of noise, hoping to scare Iran. If the noise doesn’t work (which it won’t) then we might feel we must attack, having put our credibility on the line. Fred Kaplan argues that a tough public stance locks us in; we should instead be letting Teheran receive secret signals that we mean business. The lock-in effect is a danger. But don’t assume a (supposedly) secret signal is better; it costs little to send and it might be regarded by the Iranians as a trick, again to be ignored.
What do the betting markets say?: Over at www.tradesports.com, the implied probability of a U.S. or Israeli attack before December is running about 20 percent (look under "Current Events"). For before March 07 it is running about 25 percent. These numbers are up from a few weeks ago.
The bottom line: We will not win this game.
Against Transcendence
Deirdre McCloskey gave the inaugural James M. Buchanan Lecture last week, The Hobbes Problem: From Machiavelli to Buchanan. It was a good start to the series, eloquent, learned, and heartfelt. McCloskey argued that the Hobbesian programme of building the polis on prudence alone, a program to which the moderns, Rawls, Buchanan, Gauthier and others have contributed is barren. A good polis must be built upon all 7 virtues, both the pagan and transcendent, these being courage, justice, temperance, and prudence but also faith, hope and love (agape).
In the lecture, McCloskey elided the difficult problems of the transcendent virtues especially as they apply to politics (I expect a more complete analysis in the forthcoming book). Faith, hope, and love sound pleasant in theory but in practice there is little agreement on how these virtues are instantiated. It was love for their eternal souls that motivated the inquisitors to torture their victims. President Bush wants to save Iran…with nuclear bombs. Faith in the absurd is absurd. Thanks but no thanks.
Since we can’t agree on the transcendent virtues injecting them into politics means intolerance and division. Personally, I’d be happy to see the transcendent virtues fade away but I know that’s
unrealistic. The next best thing, therefore, is to insist that the transcendent virtues be reserved for civil society and at all costs be kept out of politics. The pagan virtues alone provide room for agreement in a cosmpolitan society, a society of the hetereogeneous.
Of course, in all this I follow Voltaire:
Take a view of the Royal Exchange in London, a place more venerable
than many courts of justice, where the representatives of all nations
meet for the benefit of mankind. There the Jew, the Mahometan, and the
Christian transact together, as though they all professed the same
religion, and give the name of infidel to none but bankrupts. There
the Presbyterian confides in the Anabaptist, and the Churchman depends
on the Quaker’s word. At the breaking up of this pacific and free
assembly, some withdraw to the synagogue, and others to take a glass.
This man goes and is baptized in a great tub, in the name of the
Father, Son, and Holy Ghost: that man has his son’s foreskin cut off,
whilst a set of Hebrew words (quite unintelligible to him) are mumbled
over his child. Others retire to their churches, and there wait for the
inspiration of heaven with their hats on, and all are satisfied.If one religion only were allowed in England, the Government would
very possibly become arbitrary; if there were but two, the people would
cut one another’s throats; but as there are such a multitude, they all
live happy and in peace.
What is Massachusetts doing?
1. All but the very rich must buy health insurance.
2. Business that don’t offer health insurance to their employees will have to pay a tax.
3. Individuals can buy insurance with pre-tax dollars, eliminating the favoritism currently shown to employment-linked insurance.
4. Insurance companies will be subsidized to offer barebones policies to the current uninsured.
There is more, here is a Boston Globe summary. Here is the LA Times. The Washington Post surveys various reactions.
Arnold Kling is skeptical:
…the politicians’ plan will force insurance companies to offer
no-deductible health insurance to people on modest incomes, at premiums
ranging from $1000 to $2000 per year. My guess is that the insurance
companies will not be willing to pay for more than about $2000 per
person per year in claims, and they will demand that the state provide
reinsurance for the rest. Given average health care spending in
Massachusetts of $6000, "the rest" could be a big number.
Andrew Sullivan approves, mostly for general reasons — "let the states try."
My take: This kind of approach will prove increasingly popular. You claim to cover everybody. It doesn’t sound very socialistic and most of the costs are hidden. It appeals to voters’ sense of justice; there is a general belief that many individuals and businesses are free-riding upon the ready availability of hospital emergency rooms. It keeps private insurance rather than trying to eliminate it (single-payer plans) or eliminate its tax advantages (HSAs). This latter feature I find appealing, since I think the private insurance mode, for all its flaws, is or at least should be, the future of the sector. "Not enough private insurance" is the relevant externality relative to the social welfare function, not "too much private insurance." Of course various lobbies — most of all the insurance companies — also will like this feature of the program.
In a political debate, this will, for better or worse, probably crush the more ambitious Democratic plans for national health insurance.
The crunch comes, as Kling points out, when you pretend that covering the uninsured will be cheap or can happen under current levels of program budgeting. Can you imagine California or Texas, both of which have higher levels of uninsured than Massachusetts, trying such a plan? The long-run future of the idea replaces the insurance company subsidies with health insurance vouchers for the poor. They would be means-tested, of course, and the expense would require federal involvement.
