What I’ve been reading
Chris W. Surprenant and Jason Brennan, Injustice For All: How Financial Incentives Corrupted and Can Fix the US Criminal Justice System. A good and clear introduction to exactly what the title promises. Possible reforms are “End Policing for Profit,” “Stop Electing Prosecutors and Judges,” “Required Rotation of Public Defenders and Prosecutors,” and others.
Laurence B. Siegel, Fewer, Richer, Greener: Prospects for Humanity in an Age of Abundance. A Julian Simon-esque take on the nature and benefits of economic growth and progress.
Lindsay M. Chervinsky, The Cabinet: George Washington and the Creation of an American Institution traces how Washington created a cabinet more than two years into his first term, and modeled after the military councils of the Continental army.
Maxine Eichner, The Free-Market Family: How the Market Crushed the American Dream (and How It Can Be Restored). There are so many anti-market books floating around these days, but this one is more likely to be true than most (the book is not as exaggerated as the subtitle). The author takes too much of a “kitchen sink” approach for my taste, and doesn’t carefully enough consider trade-offs (U.S. as Finland is not actually a dream), but still I would rather spend time with this book than most of what is coming out these days.
Peter Andreas, Killer High: A History of War in Six Drugs, does a good job of restoring drugs and alcohol to their rightful place in the history of war.
What changes the probability of divorce?
We study how promotions to top jobs affect the probability of divorce. We compare the relationship trajectories of winning and losing candidates for mayor and parliamentarian and find that a promotion to one of these jobs doubles the baseline probability of divorce for women, but not for men. We also find a widening gender gap in divorce rates for men and women after being promoted to CEO. An analysis of possible mechanisms shows that divorces are concentrated in more gender-traditional couples, while women in more gender-equal couples are unaffected.
That is from a new paper by Olle Folke and Johanna Rickne, just published in the American Economics Journal: Applied Economics. Elsewhere in that issue, Adukia, Asher, and Novosad find that better roads aid education in India by boosting the returns to schooling.
Thursday assorted links
1. Scott Sumner movie reviews, recommended. Awesome range in addition to good taste. Covers TV and books too.
2. What it looks like for China to learn soft power.
3. We need international limits on hypersonic weapons (NYT).
4. In Norway, schools and neighborhoods do not matter much for your life prospects.
5. Lotteries and religion in Haiti.
6. Prison in Japan.
What should I ask Garett Jones?
I will be doing a Conversation with him, in part around his forthcoming book 10% Less Democracy: Why You Should Trust the Elites a Little More and the Masses a Little Less, see earlier MR commentary. Garett has another, earlier book The Hive Mind, numerous noteworthy articles, and he is my longstanding colleague.
So what should I ask him?
Artificial Intelligence Applied to Education
In Why Online Education Works I wrote:
The future of online education is adaptive assessment, not for testing, but for learning. Incorrect answers are not random but betray specific assumptions and patterns of thought. Analysis of answers, therefore, can be used to guide students to exactly that lecture that needs to be reviewed and understood to achieve mastery of the material. Computer-adaptive testing will thus become computer-adaptive learning.
Computer-adaptive learning will be as if every student has their own professor on demand—much more personalized than one professor teaching 500 students or even 50 students. In his novel Diamond Age, science fiction author Neal Stephenson describes a Young Lady’s Illustrated Primer, an interactive book that can answer a learner’s questions with specific information and also teach young children with allegories tuned to the child’s environment and experience. In short, something like an iPad combining Siri, Watson, and the gaming technology behind an online world like Skyrim. Surprisingly, the computer will make learning less standardized and robotic.
In other words, the adaptive textbook will read you as you read it. The NYTimes has a good piece discussing recent advances in this area including Bakpax which reads student handwriting and grades answers. Furthermore:
Today, learning algorithms uncover patterns in large pools of data about how students have performed on material in the past and optimize teaching strategies accordingly. They adapt to the student’s performance as the student interacts with the system.
