When was it possible to institute social democracy?

by  Tyler Cowen in

Notably, almost all the foreign programs that American social democrats envy were enacted during Europe’s long post-war economic and demographic boom. That meant that the initial cost of these systems was fairly low — young people don’t need much in the way of health care or pensions, and economies at full employment don’t spend a lot on unemployment insurance or job retraining. As incomes soared, it was comparatively easy for government to skim some of the surplus for their new social insurance schemes, because even as their taxes went up, workers still got to take more money home every week. Governments ran into problems when the boom stopped, of course, but by then, political sentiment had cemented those programs in place.

What was easy in 1960 looks herculean as 2020 approaches. Economic growth has slowed, and populations are aging, which raises the cost of any proposed program and requires you to fund heavy losses on someone to fund it, either workers in those industries, or taxpayers. As psychologists tell us, people are “loss averse” — they care much more about losing something they have than about equivalent potential gains. Given the mammoth cost of socializing the U.S. economy now, and the huge number of people who face substantial losses, I’d argue that we should probably change “herculean” to “impossible.”

That is from Megan McArdle at The Washington Post.

What is the “Poet Voice” signaling?

by  Tyler Cowen in

By comparing Poets and Talkers along these lines, the researchers were able to draw two overall conclusions. First, when compared to the Talkers, the poets tended to speak more slowly and stay within a narrower pitch range. Second, very few Talkers indulged in long pauses, but plenty of poets—33 percent—had no trouble leaving their listeners hanging for two seconds or more…

This is also, perhaps, why it can seem grating or detached: “In a more natural conversational intonation pattern, you vary your pitch for emphasis depending on how you feel about something,” says MacArthur. “In this style of poetry reading, those idiosyncrasies … get subordinated to this repetitive cadence. It doesn’t matter what you’re saying, you just say it in the same way.” Overall, the researchers write, “from this small sample, we would conclude that perhaps when some listeners hear poets read with one or more of these characteristics—slow pitch speed, slow pitch acceleration, narrow pitch range, low rhythmic complexity, and/or slow speaking rate—they hear Poet Voice.”

Here is more from Cara Giaimo at Atlas Obscura.

Google Bans Bail Bond Ads, Invites Regulation

by  Alex Tabarrok in

Google: Today, we’re announcing a new policy to prohibit ads that promote bail bond services from our platforms. Studies show that for-profit bail bond providers make most of their revenue from communities of color and low income neighborhoods when they are at their most vulnerable, including through opaque financing offers that can keep people in debt for months or years.

Google’s decision to ban ads from bail bond providers is deeply disturbing and wrongheaded. Bail bonds are a legal service. Indeed, they are a necessary service for the legal system to function. It’s not surprising that bail bonds are used in communities of color and low income neighborhoods because it is in those neighborhoods that people most need to raise bail. We need not debate whether that is due to greater rates of crime or greater discrimination or both. Whatever the cause, preventing advertising doesn’t reduce the need to pay bail it simply makes it harder to find a lender. Restrictions on advertising in the bail industry, as elsewhere, are also likely to reduce competition and raise prices. Both of these effects mean that more people will find themselves in jail for longer.

As with any industry, there are bad players in the bail bond industry but in my experience the large majority of providers go well beyond lending money to providing much needed services to help people navigate the complex, confusing and intimidating legal system. Sociologist Joshua Page worked as a bail agent:

In the course of my research, I learned that agents routinely offer various forms of assistance for low-income customers, primarily poor people of color. It’s very difficult for those with limited resources to get information, much less support, from overburdened jails, courts, or related institutions. Lacking attentive private attorneys, therefore, desperate defendants and their friends and families turn to bail companies to help them understand and navigate the opaque, confusing legal processes.

…In fact, even when people have gone through it before, the pretrial process can be murky and intimidating….[A]long with walking clients through the legal process, agents explain the differences between public and private attorneys and the relative merits of each. Discussions regularly turn to the defendant’s case: Is the alleged victim pressing charges? Will the case move forward if he or she does not? When is the next court date? If convicted, what’s the likely punishment? Any chance the charges will get dropped?

…In a classic 1975 study, sociologist Forrest Dill argued:

One of the key functions performed by attorneys in the criminal process is to direct the passage of cases through the procedural and bureaucratic mazes of the court system. For unrepresented defendants, however, the bondsman may perform the crucial institutional task of helping to negotiate court routines.

Dill’s observation still rings true: bail agents and administrative staff (at least in Rocksville) act as legal guides for defendants who do not have private attorneys—and at times they provide this help to defendants with inattentive hired counsel. They provide information about court dates and locations, check the status of warrants, contact court staff on defendants’ behalf (especially when the accused have missed court or are at risk of doing so), and, at times, drive defendants to their court dates. These activities help clients show up for court, thereby protecting the company’s investments.

