Friday, February 29, 2008

Music Hath Charms

The image above is from the recent concert by the New York Philharmonic in Pyongyang, which I watched the other night. I was struck when I saw the woman, who appears to be sleeping but in fact is singing the words to a traditional Korean song, “Arirang,” performed for her and her country by the orchestra. She actually appears to be in a state of profound reverie, which is all the more striking for the contrast with the expressionless audience around her. (I found the performance, of a song I had never heard, beautiful.) She appears to be in her 50s, too old to remember the Korean War or a world in which there was simply Korea, and I am compelled to wonder what is moving her at this moment. Is it blissful nostalgia at remembrance of a song from her distant past long since purged from the public sphere in her country as “bourgeois”? Is it joy that the long-time enemy Americans are paying North Korea such a sign of respect, perhaps hinting at something better? No one knows, but it is an image to remember in any event, with so much often painful history behind it and such a perilously promising future in front of it.

The entire song can be seen at Youtube The image above is just past the 4:50 mark of a video that lasts 8:43.

Thursday, February 28, 2008

Huddled Masses, Swamped Lifeboat

Few individuals confound the honest American individualist more than immigration. Here is part of “The Difference Between an Illegal Immigrant and Me,” from Robert Higgs of the Independent Institute:

Many of the Mexican children with whom I grew up might have told a tale similar to mine. The only difference would have been that for them, the origin of their migration to California happened to be not one of the states of the United States of America, commonly known as America, but one of the states of the United Mexican States, commonly known as Mexico. Was this difference important? If so, why? Do the lines that government officials draw on maps sever the heart of humanity?

To return to my story, however, the undeserved misfortunate that many of my childhood comrades suffered sprang from the simple, morally irrelevant fact that the government officials who ruled the states of Sonora, Chihuahua, Coahuila, and others included in the thirty-one states of the Mexican union had not entered into the same agreement that the government officials who ruled Oklahoma, Texas, California, and others included in the (then) forty-eight states of the United States of America had made with regard to state border crossings.

From time to time, people of my acquaintance were rounded up and deported, as if they were criminals. What was their crime? Picking cotton? If so, then I was guilty, too, because when I was growing up, many of the ranchers had yet to switch from Okies and Mexicans to mechanical pickers, and by the time I was eleven or twelve years old, I could fill a 12-foot sack and, having weighed my pickings, haul it up the ladder like a man to empty its contents into the cotton trailer.

So far as I was ever aware, the deportations pleased nobody: neither the unlucky individuals wrenched from their homes and places of employment; nor the ranchers and other business owners who readily hired these hardworking people; nor the rest of us, whose relations with the Mexicans were generally cooperative and cordial. La Migra—the immigration officers—was like a natural disaster. These obnoxious state functionaries descended on the community like a plague or a swarm of locusts, benefiting no one, yet collecting salaries at public expense for their mischief.

Dr. Higgs performs a valuable service, as he so often does, in returning us to first principles: people have a right to contract freely with other people, and the details of the map do not change that fact. I think he oversimplifies a little, in that the Rio Grande is a considerably more important line of demarcation from the point of view of human freedom than the line between California and Arizona. Mass migration may, because of the presence of a bloated welfare state, mean that the migrants’ decision increases my tax burden and lessens my control over my own life. Can an immigrant have the right to do that? Surely not, in the abstract. And yet new research suggests that immigrants in California commit crimes and considerably lower rates than the native-born. The study is not perfect, in that it cannot distinguish between legal and illegal immigrants, but it does report the same results even among first-generation Mexican immigrants and their third-generation descendants.

Are we really surprised by this? People are not drawn to the life-upending experience of immigration by a desire to commit crime. They may, as in some European countries (where the welfare state is lavish and job creation scarce) do so to obtain welfare benefits, but I would be surprised if these costs outweighed the gains to the illegal immigrants’ drive and creativity. The mind easily conjures up images of barrios full of criminals and out-of-wedlock births, but there is nothing purely racial about that: that is an issue of culture, reinforced by whatever fads happen to prevail among the chattering classes.

And yet, and yet…there is the basic fact that America is the country they come to, and we have an imperative in making sure it doesn’t become the countries they left. This, I think, is what more than anything gives the honest individualist pause when he ponders immigration, and what to do about it.

