Monthly Archives: July 2016

If you are worried about inequality now. . .

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Noah Smith writes,

With robot armies, the few will be able to do whatever they want to the many.

…A.I.’s–if they ever exist–may or may not have any reason to dominate, marginalize, or slaughter humanity. But we know that humans often like to do those things. Humans already exist, and we know many of them are evil. It’s the Robot Lords we should be afraid of, not Skynet.

This article says,

As military research pushes robotics prices down and Pentagon policies push battlefield gear to domestic law enforcement agencies, expect to see more armed robots on American streets.

Feel free to make guesses as to how the future will play out. I would place a low probability that it turns out to be simply people who own drone armies repressing the rest of us. At the very least, things will be complicated by the phenomenon of people with drone armies fighting other people with drone armies.

Three Axes and Police

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Jonah Goldberg writes,

At least for a moment, antagonists on either side of polarizing issues could see beyond the epistemic horizon of their most comfortable talking points. Black Lives Matter activists thanked the police for their protection and sacrifice. Conservative Republicans, most notably House Speaker Paul Ryan and former speaker Newt Gingrich, spoke movingly about race in America. Gun-rights activists were dismayed that Philando Castile, the man shot by a police officer in Minnesota, had followed all of the rules — he had a gun permit, cooperated with the officer, etc. — and was still killed.

So are people able to view this along one another’s axes? I doubt it.

1. Progressives, who communicate in terms of the oppressor-oppressed axis, stress entrenched racism.

2. Conservatives, who communicate in terms of the civilization-barbarism axis, stress the importance of maintaining respect for police.

3. Libertarians, who communicate in terms of the freedom-coercion axis, stress that laws from the state ultimately are backed by force, so that if you want less state violence you need fewer laws.

Judging from my facebook feed, some libertarians also seem eager to align themselves with progressives.

My own feelings are mixed. On the progressive side, it seems reasonable to me to hold police to a standard that they should respond to the same behavior in the same way, regardless of the person’s race. Shopping while black should not be presumed criminal.

On the conservative side, it seems reasonable to me to want an active and assertive police force that is treated with respect. It seems likely that an active and assertive police would be particularly beneficial to poor people living in dangerous areas.

Private Firms as Public Utilities

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Thomas Sowell writes,

What President Obama has been pushing for, and moving toward, is more insidious: government control of the economy, while leaving ownership in private hands. That way, politicians get to call the shots but, when their bright ideas lead to disaster, they can always blame those who own businesses in the private sector.

Another advantage of using regulation of private firms is that it allows political leaders to finesse the socialist calculation problem. They do not have to know how to implement their goals, or even to have goals that are implementable. They put that challenge to the private sector.

If the government had to tried to actually run a mortgage relief program along the lines that many economists were proposing back in 2009, it would have never gotten off the ground, because there were so many legal and practical difficulties. And when those programs were to slow to get underway and produced disappointing results, the politicians had the mortgage industry to blame.

Three Abstracts that Caught My Attention

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1. Roland Fryer.

This paper explores racial differences in police use of force. On non-lethal uses of force, blacks and Hispanics are more than fifty percent more likely to experience some form of force in interactions with police. Adding controls that account for important context and civilian behavior reduces, but cannot fully explain, these disparities. On the most extreme use of force – officer-involved shootings – we find no racial differences in either the raw data or when contextual factors are taken into account. We argue that the patterns in the data are consistent with a model in which police officers are utility maximizers, a fraction of which have a preference for discrimination, who incur relatively high expected costs of officer-involved shootings.

2. Emi Nakamura, Jósef Sigurdsson, Jón Steinsson.

We exploit a volcanic “experiment” to study the costs and benefits of geographic mobility. We show that moving costs (broadly defined) are very large and labor therefore does not flow to locations where it earns the highest returns. In our experiment, a third of the houses in a town were covered by lava. People living in these houses where much more likely to move away permanently. For those younger than 25 years old who were induced to move, the “lava shock” dramatically raised lifetime earnings and education. Yet, the benefits of moving were very unequally distributed within the family: Those older than 25 (the parents) were made slightly worse off by the shock. The town affected by our volcanic experiment was (and is) a relatively high income town. We interpret our findings as evidence of the importance of comparative advantage: the gains to moving may be very large for those badly matched to the location they happened to be born in, even if differences in average income are small.

3. Ran Abramitzky, Leah Platt Boustan, Katherine Eriksson.

Using two million census records, we document cultural assimilation during the Age of Mass Migration, a formative period in US history. Immigrants chose less foreign names for children as they spent more time in the US, eventually closing half of the gap with natives. Many immigrants also intermarried and learned English. Name-based assimilation was similar by literacy status, and faster for immigrants who were more culturally distant from natives. Cultural assimilation affected the next generation. Within households, brothers with more foreign names completed fewer years of schooling, faced higher unemployment, earned less and were more likely to marry foreign-born spouses.

A Comment to Ponder

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The commenter writes,

It’s funny how Montesquieu never thought that this “division of power” wouldn’t work if those in power all went to the same schools and married each other.