…Studies show that these systems can raise student performance well beyond the level of conventional classes and even beyond the level achieved by students who receive instruction from human tutors. A.I. tutors perform better, in part, because a computer is more patient and often more insightful.
…Still more transformational applications are being developed that could revolutionize education altogether. Acuitus, a Silicon Valley start-up, has drawn on lessons learned over the past 50 years in education — cognitive psychology, social psychology, computer science, linguistics and artificial intelligence — to create a digital tutor that it claims can train experts in months rather than years.
Acuitus’s system was originally funded by the Defense Department’s Defense Advanced Research Projects Agency for training Navy information technology specialists. John Newkirk, the company’s co-founder and chief executive, said Acuitus focused on teaching concepts and understanding.
The company has taught nearly 1,000 students with its course on information technology and is in the prototype stage for a system that will teach algebra. Dr. Newkirk said the underlying A.I. technology was content-agnostic and could be used to teach the full range of STEM subjects.
Dr. Newkirk likens A.I.-powered education today to the Wright brothers’ early exhibition flights — proof that it can be done, but far from what it will be a decade or two from now.
See also my piece with Tyler, the Industrial Organization of Online Education and, of course, check out our textbook Modern Principles of Economics which isn’t using AI yet but the course management system combines excellent videos with flexible computerized assessment and grading.
How much did the bailouts cost?
Deborah Lucas has studied this question, and here is the core of her results:
This review develops a theoretical framework that highlights the principles governing economically meaningful estimates of the cost of bailouts. Drawing selectively on existing cost estimates and augmenting them with new calculations consistent with this framework, I conclude that the total direct cost of the 2008 crisis-related bailouts in the United States was on the order of $500 billion, or 3.5% of GDP in 2009. The largest direct beneficiaries of the bailouts were the unsecured creditors of financial institutions. The estimated cost stands in sharp contrast to popular accounts that claim there was no cost because the money was repaid, and with claims of costs in the trillions of dollars. The cost is large enough to suggest the importance of revisiting whether there might have been less expensive ways to intervene to stabilize markets. At the same time, it is small enough to call into question whether the benefits of ending bailouts permanently exceed the regulatory burden of policies aimed at achieving that goal
Here is the paper, via the excellent Kevin Lewis.
You will note that 3/4 of that sum comes from the bailouts of the government mortgage agencies. I am myself uncertain how to think about this problem. First, is it useful to think of the additional bailout expenditure as being monetized, if only indirectly through the mix of Fed/Treasury policy? If yes (debatable), and the monetization itself limits a harmful further deflation, can it be said that this monetization is not a transfer away from citizens in the usual sense that an inflation in Zimbabwe might be? But rather a net gain for citizens or at least a much smaller loss? Is the interest paid on those monetized reserves the actual cost?
In any case, where exactly does the “3.5% of gdp” loss “come from”?
I do not know!
The Dan Wang year-end letter
This year I want to discuss mostly science and technology. First, some thoughts on China’s technology efforts. Then I’ll present a few reflections on science fiction, with a focus on Philip K. Dick and Liu Cixin. Next I’ll discuss books I read on American industrial history. I save personal reflections for the end.
Dan now lives in Beijing. He left out music, however…
The United States as a Developing Nation
In the decades between 1850 and 1950, the United States decisively transformed its place in the world economic order. In 1850, the US was primarily a supplier of slave-produced cotton to industrializing Europe. American economic growth thus remained embedded in established patterns of Atlantic commerce. One hundred years later, the same country had become the world’s undisputed industrial leader and hegemonic provider of capital. Emerging victorious from the Second World War, the US had displaced Britain as the power most prominently situated — even more so than its Cold War competitor — to impress its vision of a global political economy upon the world. If Britain’s industrial revolution in the late eighteenth century marked the beginning of a ‘Great Divergence’ (Pomeranz) of ‘the West’ from other regions around the world, American ascendance in the decades straddling the turn of the twentieth century marked a veritable ‘second great divergence’ (Beckert) that established the US as the world’s leading industrial and imperial power.