The bail agents are not purely altruistic, they are in a competitive, service business and it pays to help their clients with kindness and care. When I asked one bail agent why he was so polite to his clients and their relations–even when they had jumped bail–he told me, “we rely a lot on repeat business.”

Ian Ayres and Joel Waldfogel also found that the bail bond system can (modestly) ameliorate judicial racial bias. Ayres and Waldfogel found that in New Haven in the 1990s black and Hispanic males were assigned bail amounts that were systematically higher than equally-risky whites. The bail bondpersons, however, offered lower prices to minorities–meaning equal net prices for people of equal risk–exactly what one would expect from a competitive industry.

My own research found that defendants released on commercial bail were much more likely to show up for trial than statistical doppelgangers released by other methods. Bounty hunters were also much more likely than the police to capture and bring to justice people who did jump bail. The bail bond system thus provides an important public service at no cost to the public.

In addition to being wrongheaded, Google’s decision is disturbing because it is so obviously a political decision. Google has banned legal services like bail bonding and payday lending from advertising on Google in order to curry favor with groups who have an ideological aversion to payday lending and the bail system. Google is a private company so this is their right. But every time Google acts as a lawgiver instead of an open platform it invites regulation and political control. Politicians on both sides will see that Google’s code is either a quick-step to political power without the necessity of a vote or a threat to such power. Personally, I don’t want to see greater regulation but if, for example, conservatives decide that Google doesn’t represent their values and threatens their interests, they will regulate.

Google’s decision to use its code as law is an invitation to politicization. Moreover, Google is throwing away its best defense against politicization–the promise of neutrality and openness.

What to make of Robert Aumann’s “agreement theorem”?

by  Tyler Cowen in

Here is my 2004 paper with Robin, if you need the background, or try this recent Scott Aaronson post.  Recently I was sent a question somewhat along these lines:

If someone blithely continues to disagree with their (apparent) epistemic peers, how much should we downgrade the rationality and/or intelligence and/or integrity of that person.  My answer was:

We can take a dimmer view of them, and should, but also have to take a dimmer view of ourselves, I think. I don’t think the “they” get downgraded relative to “us.”

…let’s say we agree with it [Aumann’s construction] completely. Then it would be true and non-operationalizable, keeping in mind that the smartest people I know — by whatever metric — do not themselves internalize the argument. There is some kind of semi-rational back and forth estimation process, where in part you judge [peer] expertise by the actual views people hold, and iterate accordingly. There is probably no fixed point theorem here, and no single obviously best way to proceed. Maybe we should downgrade those who do not know that. But I don’t know by how much. Maybe not by a lot, since knowing all those complications doesn’t improve one’s own rationality by a whole lot, as far as I can tell.

With a bit more thought, I have come up with a further and more specific answer.

Let’s say you are staying at a hotel, and everyone agrees that the hotel offers room service.  There is also a very good restaurant one hour away, but people strongly disagree on how to find the place.  Half of the people think the restaurant is to the West, and you strongly agree with this group; the other half strongly believe the restaurant is to the East.  If you choose the wrong direction, you will have wasted two hours driving and will have to settle for the room service in any case.

If you buy into Aumann, you should be more likely to start with the room service, even though you strongly believe the restaurant is to the West.

You will note that is a purely self-regarding choice only.  For choices in that category, accepting Aumann means you should be more willing to focus on what everyone agrees is good, possible, beneficial, etc. — you might call this common sense morality.

Alternatively, let’s say it is a choice for all of society, and many other people are pitching in their efforts to some kind of common enterprise — let’s call it politics.

You then have to ask what kind of stupidity you are most likely to expect from the contributing others.  If the relevant bias is excess conformism, I see no special case to take greater care to converge upon what others think is best.  In fact, there might be external benefits from doubling down on your own stubbornness.  You might be wrong a lot of the time, but still it will be truly rare when lots of people are really quite right, and it is important that your voice shine through and be heard in those cases.

So in a nutshell, the implications of Aumann are “common sense morality for yourself, but political orneriness remains on the table.”

Monday assorted links

by  Tyler Cowen

1. The polity that is Alexandria, Virginia this is the real America this will bore you.

2. “Ian McEwan, the award-winning author, has admitted feeling “a little dubious” about people being compelled to study his books, after helping his son with an essay about his own novel and receiving a C.” Link here.

3. Meet the wonderful Tim Kane, occasional GMU lunch partner.  The NYT runs a feature article on him, titled “Meet the Pro-Trade, Pro-Immigration Economist Running for Congress. As a Republican. In Ohio.”  And this:

On the campaign trail, Mr. Kane adapts a refrain from Howard Dean’s 2004 presidential run, saying that he is “from the Republican wing of the Republican Party.”