What is required to make “checks and balances” work well? If the major institutions become controlled by people who share an ideology and outlook, does that mean that checks and balances disappear?

Last week, Alex Tabarrok wrote,

For college and university faculty in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont – the liberal to conservative ratio is above 25 to 1!

My guess is that those professors tend to see checks and balances as a bug rather than a feature, at least as long as there is a President in office who shares their world view.

Where to Expect Automation

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Folks at McKinsey write,

Manufacturing, for all its technical potential, is only the second most readily automatable sector in the US economy. A service sector occupies the top spot: accommodations and food service, where almost half of all labor time involves predictable physical activities and the operation of machinery—including preparing, cooking, or serving food; cleaning food-preparation areas; preparing hot and cold beverages; and collecting dirty dishes. According to our analysis, 73 percent of the activities workers perform in food service and accommodations have the potential for automation, based on technical considerations.

Pointer from Timothy Taylor.

I can’t wait to see the results of higher minimum wages.

Larry Summers Rides the Populist Wave

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He writes,

If Italy’s banking system is badly undercapitalised and the country’s democratically elected government wants to use taxpayer money to recapitalise it, why should some international agreement prevent it from doing so? Why should not countries that think that genetically modified crops are dangerous get to shield people from them? Why should the international community seek to prevent countries that wish to limit capital inflows from doing so? The issue in all these cases is not the merits. It is the principle that intrusions into sovereignty exact a high cost.

Pointer from Mark Thoma. My thoughts:

1. If Larry Summers has a natural affinity with ordinary people, then I was born to play in the NBA.

2. Note that he instinctively thinks that decisions should be made by governments. His concession to populism is that these decisions should be made by national governments rather than international bureaucrats.

3. I don’t think that we should sell free trade and increased legal immigration to people as “Take this pill, it will be good for you.” I think we should try to sell free trade by example, which means being willing to give up the protections against competition that we enjoy in our credentialist society.

Need Something to Read?

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For those with an interest in economic history, here are some suggestions. Pointer from Tyler Cowen.

On the list, I have reviewed the following:

Gregory Clark, A Farewell to Alms (review)

Findlay & O’Rourke, Power and Plenty: Trade, War, and the World Economy in the Second Millennium (review)

Garett Jones, Hive Mind and Joseph Henrich The Secret of Our Success (discussed in my essay on Cultural Intelligence)

I also have a soon-to-be-published review of Peter Turchin’s War and Peace and War
.

I have read enough by and about Mokyr, McCloskey, and Pomeranz to feel that I could hold my own in a conversation about their works. The many other books on the list are not familiar to me.

Heinz D. Kurz on Classical Economics vs. Marginalism

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I was sent a review copy of the book, Economic Thought: A Brief History. A few excerpts:

The classical economists emphasized the asymmetries between social classes in terms of differences in economic property and political power. . .landlords. . .as Smith put it in The Wealth of Nations, “they love to reap where they never sowed.”

…these economists started to see the interdependence of economic units as a central analytical theme. The task of political economy was to analyze the entanglement of intended and unintended consequences that resulted from the actions of self-regarding agents.

…While David Hume had maintained that man is “but a heap of contradictions” and reason “the slave of the passions,” marginalist economic thought became preoccupied with simple, linear characters who know what they want and efficiently pursue it. . .

…While the classical authors had started their analyses with a view to society. . . stratified in different classes, the marginalists began their analysis from the single needy individual.

…The marginalist concept of given preferences, depicted in a utility function (defined in terms of a given and constant set of goods), also does not provide for the emergence of new goods and hence has no way of dealing with dynamic cases. It therefore should not come as a surprise that with marginalism attention initially shifted away from questions about development and economic growth to questions about the allocation of resources toward alternative uses.

In writing a “brief” history of economic thought, any author faces a challenge of when to cut a discussion short and when to let it go on. I did not agree with some of Kurz’s choices. My overall reaction is that I found the book stimulating but not spectacular.

I am interested in the relationship among the issues on which economists focus, the approaches that they develop, and the shortcomings of those approaches. If you’ve read Specialization and Trade, then you know that I think that modern economists have taken an approach that is defective in important respects. I offer the hypothesis that they took this approach in part because of the salience in the aftermath of the second World War of the challenge of producing the combination of ships, planes, tanks and other weapons that would best meet military objectives. They came up with methods that were useful for addressing this challenge but which were inappropriate for describing an economy with many more useful goods and services and a much higher degree of specialization.

A Delicious Rant

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by Victor Davis Hanson. He winds up

In matters of deception, ostentatious vulgarity never proves as injurious as the hubris of the mannered establishment. So what I resent most about the Washington hollow men is not the sources and methods through which they parlay wealth, power, and influence, or the values they embrace to exercise and perpetuate their privilege and sense of exalted self, but the feigned outrage that they express when anyone dares suggest, by word or vote, that they are mediocrities and ethical adolescents — and really quite emotional, after all.

He leads up to it with a litany of outrages committed by Washington insiders.

Yet Victor Davis Hanson is a conservative, not some libertarian outsider. He would esteem the right sort of insider.