George Washington Can Be Proud

In recent years formerly proud universities such as Georgetown, Princeton, and MIT have cravenly failed to defend liberal principles.

Justice, however, is about more than punishing and condemning evil. It is even more important to defend and laud the good. So I want to laud the clear, concise, principled, and measured but forceful letter from George Washington University Provost Christopher Alan Bracey and Law School Dean Dayna Bowen Matthew responding to calls to condemn and fire one of their professors.

Dear Members of the George Washington University Community,

Since the recent U.S. Supreme Court ruling to overturn Roe v. Wade, we have heard from members of our community who have expressed feelings of deep disagreement with this decision.

We also have received requests from some members of the university and external communities that the university terminate its employment of Adjunct Professor and Supreme Court Justice Clarence Thomas and cancel the Constitutional Law Seminar that he teaches at the Law School. Many of the requests cite Justice Thomas’ concurring opinion in Dobbs v. Jackson Women’s Health Organization, in which he called the substantive due process doctrine a “legal fiction.” Justice Thomas has been a consistent critic of the Court’s legal philosophy on substantive due process for many years. Because we steadfastly support the robust exchange of ideas and deliberation, and because debate is an essential part of our university’s academic and educational mission to train future leaders who are prepared to address the world’s most urgent problems, the university will neither terminate Justice Thomas’ employment nor cancel his class in response to his legal opinions.

Justice Thomas’ views do not represent the views of either the George Washington University or its Law School. Additionally, like all faculty members at our university, Justice Thomas has academic freedom and freedom of expression and inquiry. Our university’s academic freedom guidelines state: “The ideas of different faculty members and of various other members of the University community will often and quite naturally conflict. But it is not the proper role of the University to attempt to shield individuals within or outside the University from ideas and opinions they find unwelcome, disagreeable, or even deeply offensive.

Just as we affirm our commitment to academic freedom, we affirm the right of all members of our community to voice their opinions and contribute to the critical discussions that are foundational to our academic mission.

Democracy for our Mars colony?

That is the topic of my latest Bloomberg column, here is one excerpt:

The Yale proposal is about how to make a Mars settlement democratic, as is an earlier proposal published in Space Legal Issues. But I fear a harsher question needs to be addressed first: Should a Mars settlement allow for contractual servitude?

When the New World was settled, it was common practice for workers to sign multiyear contracts, receiving passage across the ocean but giving up a share of their earnings and some of their freedom.

Contractual servitude is distinct from slavery in the sense that it is chosen voluntarily. But once the contract is signed, the worker is in an uncomfortable position, in both an economic and democratic sense. And once these individuals land in the New World — or, as the case may be, on Mars — their protection by mainstream legal institutions cannot be assumed.

It is easy to inveigh against contractual servitude, but it has one valuable function: It creates incentives for someone to finance the voyage in the first place. If I had to finance my own passage to Mars, and then sustain myself when I got there, and pay off the travel costs, I would never go. But if a company can send a few thousand people, keep half the profits, and remain in charge, the voyage might stand a chance, at least decades from now when the technology is further along…

The tension is that most people have well-developed moralities for wealthy, democratic societies in which most citizens can earn their keep or be provided for by a well-funded social welfare state. Neither of those assumptions holds for Mars, which at least at the beginning will be a kind of pre-subsistence economy.

The upshot is that feasible Mars constitutions will probably offend the educated classes dearly.

Recommended.

Rent seeking and the decline of the Florentine school

Economists have claimed that the invisible hand of competition is behind the historical episodes of outstanding artistic achievement, from Shakespearean theater to musical composition in Mozart’s Vienna. Competition, the argument goes, acts on producers of the arts just as it does on producers of mundane commodities. By pitting one artist against all others for the public’s purse and the critics’ praise, rivalry encourages them to supply more refined products. While often left unstated, the same argument implies that the absence of competition will be detrimental to the quality of artists’ output. We extend that insight to explain the decline of the Florentine school of painting in the Late Renaissance period. The rise of the Medici family as Florence’s ruling dynasty turned the previously competitive market for paintings into a monopsony. That development, we argue, strengthened the benefits to local painters of forming a cartel to reclaim the rents captured by the monopsonist. The result was the creation of a local painters’ guild that restricted competition, ultimately contributing to a decline in the quality and influence of Florentine painting.