Wednesday, February 27, 2008

The Wisdom of Half the Crowd

A lady named Lynda Withbroe has a letter in the New York Times commenting on a piece by Geraldine Ferraro defending the role of Democratic superdelegates in the nominating process:

What does the party say to those new voters and young people who have participated in record numbers this year? Do the superdelegates say, “Thank you for your excitement and participation, but now the wiser elders of the party will adjourn to our back room and make the grown-up decision”?

How does a political party grow if it doesn’t reach out and include new people, respect their opinions and include them in the process? Please keep the process fair and transparent.

Aaron Christopher Cohen has a similar argument further down the page:

Geraldine A. Ferraro, in her defense of the Democratic National Committee’s use of superdelegates, rather casually remarked, “Besides, the delegate totals from primaries and caucuses do not necessarily reflect the will of rank-and-file Democrats.” Here’s a radical notion: let all Democrats vote for their preferred nominee, and whoever gets the most votes wins.

This is a striking example of the adoration of pure democracy, i.e. absolutist majority rule, without much thought given to other ways that one might get good political decisions. Every letter-writer, and every superdelegate, presumably wants to nominate the candidate with the best chance to win in November. So is a rule of majority rule likely to yield this outcome? The (or one) trouble with this argument is that while Sen. Obama will get a majority of non-superdelegates, it will not be a giant majority. The idea that, say, 52 percent of a particular voting public amounts to the truth is a mistake. The argument is made all the time in the context of markets, when it is called “the wisdom of crowds” – the idea that a market is collectively smarter than any individual participating in it. In principle the same is true for political decision-making, but voters don’t compete the way investors or businesses do, nor do they make serious material sacrifices that require them to be careful about the information they collect.

The people who do have the greatest stake, ironically, are the superdelegates themselves, who will have to live with the consequences of the choice that is made to a much greater degree than an individual primary voter will with the consequences of his infinitesimal vote. In that sense, they have the most reason to choose wisely. But alas, this is not an argument that plays well to the sorts of progressives who make up much of the Democratic primary and caucus-going electorate. For them, not just in nominating a candidate but in all things, majority rule is the only source of morality and knowledge, hence is to be obeyed without question. Hence, no superdelegates, no electoral college, no tradition or higher or embedded wisdom should stand between the majority and its will. Ironically, Democratic bigwigs in employing the superdelegate process have employed a very conservative argument – a respect for the wisdom not of crowds but of elders. And that is what threatens to get them into so much trouble.


Tuesday, February 26, 2008

Doctors, but Not of Philosophy

Very casual empiricism leads me to conclude that doctors have a greater urge toward collectivism than almost any other profession. The Lancet, one of the world's oldest and most prestigious medical journals, has an editorial arguing that rich countries should be prevented from soliciting doctors, nurses and pharmacists in poor ones, because of the impact on health care in the latter (free registration required):

If there is any hope of strengthening the workforce capacity in poor countries every possible local and international solution should be seriously considered, no matter how aspirational. Demanding that rich countries stop actively recruiting from poorer nations remains a viable option. The human resources crisis may be undoubtedly complex but this still does not obscure right from wrong. Richer countries can no longer be allowed to expoit (sic)and plunder the future of resource-poor nations.

The Lancet, according to its fans, plays an outsize role in such questions:

The Lancet has always promoted debate and set the agenda.

"One of its greatest editors Robbie Fox, who was editor from 1944 to 1964, was well known for doing that."

He added: "It is especially relevant in the internet age in which we live.

"In many ways it makes more sense to publish data on the internet, where it is freely available to everyone, than a journal.

"And if that is so, it is clear the role of journals is much more about interpreting the information."

So what exactly is the "right and wrong" of this question? A pure utilitarianism, focused on the here and now, could suggest restricting the ability of wealthy countries to recruit professionals form poor ones, even if the shortage is caused by incentives not fully appreciated. A health-care worker in Malawi probably adds considerably more years of good health at the margin than one in London.

