Category Archives: Tyler Cowen is my Favorite Blogger

Honor, Face, Dignity, and Victimhood

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Jorg Friedrichs writes [UPDATE: link fixed],

In short, status is more salient for honor and face than for dignity cultures. In honor cultures, hierarchy is like a “pecking order” with “cockfights” rife among status-anxious rivals because the honor code requires defending honor against real or perceived challenges from peers. In face cultures, hierarchy is engrained in the collective consciousness of the group and status anxiety cannot burst into conflict because people must know their place. In dignity cultures, self-worth is a birthright so status and, by implication, status anxiety should matter less.

There is a lot of interesting, speculative discussion along these lines.

On a related note, in a recent Cowen-Haidt discussion, Jonathan Haidt brought up one of his old posts.

I just read the most extraordinary paper by two sociologists — Bradley Campbell and Jason Manning — explaining why concerns about microaggressions have erupted on many American college campuses in just the past few years. In brief: We’re beginning a second transition of moral cultures. The first major transition happened in the 18th and 19th centuries when most Western societies moved away from cultures of honor (where people must earn honor and must therefore avenge insults on their own) to cultures of dignity in which people are assumed to have dignity and don’t need to earn it. They foreswear violence, turn to courts or administrative bodies to respond to major transgressions, and for minor transgressions they either ignore them or attempt to resolve them by social means. There’s no more dueling.

Campbell and Manning describe how this culture of dignity is now giving way to a new culture of victimhood in which people are encouraged to respond to even the slightest unintentional offense, as in an honor culture. But they must not obtain redress on their own; they must appeal for help to powerful others or administrative bodies, to whom they must make the case that they have been victimized.

Liberty, Conformity, and Academic Diversity

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Miles Kimball writes,

John Stuart Mill argued that protecting civil liberty is not enough; social liberty must also be protected. It is possible to force most people into conformity with prevailing opinion by criticism, disapproving glances, and mockery of nonconformity.

Pointer from Tyler Cowen.

I am afraid that this is the price that we pay for living in society. Any cohesive society will reward cooperators and punish defectors. Social sanctions are going to be part of that.

To put this another way, I would argue that conformity is usually good and nonconformity is often bad. Yes, we want our society to accept some nonconformity. However, I believe that those who profess to want to live in a society with a much higher tolerance for nonconformity are probably kidding themselves. Note that in the 1960s how quickly the expressions of non-conformity (long hair, etc.) came to be themselves enforced by standards of conformity.

In another interesting paragraph, Kimball writes,

As an academic, I notice how powerfully the opinion of other economists–whether right or wrong–operates in controlling the behavior and the research priorities of the typical academic. It is hard to think of many people who could be more safe from harsh practical consequences for a dissenting opinion than tenured professors, yet most still meekly follow the opinion of the crowd within their discipline. Is this the way it should be? Is this the way to best advance science? I don’t think so. Surely, a bit greater variance in expressed opinion would be more productive of scientific progress than the degree of conformity that prevails within most scientific disciplines, including economics.

My comments.

1. Do you remember what Paul Romer said?

The only way I can see to protect scientific discourse is to limit entry into the discussions of science.

2. If you are looking for an optimum degree of tolerance for divergent ideas, I do not think you will find it at either 0 percent of 100 percent. I do think that right now in economics, the tolerance for divergent ideas is too low. However, it is better than it was 30 years ago.

How Can Both Left and Right Believe that they are Losing?

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Tyler Cowen writes,

the new book by Jacob S. Hacker and Paul Pierson, and the subtitle is How the War on Government Led Us To Forget What Made America Prosper. It is well written and will appeal to many people. It is somewhat at variance with my own views, however. Most of all I would challenge the premise of a “war on government,” at least a successful war.

This reminds me of a puzzling phenomenon that I have noticed. If you read narratives of recent history from the perspective of the left and the right, each side believes it is losing. One could dismiss this as marketing strategy. If our side is winning, then why is it urgent to read my book or donate to my organization?

But I think it is possible for the each side to sincerely believe it is losing.

The left presumes that government can solve problems. We have problems. Therefore, we must be losing!

The right presumes that the government causes problems. We have problems. Therefore, we must be losing!

Entertaining Debate on the Economics of Education

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I recommend this EconDuel between Tyler Cowen and Alex Tabarrok, with the latter channeling Bryan Caplan, on whether education is content or signaling.

Tyler argues that students pick up valuable intangible forms of knowledge in college. One might term this cultural learning.

