Out of Town

I will be vacationing with my family until after the New Year. I wish all of you a merry Christmas and a happy New Year.

Some More Economics of Language

A couple of years ago I wrote a piece on the economics of language, in which I speculated on what the global language was likely to be. I argued in particular that one of the things working against the shoving aside of English by Chinese, even if Chinese economic strength continues to grow, is that the Chinese language is not as good at expressing new concepts, because of its fixed character set. Whereas English (and many other languages, including Japanese) is very welcoming of outright foreign constructions, in Chinese the existing character set must be used to create a rough synonym for new ideas. Something is therefore presumably lost in the translation of foreign neologisms. (The Japanese, despite their use of Chinese characters, avoid this problem by also using a phonetic alphabet for foreign words, allowing them to be imported in directly, sometimes with altered meaning.)

But one advantage of the static or centrally planned (as with the Académie Francaise policing the French language) tongue is its very constancy. Any educated Chinese person may have a much better chance of reading classic Chinese documents because the character set is known to him. The English speaker, on the other hand, has it much harder because new words are constantly being coined, in addition to new usage rules. (I found this argument as I was rereading Jacques Barzun’s magisterial From Dawn to Decadence.) For an American in 2007, Mark Twain is mostly readable, Shakespeare can be read by the generally well-educated, but Chaucer and certainly Beowulf are impossible to read without arcane training. The policed, more static language thus makes it easier to communicate, as it were, with the culture of the past.

How important this is depends on how important you think the future is, versus the past. I, and Americans in general, tend to be future-oriented people, and in an atmosphere of general cultural and technological dynamism a fixed language is more of a problem in taking advantage of, and contributing to, this ferment. But if you believe, as Edmund Burke did, that society is an eternal contract among “those who are living, those who are dead, and those who are to be born,” linguistic evolution is problematic. Perhaps it is thus not surprising then that people of a conservative temperament are most eager for prescriptive linguistics, for a language of rules, instead of asserting that whatever people are saying right now is grammatically correct.

If They Invited Me to a Debate...

For a variety of reasons, I could not be elected dogcatcher. But if I had participated in the GOP debate yesterday in Iowa, here is how I would have answered some of the questions the moderator asked:

Q: What sacrifices would you ask Americans to make to lower the country's debt? And I'd like you to be specific.

A: Your question is vague, as it does not specify what sort of “debt” is a problem. My “debt” to my mortgage broker is not only not a problem, it is essential to enabling me to have a home for my family. A lot of “debt” is like that, a voluntary exchange of present for future wealth, a trade between people with money but not many opportunities and people with opportunities and not so much money.

If you mean the federal debt, the accumulated money owed to holders of federal bonds, you ask the wrong question. That the government borrows money is not the fundamental problem; that the government spends money to begin with can be. Imagine that we are asked to approve the government’s building of the world’s tallest sandcastle, and that it will cost $1000 per taxpayer. Imagine that the interest rate and the term structure of government borrowing is such that $1 borrowed today implies $2 must be repaid in 20 years. Suppose also that I have $10,000 saved up that I wish to invest for my children, which by construction will be $20,000 in 20 years.

We have two choices as to how to fund our sandcastle. First, borrow the money. If so, I pay no taxes. But the government borrows $1000 on my behalf, and my son inherits $2000 in debt, meaning that the $20,000 he expected to inherit is only $18,000. This is called “borrowing from our children,” and widely decried.

Now suppose the government “pays” for the sandcastle by raising my taxes by $1000. Alas, this means I can only invest $9000 for my child, leaving him with…$18,000. It is not borrowing that takes money from our children; it is government spending. If the sandcastle is actually a wasteful use of dollars relative to what I and my children do with it, the problem is (so to speak) compounded. The sandcastle had better add more to society than the $1000 does.

Q: Who in this country is paying more than a fair share of taxes relative to everyone else -- the wealthy, the middle class, the poor or corporations?