To me the Massachusetts plan sounds messy and fragmented. It is a series of concessions rather than a set of solutions. It relies too heavily on unfunded mandates rather than improving incentives. I am not sure it will make anyone healthier. It does nothing to solve the number one problem of the sector, namely bringing competitive forces to bear on improving product quality, accessibility, and affordability. I just bought a new Toyota Corolla for a lower nominal (much less real) price than I paid nine years ago for the same but inferior make without side air bags. Why can’t we have more stories like that in health care? It is the person who figures out how to point health care competition in the right direction who will deserve the brass ring.
That all being said, the Massachusetts plan is better than I would have expected. I am not convinced that the plan will work out badly, at least relative to feasible alternatives.
French economics
Earlier I wrote that French students need more Bastiat and less Foucault. Supporting evidence is provided by The International Herald Tribune which notes:
In a 22-country survey published in January, France was the only nation
disagreeing with the premise that the best system is "the free-market
economy." In the poll, conducted by the University of Maryland, only 36
percent of French respondents agreed, compared with 65 percent in
Germany, 66 percent in Britain, 71 percent in the United States and 74
percent in China (!, AT)…."The question of how economics is taught in France, both at the bottom
and at the top of the educational pyramid, is at the heart of the
current crisis," said Jean-Pierre Boisivon, director of the Enterprise
Institute…"In France we are still stuck in 1970s Keynesian-style economics – we
live in the world of 30 years ago," he said. …And then there are the textbooks. One, published by Nathan and widely
used by final-year students, has this to say on p. 137: "One must
analyze the salary as purchasing power that you could not cut without
sparking a deflationary spiral and thus higher unemployment." Another
popular textbook, published by La Découverte, asks on p. 164: "Are
there still enough jobs for everyone?" It then suggests that the state
subsidize jobs in the public sector: "We can seriously envisage this
because our economy allows us already to support a large number of
unemployed people."These arguments were frequently used on the streets in recent weeks,
where many protesters said raising salaries and subsidizing work was a
better way to cut joblessness than flexibility.
Hat tip to Peter Gordon who is teaching in Paris but finds his students considerably more sophisticated.
Markets in everything
Take my son to the prom. At $500 cash and $300 expenses, surely he is charming.
Contemporary Chinese painting
Here are images by a few painters I like:
He Sen, who seems to only paint women smoking.
Shi Xinning reminds me of Mark Tansey. Try his Christo’s Temple of Heaven, Pride and Prejudice, or Chairman Mao in Vegas. Here is his Duchamp painting, which of course is also about the Chinese fascination with capitalism:
Charlie and the Missing Link
From Boing Boing Blog. Related story here.
Favorite headlines
Inconvenient questions about immigration
MR readers will know I hold a relatively cosmopolitan stance, sympathetic to immigration, including the immigration of low-skilled labor. But notice the tension with Milton Friedman’s classic stance that businesses should maximize profit only, without regard for broader social concerns. If businesses have this liberty to behave selfishly, why do not governments? Similarly, cannot a mother give priority to her child, rather than selling it to save ten babies in Haiti? Why should governments be the unique carrier of cosmopolitan obligations?
I see a few possible stances:
1. Randall Parker thinks Western governments should be be elitist, nationally selfish, and determined to maximize national average IQ.
2. Perhaps government holds special obligations. Robert Goodin argued that government should be utilitarian while other institutions pursue selfish concerns. But where does this dichotomy come from, and still, why should the concerns of a government stretch past its citizenry?
3. Peter Singer and Shelley Kagan believe that all entities, whether collective or individual, should take the most cosmopolitan view possible. For Singer this includes the consideration of other species. Few people are willing to live the implications of this.
4. We have not (yet?) found a universally correct perspective from all vantage points. We have public obligations, private obligations, and no clear algorithm for squaring the two. We nonetheless can find local improvements consistent with both, or which do not greatly damage our private interests. Freer immigration, even when costly, is one of the cheapest and most liberty-consistent ways of addressing our (admittedly ill-defined) obligations to others. But surely those obligations are not zero. This implies, by the way, that Friedman’s maxim is not strictly accurate.
Note that libertarians are often extreme nationalists when it comes to foreign policy ("Darfur is no concern of ours") but extreme cosmopolitans when it comes to immigration.
My views are closest to #4. Our inability to fully embrace cosmopolitanism is a central reason why the case for open borders is not more persuasive. Many people hear the cosmopolitan call and sense, instinctively, that something is wrong. But when we view the argument in explicitly economic terms — what is the best way of satisfying marginal obligations which are surely not zero? — the case for a liberal immigration policy is stronger.
The Shangri-La Diet
Seth Roberts’ diet book, The Shangri-La Diet has just been published. Actually, the Shangri-La Diet isn’t really a diet, it’s a method of suppressing appetite. Roberts argues that the body follows a simple heuristic – when calories are tasty they must be plentiful so turn up the appetite and stock up when the fruit is on the tree. But if calories taste like cardboard then times must be bad (why else would you be eating cardboard?) so turn the appetite down and use up those fat stores. If you had to eat cardboard to lose weight the diet wouldn’t be very appealing but Roberts found that a few hundred calories of extra-light olive oil or sugar water are enough to turn the appetite weigh down (pun intended.)
