Monthly Archives: April 2017

Moderates fall by the wayside

Posted on by

HaAretz reports,

Two former heads of the Israel Defense Forces formally launched a new movement Monday designed to bring together a million Israelis against the forces of division they say are racking the country.

…The main problem of Israeli society, Piron said, is hatred of those who are different  − as a result of alienation, ignorance and a lack of familiarity.

I think that such a movement also is needed in the U.S. Hating the other–and feeling smug about it–is where we seem to be headed. But I think this is an uphill battle.

In a way, I think it gets back to narrower, deeper, older. In politics, as in other interests, people with only a moderate commitment tend to be left on the sidelines, while the more militant players take the field. Consider:

Would there be much of an audience for a talk radio program that was moderate?

Would Paul Krugman have the following he does if he were moderate?

Would readers of the WaPo reward it for being even-handed?

Would celebrities bring attention to themselves by being moderate?

Do lots of people use social media to share thoughts that are moderate?

I rest my case.

Meaningless rituals might be good for you

Posted on by

Veronika Rybanska and others write,

To be accepted into social groups, individuals must internalize and reproduce appropriate group conventions, such as rituals. The copying of such rigid and socially stipulated behavioral sequences places heavy demands on executive function. Given previous research showing that challenging executive functioning improves it, it was hypothesized that engagement in ritualistic behaviors improves children’s executive functioning, in turn improving their ability to delay gratification. A 3-month circle time games intervention with 210 schoolchildren (Mage = 7.78 years, SD = 1.47) in two contrasting cultural environments (Slovakia and Vanuatu) was conducted. The intervention improved children’s executive function and in turn their ability to delay gratification. Moreover, these effects were amplified when the intervention task was imbued with ritual, rather than instrumental, cues.

Pointer from Kevin Lewis. The rationalist would be opposed to meaningless rituals. Perhaps unwisely so.

Visions for a World Transformed

Posted on by

The subtitle is 99 ideas for making the world a better place–starting right now. It is edited by Philip Bowermaster and Stephen Gordon. Idea #48 is an anti-outrage campaign.

Some very successful Internet/social businesses have been built and are sustained primarily by feeding the outrage beast. In the long run, this mindset only leads us to isolate and vilify each other, increasingly making those we disagree with the Other. It is time for an anti-outrage campaign. One way to make it happen would be for highly partisan people to start publishing true and fair information about their opponents. . .saying: “I don’t like this person, but here’s what they actually say and what they’re actually doing. And why.”

The book is cheap to download on Kindle. Actually, through April 7 it’s free. Most of the ideas in the book are more exotic than #48. Skimming the book led me to speculate that the editors’ approach for finding writers consisted of hanging out in mental institutions. Or with the rationality community. (Same thing?) They had me contribute idea #76.

Some Pro-Trump Intellectuals

Posted on by

Joshua Mitchell writes,

What binds globalism and identity politics together is the judgment that national sovereignty is not the final word on how to order collective life. This judgment against national sovereignty—let us state the matter boldly—was the animating principle of the post-1989 world order, an order that is now collapsing before our eyes. Citizens who came of age after 1989 scarcely know how daring this project has been and, thanks to the American university, can scarcely conceive of any alternative to it. The post-1989 world order, however, is not fixed and immutable. It is, moreover, a rather bold historical experiment.

These are from a new journal called American Affairs. Pointer from Tyler Cowen. I will put some more quotes, from this and other articles, below the fold.

A few random thoughts from me:

1. What is Michael Lind doing on the masthead? I do not think of him as a natural Trump supporter. Of course, the mission statement for the journal does not say anything about Mr. Trump. It says, for example

We seek to provide a forum for the discussion of new policies that are outside of the conventional dogmas, and a platform for new voices distinguished by originality, experience, and achievement rather than the compromised credentials of careerist institutions.

2. We have National Affairs (Yuval Levin’s journal) and now American Affairs. What’s next? Playoffs? A college draft?

3. I find it easier to be anti-anti-Trump than to be pro-Trump. Left-wing campus activism repels me. The Democratic Party’s identity politics repels me. The outrage-manufacturing machine that is the Washington Post front page repels me. The arrogance of those in power regarding ordinary citizens repels me, although I do not think that American’s citizenry is blameless when it comes to the health care mess, for example.

4. I think that most of the policy ideas to help working-class Americans that are floating around these days are beside the point. I feel that way about trade restriction, immigration restriction, minimum wage increases, support for unions, education–pretty much every hobby horse, left and right.

I think that deregulation could make a positive difference, although the difference might be small. That is an area where there is some alignment between President Trump’s agenda and the needs of working-class Americans.

However, if it were up to me, I would focus on reducing the implicit taxes on labor demand and labor supply.

a. Get rid of “employer-provided” health insurance, which is an employment tax on healthy workers to pay for health care costs of workers with chronic illnesses, and instead provide support for the chronically ill with government funds. On health care policy in general, I continue to prefer the approaches that I suggested a decade ago in Crisis of Abundance to the Obamacare and ObamacareLite choices currently in play.

b. Reduce or eliminate the payroll tax.

c. Substitute a basic income grant for means-tested programs, including food stamps and Medicaid. However, reduce overall spending on poverty programs. That probably means setting the BIG below the level required to sustain a household. Leave it to charities and local governments to find the households that need and deserve more assistance than a low BIG can provide.

d. Fund (a) and (b) with a tax on consumer spending.