A: Corporations are simply a form of citizen organization, and they should not pay taxes any more than the government workers’ unions or the Knights of Columbus should. Taxes should be assessed on individuals, so as to maximize their transparency and make it more difficult for congressmen to by subterfuge extract wealth from free men and women. Individuals should pay the same tax burden – not as a percentage, but an absolute amount. This insures that all citizens are equal before the law. I would be willing to consider the justice of everyone paying the same share of income as taxes (a “flat tax”), but the lump-sum tax seems to me to be the most just, and most likely to restrain government.

Q: Some of our big trading partners commit human rights violations. Considering that poverty and abuse are often blamed for fostering terrorism, should we alter trade policies with those countries?

A: The assertion that “poverty and abuse” cause terrorism is asinine. The Sept. 11 hijackers, and leaders and foot soldiers of the jihad generally, are often from middle-class backgrounds. Terrorism is a tactic used by enemies who are otherwise militarily weak.

Since I as president would have no sovereign authority over foreigners, I must act to protect the liberty of Americans. This indicates that all Americans should have the right to buy and sell with foreigners without restraint, national-security needs (narrowly defined) excepted.

The assertion that “some of our big trading partners commit human rights violations” is too vague to be helpful in answering the question.

Q: What specific changes should be made in NAFTA?

A: As president I would seek to withdraw the US from NAFTA and all other trade agreements, and implement unilateral free-trade policies with the rest of the world. Buyers and sellers need to be equal before the law, and it is not proper to use the power of the state to restrict the liberty to trade of either. The gains to trade are first and foremost greater competition, lower prices, higher quality and more possibilities generally for consumers, with jobs created in export industries only the price that needs to be paid (our workers making things that our people don’t even get to use) to achieve this. A dead white male named Adam Smith settled this some 230 years ago; please look into it.

Q: I want to take on a new issue. I would like to see a show of hands. How many of you believe global climate change is a serious threat and caused by human activity?

A: Raising hands is what schoolchildren do. It is undignified and showboating by the moderator in what should be a serious enterprise, a presidential debate. [To his credit, Sen. Thompson gave a similar answer.]

Q: What impact on the economy would be acceptable in order to reverse global warming and greenhouse gas emissions?

A: Man is an immensely innovative creature, and rumors of his demise are constantly being exaggerated by those resentful of commerce and achievement, including the modern neurotics of the environmental movement. Such climate change as occurs will be handled, just as it has been handled in the last 100 years, by free men and women responding to problems as they occur. The transnational bureaucracy that many seek to create so as to limit our freedom to experiment, to buy and sell, and to achieve is a far greater threat than any human-induced climate change.

Q: American 15-year-olds ranked behind 16 other countries in a recent assessment of science literacy. What educational standards does the U.S. need to adopt or improve to compete in the global economy? And what will you do to move us toward those standards? And what's your timetable?... If we need to improve our educational system quickly to be more competitive in the world, does the federal government need to exercise different influence than it has historically over educational standards? If so, in what ways? And if not, how do you encourage state to meet national goals to move us forward?

A: The regulation of public schooling is not a constitutionally authorized function of the federal government.

Q. Please suggest a New Years resolution for one of your opponents here today.

A: I suggest that candidates resolve to read and to send to every member of Congress the following items: The Constitution of the United States, the Federalist and Anti-Federalist Papers, Montesquieu’s The Spirit of the Laws, Hayek’s The Constitution of Liberty and The Road to Serfdom, and Burke’s Reflections on the Revolution in France. Thank you for your attention.

Marrying Death

What on earth are we to make of this?

LIVINGSTON, Texas – Romina Deeken is a classic beauty – long and lithe, cascading blond hair, green eyes set in alabaster – not the type of woman who needs to solicit attention from men.

But last year, the 24-year-old German reached out to a convicted killer on Texas' death row. Her motives were altruistic, she said, not romantic. In time, after more than 50 letters posted back and forth across the Atlantic, Ms. Deeken said, mutual feelings grew.

"I have a connection with him," she explained recently, shaking slightly, tears running down her cheek. "Everyone in life has a vision, has dreams, has fears, is searching for something. He is the person I can talk deeply with about these things."
Ms. Deeken's story is coffee shop talk in this small southeast Texas town, home of the maximum-security Polunsky Unit and death row.