The book is a quick read and in addition to the diet itself there are interesting asides about science, self-experimentation, the obesity epidemic and other topics.
Don’t take my word for it, however. The great thing about Roberts’ methods is that you will know whether they work within a day or two. Buy the book, try it out, you have a lot to lose!
Addendum: Long-time readers may recall that I wrote a brief profile of Berkeley psychologist Roberts and his novel self-experiments. That profile turned out to be one link in a chain that led to the present book (I am kindly mentioned in the acknowledgments.).
Bias at the New York Times
The Times has a biased article on school vouchers. Surprisingly, the bias is in favor of vouchers. Oh sure, there’s the usual crazed principal sounding like a cross between Che Guevera and Andrea Dworkin as she attacks vouchers for "raping the public schools of students and resources." Also, I would have liked a better review of the evidence which is strongly in favor of vouchers. Nevertheless, the overwhelming impression of private schools left by the article is delightfully positive.
It’s the stories of little boys and girls sadly left behind by the public schools but now attending private schools like the one "near a verdant hill of churches" that tell the tale. And how about this to bring a tear to your eye?
Breanna Walton, 8, rises before dawn for the long bus ride from
Northeast Washington, "amongst the crime and drugs and all that," in
the words of her mother, April Cole Walton, to Rock Creek
International, near Georgetown University. There, she learns Spanish
with the children of lawyers and diplomats.
The best is left to last:
"I’ll probably go to Washington Latin," said Jhontelle Johnson,
setting her sights on a new charter school opening in August. If not,
she said, "I’d probably be home-schooled."A teacher’s aide, Sheonna Griffin, looked askance. "You don’t like public schools?" she asked the child.
Jhontelle turned back, her young eyes flashing. "You can’t make me go," she said.
Sadly, in most of the country they can.
жеÑткий is Russian for “intense”
Millions of passengers traveling through Russia soon will have to take a lie detector test as part of new airport security measures that could eventually be applied throughout the country.
The technology, to be introduced at Moscow’s Domodedovo airport as early as July, is intended to identify terrorists and drugs smugglers. But many passengers will be chilled by the set of four questions they will have to answer into a machine, including, "Have you ever lied to the authorities?"
The machine asks four questions: The first is for full identity; the second, unnerving in its Soviet-style abruptness, demands: "Have you ever lied to the authorities?" It then asks whether either weapons or narcotics are being carried.
To cut delays, passengers will take the tests after taking off their shoes and putting baggage through the X-ray machines. He doesn’t get his shoes back until he satisfactorily answers the questions. Each test will take up to a minute. "If a person fails to pass the test, he is accompanied by a special guard to a cubicle where he is asked questions in a more intense atmosphere," says Vladimir Kornilov, IT director for the airport.
The fully automated instrument to be used, known as the "Truth Verifier," is hardly the polygraph familiar from old spy thrillers. Passengers will simply speak into a handset. Thanks to "layered-voice-analysis technology," the system, developed by an Israeli company, can even establish whether answers come from the memory or the imagination.
Here is the full story.
Africa fact of the day
This one is good news, sort of. Contrary to common claims, many African nations have HIV-positive rates of only two or three percent. The truly horrific rates of thirty percent or more appear restricted to the southern part of the continent. The incorrect estimates stem from placing too much weight on data from urban prenatal clinics.
Why Eric Rasmusen does not worry about the housing bubble
Housing is a special form of wealth…If its price falls after a bubble, the cost of consumption is falling at the same time as the amount of wealth. In fact, the country has become richer, because all the same real assets exist, but their replacement cost has fallen.
Also, since houses are mortgaged, the wealth loss is shared by household and banks, while the consumption cost gain is entirely to households. The real wealth of households will thus have risen, and consumption should increase (I am thinking that banks are owned by richer people, who save more). Am I right on this?
Here is the link. Here is my previous post on this topic. So is Eric right not to worry?
The economics of polygamy, continued
Perhaps this topic needs a little public choice analysis:
Many Sub-Saharan African countries are extremely poor. It has been argued that the marriage system (in particular polygyny) is one contributing factor to the lack of development in this region. Polygyny leads to low incentives to save, depressing the capital stock and output. Enforcing monogamy might seem like an obvious solution. However, such a law will have winners and losers. In this paper, we investigate the transition from a polygynous to a monogamous steady state. We find that the initial old men will be big losers. The reason is that they had married many wives in anticipation of the brideprice that future daughters will fetch. However, due to the marriage reform, the value of daughters depreciates rapidly, as the brideprice changes from positive to negative. This increases savings and thereby the aggregate capital stock. The interest rate falls and the initial young suffer a loss in capital income. Thus, all men alive during the reform period experience a loss in utility. Young women and all future generations will benefit. However, the future gains are not enough to compensate the losers. This may explain why many African countries experience strong resistance to changing their marriage laws.
Here is the paper, and thanks to Alina Stefanescu for the pointer. Here is Alex’s previous post on polygamy, which leads you back to mine as well. Here are more links.