Complaining about the treatment of women in Iran is pointless unless you are suggesting we invade them to impose our view.
March 30, 2012 • 6:39 am 1
Complaining about the treatment of women in Iran is pointless unless you are suggesting we invade them to impose our view.
March 27, 2012 • 10:17 pm Comments Off
Chris Brunk, an all-too-loyal MR reader, writes to me:
I developed a thought experiment that I wanted to share with you. I call it “The Grand Gameshow”.
In this thought experiment you are a contestant on a gameshow. The host of the gameshow (let’s call him Alex) has a notecard that says whether or not god exists and to what extent he is involved in the affairs of mankind. You start with $1,000,000 that you must allocate across five possible categories:
- Category 1 – Scriptural literalism. Bet into this category if you believe that one of the religious texts is precisely accurate.
- Category 2 – God is omnipresent. Bet into this category if you believe that god is everywhere and intimately involved in our lives.
- Category 3 – God as a guide. Bet into this category if you believe that god is only there for the major turning points in life and/or when we reach out in prayer.
- Category 4 – God as a watchmaker. Bet into this category if you believe that god set the universe in motion but is no longer around.
- Category 5 – Atheism. Bet into this category if you believe that god does not exist.
You can distribute the money however you like (e.g. all $1,000,000 in one category or $200,000 in each). After you’ve allocated your $1,000,000 Alex flips over the notecard and reveals which of the five categories is correct. You keep any money that you’ve allocated into the correct category.
Some footnotes. For the purposes of playing this gameshow assume that your financial situation is that of a farmhand in Mexico. You earn about $4,000 per year and have no substantial savings or degrees. I classify simulism as being category 4.
I would be very interested to hear how you’d allocate your funds versus say, Russ Roberts or Robin Hanson.
What about Thor? Or Taoism? Or Buddhism? Or multitheism?
Privileging Judeo-Christian traditions just makes you look silly to me. Any teleology makes you look stupid; one which implies that world religions reached some sort of apogee in one particular messianic jewish cult which happened to be adopted by one particular medium sized, medium-duration empire of premodern Eurasia makes me just plain sad.
March 27, 2012 • 5:49 pm 4
I’ve been reading Why Nations Fail, the blog and book. I’ve reached the section on the Soviet Union and the Lele and the Bushong – the discussions linked to above are from Paul Krugman and James Robinson, but are on very similar lines.
The Soviet Union achieved economic growth in the 1920s-1970s by moving resources, very, very violently, out of low productivity agriculture into high productivity industry. From 1930 to 1960 the Soviet Union saw growth rates of 6% a year, probably the fastest sustained rate ever seen at that time.
The Bushong and Lele are tribes that live on opposite banks of the Kasai river. The Bushong are far wealthier, more peaceful and more technologically advanced than the Lele. This was because in the early seventeenth century, on just one side of the Kasai, Shyaam formed the Kuba Kingdom. This was an absolutist and centralised collection of the local warring villages.
What links both is that in the Soviet Union, and on the Bushong side of the Kasai, elites came to power who had the incentive to move resources to high productivity sectors in order to extract more wealth for themselves. Both societies eventually stagnated – the Soviet Union at the level of a poor industrial society, the Bushong at the level of a rich agricultural one – because both lacked institutions that gave citizens incentives to innovate and invent.
Acemoglu and Robinson argue, at length and convincingly, that wealthy capitalist countries are successful because institutions in these countries are politically inclusive, giving everyone a stake in their functioning, and economically inclusive, giving everyone a chance to take whatever employment suits them and experiment to see what innovations they can make work. Only this combination creates sustained economic growth. There are echoes of Eric Jones’ Growth Recurring, which I have discussed before.
I’ve also just read Richard Seymour‘s history of lynching and its importance in understanding the murder of Trayvon Martin. Richard underlines the long tradition of American citizens being deputised into violently upholding America’s racial hegemony. Lynching was just one part of the system of exploitation and repression blacks faced in the US.