Each month, dozens of travel-weary, love-struck European women arrive in Livingston for visits with condemned inmates, a pair of four-hour chats through Plexiglas. There is no touching.

Exactly why they come depends on who is asked. Experts say many of these women have been scarred by violence or sexual abuse, though that's not the case for any of the women interviewed for this story. Others say the women are motivated by compassion and a desire to nurture, or an attraction to the baddest of the bad boys.

I am a reluctant opponent of capital punishment. Not because it is intrinsically wrong – I am convinced that if a loved one of mine were killed I would want the offender to die – but because I do not trust the government, an entity that so magnifies all of man’s frailties, to carry out such a task. The idea of executing an innocent man strikes me as one of the highest state crimes imaginable.

But this does not make these men anything less than contemptible. It is the survivors of their victims, not the men themselves, who deserve our charity. And so why do they draw the attention of these women? They go to extraordinary expense – repeated flights back and forth between Europe and Livingston, even to the extent that two long-term inns, one owned by a European widow of an executed inmate, are profitable businesses. And all the while the impatient wheels of justice in Texas grind on, guaranteeing a disastrous outcome.

Economists are trained to believe that people are fit to rationally pursue their interests. But sometimes our faith, as many political thinkers might have put it, in reason is sorely tested. There are, one supposes, innumerable single men who are eminently more capable, more deserving of Ms Deeken's "altruism," of providing the things we traditionally think people want in lifetime companions – the ability to be a good father (conjugal visits are not even allowed for these wives), meaningful long-term companionship, the chance to pass through life’s challenges clear through to the end in partnership instead of alone. They are, one could say, eminently more deserving of these women’s attention.

But, self-evidently, none of these conventional desires are in play here. These men cannot do any of the things for which husbands are traditionally valued and cherished. So what is this about? The instinct to rescue a doomed cause through love? An act of ostentatious political self-expression, either against capital punishment itself or as a thumb in the eye of workaday society and its hopelessly bourgeois values? Or perhaps, as some have said, it is in the last stage of a culture's decadence that people become the most unmoored from the traditional anchors of right and wrong. Whatever the case may be, the women's behavior is most unimpressive. It is true, pace Pascal, that “the heart has its reasons, of which the mind knows nothing.” But that does not exempt these thoughtless (in both senses) reasons from critical introspection. I find myself as much contemptuous and disappointed as piteous. Is that harsh? I am uncertain; while the article asserts that "experts" say that these women often have history of being sexually abused, that seems to be true for none of the women quoted in it, who have been drawn in after joining anti-capital punishment groups. More than anything else, this behavior leaves me mystified.

The Things We Worry About

Tony Perry of the LA Times reports that those who tend the USS Arizona Memorial are worried about what it is doing to Pearl Harbor:

The 1.6 million visitors a year to the Arizona Memorial are told by their guides about the legends surrounding the oil that still bubbles up from the sunken battleship.

One legend holds that the oil represents the tears of the 900-plus sailors, soldiers and Marines entombed below decks since the Japanese attack of Dec. 7, 1941. Another tale says the oil will continue to surface until the last Arizona survivor dies.
But the fact is that 500,000 or more gallons of fuel oil are estimated to remain aboard the Arizona. Now the National Park Service and the U.S. Navy, which jointly maintain the memorial, are in the early stages of a comprehensive study of the sunken ship and the possibility that its oil might someday spill into Pearl Harbor, fouling the shoreline and hampering naval operations.

I do not pretend to know the likelihood or scope of the threat that leaking oil from the Arizona poses. But one thing I do know is that a threat that is conspicuously absent these days is that of Japanese (or German or Italian) fascism, which was seen as potentially a threat to Western civilization itself on the morning the Arizona burned. Instead, we devote quite a bit of time to the threats of fuel oil, DDT in bird eggs and the like.