5. On foreign policy, if Trumpism means nothing more and nothing less than treating governments that work with us better than governments that work against us, then I am on board.

Continue reading →

The Fiscal Outlook

Posted on by

The Committee for a Responsible Federal Budget reports,

CBO finds debt held by the public will roughly double as a share of the economy over the next three decades, rising from 77 percent in 2017 to 150 percent by 2047.

…A number of major federal trust funds face exhaustion in the coming years, including the Highway Trust Fund in 2021, the Social Security Disability Insurance Trust Fund in 2023, the Medicare Part A (Hospital Insurance) Trust Fund in 2025, and the Social Security Old-Age and Survivors Insurance Trust Fund in 2031.

Of course, for the press, this is a yawner. It’s the CBO “scoring” of the health care bill that makes front page news.

We are not Singapore

Posted on by

John Mauldin writes,

Forty-one percent of Americans have no savings at all. An article in Forbes cites data that shows that just 37% of Americans have savings to cover an emergency that costs over $500.

…Simply put, most Baby Boomers will be down to subsistence living by the time they are 80, living on Social Security and other government benefits, with help from any capable children.

He points out that Social Security benefits are typically less than $20,000 a year, and the system is not exactly in robust financial shape. And Medicare does not completely relieve beneficiaries of out-of-pocket expenses.

Perhaps a lot of these people own homes. That would mean not having to spend any money on rent, and in a pinch they could take out a mortgage to finance emergency expenses. Still, I think that a culture of not accumulating financial savings is worrisome.

Making India More Legible

Posted on by

Via John Mauldin, Raoul Pal says,

India, pre-2009, had a massive problem for a developing economy: nearly half of its people did not have any form of identification. If you were born outside of a hospital or without any government services, which is common in India, you don’t get a birth certificate. Without a birth certificate, you can’t get the basic infrastructure of modern life: a bank account, driving license, insurance or a loan. You operate outside the official sector and the opportunities available to others are not available to you. It almost guarantees a perpetuation of poverty and it also guarantees a low tax take for India, thus it holds Indian growth back too.

…But in 2009, India did something that no one else in the world at the time had done before; they launched a project called Aadhaar which was a technological solution to the problem, creating a biometric database based on a 12-digit digital identity, authenticated by finger prints and retina scans.

Read the whole essay. He goes on to claim that this greater legibility (to use James Scott’s term) will greatly increase India’s efficiency and economic growth.

You may know that about ten years ago economist Hernando de Soto drew attention to the idea that legibility of property ownership would do wonders for capital formation in underdeveloped countries. It is plausible that human legibility is even more important.

Handle with Cynicism

Posted on by

The commenter writes,

A cynic might say that people want things produced by others to be free and easy to get, while they also want the things they produce to be expensive and under their tight and exclusive control.

So, government statistics are data collected, analyzed, and published for free, and which many academics find useful.

Meanwhile, we already know that most academics are reluctant to publish all their full data sets and program codes online for everyone to both scrutinize and use. Peer review referees often have to sign all sorts of nondisclosure agreements.

The cynic could be even more cynical and say that the government could get a lot more bang for its public buck if it insisted as a condition of accepting public funding that all research results – data and published papers – be available to the public for free, and that many publicly-funded academics currently calling for more funding of government statistics would resist such a reform if it applied to their own research.

Actually, I think that a lot of economists are unhappy with the way that journals perform their gatekeeping function, and a lot of economists want more transparency. Academic life has powerful inertia (think of the low turnover rate among elite institutions), because academics who have succeeded under a particular set of norms and institutions have both the incentive and the ability to sustain those norms and institutions.

I do not think that most academic economists necessarily prefer that their research be proprietary rather than open. It’s just that those with the opposite preference are fighting inertia. But my impressions are based on reading blogs, and the blogosphere is bound to select for economists who prefer open to proprietary.

Revisiting My Former Life

Posted on by

Susan Wharton Gates, a former Freddie Mac employee, recently published a book delving into the collapse of that housing finance enterprise. In my review, I write,

The fall of Freddie Mac came as a shock to those of us who were there in the late 1980s and 1990s, who refer to ourselves as “old Freddie.” Was the tree that seemed so sturdy twenty-five years ago knocked down by a storm or did it rot from within? Gates says that it was both. She tells the story of Freddie Mac’s fall as a combination of both external pressure and internal rot.

My review essay is long and personal. You might see at as an exercise in therapeutic reminiscence.

War, State Capacity, and Economic Growth

Posted on by

Jared Rubin looks at the literature which says that European states fought many wars, that this required them to add “state capacity,” and this in turn produced economic growth. He concludes,

while the war argument has many merits, it needs to be complemented by other arguments for “why the West got rich.” Specifically, we need to understand i) why Europe was so fractionalized in the first place, and ii) why northwestern Europe pulled ahead first. As I noted at the beginning, I think that combining the war argument with ones that look at other aspects of political institutions (especially legitimacy!) and certain aspects of culture paints a more complete story.

Pointer from Mark Thoma. Read Rubin’s whole post. A few quick points.

1. For libertarians, the idea that state capacity is important for economic growth is hard to swallow. But it may be correct. Remember your North, Weingast, and Wallis.

2. I am looking forward to Rubin’s discussion of “certain aspects of culture.” As you know, I take the view that mental-cultural factors are under-emphasized in most of the disciplines that study human behavior, including economics.