Monthly Archives: April 2016

Slouching Toward Progressivism?

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From a Handle comment on problems with contemporary libertarian thought.

A steady slouching towards progressivism. (e.g. The Niskanen Center). Of course it is hardly alone in his regard, and one may just as easily point to trends in mainstream conservatism or Christianity.

My remarks.

1. I believe that Robert Conquest’s second law says that any organization not explicitly right-wing sooner or later becomes left-wing.

2. I think that progressives are more prone to using the threat of scorn or excommunication, and it is hard not to respond to that. As a thought experiment, I believe that if I were to say, “I think gay marriage is ok” in a room full of conservatives, they would not hold that against me. However, if I you were to say, “I think gay marriage is wrong” in a roomful of progressives, they would give me what-for and never let me forget it.

3. Handle also says that liberatiranism tends toward

An overoptimistic – to put it charitably – account of human nature, psychology, and the decision-making capacity of most adult human beings. Specifically, there are hard questions about the nature of utility or happiness and the origin of our wants that are often overlooked.

More specifically, I think that whether libertarians break left or right depends on their outlook on human nature. The libertarians I know who break right all seem to share with conservatives a concern with the more competitive and violent propensities in human nature. The libertarians I know who break left tend to see such tendencies only in politicians.

Three Axes and Jews

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Larry Summers writes,

It has seemed to me that a vast double standard regarding what constitutes prejudice exists on American college campuses. There is hypersensitivity to prejudice against most minority groups but what might be called hyper-insensitivity to anti-Semitism.

The progressives own the sensitivity issue, which means that it is aligned with the oppressor-oppressed axis. Nowadays, Jews do not qualify as oppressed. End of story.

Passover is coming up in a few weeks. The Passover story is an oppressor-oppressed narrative with the Hebrews as the oppressed group that is redeemed from slavery. I believe that the power that this story holds for Jews is one of the factors accounting for the tendency of Jews to lean left. However, I see a lot of Jews my age experiencing cognitive dissonance between their left-leaning historical inclinations and the fact that nowadays the oppressor-oppressed axis is often invoked against Israel.

Note that Larry Summers has another reason for experiencing cognitive dissonance relative to left-wing college students and their oppressor-oppressed axis. Recall that he lost his Harvard Presidency over his alleged insensitivity to women.

Three Axes as Tribal Rallying Flags

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Scott Alexander has an essay post on tribalism. Read the whole thing. An excerpt:

in order to talk about tribes coherently, we need to talk about rallying flags. And that involves admitting that a lot of rallying flags are based on ideologies (which are sometimes wrong), holy books (which are always wrong), nationality (which we can’t define), race (which is racist), and works of art (which some people inconveniently want to enjoy just as normal art without any connotations).

What I call three axes are three rallying flags. Progressives rally around oppressor-oppressed, conservatives rally around civilization-barbarism, and libertarians rally around freedom-coercion. It is important to recognize that the actual belief systems are much more complex than that.

Methodological Individualism, Libertarianism, and Conservatism

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The error at the heart of all libertarian thought is that the individual is the smallest and primary unit of society. The libertarian consistently frames social and moral imperatives in terms of individual needs and desires and freedoms. He posits that society is the sum total of individuals pursuing self-interest.

This is not true. The smallest unit of society is the relationship between two individuals. One, two, or a thousand individuals do not comprise a society until there are relationships connecting them to each other–agreements, customs, laws, values. The connecting relationship, not the individual, is the atom of human society. It is impossible to have a society of one man.

A commenter supplied this quote, with vague attribution. If you put the whole thing into Google, it will provide a couple of forum posts by “Pleasureman.”

I believe that there is a weakness in libertarian thought, but I am not sure that methodological individualism is the culprit. Consider an analogy. Chemists want to talk about atoms as being fundamental. But in the spirit of the quote above, one could argue that we do not have a substance until we have many atoms bound together. The relationships binding the atoms are what is really fundamental in chemistry. It is impossible to have a substance with just one atom.