This is more evidence that environmentalism, even in its current global-warming manifestation, is a problem for nations at leisure, an issue for countries that have solved the truly substantial concerns they once faced, countries at peace and where no one starves. Al Gore in his Nobel peace prize acceptance speech today described, in his customary hysterically overwrought way, global warming as a “planetary emergency” and “a threat to the survival of our civilization.” Mr. Gore even invokes World War II in his speech by likening the need to fight it to the struggle against fascism, a trick like referring to global-warming “deniers” in order to try to trick the inattentive reader into placing those who oppose a massive global bureaucratic attack on our freedom into the same mental file as Holocaust deniers. But give me any day a world where this is the sort of thing we worry about, in lieu of a world with totalitarianism on a seemingly unstoppable march. There are problems, and then there are problems.

Fight Global Warming - Get Married!

What can you as a concerned environmentalist do to save the climate? Grow up, get married and settle down, according to a study out of Michigan State summarized by The Washington Post:

Divorce is not just a family matter. It exacts a serious toll on the environment by boosting the energy and water consumption of those who used to live together, according to a study by two Michigan State University researchers.

The analysis found that cohabiting couples and families around the globe use resources more efficiently than households that have split up. The researchers calculated that in 2005, divorced American households used between 42 and 61 percent more resources per person than before they separated, spending 46 percent more per person on electricity and 56 percent more on water.

Their paper, published yesterday in the Proceedings of the National Academy of Sciences, also found that if the divorced couples had stayed together in 2005, the United States would have saved 73 billion kilowatt-hours of electricity and 627 billion gallons of water in that year alone.

Married households use energy and water more efficiently than divorced ones because they share these resources -- including lighting and heating -- among more people, said Jianguo Liu, one of the paper's co-authors. Moreover, the divorced households they surveyed between 1998 and 2002 used up more space, occupying between 33 and 95 percent more rooms per person than in married households.

The reasoning in theory has nothing to do with marriage per se, simply hinging on the fact that people sharing the same dwelling use less energy than they would if they lived apart. This argument can apply to those who merely shack up, as well as those who live together for non-romantic reasons (just plain roommates, in other words). But even that concession understates the beneficial impact of the married life. Marriages break up, of course, but not nearly as often as cohabiting couples, and certainly non-attached roommates, do.

I am especially struck by some of the comments, which express outrage that someone would use climate change to make a political argument. Here is one from “egrason”:

It is not a surprise to anyone that increasing density of housing saves in energy costs. What is more disturbing is what sounds like the researchers are doing a disservice to themselves and the study by WAY overstepping the information the data provides and making social recommendations, that sound - to me - politically motivated.

To contend that no one has considered the household as a major energy consumer and that now we need to stop blaming industry is well beyond the purview of the data they gained. I'm disappointed to hear scientists making these claims, and further disappointed that the Post or any other journalistic entity should see fit to publish these claims just because it sounds good.

But of course any government-mediated solution to global warming is “politically motivated,” as is “blaming industry.” (Indeed, “blame” is itself the province of politics and its zero-sum nature; one never hears of a business facing new competition “blaming” customers for their defection.) But no one seems to notice when the implied political recommendation is requiring people to give up the personal autonomy provided by the automobile by forcing gas prices higher, or to give up those McMansions out there in Sprawlland by no longer building roads or by increasing heating-oil costs. Like marriage, these are lifestyle choices that generate more CO2, but not the sort of choices the right-thinking crowd is prone to making.

This reveals the whole problem of the growing global-warming hysteria. Even if it is true that human activity is increasing average temperature, it in no way follows that this necessitates a vast new (perhaps multinational) bureaucratic apparatus to roll back the tide of greater human freedom. If it were created it might do something crazy and completely unacceptable, like taxing the single life.

Protectionism is Free!

NPR had a debate in Iowa for Democratic candidates, and there were a couple of instances of candidates running away from economic reality. The first involved whether we should be willing to pay higher prices for goods we consume in order to “fix” our trade balance with China:

NORRIS: It's the holiday season and many Americans are heading to the stores, and many of the products that they're going to find on the shelves have a "Made in China" label. We've talked to Iowans about China, and there's one listener in particular, whose name is Don Frommelt, he said that consumers and politicians both have a somewhat schizophrenic relationship when it comes to China. Let's listen to what he had to say.

