Ron Bailey’s New Book

It is called The End of Doom. From the final paragraph:

New technologies and wealth produced by human creativity will spark a vast environmental renewal in this century. . .the world will be populated with fewer and much wealthier people living mostly in cities fueled by cheap no-carbon energy sources. As the amount of land and sea needed to supply human needs decreases, both cities and wild nature will expand, with nature occupying or reoccupying the bulk of the land and sea freed up by human ingenuity.

Other notes:

1. Bailey is another devotee of North, Wallis, and Weingast. He argues that open access orders achieves sustainability, but limited-access orders do not and hence collapse. He worries less about environmental doomsday than about the United States slipping back into a limited-access order, in which political elites and business cronies are able to thwart human ingenuity.

2. From the introduction:

Canadian environmental researcher Vaclav Smil calculates that back in 1920 in the United States it took about 10 ounces of materials to produce a dollar’s worth of value, but that same value is now accomplished using only about 2.5 ounces

3. Also from the introduction:

wherever someone sees an environmental predicament in the world. . .the problem is occurring in an open-access commons, an area no one owns and for whose stewardship no one is responsible.

He is a fan of fish farms and private ownership of aquifers. For atmospheric pollution, such as chlorofluorocarbons that threaten the ozone layer, he sees a role for international treaties and regulations.

Bailey spoke here, and I enjoyed attending the talk.

What I’m Re-reading

Alone, the second volume of William Manchester’s biography of Churchill, The Last Lion. If I were to sum up Manchester’s view of the 1932-1940 period in British history in two paragraphs, they would be:

1. The British ruling class was rotten. The British Prime Ministers of that era were dull-witted and feckless. Traumatized by the first World War and frightened of Bolshevism, they came up with an endless list of excuses not to confront Hitler. The role played by the media during this period was dreadful–covering for Hitler and suppressing the views of Churchill until very late in the game.

2. Churchill was, in many ways, more out of touch with the twentieth century than were other members of the ruling class. However, he had the strength and intelligence that the leading politicians lacked. And unlike most others of his class, he saw Hitler with clarity.

It is very tempting to draw parallels between the highly-educated classes in this country today and the upper-class twits of Britain in the 1930’s. Indeed, at one point I suggested such a parallel during the discussion of the future of democracy, prosperity, and freedom.

So, as usual, I wrote the foregoing and scheduled it ahead. Meanwhile, there was the Islamist’s attack that killed four marines in Tennessee.

A casual reader of the Washington Post could be forgiven for blaming the attack on conservatives and the National Rifle Association. The lead Post story said that this was “the latest eruption of gun violence in the United States.” The print newspaper also provides a second front-page story, headlined “Shooter grew up in conservative family.” [The online version says “middle-class Muslim family.”]

I read every word of the second story, looking for the basis for terming the family “conservative.” Did they have a Romney bumper sticker on their car? A subscription to National Review? Perhaps they flew a Confederate flag? Were active in the Tea Party?

Instead, there are only two references to the attacker’s parents. One says that his father was briefly put on the terrorism watch list but was later removed from that list. The other quotes someone familiar with one of the daughters of the family:

“I got the sense [her parents] were very religious,” Harper added. “I got the sense they wanted to pick who she would marry.”

I would love to know how the Post determined on the basis of the content of the story that the best adjective to describe the family was “conservative.” Getting back to the 1930s comparisons, I do not want to equate Muslim radicals with Nazis, because I think that there are important differences. What I am getting at here are the similarities between the British media in the 1930s and what we find in the U.S. today.

As for the American educated in class in general, consider Harry Painter’s analysis of summer reading lists for college students.

Upon browsing the list, one might conclude that all of humanity’s best books are about minorities fighting and ultimately overcoming the oppressive constrictions of Western, male-dominated society.

My guess is that no college is going to suggest that students read Alone.

Greece and Representative Negotiation

John Cochrane writes,

So, the Drachmaized Greece that I see is not the cleanly devalued newly competitive powerhouse that some on the left seem to envision. Instead I see a two-currency economy. Pensioners and government workers and anyone unlucky enough to still have a Greek bank account get Drachmas. Hotel owners, restaurant owners, and exporters get euros, above or under the table.

My comments:

1. I agree with John that nothing real changes with a new currency. Instead, it is a way of arranging the government’s default. In addition to defaulting to bondholders, the government will default to other claimants, including pensioners. But the way it will default to the latter is by paying them in lower-valued currency.

2. I continue to believe that we will see an opaque bailout. What is happening now is pre-concession posturing on the part of the other European nations.

The classic example of pre-concession posturing is the labor union strike. One theory of strikes is that they take place because the union leaders are ready to make a deal, but they need to convince their membership that the union leaders bargained really hard. Going out on strike sends that message. Similarly, for the European leaders, engaging in table-pounding and other theatrics will help convince their constituents that they were really tough on the Greeks. Meanwhile, in the background, an opaque bailout will be arranged.

This theory of representative negotiation also holds for the nuclear negotiations with Iran. The theory predicts that there will be a deal, but in the meantime the negotiators will posture to indicate that they are being very tough with their opponents.