That is an excerpt from a new essay in Past and Present by Stefan Link and Noam Maggor. (You’ll find the best summary of the actual thesis in the last few pages of the piece, not in the beginning.) It is one of the more interesting economic history pieces I have read in some time. The pointer is from Pseudoerasmus, who also has been doing some running commentary on the article in his afore-linked Twitter feed.
Wednesday New Year’s assorted links
1. Evidence that puffins use tools. Good evidence. With videos.
2. Facts about Korea (recommended).
3. Esports predictions for 2020?
4. Is drinking going out of fashion? (The Economist)
5. Gordon Wood responds to the NYT.
What libertarianism has become and will become — State Capacity Libertarianism
Having tracked the libertarian “movement” for much of my life, I believe it is now pretty much hollowed out, at least in terms of flow. One branch split off into Ron Paul-ism and less savory alt right directions, and another, more establishment branch remains out there in force but not really commanding new adherents. For one thing, it doesn’t seem that old-style libertarianism can solve or even very well address a number of major problems, most significantly climate change. For another, smart people are on the internet, and the internet seems to encourage synthetic and eclectic views, at least among the smart and curious. Unlike the mass culture of the 1970s, it does not tend to breed “capital L Libertarianism.” On top of all that, the out-migration from narrowly libertarian views has been severe, most of all from educated women.
There is also the word “classical liberal,” but what is “classical” supposed to mean that is not question-begging? The classical liberalism of its time focused on 19th century problems — appropriate for the 19th century of course — but from WWII onwards it has been a very different ballgame.
Along the way, I believe the smart classical liberals and libertarians have, as if guided by an invisible hand, evolved into a view that I dub with the entirely non-sticky name of State Capacity Libertarianism. I define State Capacity Libertarianism in terms of a number of propositions:
1. Markets and capitalism are very powerful, give them their due.
2. Earlier in history, a strong state was necessary to back the formation of capitalism and also to protect individual rights (do read Koyama and Johnson on state capacity). Strong states remain necessary to maintain and extend capitalism and markets. This includes keeping China at bay abroad and keeping elections free from foreign interference, as well as developing effective laws and regulations for intangible capital, intellectual property, and the new world of the internet. (If you’ve read my other works, you will know this is not a call for massive regulation of Big Tech.)
3. A strong state is distinct from a very large or tyrannical state. A good strong state should see the maintenance and extension of capitalism as one of its primary duties, in many cases its #1 duty.
4. Rapid increases in state capacity can be very dangerous (earlier Japan, Germany), but high levels of state capacity are not inherently tyrannical. Denmark should in fact have a smaller government, but it is still one of the freer and more secure places in the world, at least for Danish citizens albeit not for everybody.
5. Many of the failures of today’s America are failures of excess regulation, but many others are failures of state capacity. Our governments cannot address climate change, much improve K-12 education, fix traffic congestion, or improve the quality of their discretionary spending. Much of our physical infrastructure is stagnant or declining in quality. I favor much more immigration, nonetheless I think our government needs clear standards for who cannot get in, who will be forced to leave, and a workable court system to back all that up and today we do not have that either.
Those problems require state capacity — albeit to boost markets — in a way that classical libertarianism is poorly suited to deal with. Furthermore, libertarianism is parasitic upon State Capacity Libertarianism to some degree. For instance, even if you favor education privatization, in the shorter run we still need to make the current system much better. That would even make privatization easier, if that is your goal.
6. I will cite again the philosophical framework of my book Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals.
7. The fundamental growth experience of recent decades has been the rise of capitalism, markets, and high living standards in East Asia, and State Capacity Libertarianism has no problem or embarrassment in endorsing those developments. It remains the case that such progress (or better) could have been made with more markets and less government. Still, state capacity had to grow in those countries and indeed it did. Public health improvements are another major success story of our time, and those have relied heavily on state capacity — let’s just admit it.
8. The major problem areas of our time have been Africa and South Asia. They are both lacking in markets and also in state capacity.