That is from a new piece by Ennio E. Piano and Tanner Hardy in Public Choice.  Speculative, as they say, and declines in artistic quality are notoriously difficult to predict or to squish into standard models.  That said, the earlier model of competitive guild bidding for artists was, I think, better for quality than Medici patronage.

Via the excellent Kevin Lewis.

Blockchains: A Promise Enforcement Engine

Anthony Lee Zhang on blockchains

How do blockchains change the state of things? Blockchains are an alternative system for promise enforcement, fundamentally different from any system human history has seen before. Promises in blockchain systems are enforced by miners, who — in reasonably competitive mining markets — have limited ability, and weak incentives, to do anything other than execute others’ promises roughly according to the gas fees they pay. In other words, the blockchain can be thought of as a universal, extremely low-discretion promise enforcement engine.

Consider, for example, automated market maker (AMM) protocols, such as Uniswap. An automated market maker allows anyone to become a liquidity provider, that is, to contribute capital, to make markets in a pair of tokens. Fees are collected from anyone trading with the market maker, and can be programmatically redistributed to liquidity providers. These “terms” are promises in the same way classic financial contracts are — but, rather than promises stated in English enforced in courts of law, they are written in Solidity and “enforced” by Ethereum miners.

Lending protocols, such as Aave, allow agents to borrow if they pledge their risky assets to the system as collateral. Aave values the collateral automatically using price oracles, and automatically seizes and liquidates collateral when the amount borrowed is worth too much compared to the collateral staked. MakerDAO similarly functions like a virtual “pawn shop”, taking risky assets and printing tokens whose value derives from the fact that they are overcollateralized by risky collateral, automatically valued using collateral price feeds. Aave and Maker function similarly to margin lending systems in traditional finance, except that the lenders are bots instead of banks. A nontrivially large fraction of the useful promises that are traded in financial systems, it seems, can be approximately as easily expressed in Solidity as they can in English, and thus can be enforced by miners rather than by courts.

The consequences of the existence of blockchains are thus that, for the first time in human history, we have a real alternative to governments and legal systems for the enforcement of promises. What are the effects this will have on the world?

Governments in developed economies are imperfect but they are adequate promise enforcers and they have reasons to suppress their competitor, blockchains. Hence Zhang argues:

…The future of finance will not be built on Wall Street, by a handful of privileged graduates from a handful of top colleges in a handful of high-income countries. The future of finance will be built on blockchains, in Africa, South America, Southeast Asia, through the combined efforts of many billions of people, who for the first time in human history will be able to participate on an equal footing in the market for promises.

This is similar to what Tyler and I write in cryptoeconomics:

Traditional finance relies on legal documents like contracts, titles, and personal identification and thus it ultimately relies on a legal system that can enforce those contracts quickly, reliably, and at low cost. Relatively few countries in the world have all the required abilities, which is why traditional finance clusters in a handful of places like New York, London, Singapore, and Zurich.

Decentralized finance, in contrast, relies on smart contracts and cryptographic identification that work exactly the same way everywhere. Decentralized finance, therefore, could be broader based and more open than traditional finance. Indeed, decentralized finance could prosper in precisely those regions of the world that do not have reliable legal systems or governments with the power to regulate heavily.

The glories of Irish economics

Yesterday I mentioned the underrated Irish Enlightenment (don’t forget Toland!), today I will briefly lay out how many top early economists came from Ireland.  Here is a partial list of those economists and their contributions:

1. Richard Cantillon, 1680s-1734.  Perhaps the second greatest economist of his century after Adam Smith, he developed the ideas of entrepreneurship and opportunity cost and in general embraced common sense.  Jevons called his Essay on the Nature of Commerce in General the “cradle of political economy.”  He was a major influence on Smith.

2. Edmund Burke, 1729-1797.  Burke has been underrated as an economist, see the recent book by Greg Collins on Burke’s economic thought.  Here is a short essay on Burke’s conservative case for markets.

3. Robert Torrens, 1780-1864.  A major thinker on international trade, he developed the theory of comparative advantage before Ricardo did, and was a sophisticated analyst on a broad range of questions, including terms of trade and currency policy.  He also promoted a version of the charter city idea for southern Australia, and to this day some things in Adelaide bear his name.