But of course that kind of primitive static utilitarianism (ignoring the question of trying to improve health care in the exporting countries, e.g. through greater economic growth, which I have never known the Lancet to argue in favor of) is not the only issue in question. As free men and women, health professionals have a right to emigrate if they are made better off. I have heard an editor of The Lancet recognize this and say he is not arguing for a ban on hiring foreigners in wealthy countries, just for recruitment by them. But this is simply an argument for the right to keep these professionals in ignorance of these opportunities. If they have a right to leave, they have a right to learn about opportunities leaving presents them with, and restricting recruitment is a limiting (through increasing their costs of doing so) of their ability to solicit the information that will help them make a better decision. I reluctantly conclude that this is a cheap substitues for moral reasoning, in which the authors are mad at the right people (rich governments and their big pharmacy chains) and don’t want to be caught on the wrong side of the rich/poor divide. For an example of this kind of thinking see the assertion by Amir Attaran in The Globe and Mail that companies should actually be criminally prosecuted for such recruitment:

"I don't have any difficulty saying that it would be lovely and I would prefer to live in a world where it were criminal," said Dr. Attaran, who teaches in the University of Ottawa's Institute of Population Health and the faculty of law.

"But their argument is that already customary international law tells us that this recruitment should stop ... That is an incorrect understanding of what customary international law is."

Dr. Attaran co-authored an article published in January by the Canadian Medical Association Journal that denounced Shoppers Drug Mart for recruiting in South Africa.

Prof. Attaran, like most residents of Canada, is himself a descendant of an immigrant. One wonders how his ancestors would've reacted to a similarly Draconian crackdown against employers who sought to recruit them way back when. The essence of sound moral reasoning is the ability to extend the rights you enjoy to others in analogous circumstances.

Friday, February 22, 2008

Are Americans Too Dumb?

There is a new book out by Susan Jacoby that takes Americans to task for their ignorance. (I have not read it yet.) In it, she apparently takes Americans to task for knowing so little about the world, a very familiar charge. The New York Times has an article about it. The comments are lengthy, and many of them (both from Americans and foreigners) are full of the familiar laments about Americans preoccupied with celebrities and America itself, ignorant of the world around them and the consequences of America for it. (Interestingly, the Google ads that came up when I loaded the article were for atheism and the Obama campaign, with atheists notorious - for example, in calling themselves “freethinkers” and “brights” - for considering themselves smarter than the rabble, traits that might evidently also apply to some potential Obama supporters.)

I have mixed feelings about the charge. First, as an educator, I naturally think knowledge is preferable to ignorance. And yet the charge of the ignorant American, often dressed up (as in Ms Jacoby’s book title) with the word “reason,” ceases to be serious when it becomes wrapped up in political accusations. Al Gore had a book called The Assault on Reason, by which he meant insufficient acceptance of the environmental views he favors, while the British writer Dick Taverne had one called “The March of Unreason,” where he laments, among other things, the excesses of environmental hysteria. “Americans are dumb because they don't have my political views” doesn’t get us very far.

But international comparisons of standardized tests clearly show that American students emerge from their schooling deficient in many ways, and consensual government certainly cannot function with an ignorant populace. (Nor can it expect to maintain a just tax policy when 40 percent of Americans pay no income taxes, but still get to vote for representatives deciding what the taxes will be, but that is a post for another day.) As a society we could certainly do much better; it is not sensible to argue otherwise.

And yet the tone of the argument – Americans are ignorant, therefore they don’t enact certain public policies that I want them to act – is if anything more dangerous. Distinct from Americans' lack of knowledge is American skepticism about intellectuals, which is in my view a healthy feature of American life. (I say this as a trafficker in ideas myself.) Intellectuals have created some of the most forlorn historical moments in the last 200 years. Those who believe that history tracks along some inevitable course, and if people are reacting unpredictably and thus slowing progress down they need to be removed by any means necessary, have brought one calamity after another to those they rule. It was the freethinkers of 1789 Paris who encouraged the Revolution to proceed full steam ahead; Hitler got critical support from such anti-capitalist intellectuals as the philosopher Martin Heidegger; Spengler asserts that an anthropologist founded the barbarous Shining Path in Peru; Lenin and Pol Pot (the latter man trained in France) were both highly educated men who just knew that they needed the absolute authority to break the necessary eggs. In America such things have been tried (think of FDR’s “brain trust,” which both ruthlessly violated American civil liberties and made the Depression much worse while many of its members were smitten with the Soviet example, or the intellectual glitz of the Kennedy administration) but with considerably less effect. Rather than scorn for degrees, ideas and the men who hold them being seen as depriving society of the necessary guidance, perhaps it is best seen as a sometime annoyance but occasionally vital disruption of the equation Intellectuals + Power = Disaster. Americans know that having read a lot of books is not the same thing as having a lot of knowledge, and the best intellectuals appreciate the limits of what they know.