4. “Great Britain’s need for guns, war supplies drove 18th-century industrialism, Stanford scholar says.”  That is Priya Satia.

5. “A single academic paper, published by three Australian researchers in 2007, has been cited by Wikipedia editors over 2.8 million times—the next most popular work only shows up a little more than 21,000.” Link here.

How economists became so timid

by  Tyler Cowen in

From Eric A. Posner and E. Glen Weyl, that was then:

Self-styled American and European radicals, for example, helped end monarchy and expand the franchise. The free-labor ideology of European radicals and American Radical Republicans helped abolish serfdom and slavery and establish a new basis for industrial labor relations. The late 18th and 19th centuries also witnessed the liberal reformism of Jeremy Bentham, Smith, James and John Stuart Mill, and the Marquis de Condorcet; the socialist revolutionary ideologies of Pierre-Joseph Proudhon and Marx; the labor unionism of Beatrice and Sydney Webb; and, influential at the time but now mostly forgotten, the competitive common ownership ideology of Henry George and Léon Walras. This ideology shaped the Progressive movement in the United States, the “New Liberalism” of David Lloyd George in Britain, the radicalism of Georges Clemenceau in France, even the agenda of the Nationalist Chinese revolutionary leader Sun Yat-Sen. The Keynesian and welfare-state reforms of the early 20th century set the stage for the longest and most broadly shared period of growth in human history.

And this is now:

So where are the heirs of the political economists? Political economy has fragmented into a series of disparate fields, none of which has the breadth, creativity, or courage to support the reformist visions that were crucial to navigating past crises.

…Yet even as economists retreated from visionary social theory, the power they wielded over detailed policy decisions grew. A notable feature of this policy guidance was that it shared the narrowness of economists’ research methods. Policy reforms advocated by mainstream economists were almost always what we call “liberal technocratic” — either center-left or center-right. Economists suggested a bit higher or lower minimum wage or interest rate, a bit more or less regulation, depending on their external political orientation and evidence from their research. But they almost never proposed the sort of sweeping, creative transformations that had characterized 19th-century political economy.

How to explain this timidity? As with many professions endowed with power (like the military), economics developed strict codes of internal discipline and conformity to ensure that this power was wielded consistent with community standards…

The upshot is that economics has played virtually no role in all the major political movements of the past half-century, including civil rights, feminism, anticolonialism, the rights of sexual minorities, gun rights, antiabortion politics, and “family values” debates.

There is much more at the link.  I am not sure I have a single endorsement or criticism in response, other than to say that I view MR as, among other things, a fifteen-year running commentary on the economics profession and its ups and downs.  In any case, beware complacency!

And do not forget about the authors’ new and stimulating book Radical Markets.

Hat tip goes to Bonnie Kavoussi.

Why aren’t all tall buildings in the same neighborhood the same height?

by  Tyler Cowen in

Let’s say there is a 40-story building and a 60-story building.  You would think the different builders face more or less the same costs for their height decisions.  If you want to own 60 stories, it is still the case that everyone can build the cheapest-height building, and you can buy the stories you want from a variety of sellers.

If you had lots of companies that needed 60 stories, and you didn’t want to split up those firms across locations, and lots of companies that needed only 40 stories, the differential building heights could be explained rather easily.  But that doesn’t seem to be the case.  Most tall buildings house a variety of tenants, and those tenants don’t “need the whole height” or anything close to it.

This puzzle is from Steve Landsburg, who says “color me stumped” in his new and forthcoming book Can You Outsmart An Economist? 100+ Puzzles to Train Your Brain.

Anthony Downs on race and urbanism, that was then this is now

by  Tyler Cowen in

It always surprises me that the name of Anthony Downs is not mentioned more often in conjunction with the Nobel Prize in economics.  His An Economic Theory of Democracy is one of the best and most important books on public choice economics, and it is the major source for the median voter theorem. Yet now a new paperback copy of the book is not to be had for less than $100.  Downs also had major contributions to transportation economics (traffic expands to fill capacity) and housing and urban economics and the theory of bureaucracy.

Yesterday I learned that Downs was a major White House consultant on race and urban affairs in 1967, working with James Tobin and Kermit Gordon and other luminaries on the National Commission on Urban Problems.  What they produced fed into what was described as “The Most Courageous Government Report in the Last Decade,” namely the Kerner Commission report.  Here are some details:

1. Downs did much of the work of the commission and much of the actual writing, including of the Kerner Report, including the section on housing policy and the ghetto.