The murder of Trayvon Martin should be seen as part of the continuation of this tradition of separating white and black space by violence in the United States. Florida’s law allowing racists to kill black people and avoid arrest if they can convince local law enforcement they were under some sort of threat. These are exclusionary political institutions in action.
The manifestly exclusionary political institutions the US still has – see also the incarceration of blacks in the US – took an even worse form in the past. These exclusionary institutions and extractive economic institutions did not however seem to significantly retard growth or innovation – although even in the US, evidence for Acemoglu and Robinson’s thesis is available, the more repressive south is poorer than the less repressive north.
The 1930s were a tragic decade macroeconomically but were the most technologically progressive decade in history, never had productivity grown so quickly. So, despite manifestly extractive institutions and exclusionary political institutions existing in the US in this period (for women as well as blacks remember) there was an explosion of innovation.
There seems to be a disconnect between incentives being important for innovation at the societal level and incentives being important for promoting innovation at the individual level. I don’t take this as evidence against the importance of institutions which promote innovation, some people had the incentive to innovate, and they pursued it with enthusiasm. The question all this seems to pose is: to what extent were these innovations individual endeavours?
What this makes me think is that many inventors do not deserve to capture the full results of their innovations. Ideas seem to be more “in the air” than the product of individual efforts. Even if inventors don’t deserve their ideas protecting, and even if it doesn’t make much sense to label something someone’s idea because they perfected it, or submitted a patent a few months or years before someone else, it may still make sense to offer them patent protection and so on to achieve the maximum possible economic growth. What policy implications this notion of desert has then is unclear.
However, synthesising Marxist analyses of race and space and the life’s work of Daron Acemoglu, James Robinson and Alexander Field isn’t something you get to do everyday. So although policy prescriptions are lacking, I hope you find the above thought-provoking.
March 27, 2012 • 5:46 pm 1
Dafna Kory first sold her homemade jalapeño jam at a clandestine farmers market in San Francisco. The jam was a hit and so was the Underground Farmers Market that brought it to consumers. But the market was shut down by the Department of Public Health because the sellers did not comply with city and state regulations.
Their crime? Most of the vendors produced their products in home kitchens.
See Emily Voigtlander’s piece for much more on this, but the question I always have about bans on commercial sale of home kitchen output is if these home kitchens are so unsafe then how is it that we’re allowed to use them at all? I eat food cooked in my own kitchen all the time, and even serve it to friends and family on a fairly regular basis. It seems like there should be some kind of standard as to what constitutes a safe facility to cook in, but if it’s safe it’s safe.
…I mean, the logic is very simple, even if I think it is stupid.
If you are cooking for yourself and your family you are likely to take greater care than if you are cooking for strangers who you may never see again and who will have difficulty identifying you as a source of infection if they do become ill subsequent to eating your food.
This one isn’t exactly rocket science.
March 27, 2012 • 4:19 pm 2
A heuristic is something that makes a complicated thing easier to understand – they usually involve simplifying things so that complicated things become easier to understand. But sometimes I think people mistake for a heuristic something which in facts makes things more complicated.
Chris’s adoption Marglin and Bhaduri terminology of “stagnationist” and “exhilarationist” for describing post-war economic institutions looks like a heuristic but really makes things more complicated. The theory goes that up until the 1970s capitalists gained from statist interference and support for the working class as the economy would have otherwise stagnated. This flipped in the 1980s as capitalists needed a more easily exploitable working class and they used the state to weaken the bargaining power of the working class.
I have two critiques.
One is that the post war world was one with incredible investment opportunities, lots of easily monetizable technological progression with a great deal of catch-up growth possible too: the UK never caught up with the US in terms of living standards. US standards of living and rates of investment were clearly seen as sustainable from this side of the pond so why state support would be necessary is unclear.
To make my second point, I have negotiated the thicket of the ONS. The vast, vast majority of economic activity is so utterly mundane that it seems bizarre to suggest that it is possible for the economy to be “stagnationist” or “exhilarationist.” Most sectors just plug along, so any “stagnationist” or “exhilarationist” impulses would be driven by very small sectors of the economy.