When I showed the debate to my high school students, they were somewhat put off by Tyler saying that students learn to “submit to authority.” I think that a better formulation would be to say that students learn to please authority in ambiguous situations. That is, a skilled worker in today’s economy needs to meet expectations in a setting where instructions are not precise. Your boss does not want to spend time telling you exactly how to do your job. Instead, the boss wants to set some general expectations and have you figure out how best to meet or exceed those expectations. In college, writing a paper or trying to prepare for a test requires similar skills–the ability to anticipate and satisfy what the professor is expecting without being given a precise set of step-by-step instructions.

When I gave job interviews, the crucial point in the interview was when I said, “Tell me what questions you have.” I took the view that someone who was going to do a good job would have the ability to ask relevant, probing questions. Someone who lacked that ability would be too passive and create too many opportunities for communication failures between me and the employee.

In theory, a better educated person would do better in my interview. That person would have a better sense of the right questions to ask in order to be successful as an employee.

On the other hand, the cultural learning aspect of college education might be nothing but an Eliza Doolittle effect. Because you are able to speak with the proper intonation and express the views of a well-educated individual, you ingratiate yourself with people who can hire you into or connect you with well-paying jobs. But someone with more lower-class conversation patterns might actually be as good or better at doing the work.

Personality and Ideology

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Alan Gerber and others write,

Agreeableness is strongly, and consistently, associated with liberal economic positions and Emotional Stability is strongly associated with conservative economic positions.

… while previous research has rightly identified Conscientiousness and Openness as the traits most
consistently related to ideology, our analysis shows that the other Big Five traits—particularly Emotional
Stability and Agreeableness—significantly and substantially affect political attitudes.

Pointer from Tyler Cowen.

The authors departed from previous research by separating issues into economic and social issues. By not confounding the two, they find different patterns of relationships between personality traits and conservatism. People who dislike markets tend to score higher on agreeableness, meaning that they like to be seen as pleasing to others. They tend to score low on emotional stability, meaning that they are prone to worry and fear.

A China Bear Growls

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He writes,

It’s unprecedented. With almost 50 million empty houses and with big inventories of major commodities, China’s lenders, builders, and manufacturers are still going for more. As one small example, the world, led by China, is still on track to produce as much as 40 percent more iron and steel than it needs this year.

No, it’s not Tyler Cowen. It’s Richard Vague (what a name to live down!).

Beware the Lone Chart

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Tyler Cowen reproduces a chart from Sober Look purporting to show that house prices are now above their 2005 peak. Several commenters on Tyler’s post are skeptical, and so am I.

Consider figure 2 in this piece by San Francisco Fed economists. It shows the price/rent ratio, and while it has gone up considerably since the trough, it is nowhere near back to the peak. Their figure also shows that mortgage indebtedness is not in a danger zone, either.

Look, if you want to suggest that house prices in San Francisco and Los Angeles are hard to justify, I won’t argue with you. But at the risk of saying something that could look stupid later this year, I will say that most of the country is not yet in a housing bubble.

Thoughts on Movie Pricing

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Tyler Cowen quotes Ashok Rao,

Is the fact that I’m browsing on iTunes at all enough of an information signal to segregate the market?

I believe that this is the answer. If you go to a movie theater nowadays, that is as good as putting a sign on your forehead saying, “I have inelastic demand.” In a world where price discrimination explains everything, you can expect movie ticket pricing to err on the high side.

On the question of why there is not a price differential for higher quality movies, I have the following thoughts:

1. The best analysis of the economics of movies can be found in The Big Picture, by Edward J. Epstein. Pretty much everything I know about the topic I learned from reading that book.

2. One thing I took away from Epstein is that a lot the revenue that goes to the industry comes from tie-in sales (think Star Wars toys) and popcorn sales. The movie per se has more limited revenue potential.

3. Should better movies cost more because they are more expensive to make? Actually, the relationship between the amount spent making a movie and the quality of the movie is not terribly strong.

4. If you think that it should be the cost of distribution that drives the cost of movie tickets, then, well, the cost of showing a good movie is no higher than the cost of showing a bad movie.

5. From the theater’s point of view, it is perfectly rational not to charge a premium for good movies. The theater does better to increase popcorn sales by raising the quantity instead of trying to increase revenue per ticket by raising the price.

6. From the theater’s point of view, it is perfectly rational not to offer discount tickets for bad movies. Because the biggest cost of seeing a movie is opportunity cost, cutting the price is not going to induce many people to watch a movie they don’t want to see. Would you waste the time to go to a theater and watch a movie just because it was half price?