Speaking of Iran nuclear issues, I read Michael Oren’s new book about being Israel’s ambassador to the U.S. I found Oren credible, although for my taste he squeezes too much melodrama out of his experience. One of Oren’s points about the Obama Administration is that it has very tight message discipline, and I believe that we can see that in some of the negative reviews of Oren coming from Obama-linked writers.

Oren’s description of Obama amounts to saying that he operates using the oppressor-oppressed axis, which strikes me as accurate. Even so, it still requires some mental contortions to treat the leadership in Iran as oppressed, rather than as oppressors.

North, Wallis, and Weingast

It is not a new book, but still I wanted to review it.

Open-access orders are likely to be highly stable. Everyone who is ambitious and able to organize others is free to attempt to earn a profit or address a political problem. This gives citizens a feeling of having a stake in the system. Moreover, the layers of beliefs, norms, and institutions that precede the open-access order all serve to reinforce the order once it is in place. For example, Americans are culturally committed to free speech, disdain for corruption, and obedience to the Constitution.

This leads one to be relatively optimistic about the prospects for the United States, regardless of how one feels about recent political and economic trends.

Thoughts on Hatred and Persecution

In a post called Fearful Symmetry, the pseudonymous Scott Alexander draws parallels between the mentality of the Social Justice Warrior and his or her opponent.

The social justice narrative describes a political-economic elite dominated by white males persecuting anybody who doesn’t fit into their culture, like blacks, women, and gays. The anti-social-justice narrative describes an intellectual-cultural elite dominated by social justice activists persecuting anybody who doesn’t fit into their culture, like men, theists, and conservatives.

My thoughts:

1. He is describing two distinct forms of persecution. Persecuting people for being black, woman (or man), or gay is hating them for who they are, for something that they cannot change. Persecuting people for being a conservative or theist is hating them for what they believe, and by implication you will stop hating them if they change their beliefs.

2. Historically, Jews have experienced both forms of hatred. As I understand it, the Inquisition sought to change their beliefs. The Holocaust was existential hatred.

3. It is not clear to me which form of hatred is “better.” Both forms can lead to violence and extreme forms of inhumanity.

4. Probably both forms can be traced to the xenophobia that is in human nature. Coincidentally, I have just received a review copy of Nature, Human Nature, & Human Difference: Race in Early Modern Philosophy, by Justin E. D. Smith. Perhaps this book will shed more light on these topics.

5. Just because you can find one example of somebody on the other side who explicitly argues for persecuting your group does not mean that your group is necessarily persecuted. Before you become paranoid, make sure that everyone really is out to get you.

6. It seems easy to go from “I am a member of a persecuted group” to “I therefore have a license to persecute.” I think that it would be helpful if we could refrain from making that move. If you took away the “license to persecute” aspect, then I think that people would find grievance politics and persecution narratives less attractive.

More Essential Hayek

Again, the book will be released next week.

Another point Boudreaux makes is that in a specialized economy, our production activities are much narrower than our consumption activities. This makes rent-seeking more prevalent on the production side.

This point is easily missed. For example, Stephen G. Cecchetti and Kermit L. Schoenholtz write about the mortgage interest deduction as if its political strength comes entirely from home owners. (Pointer from Mark Thoma.) In fact, I would argue that it is the NAR, NAHB, and the MBA that make it inviolable.

We know that food stamps are popular with the farm lobby. And perhaps Medicaid does not benefit recipients as much as it does providers of medical services.

Don Boudreaux on The Essential Hayek

It is a project for Canada’s Fraser Institute. It will launch next week.

Boudreaux starts with a “nobody knows how to” introduction. He uses paper and ink as examples of mundane goods that require many different people and specialized tasks to be produced.

As I start my book on specialization and trade, I find myself doing the same thing. This is in a great tradition. Adam Smith used the woolen coat. Leonard Read used the pencil. My thought was to use a bowl of cereal.

Payroll Taxes in Europe

In France, the rate is 42 percent; in Germany, it is 39 percent; in Italy, 40 percent; and in Spain, 37 percent.

That is from Diana Furchtgott-Roth and Jared Meyer Disinherited: How Washington Is Betraying America’s Young. I see it as saying “left-wing economics is bad for children and other living things,” but they are trying to position it differently. In any case, they are suggesting that we could be headed for much higher payroll taxes ourselves.

I had not realized that these tax rates are so high. I find it hard to reconcile Germany’s relatively low unemployment rate with this high payroll tax rate.

Pinker, Hobbes, and Baltimore

I am still re-reading The Blank Slate. In his chapter on violence, he endorses Hobbes. On p. 330, he writes,

Adjudication by an armed authority appears to be the most effective general violence-reduction technique ever invented. . .there can be no debate on the massive effects of having a criminal justice system as opposed to anarchy. The shockingly high homicide rates of pre-state societies, with 10 to 60 percent of the men dying at the hands of other men, provide one kind of evidence. Another is the emergence of a violent culture of honor in just about any corner of the world that is beyond the reach of the law. Many historians argue that people acquiesced to centralized authorities during the Middle Ages and other periods to relieve themselves of the bureden of having to retaliate against those who would harm them and their kin. And the growth of those authorities may explain the hundredfold decline in homicide rates in European societies since the Middle Ages.