The top seven or so categories of production in the national accounts are: Total government, health and education; Total distribution, transport, hotels and restaurants; Total production; Total professional and support; Wholesale, retail, repair of motor vehicles and m/cycles; Total manufacturing; Real estate; Financial and insurance; Total human health and social work activities.
That is some mundane shit and I’m not sure that the heuristics mentioned above are useful in describing an economy so boring.
March 23, 2012 • 5:32 pm 4
Minimum alcohol pricing – bloody arseholes – and I say that in a professional and personal capacity.
The pricing of alcohol at 40p a unit, given modern booze taxes (about £1.90 on a bottle of wine), amounts to a ban on loss leaders. In other words, it solves a coordination problem for supermarkets. This is one reasons Tesco supports minimum pricing; they no longer have to sacrifice margin to attract customers from Sainsbury’s etc.
So, what we have is a transfer of wealth from most people who drink, but especially from heavy and thrifty drinkers, to supermarkets’ bosses and shareholders. Interestingly, given supermarkets’ size and prominence, this means it is a transfer of wealth to people with private pensions which will tend to be at least somewhat invested in supermarket stock.
Slow hand clap for the Tories – combining socialism for the rich; innovation stunting regulation and the shittiest part of Scandinavia since their post-war embrace of eugenics.
March 21, 2012 • 5:37 pm Comments Off
First, stimulus. Mr Osborne has been boasting of his plans to reduce taxes and spending simultaneously. This is precisely the opposite of what is required at a time of weak aggregate demand, and every bit as foolish as when Gordon Brown increased both taxes and spending in a boom. I will unveil a package of spending on roads, railways, primary schools in oversubscribed areas and social housing. In many cases this will simply mean implementing pre-existing plans, so the building work can start without delay. By utilising spare resources in the economy, this plan will stimulate demand and provide urgently needed infrastructure at a low cost to the wider economy. On the “stitch in time” principle it will also reduce the total need for public spending over the next decade and beyond.
More at the FT from Tim Harford.
March 21, 2012 • 5:11 pm Comments Off
The problem with developing countries finding resources is that it becomes very easy for whoever controls the resources, usually the only thing in the country capable of beign exchanged for foreign currency, can control the country and set the rules of the game in their favour. This is usually very bad for economic growth.
That doesn’t sound too dissimilar to the position Finance has found itself in since the 1980s in the UK and US. Finance is immensely profitable and those that control financial firms seem capable of controlling the institutions of the countries in which they operate setting rules – with regard to barriers to entry, bailouts, taxation – in ways which suit incumbent rich people.
The Finance Curse doesn’t operate to anything like the degree the Resource Curse operates in poorly run, poor countries. Perhaps Finance handicap is better.
March 21, 2012 • 4:49 pm Comments Off
March 21, 2012 • 4:17 pm 1
If you’ve got some natural resource within your borders, one that lots of people want to buy, then you end up getting lots of foreign money being changed into your local currency as people buy that resource. That drives your exchange rate up and thus strangles everything except that natural resource.
That isn’t the resource curse, that’s Dutch Disease, so named because after the Dutch discovered Gas all their other businesses became uncompetitive. The resource curse is more complex than that.
Currency appreciation may be bad for producing and exporting things, but it is very good for consuming and importing things. Both of these things are good things to do, it is all about degree. To call either circumstance a curse is a misnomer. Consuming things is the point of economics, were it not why invest in a gamble to consume more in the future?
No, I think currency appreciation is a significantly smaller part of the resource curse than is the fact that the presence of valuable resources make it more profitable for elites of one shade or another to seize political and economic control of a country’s institutions.
Acemoglu and Robinson have a blog all about this.
Having an overvalued currency might depress output in a few exporting sectors a bit, having competing meglomaniacs try to take over your country will crush economic activity everywhere.
The most important thing a developing country can do is to enforce fair rules in a predictable way, natural resources and the super profits available from their sale, make it incredibly easy for one group or another to evade, subvert or supplant the law.