The Goldwater Debacle

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I have finished reading my advance copy of Yuval Levin’s The Fractured Republic. I am confident that when I make up my list of most important books of 2016 that it will be included. Unfortunately, it does not go on sale for another three months.

Levin attempts to interpret extended periods of economic, cultural, and political history in terms of broad themes. Given that such an effort takes huge risks (of which he is aware), I think he does a very creditable job. But these sorts of high-level analyses are always subject to quibbling over details.

One such detail concerns Lyndon Johnsons’ Great Society. Levin–and he is hardly alone in this–sees the legislation of 1965 as a natural product or capstone of an era in which the Federal government took on increasing responsibilities.

I want to push back and to stress the idiosyncratic and accidental nature of the Great Society legislation.

1. Johnson never succeeded in selling his program to the public. The public’s attitude toward the Great Society was predominantly scornful and cynical. Grace Slick, before she became the lead singer for Jefferson Airplane, was in a band called The Great Society. It was not an homage.

2. The left had very mixed feelings about Johnson. Many northern liberals were put off by his southern accent. They were still in mourning over Kennedy and many were put off by Johnson’s lack of the Kennedy charm and grace. Also, by 1965, Vietnam was cutting deeply into his support among liberals, particularly younger ones. And there seemed to be a disconnect between the term Great Society and the urban unrest that was starting to erupt. Rather than wishing to share in the glory of the Great Society, many liberals saw it as an exercise in Johnson’s ego and parliamentary wiles.

3. What made the Great Society possible was the landslide victory that Democrats won in 1964. In that sense, we owe the Great Society to Barry Goldwater. His nomination shattered the Republican Party. In today’s terms, think of an effect on the Republican establishment somewhere between a Cruz nomination and a Trump nomination. Moderate Republican voters stayed away in droves in 1964, and in those days coattail effects were much stronger. As a result, the disaster of 1964 decimated Republicans up and down the ballot. There are those on the right who like to romanticize the Goldwater insurgency by saying that it “paved the way for Reagan.” What it actually paved the way for was Democratic control of Congress that remained well entrenched into the Reagan era and beyond. It was the class of 1964 that passed the Great Society programs and that made them impossible to repeal even when Republicans re-took the Presidency.

It can be difficult to predict the consequences of one’s preferred candidate winning a nomination or an election. That is one reason to agree with Tyler Cowen that you should be careful what you wish for.

What is the Stock Market Watching?

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The Bernank applies statistical analysis to the way the stock market has reacted to oil prices. Pointer from Mark Thoma.

Amni Rusli points to a Merrill Lynch study of how markets watch central banks. Pointer from Tyler Cowen.

Am I the only one who thinks that the stock market should be watching the election season, and that it should be tanking even more than it already has? On the Democratic side, the defining issue of our time is rich people making too much money and not paying enough of it in taxes. And the government not providing enough freebies to everybody else.

On the Republican side, the defining issue of our time is immigration enforcement. I cannot get on board with that. Are immigration laws even the most important of all the laws that are loosely enforced? I don’t see speed limits being strictly enforced on the Beltway. I don’t see recreational drug laws being strictly enforced on college campuses.

My point is not that I think we should be moving toward strict enforcement of speed limits and drug laws. My point is that “But it’s illegal!” isn’t the argument-clincher on immigration enforcement that a lot of people think it is.

I am not the type of person who is going to say, “inequality and immigration must be important, because so many people think so.” Instead, I am just going to say that the people who are voting to express themselves on those issues are, in my opinion, flat-out wrong.

I don’t think of myself as a defender of the political establishment. But when see where Sanders supporters and Trump supporters are taking this campaign, it’s enough to make me want to send valentines to Mitch McConnell and John Boehner.

What are the issues I worry about? Our country is sleepwalking toward a fiscal meltdown, as the past debts and future unfunded liabilities get larger every year. We have piles and piles of regulations, without knowing whether they are aligned with or working against their intended objectives–but I strongly suspect it’s the latter. We have a substantial share of the population that is poorly integrated into the productive economy and having most of its children out of wedlock. Our response to Islamic terrorism consists of random flailing overseas and massive inconvenience to innocent people at home, so as not to appear to be engaged in the dreaded “profiling.”

But those issues have been crowded out by inequality and immigration. If other investors shared my view of the political environment–and some day they might–stock prices would be less than half of what they are today.