9. State Capacity Libertarians are more likely to have positive views of infrastructure, science subsidies, nuclear power (requires state support!), and space programs than are mainstream libertarians or modern Democrats. Modern Democrats often claim to favor those items, and sincerely in my view, but de facto they are very willing to sacrifice them for redistribution, egalitarian and fairness concerns, mood affiliation, and serving traditional Democratic interest groups. For instance, modern Democrats have run New York for some time now, and they’ve done a terrible job building and fixing things. Nor are Democrats doing much to boost nuclear power as a partial solution to climate change, if anything the contrary.
10. State Capacity Libertarianism has no problem endorsing higher quality government and governance, whereas traditional libertarianism is more likely to embrace or at least be wishy-washy toward small, corrupt regimes, due to some of the residual liberties they leave behind.
11. State Capacity Libertarianism is not non-interventionist in foreign policy, as it believes in strong alliances with other relatively free nations, when feasible. That said, the usual libertarian “problems of intervention because government makes a lot of mistakes” bar still should be applied to specific military actions. But the alliances can be hugely beneficial, as illustrated by much of 20th century foreign policy and today much of Asia — which still relies on Pax Americana.
It is interesting to contrast State Capacity Libertarianism to liberaltarianism, another offshoot of libertarianism. On most substantive issues, the liberaltarians might be very close to State Capacity Libertarians. But emphasis and focus really matter, and I would offer this (partial) list of differences:
a. The liberaltarian starts by assuring “the left” that they favor lots of government transfer programs. The State Capacity Libertarian recognizes that demands of mercy are never ending, that economic growth can benefit people more than transfers, and, within the governmental sphere, it is willing to emphasize an analytical, “cold-hearted” comparison between government discretionary spending and transfer spending. Discretionary spending might well win out at many margins.
b. The “polarizing Left” is explicitly opposed to a lot of capitalism, and de facto standing in opposition to state capacity, due to the polarization, which tends to thwart problem-solving. The polarizing Left is thus a bigger villain for State Capacity Libertarianism than it is for liberaltarianism. For the liberaltarians, temporary alliances with the polarizing Left are possible because both oppose Trump and other bad elements of the right wing. It is easy — maybe too easy — to market liberaltarianism to the Left as a critique and revision of libertarians and conservatives.
c. Liberaltarian Will Wilkinson made the mistake of expressing enthusiasm for Elizabeth Warren. It is hard to imagine a State Capacity Libertarian making this same mistake, since so much of Warren’s energy is directed toward tearing down American business. Ban fracking? Really? Send money to Russia, Saudi Arabia, lose American jobs, and make climate change worse, all at the same time? Nope.
d. State Capacity Libertarianism is more likely to make a mistake of say endorsing high-speed rail from LA to Sf (if indeed that is a mistake), and decrying the ability of U.S. governments to get such a thing done. “Which mistakes they are most likely to commit” is an underrated way of assessing political philosophies.
You will note the influence of Peter Thiel on State Capacity Libertarianism, though I have never heard him frame the issues in this way.
Furthermore, “which ideas survive well in internet debate” has been an important filter on the evolution of the doctrine. That point is under-discussed, for all sorts of issues, and it may get a blog post of its own.
Here is my earlier essay on the paradox of libertarianism, relevant for background.
Happy New Year everyone!
Markets in everything
…if you stay in the hotel bedroom created by Christopher Samuel, don’t rush to post a scathing review. He has actually designed it to be as annoying as possible (while remaining just about habitable).
“You probably wouldn’t spend more than a night in it in reality,” says Michael Trainor, creative director of the Art B&B in Blackpool. “I think the novelty would soon wear off.”
Samuel is one of 19 artists who have kitted out a room in the seaside B&B. And it’s hard not to chuckle at the fiendishness of Samuel’s adaptations every time you spot another deliberately awkward feature (the upside-down shower gel dispenser is a particular triumph of user-unfriendliness).
But for him, it’s not a joke.
By making life difficult for visitors, the artist wants to give them a taste of the access problems faced by many disabled people…
In his room – titled Welcome Inn – the bed is surrounded by a 3ft lip, which you must scramble over every time you want to get in or out. The bathroom door doesn’t close because it hits the toilet, meaning there’s no privacy.