I would say that it is useful for chemists to think in terms of atoms, and by the same token it is useful for social theorists to think in terms of individuals. But it is important for chemists to understand the various bonding mechanisms among atoms, and it is important for social theorists to understand the various bonding mechanisms among humans.

I think that what makes conservative social theory of the Burke/Tocqueville/Yuval-Levin sort distinctive is its emphasis on multiple modes of human interaction and bonding mechanisms, including families, organized religion, civic associations, and business enterprises. Libertarians tend to focus almost entirely on free trade as a mode of interaction, and progressives tend to focus almost entirely on the central government as a bonding mechanism.

Economic Experts vs. the Public

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Noah Smith writes,

the economists were more likely than the public to support the U.S. auto bailouts, by 58.6 percent to 52 percent. They were also more likely to support President Barack Obama’s economic stimulus bill, by 52.8 percent to 43.4 percent. More economists — over 97 percent — were in favor of tax hikes, and fewer supported school-voucher programs.

Pointer from Mark Thoma.

The paper to which Smith refers, by Sapienza and Zingales, is complex, so do not take either Smith’s or my word for what it says. From their conclusion:

This difference does not seem to be justified by a superior knowledge of economists, but by a different way average Americans interpret the questions. Economists answer them literally and take for granted that all the embedded assumptions are true, average Americans do not.

…Hopefully, the same economists, when they do policy advice, would answer the same questions very differently. Otherwise, we would have to conclude with William F. Buckley, Jr. that “I’d rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University.”

As to Smith’s larger point, that economists are becoming more interventionist, I would be curious as to how much more interventionist. As long as I can remember, many economists and nearly all economic textbooks have been interventionist. Going back to 1971, whose idea was it to try to control inflation with wage-price controls?

Given the general drift to the left in academia, it would not surprise me if economists are more interventionist today than they were 30 years ago. But I would like to see some careful study to show that, not just casual empiricism.

Answers on Breaking Up the Big Banks

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Aaron Klein writes,

While big banks are extremely politically unpopular, people are increasingly banking at large banks.

Pointer from Tyler Cowen. My comments:

1. I guess once Brookings is bought and paid for, they stay bought and paid for. Remember?

2. Don’t try to make it sound like people are switching out of small banks as a conscious preference. Big banks do not grow organically, like Wal-Mart or Costco. They grow through mergers and acquisitions. I did not choose to bank with Capital One. Capital One simply swallowed up Chevy Chase Bank, the community bank where I had my accounts.

3. Don’t try to make it sound like an international business cannot operate without a bank at its disposal with at least $1 trillion in assets. My guess is that $10 billion would be plenty big for a bank to be able to satisfy multinational businesses. Remember that if there were fewer ginormous banks, there would be many more large banks. Banks can syndicate deals, also.

4. Don’t try to make it sound like big banks are an American comparative advantage. On the contrary, if we have a comparative advantage in finance in the world, it is that historically we have had other large institutional sources of capital.

5. Don’t tell me that you have solved the too-big-to fail problem. See my tests for that in the link in (1).

Economists Discuss the Movie “The Big Short”

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Jason Bram and Andreas Fuster write.

many people who were pessimistic about the housing market simply stayed on the sidelines—which in turn meant that for a while, valuations in the market primarily reflected the beliefs of optimists.

Pointer from Mark Thoma. I found myself agreeing with most of what they wrote.

I think that the same thing happened with the Internet bubble. Some of us thought that the prices were ridiculous, but we just stood aside and watched. You have to be really greedy and risk-tolerant to try to go short during that kind of frenzy, and you have to be lucky in terms of timing.

My Review of Yuval Levin

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The book will not be available for another month. My review is here. An excerpt:

His diagnosis blames both the left and the right for promulgating an untenable vision of an individualistic society under the umbrella of the central government. The result has been to demean and weaken mid-level social institutions, including local government, organized religion, and the charitable sector. He argues that such institutions are the best hope for addressing challenges that require collective action but for which the federal government is poorly equipped.