MR. DON FROMMELT: (From tape.) You can't have it both ways. And I think we need candidates who are willing to bite the bullet. And if you're going to say our balance of trade is upside down with China, there's one way to fix it; put on some kind of a tariff and prevent the American people from buying $300 TVs instead of $600 TVs.

NORRIS: Senator Biden, how would — would you actually restrict trade with China? And given the WTO guidelines, could you actually do that?

SEN. BIDEN: With the WTO guidelines, we could stop these products coming in now. This president doesn't act. We have much more leverage on China than they have on us.
Let's get something straight here. We're making them into 10 feet tall. It took them 30 years to get 20 percent of their population out of poverty. They've got 800 million people in poverty. They're in real distress.

The idea that a country with 800 million people in poverty has greater leverage over us is preposterous. What it is: We've yielded to corporate America. We've yielded to this president's notion of what constitutes trade, and we've refused to enforce the laws that exist.

As an aside, when Ms Norris says “schizophrenic,” what she probably means is “split personality;” this particular error has always irritated me. But getting beyond that, it is striking how no candidate is willing to confront the basic economics of this situation, which is that Americans buy a lot of stuff because they find what the Chinese are offering attractive. But rather than just tell listeners straight up that a consequence of limiting these options is a lower standard of living for Americans, there is a lot of blather about “enforcing the laws.” Barack Obama goes on and does the same:

NORRIS: My colleague Steve has a question. But first, before we get there, I just want to follow up on something that Mr. Frommelt also said. He said he wants a president who's going to level the playing field.

Senator Obama, what would you do in order to give the U.S. more leverage, to be able to deal with China at least as an equal partner? And are you willing to do that despite the consequences, even if it means that consumers have to kiss those $300 televisions goodbye?

SEN. OBAMA: Well, look, I mean, I think Chris and Joe made a good point, which is, we have laws on the books now that aren't being enforced. This is what I mean in terms of us negotiating more effectively with them.

Part of the problem is, is that the relationship has shifted over time. Joe's absolutely right that they were much impoverished 10, 20 years ago, and so our general attitude was, you know what, whatever they send in, it doesn't really impact us that much, and they're a poor country.

So again the “problem,” that American consumers have options they didn’t have before, is to “enforce laws.” Any "leverage" will thus have American consumers as the fulcrum. To his credit, Sen. Obama does go on to at least acknowledge the tradeoff:

Now, could there potentially be some higher costs in the front end? Probably. But I guarantee you I don't meet a single worker in Iowa who's been laid off who says, "I wouldn't rather pay a little bit more for sneakers at Wal-Mart but still have a job."

But of course “workers” (whatever that means; is an associate lawyer looking to make partner who puts in 80 hours a week a “worker”?) in Iowa are not the sum total of the economy. The problem is not that “workers” in Iowa buy Chinese stuff, the problem (such as it is) is that everyone else wants to, as is their right.

But as usual, John Edwards is at the head of the class with regard to economic illiteracy:

NORRIS: But we also know that China can easily get around that. They can sometimes use the "Made in Hong Kong" label instead of the "Made in China" label.

SEN. EDWARDS: But the starting place is to actually enforce the laws that exist here in the United States and their obligation to the WTO, neither of which are being done. They're not being done because corporate America drives so much of what happens in Washington, whether it's trade policy that costs Americans millions of jobs — NAFTA, CAFTA, et cetera; whether it is these dangerous Chinese toys coming into the United States of America; whether it is country-of-origin labeling. Why is the president of the United States not saying to the American people, to local communities, "Buy local"? It is good for the local economy. It is good for farmers. It is good on the issue of global warming. Because everything that comes from China carries an enormous carbon footprint with it.

I am not sure what the “local economy” is, nor why I should systematically favor it. I know that when I need my car fixed I don’t ask my brother to do it just so money stays in the family, nor do I get my furniture from my accountant neighbor just because I like him more than the unknown people (dastardly Chinese people, perhaps) who make the furniture I see at the store. I know also that Chinese people possess the same moral right to try to earn a living as any other person, and that Americans have a moral right to buy without having to overcome nationalistic discrimination encoded in the law. But in Sen. Edwards’ world, apparently, consumers are not part of the economy, in defiance of every economic class he ever had the opportunity to take. (Sen. Edwards later goes on to deny, in the teeth of all the evidence, that textile manufacturing is what poor countries do, and if we do it here that makes us poorer.)

