The Economics Platform

I’m listening to old NPR Planet Money episodes and they have this whole sequence about what “economists agree on” and what their “fake presidential candidate” would run on. And wouldn’t you know it? It’s basically the Sane Left-Libertarian Party platform. Legalize marijuana. Cut the corporate income tax. Cut mortgage interest deduction. Cut income taxes entirely, replace it with a consumption tax. Add a carbon tax to make up the rest. Thats just the obvious stuff.

Particularly interesting is episode 406, where they bring in the political consultants, who tell them they don’t have a hope in hell, because nobody votes for anything sensible. I’m paraphrasing, but not by much. Listen to it, it’s an entire government internship worth of idealism-busting.

Of course, in this country you only need to turn on any news channel to achieve that effect.

A Guide to the Legitimacy of State Authority for Minarchists

The point of a legitimate monopoly on the use of force is, at a fundamental level, to limit the level of violence. Insofar as it accomplishes this aim the state is superior to anarchism; insofar as this monopoly unleashes unchecked or insufficiently checked violence, it is not. In a situation where multiple agents try to extract rents through the use of force a state modeled simply as a stable protection racket- forget theories of justice or any larger scope of political philosophy- still pays for itself; in a society that largely understands the virtues of cooperation where apathy and where badly calibrated moral outrage over, say, drug laws leads to the disproportionate incarceration of millions of lower-class citizens of minority backgrounds, it does not.

Inspired by: http://thenewinquiry.com/essays/no-kony-is-an-island-death-and-profit-in-central-africa/ , although I didn’t read the whole thing, because it says far too little in far too many words.

Political Economy is Depressing

I don’t want to turn the overall tone of this blog more conservative, especially as I’m detecting a slow but certain leftward trend in my political views, but I’m afraid this is going to be another conservative post. This is not, however, an anti-Occupy-Wall-Street post, just an anti-Marxism one.

Partly due to Occupy Wall Street, I was reading some Marxist theory-distilled, condensed, simplified, etc, but in book form, and it seems to cover the basics- and it’s really startling to see how so many of the arguments have remained essentially unchanged. Post-scarcity economics has always been a contradiction in terms but at least it is something that can be considered in a science-fictional setting; however, a similar optimism about the abundance of the industrial age and the bounty of the coming era seems to me to be woven into much of Marxist theory.

The basic idea that wealth becomes ever more concentrated and that this is the inevitable product of the system and so on is something that I have a certain amount of sympathy with, but on the other hand, the clear failure of Marx‘s theory that wages will always be pushed down to subsistence levels and that productivity gains will always be captured by capital and not labour do not seem to be sufficiently impressed in the minds of those who continue to call themselves Marxists. Even more, the simple fact that Marx’s theory of human nature- human nature having always been the largest and most obvious impediment to the success of practically every alternative to plain old capitalism that has ever been suggested or implemented- was wrong doesn’t seem to be fazing anyone in the slightest. Clearly, though, the less-than-necessarily-pliant selfishness of man is a fact that most people grow up to accept (I have always thought this rather than a decreasing sympathy for unfortunates was at the core of that old joke: “if you’re not a socialist before 20, you have no heart; if you are a socialist after 20, you have no head.”)

This, then, is why the “why don’t these people have any actual demands?” question is worth asking, all rhetoric about pushing “the idea” and “maintaining unity” and “not allowing ourselves to be boxed in” aside. (I feel fairly comfortable calling it rhetoric because after all the focus on rhetoric is precisely what “momentum” and “the idea” are all about.) I can accept their premises in the narrowest sense: inequality is widening, and this is bad. I can’t accept their details because the details vary with every telling*, and I can’t accept their solutions because there aren’t any**. Capitalism-as-she-is-practised may well be a system nobody wants, but neither an alternative workable system nor a feasible transition to it (the bigger hurdle, in my opinion) seem to be on offer.

PS: This isn’t to say there’s nowhere to go from here, of course. The system could use more than a few tweaks, and a fair bit of re-shaping. It’s not going to change it’s essential incentive-based structure, that’s all.

PS2: And, of course, burning books is bad.

* I mean, of course crony capitalism is bad, of course banks shouldn’t be given bailouts and then turn around and hand their executives huge bonuses, of course we should avoid moral hazards and try for a more stable, better balanced financial system- but yet again, these aren’t details, those are practically tautologies!