March 21, 2012 • 8:30 am Comments Off
As discussed at Lawyers, Guns and Money there’s lots of negative anecdotal evidence of the climate changing. However you don’t here much about the good news about climate change. So here are a few pieces of good news (and one bad) from what I know about: wine.
When you work in an industry where profitability is tightly coupled with the weather, then you notice something like climate change.
Personally, my two favourite wine producing regions are Bordeaux and Germany so there is a major, probably overwhelming, upside to mild to modest degrees climate change (about 80% of likely scenarios). However, I still find climate change worrying and we should definitely take steps to stop it.
If we don’t then I can highly recommend 2009 in both Bordeaux and Mosel or Pfalz for drinking now and for their ageing potential – and 2010, 2011, 2012, 2013…..
March 19, 2012 • 9:10 pm Comments Off
First of all, I don’t blame my generation for lacking a little work ethic or for suffering from a little economic fatalism. The FT report that my generation are no better off than those before and of course we’re also more unemployed than earlier generations. So a little pessimism is to be expected and some of that will present as fussiness and laziness.
That said, doing nicer work and less of it is one of the major driving forces of properly functioning economies. Look at this from the OECD. Now, look at which countries look fussy and lazy, and which look hard working.
I sure like the look of lazy Belgium over industrious South Korea. South Koreans work 30% more hours for 30% less money. To become plump and lazy is what success looks like.
March 18, 2012 • 7:23 pm Comments Off
So there is some land behind where I live which local residents have fought long and hard to keep clear. The council want to put a block of flats there and the local residents don’t want the disruption. Your common and garden variety of NIMBYs.
This afternoon seven caravans (with four pit bulls) of travellers set up camp.
Were I not worried about being that liberal that actually gets mugged, I still wouldn’t have stopped laughing.
March 14, 2012 • 9:23 am 4
George Osborne is planning to take advantage of Britain’s historically-low interest rates by issuing so-called ‘super bonds’, which will not be repaid for 100 years or more…
A Treasury source said: “This is about locking in for the future the tangible benefits of the safe haven status we have today.
“The prize is lower debt interest payments for taxpayers for decades to come. It is a chance for our great-grandchildren to pay less than they could otherwise have expected to because of this Government’s fiscal credibility.”
Long-term debt will not lock in low interest rates for 100 years. Long-term interest rates will be determined by the expected future path of short-term interest rates plus a risk premium. Nobody will lock in any sort of free gift for current or future taxpayers because people are not mugs.
We know nothing about how productivity, geopolitics etc will shape up over the next 100 years (compare 1845 to 1945 or 1912 to 2012!), so I don’t really see how Osborne can honestly expect a meaningful change in funding costs from issuing such long bonds. This makes me think he is doing this as a propoganda tool
Look how extreme the situation is. Look at the crazy things we have to do!
I’m not sure government funding choices are the best outlook for propaganda exercises but there you go, Osborne’s always been a canny political operator.
March 14, 2012 • 8:00 am 1
This is an example of what I was talking about here. What should I write about the NHS?
At the moment, Tories and Lib Dems have legislated to destroy large, geographically located primary care trusts and to replace them with small, non-geographically based GP consortia. These will register and treat patients but will have the option to have a large degree of administration carried out by private sector contractors. More details are not forthcoming in the maelstrom of amendments the Liberal Democrats are sticking over the Bill.
My priors tell me that:
Finally, there is other things militate against my adoption of Conservative and Liberal Democrat and reforms.
So with respect to yesterday’s post, I still find myself in stage two, struggling to understand what is going on in the world, aware of my own ignorance merely sketching out ideas. I hope that these sketches are illuminating to my readers.
To sum up, my primary worry is that any long term benefits of the reform – assuming it leads to a productivity miracle which is widely shared and not merely a cover for privatisation – is swamped by the short term disruption such as the cost and waste of GPs spending four out of five days setting up Consortia rather than treating patients. In the long run the reforms may destroy the NHS, but it can be rebuilt – in the short run, these reforms are going to kill people, and those lives cannot later be rebuilt.