Finally, illegal immigration. Everybody’s against it, it seems, but none of the Democrats, evidently, want to be against the immigrants themselves. A moderator asks Sen. Clinton about another economically inescapable dilemma, that cracking down on employers who hire workers is in effect damaging the workers themselves (which would anger Democratic pressure groups), and this is what she says:

INSKEEP: Now, let's dive right back in with Senator Clinton, who had her hand up before. And I do want to ask about a very similar topic, Senator.

You said in a debate on Saturday night that you support people who are, as you put it, "Yes, undocumented, but also working hard, trying to support their families. That's why they're here." In the same answer, you said you want to crack down on employers. Is there a contradiction there? If you crack down on employers, doesn't that mean you're telling employers to put these hardworking people, as you define them, out of work?

SEN. CLINTON: No, there is no contradiction.

You know, comprehensive immigration reform means five things. You have to have tough border security plus a system of knowing who's here and what they're doing. Secondly, you've got to crack down on employers, because people wouldn't come if there weren't a job waiting for them. Third, you've got to provide more help to local communities to be able to bear the costs, because they don't set immigration policy. Fourth, you do have to do what Chris Dodd is talking about, and that is try to create some economic activity by working with the countries to our south. But fifth, you've got to have a path toward legalization.

This is an answer for idiots. Employers are bad, so penalize them, but run away rhetoricaly from the whole conundrum that for every labor buyer there is a labor seller, and that making it more costly to hire the latter damages them. Then dredge up the talking points you prepared with your advisers and try to escape the whole mess.

Several points to note overall. First, I suspect most of the candidates really are aware of the notion of tradeoffs, but are unwilling to concede that voters are. Second, kudos to NPR reporters for asking at least some economically literate questions. Finally, I was pleasantly surprised that Barack Obama occasionally gives straight answers to questions, acknowledges that tradeoffs exists, and simply says that we should make them. If he took an economics class, he paid attention. He is certainly not my idea of a good president, but neither is he as irretrievably weaselly and evasive as Sens. Clinton and Edwards. Sen. Edwards in particular may be the most economically ignorant presidential candidate in my lifetime.

The Great De-Synthesis

Once upon a very recent time, two British journalists could write a book claiming that American conservatism was vastly different from its European counterpart, and that it was a growing and permanent force in American politics. But 2008 makes me wonder.

American conservatism was and is still premised on the Reagan synthesis. A Republican debate was held in May at the Reagan Library in California, and Reagan is still adored by the GOP faithful, even if they adore him for different reasons. But it is not Reagan’s world, or Reagan’s political terrain, anymore. The odes to Reagan remind me a lot of the way Democrats used to talk when Reagan was running for president in 1980, with a lot of reflexive references to past greatness under FDR and JFK, even though their era was over. It is worth remembering that Reagan was only electable to begin with (I can still remember my mother speaking with fear in her voice the morning after Morning in America began on Election Day in 1980) because the country was in such disastrous shape. There was economic disaster; journalists spoke of the “misery index,” the sum of the inflation and unemployment rates, which was over 20% on Election Day and is less than nine percent now. There was foreign-policy disaster, with American diplomats and an American president being humiliated by Iranian revolutionaries. And there was perceived social disaster too, with the concerns of social conservatives over abortion and school prayer (gay rights were hardly an issue then) finally being treated with respect by a major-party presidential candidate.

And this allowed Reagan to stitch a majority coalition out of the national-security hawks, the social conservatives and the economic libertarians, in addition to Americans who were not members of these camps but were alarmed by what America was becoming.