2. He was very concerned with “white flight” and thought a more radical approach to urban poverty was needed.  He thought Great Society programs had not been tried on a large enough scale.

3. In the view of Downs, major progress already had been made, but he worried that aspirations were rising faster than living standards.

4. He spelt out a “status quo approach,” a “ghetto-improvement strategy,” and a “dispersal strategy” based on integration.  He considered the latter the most ambitious and perhaps the most unikely.  He focused on outlining these alternatives, and their benefits and costs, rather than recommending any one of them.

5. Among the specific proposals considered were a Neighborhood Youth Corps, increasing the minimum wage, job training, public service programs, and a federally enforced fair employment-practices bill.  The draft also encouraged policymakers to think about educational vouchers, decentralizing urban school systems, and educational innovation.  There were arguments as to whether teachers’ unions should be held at fault and weakened.

It is striking how little these debates have progressed since more than fifty years ago.

p.s. Many on the right were critical of the report.

This is all from Steven M. Gillon, Separate and Unequal: The Kerner Commission and the Unraveling of American Liberalism.

Guanajuato fact of the day, Huachicolero edition

by  Tyler Cowen

Gangs from nearby Jalisco and Michoacán moved into the state from 2015. They are not led by El Chapo-style narcos. They make most of their money from theft and extortion. Some of the loot, including grain, car parts and furniture, is hijacked from trains bound for the United States. The biggest money-maker is fuel theft. Nearly a fifth of recorded cases occur in Guanajuato. The country-wide cost of this to Pemex, the state-controlled oil firm, is more than 30bn pesos ($1.6bn) a year.

Huachicoleros, as the thieves are called, fight each other and oil-industry workers for control of pipelines, just as drug gangs war over highways, border crossings and street corners. A politician in Guanajuato claims that 80% of murders in the state are related to fuel theft.

Here is more from The Economist.  Of course this is disquieting because Gunajuato has even quite recently been one of the safer parts of Mexico.

N.V.N.

by  Tyler Cowen in

Of course I end up reading much more than what gets reported here on MR.  In my preparation for my Conversation with poetry scholar Elisa New, I ran across this wonderful Anna Akhmatova poem, entitled N.V.N. and translated by Jane Kenyon:

There is a sacred, secret line in loving

which attraction and even passion cannot cross, —

even if lips draw near in awful silence

and love tears at the heart.

 

Friendship is weak and useless here,

and years of happiness, exalted and full of fire,

because the soul is free and does not know

the slow luxuries of sensual life.

 

Those who try to come near it are insane

and those who reach it are shaken by grief.

So now you know exactly why

my heart beats no faster under your hand.

 

We now return to your regularly scheduled programming…

What I’ve been reading and not reading

by  Tyler Cowen in

Sara Zaske, Achtung Baby: The German Art of Raising Self-Reliant Children.  Es erinnert mich an meinen Freund Bryan Caplan aber auf deutsch.  Behind the link you will see how they changed the title for the American edition, I am giving you the better British title.

Pascal Boyer, Minds Make Societies: How Cognition Explains the World Humans Create. Boyer is one of my favorite writers in the “social science tries to explain the previously underexplained anthropological practice” genre, but this one I thought lacked focus and doesn’t have an obvious enough pay-off.  I will try it again, however.

Avidit Acharya, Matthew Blackwell, and Maya Sen, Deep Roots: How Slavery Still Shapes Southern Politics is an important documentation of their core results.

Primavera De Filippi and Aaron Wright, Blockchain and the Law: The Rule of Code, is a good treatment of how the principles of blockchain and principles of the law may clash, overlap, or coexist.  It’s a good place to start on the notion that blockchains are fundamentally innovations in governance.

I have yet to crack open The Structural Foundations of Monetary Policy, edited by Michael D. Bordo, John H. Cochrane, and Amit Seru.

There is Christopher Payne and Rob Barnett, The Economist’s Diet, by two economists and based on economic reasoning, noting that I wish never to offer opinions on diet books; this one is “micro habits and meta rules.”

W. Kip Viscusi, Pricing Lives: Guideposts for a Safer Society, is as you would expect full of good common economic sense.

Saturday assorted links

by  Tyler Cowen

1. Reading Gone With the Wind in China.

2. Are nouns less emotive than verbs? (The Economist)

3. Jedediah Purdy on “the usual stuff,” though better than usual.

4. The again collapse of Argentina.

5. “The results show that fully two thirds (67%) of children either do not know what a floppy disk is or incorrectly identify it. And yes, several children did in fact identify the object as a save icon.” Link here.  And “71% of children are also unfamiliar with overhead projectors, a former mainstay of classrooms across the country.”  Thank goodness, there is indeed no great stagnation!

6. How Sweden became an enclave for country and roots music.