4. Richard Whately, 1787-1863.  Mostly an archbishop, theologian, and philosopher, his writings on economics developed the notion of “catallactics,” namely economics as the science of exchange.

3. Mountifort Longfield, 1802-1884.  A first-rate common sense economist, and arguably the first writer to clearly state the laws of supply and demand.  He also developed a marginal productivity theory for the value of labor and capital.  The first professor of political economy at Trinity College.

5. John Elliott Cairnes, 1823-1875.  An important thinker on the methodology of the social sciences, an all-around excellent economist, and his diagnosis of the economics and sociology of slavery (it ruined and infected all parts of Southern society) was spot on.  He is sometimes considered “the last of the classical economists.”

6. Isaac Butt, 1813-1879.  Best-known for his role in Irish political history and the Home Rule movement, he produced what is arguably the first coherent account of the marginal product theory of distribution and factor prices.  He also analyzed the Irish system in terms of the economics of misallocated land, and he promoted welfare state ideas.

7. Francis Ysidro Edgeworth, 1845-1926.  One of the founders and leading lights of mathematical economics, he produced an early version of the Coase Theorem, the notion that market price converges on a competitive equilibrium as the number of buyers and sellers grows, explained the importance of tangency conditions for economic equilibrium, developed the economics of progressive taxation, fleshed out the economics of monopoly pricing, and he initiated the use of offer curves for international trade theory.

And please, none of your b.s. about Anglo-Irish, Norman, Spanish, etc. — they were Irish!  I think of these individuals as continuing the earlier Irish Enlightenment of the eighteenth century.

More guns, more crime?

The full title of the paper is “More Guns, More Unintended Consequences: The Effects of Right-to-Carry on Criminal Behavior and Policing in US Cities” and the authors are John J. Donohue, Samuel V. Cai, Matthew V. Bondy, and Philip J. Cook (does Cook get enough credit for his trajectory of ongoing productivity?) and here is the abstract:

We analyze a sample of 47 major US cities to illuminate the mechanisms that lead Right-to-Carry concealed handgun laws to increase crime. The altered behavior of permit holders, career criminals, and the police combine to generate 29 and 32 percent increases in firearm violent crime and firearm robbery respectively. The increasing firearm violence is facilitated by a massive 35 percent increase in gun theft (p=0.06), with further crime stimulus flowing from diminished police effectiveness, as reflected in a 13 percent decline in violent crime clearance rates (p=0.03). Any crime-inhibiting benefits from increased gun carrying are swamped by the crime-stimulating impacts.

Here is the link to the NBER working paper.

What should I ask Hanif Abdurraqib?

It will be a conversation, though not a recorded CWT.  Here is Wikipedia on him:

Hanif Abdurraqib is an American poet, essayist, and cultural critic. He is the author of 2016 poetry collection The Crown Ain’t Worth Much (published as Hanif Willis-Abdurraqib), the 2017 essay collection They Can’t Kill Us Until They Kill Us, the 2019 non-fiction book, Go Ahead in the Rain: Notes on A Tribe Called Quest on the American hip-hop group A Tribe Called Quest, the 2019 poetry collection A Fortune for Your Disaster, and the 2021 essay collection A Little Devil in America: Notes in Praise of Black Performance which received the 2022 Andrew Carnegie Medal for Excellence. Go Ahead in the Rain was on the long list for the 2019 National Book Award.

So what should I ask?

What I’ve been reading

1. Andrea G. McDowell, We the Miners: Self-Government in the California Gold Rush.  An important law and economics study of an “anarchistic” episode, going much deeper than some earlier accounts on matters involving Native Americans, fairness of trials, dispute resolution, miner-mining company interactions, and more.

2. Chris Blackwell, with Paul Morley, The Islander: My Life in Music and Beyond.  Obviously an interesting story in its own right, and well-written as well.  I also found this a good take on talent search.  First, if you come across a very talented cluster (in this case Jamaican reggae), never stop supporting it and working with it!  Sounds trivial, but it runs against the spirit of our age.  Second, if you ever have a chance to work with a very talented person (people), just do it.  Yes, try to get the arrangements right but in the final analysis just do it.  Chris understands and articulates that principle very well.  One of my favorite parts of the book was his account of his decision to simply advance 4k to Bob Marley and the Wailers with no agreement whatsoever.