Someone once said that totalitarianism is always just around the corner in America, but always actually happens in Europe. I think that skepticism of intellectuals as just another pressure group serves us well, no matter what the intellectuals themselves may say about it. One should always be skeptical of someone starting from the premise that he knows what's best for you. Undoubtedly highly educated people around the world are frustrated that a society with such a strain of thought is the most powerful nation in the world, but the alternative could be worse. Much worse. Knowledge is not the problem. Men intoxicated with their knowledge is.

Monday, February 18, 2008

The House That No One Built

Some years ago I applied for a job at a university in an expensive California coastal city. In academic job interviews, you spend the whole day being shuttled from one person to another, sometimes a potential future colleague, sometimes someone in the chain of command. During the course of this interview, I met with the dean of the particular college in the University where I would be employed. He began by noting that professors there were expected to engage a lot with the surrounding community, and to use their talents to address community problems. He then said that the biggest problem that they faced was the housing crisis -- housing was phenomenally expensive, and most of the people who did the most difficult labor could now not dream of buying a home there.

So he asked me what I would recommend the local government do about it. I told him that to me, as an economist, it sounded like there was a shortage of housing. So I told him, if I were a housing entrepreneur determined to provide a lot of housing cheaply, I would probably have to economize on land, which is very expensive there. I asked him how easy it would be for me to build, say, a tall building full of relatively inexpensive condominiums -- say, 10 stories with 10 small condos to a floor. He told me it would be difficult if not impossible, because most of the local building codes flatly prohibited something like that. I told him that was why housing was so expensive. In this locality, as in much of the West Coast, and in fact in many wealthy communities all across the land, existing homeowners have captured the regulatory apparatus, and rammed through regulations limiting the amount of land that can be used for housing, requiring minimum lot size when housing can be built, limiting housing density, etc. All of this prevents housing entrepreneurs from responding to what is clearly an unmet social need. The dean sort of smiled indulgently at me, probably saying to himself that this is the way those crazy libertarian economists talk, and saying that the kinds of solutions I proposed were impractical.

Alas, making housing easier to build is ultimately the most practical response. Anything else glosses over the root problem, which is that many communities have chosen other goals (open space, preserving views, keeping the riffraff out, and so on) that conflict with housing affordability. And now, an economist at the University of Washington has come up with an estimate of what these regulations do to the cost of housing in Seattle that is frankly staggeringly large. The Seattle Times summarizes his findings:

An intriguing new analysis by a University of Washington economics professor argues that home prices have, perhaps inadvertently, been driven up $200,000 by good intentions.

Between 1989 and 2006, the median inflation-adjusted price of a Seattle house rose from $221,000 to $447,800. Fully $200,000 of that increase was the result of land-use regulations, says Theo Eicher — twice the financial impact that regulation has had on other major U.S. cities.

"In a nationwide study, it can be shown that Seattle is one of the most regulated cities and a city whose housing prices are profoundly influenced by regulations," he says.

A key regulation is the state's Growth Management Act, enacted in 1990 in response to widespread public concern that sprawl could destroy the area's unique character. To preserve it, the act promoted restrictions on where housing can be built. The result is artificial density that has driven up home prices by limiting supply, Eicher says.
Long building-permit approval times and municipal land-use restrictions upheld by courts also have played significant roles in increasing Seattle's housing costs, he adds.

This means that regulations increase the price of housing in Seattle by over 80%. And of course, the housing shortage that results leads to calls for ever-more government regulation - requirements, for example, that multi-unit housing have a certain percentage of units set aside for low-and moderate-income people. This in turn raises the expected cost (opportunity cost, in terms of higher purchase prices foregone when you build here and not somewhere else) of building the housing, causing housing to be even less desirable to build in the first place, given that property owners can do other things with their land, and builders can target other less restrictive markets.

Such regulations are frankly a criminally hostile act against both current low-income residents, and potential future residents, who are affected by these policies but never get much chance to influence them. This is why decisions about how much housing to build, and where to put it, should generally not be voted on to begin with. Voting allows us to promote public decisions in a way that does not require us to take account of the consequences of our choices on other people. Transacting through the price system, on the other hand, requires us to take account of these consequences. While he does not cite a source, the economist Thomas Sowell in one of his books says that prior to the advance of aggressive zoning, housing in coastal California was not much more expensive, after standardizing for size and so on, than it was in other parts of the country. But once people figured out that they could use the state to preserve their interests while damaging the interests of others (inadvertently, not that it matters to the others), and raise the value of their property besides, this changed. Land-use regulation has messed up the market for housing in the places where it is most intensively used, in the same way that most kinds of regulation mess of most kinds of markets.