In part because of the Reagan agenda, with its permanent tax cuts and temporary tax simplification and its conquest of the Soviet Union, it ain’t that country anymore. And current GOP politics reveal that the Reagan coalition is gone. The favorite candidate of the social conservatives appears to be Mike Huckabee, who has no particular enthusiasm for small government, and even indulges in nanny-state tendencies with respect to health and social spending. (Perhaps his great weight loss gives him the zeal of the convert; he’s healthier, so that rest of us have to be made healthier too, freedom be damned.) Meanwhile, believers in smaller government, which Reagan believed in but could do little to achieve in the teeth of a Democratic Congress, have only Ron Paul - the only GOP candidate who appears to honestly believe in liberty - to turn to. He generates great enthusiasm among those who believe in freedom, but attracts a number of crackpot supporters who make libertarians nervous, and adamantly rejects the agenda of the national-security hawks. And, critically, there are fewer libertarians than social conservatives in the GOP electorate in any event, which is why Gov. Huckabee is polling so much more strongly than Rep. Paul.

These two constituencies, it seems, to me, are no longer united. The distinctive American form of conservatism was a product of a unique moment, and the groups who made the movement up in 1980 no longer speak the same language. The social conservatives are often not particular friends of limited government, while the libertarians do not like the socon tendency to use the state to further their own private ends, e.g. through “faith-based” big government. For the libertarians, as Reagan famously said, “government is the problem.” For the social conservatives, as Reagan famously said in the very same speech, “we are a nation under God.” With Reagan and the problems he inherited gone, never again the twain shall meet.

The BCS as Path Dependency

I am ordinarily not much of a fan of the market-failure argument, whereby someone purports to show that the market has achieved an inferior outcome because of what economists call externality or public-goods problems, and that a particular government proposal would improve things.

But one often interesting assertion of market failure involves something known as path dependence. In a path-dependency problem, a market standard is chosen for historical reasons, and despite its inferiority persists because the costs of switching to a new standard would be too high. Americans persist in foolishly avoiding the metric system, for example, or Microsoft Windows maintains its dominance only because so many people are already Windows-fluent that the cheapest path to developing new software lies in designing it to be Windows-compatible, even though the operating system itself is lousy.

Many of these assertions are disputed. The Dvorak typewriter was said to allow typists to type faster, but the QWERTY keyboard, which according to some was actually designed to slow typists down so that the keys wouldn’t clog up, has persisted despite its inefficiency. Typists all train on QWERTY, and so keyboard makers keep building QWERTY keyboards. And no one bothers learning an alternative to QWERTY, because that’s the layout on all the keyboards. But an article some years ago called “The Fable of the Keys” in The Journal of Law and Economics found that most of the studies purporting to show that typing was faster on Dvorak were conducted by people with a financial interest in that layout’s success, and that well-trained typists could type as well on either layout.

And so that brings us, in a roundabout way, to LSU vs. Ohio St. It seems clear to me that if we were to design a college football postseason competition from scratch, it would bear no resemblance either to the bowl system in general or the BCS system for deciding a “champion” in particular. The only reason there is a BCS system is because the old lineup of big-time bowls with conference ties – Big Ten and Pac-10 in the Rose, Big 8 in the Orange, SEC in the Sugar – failed to produce a definitive 1 vs. 2 matchup, and fans demanded that the system be altered. But not by eliminating the bowls in favor of a playoff. Instead, the New Year’s system was woven into the championship framework, which has evolved into the separate BCS national-championship game we have now.

But as everyone who follows college football knows, there are a lot of teams with plausible claims on that game – the conference champions USC and West Virginia in particular, and arguably even Hawaii. A sensible system would look like every other NCAA sport, with a playoff elimination bracket culminating in a final game matching the survivors. But that has been successfully opposed by the people who make so much money off the BCS bowls (and by those who benefit from the absurdly large number of bowls overall, which only require six wins over a Division IA team as a qualification). Yet clearly the NCAA is content with the current system, in which computers and voters determine who one of their champions is.

And so we are locked into a system that most fans dislike, because the costs of switching are too high. As I indicated these kinds of arguments ordinarily do not impress me, and this is obviously not a question for government intervention of any sort, but the college-bowl system as a path-dependent outcome clearly inferior to what would occur if we could start over seems clear to me. I am hard-pressed to come up with any argument for the system the way it is from the point of view of total welfare, including the welfare of the fans who watch the games. (Unless arguing over the title game itself generates a lot of fan utility, which seems like a cheap way out.)