3. Lane Kenworthy, Would Democratic Socialism be Better?  No.  “My conclusion is that capitalism, and particularly social democratic capitalism, is better than many democratic socialists seem to think.”  The notion of writing a book that argues clearly and directly for a correct conclusion remains vastly underrated!  That said, I worry a bit this book is ignoring what is upstream and what is downstream.  If a socialist claimed “Cuba is better than Haiti,” would it really work to shoot back “The Nordics are better than either!”  How about the Dominican Republic?  What exactly is on the menu here?

4. Edmund Burke and the Perennial Battle, 1789-1797, edited by Daniel B. Klein and Dominic Pino.  It is sometimes forgotten that the great Irish thinkers of the 18th century (Swift, Berkeley, Burke, Sterne, etc., and don’t forget Shaftesbury wrote there) are really not so far behind the Scots.  Yet when do you hear talk of an Irish Enlightenment?  This much-needed book assembles excellent quotations from the wisdom of Burke.

Jorge Almazán Studiolab, Emergent Tokyo: Designing The Spontaneous City, very good for those who care.  The book also provides excellent visuals on how the city actually is laid out.  Do note that much of the Tokyo of the 1980s and 90s is disappearing, due to high-rise towers.  Visit while you can!

How much pilot training should be required?

[Derek} Thompson: To what extent do you think regulatory policy is making America’s airlines particularly fragile to the sort of problems we’re currently experiencing?

[Scott] Keyes: One of the front-and-center issues discussed in the airline industry right now is this question of pilot training. Is 1,500 hours the proper amount of air time we should be expecting from pilots before we certify them to fly commercial jets? On the one hand, it’s easy to say, “You can’t be too careful.” Just imagine the attack ads if somebody votes to decrease the training requirement, and then all of a sudden there’s a crash. The optics are horrendous. On the other hand, the U.S. is a bit of an outlier. Most other countries do not require anything near this level of training ahead of being certified. The U.S. historically has not required that level of training. And we let foreign pilots fly to JFK and SFO and LAX without this requirement. All that said, there’s still no quick overnight fix that will immediately get you more flights, more pilots, and a greater supply of air travel. Certainly not for this summer.

Here is more on why air travel is so screwed up this summer, via Daniel Wilner.

The intellectual mistake of once-and-for-allism

One of the most common intellectual mistakes!

Do note however that it is an efficient mistake for many people to commit, and that is part of why it is so common.

“Once-and-for-allism” occurs when people decide that they wish to stop worrying about an issue at the margin.  They might either dismiss the issue, or they might blow up its importance but regard the issue as hopeless and undeserving of further consideration.  Either way, they seek to avoid the hovering sense of “I’ve still got to devote time and energy to figuring this out.”  They prefer “I am now done with this issue, once and for all!”  Thus the name of the syndrome.

I see once-and-for-allism with so many issues, but one recent example would be the forthcoming path of Covid and Long Covid.  Most people just don’t want to think about it any more, and so they settle on something (“it’s just a cold!” or “it will bankrupt the nation!”) rather than having to do lots of intellectual revisions based on the stream of new data.

Other examples of topics that attract once-and-for-all thinking would be crypto, demographic decline, long-run fiscal solvency, various foreign policy crises, biodiversity, AI issues, the Repugnant Conclusion and Non-Identity Problems, whether we are living in a simulation, UFOs, abortion, what is the person’s ultimate normative standard, and much more.

People won’t let these topics take up too much of their mind space.  But neither can they do the Bayesian detachment thing, and so they shunt these topics into settled categories and put them aside.

If you are trying to figure out a thinker and his or her defects, see if you can spot that person’s “once-and-for-all” moves.  There will be plenty of them.

Saturday assorted links

1. “It’s 5,000 times bigger than most bacteria,” Volland said. “To put it into context, it would be like a human encountering another human as tall as Mount Everest . . . This is the first opportunity we have to manipulate individual bacteria with tweezers.”  FT link here.  NYT coverage here.

2. Daniel Lippman, James Bond.

3. Kramnik on the human capital deficit.  Speculative.

4. Has the excess demand for truckers melted away?

5. Claims that Russia is exhausting its forces.