Saturday, February 16, 2008

The Anti-Ehrenreich

My college, like quite a few, once chose Barbara Ehrenreich’s Nickel and Dimed: On (Not) Getting by in America as a common text that all freshmen were required to read. The author tries to find out the lot of poor women in the US by living like one for a year. She gets several very low-wage jobs waiting tables, working in a nursing home, etc. She finds she must get two jobs to survive, that most aspects of a decent life are unattainable, that she must (in the words of the Amazon description) suffer “the humiliation of a urine test” (which professional athletes, truck drivers, law enforcement personnel and both civilians working for the military and military personnel themselves routinely undergo despite the “humiliation” contained therein).

In 2004 our faculty and staff were electronically discussing the campaign, and the plight of the poor – whether they are doomed to their fate by American social rigidity or whether they can become successful by making intelligent choices – came up. Someone invoked Nickel and Dimed as evidence for the cruel-America hypothesis, and a staff member replied that it is not clear whether Ms Ehrenreich ever tried to better herself, by seeking to get promoted, for example, or whether she went out of her way to go to the most miserable jobs she could find..

Now, a book has come out in which a person conducts the same experiment with much different results. It is by Adam Shepherd, and is called Scratch Beginnings: Me, $25, and the Search for the American Dream. Here is some description from The Christian Science Monitor:
Alone on a dark gritty street, Adam Shepard searched for a homeless shelter. He had a gym bag, $25, and little else. A former college athlete with a bachelor's degree, Mr. Shepard had left a comfortable life with supportive parents in Raleigh, N.C. Now he was an outsider on the wrong side of the tracks in Charles¬ton, S.C.

But Shepard's descent into poverty in the summer of 2006 was no accident. Shortly after graduating from Merrimack College in North Andover, Mass., he intentionally left his parents' home to test the vivacity of the American Dream. His goal: to have a furnished apartment, a car, and $2,500 in savings within a year.

To make his quest even more challenging, he decided not to use any of his previous contacts or mention his education.

During his first 70 days in Charleston, Shepard lived in a shelter and received food stamps. He also made new friends, finding work as a day laborer, which led to a steady job with a moving company.

Ten months into the experiment, he decided to quit after learning of an illness in his family. But by then he had moved into an apartment, bought a pickup truck, and had saved close to $5,000.

Mr. Shepherd to be sure had advantages, but he strictly refused to use the ones Ms Ehrenreich and her acolytes might assume are the most important ones, the material advantages. Instead, he traded on his cultural advantages: an ability to postpone gratification, to plan for the future, to aggressively seek help from others, who are often glad to provide it.

To be fair, Mr. Shepherd did initially rely on food stamps (although he got off them quickly), and a poor person living a life rather than an experiment does not have the choice to end the experiment to cope with a family illness (although such a person might have options that Mr. Shepherd didn't, e.g. other family living nearby). It would’ve been an equally interesting experiment to rely entirely on private charity, although I’m not sure that that kind of libertarianism was what he wanted to test. But his experiment certainly provides at least modest evidence for a proposition reinforced by the data on poverty (a poor American now lives as well as a middle-class American in 1970) and by the huge wave of truly poor people pouring into this country from elsewhere, eager to take advantage of the incredible opportunities it offers. This proposition is best summed up in a remark I once saw from an immigrant cab driver in a newspaper article in New York: this is a country where it rains money; all you have to do is build a basket.

Friday, February 15, 2008

Another Drug-Company Outrage

Sen. McCain thinks they chisel the taxpayers, Sens. Obama and Clinton are sure they have too much influence in Washington, and now a member of Big Pharma goes and does this:

CNBC’s Mike Huckman reported on a study just released in the New England Journal of Medicine that found that Rituxan, a joint-venture between Genentech and Biodec intended for use on rheumatoid arthritis and non-Hodgkin’s lymphoma, is also useful in treating M.S. According to the study, patients using Rituxan saw a 58% decrease in M.S. flare-ups and a 91% drop in brain legions after just two infusions of the drug.