See also Mark Weiner, The Rule of the Clan. A few remarks.

1. This chapter challenges the more anarchist-leaning libertarian views. Instead, Pinker argues that it is natural for humans to form coalition, to fear others’ coalitions, and to launch pre-emptive strikes on relatively small pretenses. (Of course, governments do this as well. Pinker would not argue that nation-states are inherently peaceful with one another. Quite the contrary.) Another excerpt, from p. 331:

When law enforcement vanishes, all manner of violence breaks out: looting, settling old scores, ethnic cleansin, and petty warfare among gangs, warlords and mafias.

2. Reading this chapter, I could not help thinking of Baltimore. Another excerpt, also from p. 331:

The generalization that anarchy in the sense of a lack of government leads to anarchy in the sense of violent chaos may seem banal, but it is often overlooked in today’s still-romantic climate. Government in general is anathema to many conservatives, and the police and prison system are anathema to many liberals. Many people on the left, citing uncertainty about the deterrent value of capital punishment compared to life imprisonment, maintain that deterrence is not effective in general. And many oppose more effective policing of inner-city neighborhoods, even though it may be the most effective way for their decent inhabitants to abjure the code of the streets. Certainly we must combat the racial inequities that put too many African American men in prison, but. . .we must also combat the racial inequities that leave too many African Americans exposed to criminals.

He does proceed to point out that drug laws, by creating an underground economy in which participants cannot call in police to contain disputes, help to promote a climate of violence.

Social Science, Dogma, and Steven Pinker

Why am I re-reading The Blank Slate? First, because on first reading I marked it as one of the all-time great non-fiction books. Second, because I am thinking about possible parallels between the psychology of B.F. Skinner and the economics of Paul Samuelson. Some remarks:

1. Both Skinner and Samuelson dominated their fields around 1960. For those of you who do not know, Skinner’s view was that all behavior is learned, through the process of reward and punishment. We do what is rewarded and avoid what is punished.

2. Both took a very mechanistic view of, respectively, human behavior and the economy. We should not be surprised to see intellectuals in the aftermath of World War II seeing the world in terms of simple machines. What won that war? T-34 tanks. B-17 bombers. LCA’s that carried soldiers to the beaches held by Germans or Japanese. Relatively simple machines, built in enormous numbers, by countries whose economies were under considerable central control. Neither Skinner nor Samuelson would have thought in terms of personal computers or the Internet as metaphors.

3. Psychology eventually escaped the clutches of Skinner’s restricted research paradigm. Economics succumbed to Samuelson’s.

4. Pinker’s goal in the book is to dispel the dogma that human beings are shaped entirely by environmental factors, especially arbitrary social circumstances, and that social scientists have the power to re-shape society to achieve any desired outcome. On p. 19, he writes,

In behaviorism [Skinner’s psychology], an infant’s talents and abilities didn’t matter because there was no such thing as a talent or an ability. . .To a behaviorist, the only legitimate topic for psychology is overt behavior and how it is controlled by the present and past environment.

According to what I see as the central dogma of (progressive) social science, individual characteristics and choices bear little or no responsibility for differences in life outcomes. Instead, people who are successful owe their achievements to being born into power and privilege. People who are unsuccessful owe their deprivation to being born into poverty and discrimination. These outcomes are entirely changeable, through the application of social science.

Of course, this dogma is still prevalent. President Obama and many academics appear to be wedded to it.

5. I am starting to think about doing a work with the tentative title: Specialization and Trade: A Re-Introduction to Economics. The idea will be to shift focus from the issues of scarcity and choice that are now considered absolutely central in economics textbooks. Although these are certainly important, I want to argue that the central social phenomenon is specialization. In some respects, my goal is like Pinker’s. I want to emphasize the weaknesses in the simple, mechanistic views Samuelsonian economics, particularly Keynesianism, and instead offer a way of thinking of the economy that owes more to computational metaphors. Consider these sentences from Pinker (p. 31, p. 39, p. 40):

The mental world can be grounded in the physical world by the concepts of information, computation, and feedback.

The mind is a complex system composed of many interacting parts.

It is now simply misguided to ask whether humans are flexible or programmed, whether behavior is universal or varies across cultures, whether acts are learned or innate, whether we are essentially good or essentially evil. Humans behave flexibly because they are programmed: their minds are packed with combinatorial software that can generate an unlimited set of thoughts and behavior.

After listing a set of physical brain differences that are associated with different mental capacities and behavioral traits, Pinker writes (p. 44-45),

These gross features of the brain are almost certainly not sculpted by information coming in from the senses, which implies that differences in intelligence, scientific genius, sexual orientation, and impulsive violence are not entirely learned. . .There is much we don’t understand about how the brain is laid out in development, but we know that it is not indefinitely malleable by experience.

Similarly, I want to point out that economic outcomes are not indefinitely malleable by fiscal, monetary policy, and policies intended to correct market failures.