Here is the full story.
Who were the two most powerful and effective orators of the decade?
My picks and Trump and Greta Thunberg, in that order, as explained in my latest Bloomberg column. Excerpt:
My choice for second place is Greta Thunberg. In little more than a year, Thunberg has moved from being an unheard-of 16-year-old Swedish girl to Time’s Person of the Year. While she is now a social media phenomenon, her initial ascent was driven by her public speaking. Communication is quite simply what she does.
As a public speaker, Thunberg is memorable. The unusual prosody of autistic voices is sometimes considered a disadvantage, but she has turned her voice and her extreme directness into an unforgettably bracing style. She communicates urgency and moral seriousness on climate change at a time when the world is not taking decisive action. She mixes anger and condemnation with the look of a quite innocent young girl. Her Swedish version of a British accent is immediately recognizable. There is usually no one else in the room who looks or acts like her.
Her core speech she can give in about five minutes, perfect for an age of limited attention spans. She speaks in short, clipped phrases, each one perfect word-for-word. It is easy to excerpt discrete sentences on social media or on television.
As for memorable phrases, how about these: “I don’t want your hope.” “Did you hear what I just said?” “I want you to panic.” And of course: “How dare you? You have stolen my dreams and my childhood with your empty words.”
These days, you can simply say the name “Greta” in many parts of the world, and people will know who you are referring to.
You will note that under the formal DSM definition of autism, deficits in communication are a fundamental feature of the condition — perhaps that should be changed? Greta uses the term “selective mutism” in describing herself, but clearly the actual reality is more than just a simple deficit, rather an uneven pattern with very high peaks. As I wrote in the column, communicating is what she does.
One other point — I frequently hear or read people charge that Greta is being manipulated by her parents. I have no real knowledge of the Thunberg family, but in the research literature on prodigies it is clear that virtually all of those who have achieved something early had quite extreme self-motivation, a common feature of autism I might add.
Tuesday assorted non-links and links
1. Cocoman’s Law?: “The more important is an investigation of applied synthetic knowledge, the less useful literature there will be.”
2. E. Glen Weyl summary of RadicalxChange as an intellectual and political program.
3. How to hypothetically hack your school’s surveillance of you.
4. Ledwich and Zaitsev respond on YouTube radicalization.
5. New French board game on wealth gap is a big hit.
6. The value of air filters in classrooms, to limit air pollution.
The great Lemin Wu reemerges
Very loyal readers may recall that Lemin Wu was a Berkeley Ph.D in economic history and a student of Brad DeLong. Then he seemed to disappear. But for the last few years he was been working and writing, and later in 2020 he has a book coming out in China, in Chinese, title still undetermined.
I have read only parts of the book (the parts in English), and an outline. Still , I am willing to predict it will be the best and most important economics book of the year, in any language. It also likely will mark the first time a Chinese economist, writing in Chinese, created an important work.
I won’t “give away the plot,” but suffice to say it is about the rise of the West, the Malthusian model, group selection in history, why development takes so long, and related big topics. Oh, and it does tie in to and draw upon Cixin Liu’s The Three-Body Problem, just in case you were wondering.
I hope very much this book will be published in English as well.
Hail Lemin Wu!
What to think about Modi these days
Ian Bremmer offers one account of all the wrongdoing, which I will not summarize here. In any case, many of you have asked me what I think of these recent events.
I do not at all favor replacing India’s secular democracy with “Hindu nation” as a ruling principle. For one thing, I believe in strong libertarian protections for minority rights against state power, including for Muslims. I also believe these moves will be bad for India’s economy. Nonetheless I find most of the extant commentary on Modi fairly misleading and/or naive.
As this outsider sees it, India’s secular democracy was never liberal. It had certain de facto liberal elements, but largely out of low levels of state capacity, necessitating a kind of tolerance but of course also leading to a very sub-par infrastructure. Furthermore, it has been commonly described by political scientists as a “democracy without accountability.” National voting has so much to do with religion, caste, and other particularistic principles that Indian democracy never enforced superior practical performance as it should have.