The NEJM, by the way, used to be edited by Marcia Angell, a major drug-company critic. Don't expect any telegenic Congressional hearings on this outrage any time soon, nor any critical reflection from Congress on how going after "the drug companies" might affect the incentive to engage in activity such as this. Thinking about the health-care system twenty years from now, as opposed to thinking about the next election, just ain't part of their job description.

Wednesday, February 13, 2008

Aliens Abroad

Two foreign leaders have recently taken somewhat unconventional, by historical standards, journeys to other lands. One, Mexico’s Felipe Calderon, came to the U.S. explicitly planning to speak primarily with Mexican migrants and local politicians, while avoiding national politicians and the nation’s capital, a more conventional itinerary for a foreign leader. His purposes were apparently to cultivate support among Mexican migrants in the U.S. (who can vote back home) and to make the case that the crackdown on illegal immigrants in the U.S. violates their human rights.

Meanwhile, Prime Minister Recep Tayyip Erdogan of Turkey has completed a trip to Germany, where he made a rather extraordinary speech to a large crowd of ethnic Turks, both native- and foreign-born, in which he urged them to hold onto their culture even as they should learn German, saying that “assimilation is a crime against humanity.” More disturbingly, he offered to send Turks to Germany to teach Turkish language and culture in Turkish-language schools to ethnic Turks living their lives in Germany.

Such trips are a product of a previously unknown phenomenon – mass global migration (mostly from poverty-stricken, high-fertility countries to rich, lower-fertility ones) combined with global communications technology that allows immigrants to easily maintain contact with the land of their birth, or their ancestors’. This is presenting the host countries with a profound challenge, namely how to maintain the integrity of the cultures that drew the immigrants there to begin with while maintaining the basic liberal decency and tolerance that is a cornerstone of their societies.

Clearly it is unacceptable for Mr. Erdogan to volunteer to shoulder the burden of one of the most basic tasks of any society, the education of the young. There is absolutely zero reason for the German government to trust any foreign leader, let alone one with Mr. Erdogan’s Islamist past, with such a job. He should simply accept that the Turks have left Turkey, have to make their way in Germany on Germany’s terms, and let them go. To do otherwise is to stoke the fears of rekindling the centuries-old conflict between the Turks (and the Arabs before them) and once-Christian Europe, and to stoke resentment against a real or imaginary conquest. The Germans, listening to Mr. Erdogan propose to smotheringly embrace the aliens among them, including the aliens they thought had crosses the bridge by being born in Germany, look back to history and see a disconcerting future.

The Mexican case is more complex, in that America has a long history of Anglo/Latino cultural mixing (many Hispanic families in America predate the 1848 conquest) while the welfare state aggravates what might otherwise be a simple movement back and forth of unskilled labor, which America, a country otherwise used to ethnic differences, is relatively poorly endowed with. But the modern public state (including the public health and education systems), which poor Mexican immigrants draw disproportionately on, combined with the multicultural rot that infects the education system, makes a system of open borders and no obligations arising therefrom on American taxpayers a distant dream. And there seem to many Americans to be so many of them from the Rio Grande south. Hence, we are forced to think of the unskilled Mexican masses as guests whose presence we tolerate, and obliged to remind President Calderon that he simply cannot speak of their human rights (other than the right not to be physically abused by the authorities) to trespass on U.S. soil.

In both cases, we see the anxious anticipation by the natives of conflicts to come. Our ideology and our politics have brought us to this anxious point, and getting beyond it will take the sort of statesmanship in short supply these days.

Tuesday, February 12, 2008

Sen. Obama on Economics

Economic illiteracy spares no party, no candidate. Dean Barnett has an interesting piece in The Weekly Standard about what Barack Obama says when he doesn't have a Teleprompter to read from. In the speech in question, in Virginia, Sen. Obama tells us what he thinks about the role of business in society:

Other improvised moments also contradicted the generally lofty tone of the Obama campaign. At one, point when addressing what we have to do for the economy, Obama ad-libbed, "The insurance and the drug companies aren't going to give up their profits easily . . . Exxon Mobil made $11 billion this past quarter." This is the kind of empty class warfare shtick that earned John Edwards an early exit from the race. What's more, it displayed the kind of simplistic sloganeering that Obama had previously eschewed.