 Confused? Good. That sentence was an allegory for the confusing nature of the reforms. Don’t say you don’t get more than one level of meaning from this blog.
March 13, 2012 • 9:58 pm 2
A schema in response to a reader I met who said I didn’t post much. I’m somewhere in the (I hope latter) stages of 2.
March 13, 2012 • 12:01 am 2
Treat enough people like scum and people will act like scum. Plan B’s new record about last year’s riots is well worth a listen on its merits and as social commentary.
Creating or reinforcing a positive or negative stereotype about someone will cause them to live up or down to that stereotype. Chris points us towards the Oak School experiments that showed pupils arbitrarily deemed to have high IQ subsequently did better at school. Other examples, again cribbed from Chris, show that American blacks (pdf) or low-caste Indians can be primed to live down to their negative stereotypes.
So in answer to Plan B‘s question: Why do some kids not care if they get criminal records? Why risk an easy life for some new trainers? To a degree, this is because they’ve been told that people just like them don’t care if they get a criminal record and that all they care about is a new pair of trainers (preferable hooky). Constantly demonise the working class as chavs and you will end up with part of the working class acting like demons.
March 9, 2012 • 1:22 am 2
So, it seems that the Edwardian period was not very criminal, crime increased substantially after the second world war, or so they say. But we used to lock up gays and not let women vote, which were surely crimes, but would not be recorded as such. So maybe times aren’t so bad now, were you to think they were. Mostly aimed at Laban Tall and Vimothy.
March 6, 2012 • 10:58 pm Comments Off
One of the advantages of being a reactionary is being able to resort to “common sense” to defend your positions. A radical proposal, even if it is a good idea – like a Land Value Tax – or supported by tons of empirical evidence – like tackling climate change – can be stymied by appeals to “common sense.”
What you rarely hear are sophisticated arguments attempting to philosophically undermine either position. You don’t hear people claiming often that value is so intrinsically effemerable that no taxation of it is possible, they just moan about old ladies being forced out of their homes because they are asset rich but cash poor.  If anything resorting to sophistry is a sign that the reactionary bigots know they’re losing an argument.
And so we turn to Cardinal O’Brien who has recently said that 1) gay marriage is on a par with slavery 2) marriage is an immutable platonic ideal and so timeless and pure it cannot and must not be reformed by governments and that finally 3) defining gay marriage as real marriage would violate the Universal Declaration of Human Rights. No. Really. All of this nonsense was said by a real person.
Controlling what counts as common sense gives you an enormous amount of power to not only silence critics but to determine the overton window within which debate occurs. For a long time homophobes helped define what common sense was, but demographics and logic has shifted common sense and majority opinion in a more liberal or accepting direction. Losing control of common sense is thus a major blow and can only really be dealt with through attempts to recapture it, capitulation, or reaching for resentiment.
O’Brien’s sort of sophistry is introduced as a sort of resentiment, focusing internal fears of losing control onto the misbehaviour of governments, or gays, or society in general. There is no choice here for O’Brien, because the reactionary can no longer appeal to “common sense” because about half of Brits think gay marriage should be fine.
So he cannot recapture it, and neither can he capitulate to it because that would be more or less impossible to reconcile with Catholicism and he knows it. So look out for shifts from “common sense” and empirics to sophistry, because it is a sure sign you’re winning whatever argument you’re having and the other person knows it.
 Look, you fuck-wits, liquidity transformation is what finance is for. If we implement a Land Value Tax, a bank, building society or whatever will help people turn their illiquid assets into liquid cash, that is one of the core purposes of finance. At the moment releasing equity in a property is quite expensive, but were a million extra customers to appear then the extent of the market would quickly increase entrants and push down costs. I could write the contract myself:
“We will pay your tax for you, but on exit from the property or your death we shall demand payment of amount paid plus seven percent for each year we paid your tax. This can be met out of sale of your property or if possible and if as your last will and testament specifies from the remainder of your estate.”
Anyway, I got sidetracked…back to the top you go.
March 3, 2012 • 2:34 am Comments Off