Tyler Cowen on Trends in Leisure and Work

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The video is here. Recommended.

I agree with most of what he says, and to the extent that I differ I am probably wrong.

He frames the question in terms of Keynes’ prediction that by 2030 we would see a work week of about 15 hours. My thoughts:

1. As William Gibson said, the future is here, it is just not evenly distributed. Tyler says, correctly, that the elderly have grabbed a huge share of any increase in leisure. But “elderly” is not some different social class. It is us when we get to be that age.

2. Suppose that the median adult male in 1930 started working at age 16 and worked until he died, and that the median adult male today starts working at age 20, retires at age 60, and dies at age 80. Take those 20 years of leisure and spread them across the working ages of 20-60, and that amounts to 1/3 of a year of leisure. If you think that you have about 100 hours a week to allocate (otherwise you are engaged in required activities like sleeping), 1/3 of a week is about 33 hours. So maybe you can say that we’ve taken about 33 hours off the typical work week, but we’ve decided to save those 33 hours for when we’re old. So if you worked 60 hours in Keynes’ day, now in effect you work 27 hours, and he is not so far off.

3. Note that the natural distribution of leisure might be quite different, but the eligibility rules for Medicare and Social Security are a major influence.

4. Another point Tyler makes that I would have made also is that the disutility of work has fallen. My guess is that Keynes did not foresee this or take it into account.

5. In fact, one of Tyler’s claims, which I do not dispute, is that for many people the utility of work is actually positive. In any event, if you gave people the wealth they have in 2016 but they faced the composition of jobs that existed in 1930, I bet a lot fewer people would choose to work full time.

6. Tyler points out that one factor increasing reported work hours is women substituting market work for home production. Again, I agree. In a variation on (5), suppose you offered a modern working woman a chance to earn her current wage for doing housework and child care as it was done in 1930. How many women would take you up on that? I’m guessing not many.

7. Tyler predicts that more people will work more hours going forward. His reasoning is that in cross-section, we observe the highest earners tending to work more hours. If that same pattern holds in time series, and earnings go up, then we should see more hours of work.

I think that is a dubious inference. The “one percent” are different not just in terms of ability but also in terms of preferences. They choose wealth-maximization with more gusto than the rest of us.

There are plenty of reasons to choose something other than the wealth-maximizing career path. In my case, I have inexpensive tastes. I also have a low tolerance for interpersonal stress. Others may have a low tolerance for risk. Some may have a strong attachment to living in a location that does not offer the highest nominal salary.

There are many margins along which people can adjust to higher wealth. I do not think that we can extrapolate from the behavior of the “one percent” to predict how the rest of us will choose.

Related: Timothy Taylor on what is a good job.

A good job has what economists have called an element of “gift exchange,” which means that a motivated worker stands ready to offer some extra effort and energy beyond the bare minimum, while a motivated employer stands ready to offer their workers at all skill levels some extra pay, training, and support beyond the bare minimum.

Why Have a Dynamic Economy?

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David Glasner writes,

I find it hard to believe that what makes people happy or unhappy with their lives depends in a really significant way on how much they consume. It seems to me that what matters to most people is the nature of their relationships with their family and friends and the people they work with, and whether they get satisfaction from their jobs or from a sense that they are accomplishing or are on their way to accomplish some important life goals. Compared to the satisfaction derived from their close personal relationships and from a sense of personal accomplishment, levels of consumption don’t seem to matter all that much.

Pointer from Mark Thoma.

If this were true, then the ideal economic arrangement would be the caste system. There would be no economic progress, but everyone would have their place and be secure about that.

I think that it is fair to say that on the margin more consumption would have little effect on our lives. But the cumulative effects of a better consumption opportunities are quite large. The thing is, in order to get those opportunities, you need a dynamic economy. And in a dynamic economy, business models become obsolete and the corresponding jobs go away.

Glasner brings up this issue in the context of the argument about protectionism (he is not protectionist–read the whole thing). But I think that trade with people from other countries is just one aspect of a dynamic economy.

Also, read Scott Sumner’s comments.