Obama's shot at Exxon Mobil's profits is strikingly disingenuous. He seems to be implicitly saying that the healthy earnings are good news for Mr. Exxon and Mr. Mobil, who will promptly stash most of the profits underneath their obviously outsized mattresses. The two will then likely invest the remainder in foreign sweatshops that will facilitate the outsourcing of even more American jobs.

Of course, who benefits from corporate earnings is a slightly complex matter, and thus vulnerable to simplistic demagoguery. Just ask John Edwards. But Barack Obama is far too intelligent to not realize that many of the school teachers and union workers and working moms that so often people his more elegant speeches likely have an interest in Exxon Mobil's profits either from their retirement plan's portfolio or their union's holdings or their own investments that they actively manage.

In a sense Mr. Barnett too misses the bigger picture as much as Sen. Obama, in that the main beneficiaries of high (at least in an absolute if not rate-of-return sense) oil profits are not just shareholders or workers, but customers. High profits make it worthwhile for Exxon/Mobil to employ the resources it directs to get gasoline to the gas stations, at a time when a lot of other people want oil too. This is profits as a way of facilitating social coordination, one of the least well understood virtues of a market economy.

I am a little disappointed, because I argued not too long ago that Sen. Obama at least appears aware of the notion of opportunity cost in ways that other candidates of both parties are not. Perhaps that view deserves a rethink. He makes a lot of other remarks in the speech at variance with the postpartisan man we are all used to seeing, for example making remarks in a very similar vein about the drug companies. The whole thing is worth a read.


Friday, February 08, 2008

It's a Shame They Couldn't Both Lose

That's what Henry Kissinger supposedly said about the Iran-Iraq war, and it is how I feel about the Hollywood writer's strike, which is apparently about to be settled. Both the writers and the execs (along, of course, with the customer who buy their products) are partners in the crime of the degradation of our culture. Fortunately, we have weapons that we didn't have before; more on that in a minute.

Culture -- here meaning the notions of what is expected and what is prohibited, reinforced (or not) by the media and the family and most of the institutions of society -- is an unusual sort of good in economic thinking. And the products of our vast culture industry are clearly very appealing to people in the US and around the world, especially young people. But this kind of culture -- movies, music, and to a lesser extent of books -- often thrives on breaking barriers. When Elvis Presley went on the Ed Sullivan show, he simply had to shake his hips provocatively. That CBS refused to show him below the waist was no help at all; that made him even more for bitter fruit. Unfortunately, the musician came after Elvis had to do something even more outrageous. So too with every other kind of popular entertainment; within the span of 20 or 30 years, the culture looks shocking or revolting to parents who may have themselves been fans of culture that their parents warned them against.

Because of the power of modern communications technology -- pop culture is very easy to produce and access -- centuries worth of socially constructed guides to good behavior can be torn down in just a few years. This is a very toxic form of negative externality. Junk culture has many of its primary damaging effects on subsequent generations, even as it is targeted to the younger current generations as sweet rebellion. In addition, the modern entertainment industry has proven astonishingly effective at crossing the protective membranes that parents used to be able to establish between their children and the toxic influences from outside the family.

I do not mean to come across as some sort of hopeless prude; I am not proud of a lot of the things I did when I was a teenager, and am adamant that my children never consider doing them, but I suppose, mostly thanks to my parents’ diligence, that I turned out okay. But we are not talking about individuals, but about averages. And on average, I suspect that because of the appeal of rebellion among the young, the producers in the entertainment industry are pushing the culture downwards as much is being pushed downward by it. Anti-globalization activists make much of the so-called "race to the bottom," in which countries are forced to eviscerate wages and working conditions to attract multinational factories. I debunk this claim with the data in my book, but the peculiar economics of the culture industry described above suggest that a cultural "race to the bottom" is more than reasonable.

But we are not without defenses. The ability to secede from the culture through private and homeschooling and taking advantage of the much greater cultural variety made possible by digital technology (Elvis was the only thing on TV back in the day, but attentive parents can now select cultural reinforcements much more to their liking, because so many more cultural types are available) are ways in which a free society allows those most concerned about the culture to protect those they love from it. (Not to mention the ability provided by the power to just say no. A colleague recently asked me if I'd seen the Democratic presidential debate the previous night on one of the cable stations, and I told them that I hadn't because I don't have cable TV. He looked at me as if I had told him that I didn't have running water.)