**Some solutions that have been proposed by some people, like a well-targeted debt jubilee, I actually think make sense. (I will, however, wager a small sum of money that no broad-based debt jubilee will happen in the United States for the next 5 years.) The same goes for a reasonable tax increase, although I have a better sense for the numbers than to suggest that it can be restricted to the top 1% and still be sufficient to reduce the deficit.

Ooh, and here’s an inkling of the sort of crap I’m talking about.

The Undue Simplification of Political Discourse

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Maybe you don’t want to get as complex as that title, but you could do with being a teensy bit more complex than this:

“I hear all this, you know, ‘Well, this is class warfare, this is whatever. No. There is nobody in this country who got rich on his own — nobody.

“You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.

“Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.”

Who’s saying otherwise?[1] Rush Limbaugh isn’t even saying otherwise, he’s just ranting at perceived tonal issues and liberals and Marxists. Most minarchists still think you need a state for providing security and some subset of those think you need one for public infrastructure. This isn’t really news. This isn’t something that anyone but the odd anarchist needs convincing about. Of course you set aside a certain amount of your earnings for public goods. The problem isn’t to convince people that they need some sort of a state. The problem is to convince people that this state should do all the things it does today, and that they have to pay for it.

PS: Of course Elizabeth Warren isn’t the only one “unduly simplifying” the debate. She isn’t even on the list of prime offenders. But this is the sort of simplification that even otherwise intelligent people feel the need to produce as a manifesto, hence the post.

[1]Aside from objecting to “the rest of us”-what, factory owners don’t pay taxes- and “paying it forward” framing vs “paying back”, at least.

Corruption in India, Anna Hazare and the Jan Lokpal Bill

Note: This is a very “thinking aloud” article and now that I’m done and it’s 2 AM and  I have a feeling I’m saying something silly somewhere in here. I just don’t know exactly what. If you can point it out and explain, I would be very grateful.

It has just been announced that the government has agreed to Anna Hazare‘s demands to set up a joint-committee to draft the new Lokpal bill consisting of 5 members from government and 5 from civil society, with a co-chairman from amongst the activists*. This is probably good news even from the point of view of those of us who were less excited by this agitation than most. However, a little more analysis seems warranted.

I will freely admit that this whole thing caught me entirely by surprise, since I don’t really keep up with Indian mass media. I stick to the web and even there, rely on social media to get me any really urgent stories. So when people started talking about this as “India’s Tahrir Square moment,” I gaped a bit and frantically started reading up, relaxing only once I figured out that that, as we would call it here in college, was “absolute fart”.

The central concern here is the Lokpal (now, Jan Lokpal) bill, and you should all go read that wiki page. Also this and this. This is probably one reading assignment too many for one post, but Pratap Bhanu Mehta has an excellent (if, shall we say, written from a position of privilige) take on the issue at the Indian Express, here. I’ll wait.

Done? Ok. Does anyone yet realize that this bill will create what is essentially a Jedi Council run by a lot of not-very-Jedi people? (Not that that worked out so well either, of course.) It can initiate prosecution, file FIRs, integrate itself with the anti-corruption wing of the CBI and the central vigilance commission, and mandate a minimum sentence of 5 years and a maximum of life imprisonment for any case. Certainly sets up a deterrent, huh?

Corruption in India, at least, can be broadly divided into 2 types: first, the “greasing of palms” necessary to get most basic services  or “baksheesh”, that poses an annoyance to almost every citizen who has to come into contact with a government agent-from the RTO who evaluates your driving to the policeman who comes to verify your address for your passport. This is usually necessary irrespective of the legality of your actions (although more often than not it’s done where only minor issues remain). The second type is large, institutional corruption, where you bribe an official for a government contract, or to approve your factory despite it not clearing regulations etc. Of course, even institutions that do everything right might need to pay up just to keep things moving, and even individuals might be paying for special favours or to make someone look the other way. But the point is that the vast majority of citizen’s annoyances are with the former, and few top down legal actions are likely to affect these much. Go to www.ipaidabribe.com (a wonderful initiative). Go look through the reports of bribes paid. The vast majority fall into this category.

So what is my point? My point is, the appropriate metaphor for the state of Indian corruption is not some ravenous dragon terrorizing the innocent villagers. It is a million little mosquitoes biting intermittently at a weary populace as they trudge to work every day. A big fu*king sword might be useful against a dragon, but the mosquitoes are probably just going to wait until you tire yourself out by waving it around.