Then enter several forces at more or less the same time, including Modi, ongoing Indian economic growth, higher expectations and thus greater demands for state capacity, a rise in what is called “populism,” and also an increase in the focality of Islam and also terrorism around the world.
In essence that state capacity starts to be built and part of it is turned to wrong ends, in an attempt to appeal to the roughly 80 percent Hindu majority. Here is the NYT:
The Modi administration has also done a better job than previous governments in pushing big anti-poverty initiatives, such as building 100 million toilets to help stop open defecation and the spread of deadly disease.
In other words, the positive and negative sides of the story here may be more closely related than is comfortable to contemplate. The picture reminds me a bit of how parts of Renaissance Europe were often more anti-Semitic or racist than medieval Europe, in part because persecuting states had more resources and it was easier to mobilize intolerant sentiment, partly due to the printing press. I don’t however idolize medieval times as being so libertarian, rather the earlier ideology contained the seeds of the Renaissance oppressions, which in time turned into foreign imperialism as well.
Similarly, oppression and religious conflict is hardly news in India, for instance you may recall the Partition which in the 1940s killed at least one million people and displaced at least 10 million more.
None of this is to excuse any of these oppressions, whether in India or elsewhere. The libertarian rights still ought to apply, and should be written into the Indian constitution and laws more firmly.
(It is an interesting and much under-discussed result that the greatest violations of libertarian rights tend to come in periods of high delta in state capacity, not high absolute levels of state capacity per se. The Nazi government was not that large as a percentage of gdp, but it was growing rapidly in terms of its efficacy along certain dimensions.)
The moral and resonant message here is “libertarian rights for minorities truly are important and beware state power!” And somehow we need to think strategically, at a deep level, how that message can be combined with the inevitable and indeed desirable growth in Indian state capacity. The libertarians only make this their issue by eliding the need for growth in state capacity. So they moralize correctly about the situation, but they don’t see the underlying dilemma so clearly either.
Consider this NYT passage:
“Modi is not a normal politician who measures his success only by votes,” said Kanchan Chandra, a political scientist at New York University. “He sees himself as the architect of a new India, built on a foundation of technological, cultural, economic and military prowess, and backed by an ideology of Hindu nationalism.”
The real question here is — still mostly unanswered — “what else is the new ideology of state capacity supposed to be?” I am happy to put in my vote for Anglo-American liberalism, but still I recognize that probably will not command either a majority or even a plurality.
Here is one proffered alternative to Modi:
“Rahul Gandhi felt people would support the Congress on issues of farmers, youth, employment, inflation. But, the core issues were left behind and surgical strikes and nationalism were highlighted. The Congress was dubbed a Muslim party. Aren’t we nationalists?” Gehlot asked.
I am not so impressed. Or try this discussion “What is alternative to ‘Modi cult'”. Again, on the ideas front underwhelming, at least for this classical liberal. Maybe something good can come out of the current protest movement (NYT).
All the more, the “establishment media” just isn’t interested in framing the story in terms of individual rights and constraints on democracy. That narrative is too…well…libertarian and also anti-statist.
For one example, blame either Nilinjana Roy or the person who titled her FT column “Democracy in India is on the brink.” Last I checked, Modi was elected, then re-elected, and his party and its allies control almost 2/3 of the lower house. That is truly an Orwellian column title. It should not be so hard to write “The problem with Modi is the statism, and lack of respect for minority rights, sadly this is democratically certified and thus democracy requires real constitutional constraint of the powers of the government.” But so many people today are mentally and emotionally incapable of thinking and writing such thoughts, having spent so much time in their mood affiliation glorifying “democracy” (or what they take to be democracy) above all other values.
So we should be spending our time developing and publicizing a new (non-Modi) ideology for greater state capacity in India, combined of course with greater liberty.
And yes, please do restore, redefine, re-enforce or in some cases discover all of the required minority libertarian rights. Hundreds of millions of Indians and others are counting on it.