But if the model I sketched above is accurate, it is the inattentive parents that we have to worry about.


Wednesday, February 06, 2008

Democracy in Action (3)

From The Washington Post:

Hundreds of confused Virginians and some Marylanders jumped the gun yesterday, showing up at polls or calling election officials to find out where to cast ballots, even though the presidential primary is next week.

Virginia and Maryland were not among the 24 Super Tuesday states that voted yesterday, but that word apparently did not make it to some voters. Virginia, Maryland and the District vote on the 12th.

More than 700 people called the Virginia State Board of Elections to ask, "Why aren't my polls opened, and where do I go to vote?" said Susan S. Pollard, a spokeswoman for the board. On a typical day, the board fields 150 to 200 calls.

For more in the "Democracy in Action" series, click the keyword "Democracy" below.


Monday, February 04, 2008

Culture Matter

I am going to guess that when idealistic British voters voted for the erection of the British welfare state, the legitimization of polygyny was not an effect they were expecting. From The Daily Telegraph:
Husbands with multiple wives have been given the go-ahead to claim extra welfare benefits following a year-long Government review, The Sunday Telegraph can reveal.

Even though bigamy is a crime in Britain, the decision by ministers means that polygamous marriages can now be recognised formally by the state, so long as the weddings took place in countries where the arrangement is legal.

The outcome will chiefly benefit Muslim men with more than one wife, as is permitted under Islamic law. Ministers estimate that up to a thousand polygamous partnerships exist in Britain, although they admit there is no exact record.

The decision has been condemned by the Tories, who accused the Government of offering preferential treatment to a particular group, and of setting a precedent that would lead to demands for further changes in British law.

New guidelines on income support from the Department for Work and Pensions (DWP) state: "Where there is a valid polygamous marriage the claimant and one spouse will be paid the couple rate ... The amount payable for each additional spouse is presently £33.65."

This effect – of big government changing incentives and the broader culture – is not unusual. The creation of cash benefits for single mothers did indeed contribute (although it was not the only cause) to the dramatic rise in single motherhood, with the attendant social decay, across the Western world. The creation of state pensions not only crowded out savings for one’s own retirement, but has contributed substantially to declines in fertility rates. Indeed, state health care has oiled the path for the acceptance of collectivization generally, ignoring the turning of the health system into a commons (as in “Tragedy of…”). So unintended consequences of the welfare state are everywhere.

Friedrich Hayek used to like to stress the virtues of the spontaneous order of a free society versus the unplanned outcomes arising form human frailty but generating planners’ resentment that results from big government. He contended that he was not a conservative in the sense of wanting to conserve culture no matter what, but neither did he want the atoms of culture split apart by the nanny state, with the rest of us left to clean up the cultural-atomic waste. In a wide variety of arenas of human activity, the welfare state elbows aside not just economic activity, as this term is generally used, but the foundations of the culture itself. This is not in and of itself a bad thing; cultures evolve all the time. But their forced, unnatural, unexpected evolution caused by the intrusions of Leviathan are an effect we will come to regret.

Friday, February 01, 2008


The election is still a long (too long) way away, but if it were held today either Hillary Clinton or Barack Obama would be elected President of the United States. Much attention has understandably been focused on what such an event would say about Americans’ willingness to vote for for a non-White Male (although in business NWMs have been succeeding for years, because businesses have to answer to someone, customers and investors). But I think the short-term effect on tribal tensions would actually be quite toxic.

Upon election a President Clinton or Obama would go through the usual tribulations of any president. He would suffer legislative setbacks, be outmaneuvered by the opposition, be mocked by talk-show hosts, and otherwise take it on the chin in the manner we expect of a free society. But while most of the opposition would be motivated by ordinary politics, it would be miscast by the president’s supporters (and perhaps by the president herself) as motivated by racism or sexism. Even if the charge were false, as it would be most of the time, it would be politically expedient to motivate the base by casting it as true.

And so race relations or charges that America is unfair to women would get worse before they got better. It is even possible that they could get worse for years, as people politically separate into tribal camps, voting only for their own kind because the other tribes are so mean to them. That is no reason not to vote for such a candidate – we can’t elect white males forever just because the first NWM or his supporters will cynically use his NWM status for political advantage – but the increase in tensions that will occur is another marker of the difference between politics and the market – one relies on manufacturing conflict, the other on achieving cooperation.