An ineffective weapon against (most) corruption in India

Of course, a lot of this depends on just how the system is going to be implemented, and I’m thoroughly clueless about that, so this might be unfair criticism. It might be that the system also involves introducing technology that can track “choke points” of paperwork. It might be that it can set up an efficient and responsive bureaucracy that will basically do what the vigilance commission has always been meant to do, only properly. I certainly hope so. I just don’t think I can count on it.

PS: OK, so the important caveat here is that it is the latter sort of institutional corruption that arguably matters more as far as economic growth, safety, environment and a whole host of other things are concerned. And this bill will hopefully make it easier to prosecute that kind of case and reduce the levels of corruption there. Which is why I don’t think this is a bad thing, by any means. I just think it’s likely to do a lot less for most ordinary people than they think.

PS2: And, of course, I realize that the ipaidabribe website is prone to a sampling bias that favours this sort of corruption.

*”Finance minister Pranab Mukherjee will be the chairman of the committee that will also include law minister Veerappa Moily, telecom minister Kapil Sibal, home minister P Chidambaram and water resources minister Salman Khurshid as members.Besides Hazare, those representing the civil society in the joint committee will be eminent lawyers Shanti Bhushan, Prasant Bhushan, retired Supreme Court Judge Santosh Hege and RTI activist Arvind Kejriwal. Shanti Bhushan will be the co-Chairman.”-TOI.

Matters of Principle

I was reading this article on livemint and wondering what to make of it. I had also read an article called “UID: Facility or Calamity” at South Asia Citizen’s Web that Aashish had shared on Google Reader a while back, which I also wanted to revisit and link to, but their site is partially broken and I can’t get at the page: here’s a cached version on google. It says, essentially, that:
a) the Unique ID/Aadhar scheme, which gives a biometric ID to all citizens is not voluntary in any real sense of the term for a lot of people, because it’s required to access certain “social security” services,
b) that it is being implemented in a hap-hazard fashion which doesn’t ensure coverage for everyone,
c) that it will be inaccurate, (pretty much guaranteed, it’s only “how bad” that we can control)
d) that this program is going to be very (too?) huge in scope, allowing for conditional cash transfers and rolling up several existing services into one, and
e) that it is going to turn into a surveillance tool that is almost guaranteed to be misused, and that there are no options for redressal of grievances that do not go through the same body.

Now, all of these are true to some extent, but… well, b) and c) are going to be true for just about any government initiative, isn’t it? And one would think a biometric ID would, if anything, be less amenable to fraud than anything else. As for d): it was DESIGNED for that, wasn’t it? I didn’t really see the problem in that when it was first proposed, and I’m not sure I see the problem now, apart from a natural distrust of big government; but somehow I don’t think that was the problem for the authors. So we are left with a) and e), and I realized, I’m not actually very concerned about a) . (This would be the matter of principle referred to in the title.) In theory, I should be quite upset about it, especially when combined with e), but if it comes with sufficient efficiency gains for people who, let’s face it, really need all the help they can get, I’m a lot less upset about it. I’m concerned about e), of course, and I’m not getting this thing unless I absolutely have to,  but I find myself willing to take the risk for other people, when there are other considerations in play… and n0, the sheer hypocrisy of this doesn’t escape me. That’s just how I roll sometimes. (Read the Livemint article I linked to earlier for some context, though.)

A large part of the reason I’m not more upset at this is that I do have a little bit of a fetish for this sort of technocratic solution to all our problems, implemented by fairly well-respected members from the private sector; although the last time I re-read the Foundation series was at least a year ago! I think I would take b), c), and e) a lot more seriously if this were something else. As it is, I can’t honestly come down on this one way or the other, except to say that “calamity” seems to be a remarkable overstatement.

Wikileaks and the Long Haul

A Question

Who is it that still does not understand this mundanely vicious cycle of curfews/blockades/other form of economic (at best) or physical deprivation–> popular outrage/support for separatists/anti-government sentiments–>Emboldened and newly capable extremists/ separatists/terrorists/ “freedom fighters”, if you wish–>more attacks on the state/the outsider group of choice/other suitable targets, usually meaning white people–>more curfews etc?

Everyone who has any sort of power over any of these decisions should be made to go through the Analog Circuits course here in IIT Madras; 4 months with Shanthi/Nagi should thoroughly drill in the concept of positive feedback.

Yes, I know I’m oversimplifying. I know riots kill people, and curfews presumably result in less damage overall.  I don’t know what we should do instead. But I find this situation, at least the way it is reported, a little ironic:

“No separatist leader would be allowed to paralyse life across the valley and cause adverse effect on education of children, commercial activities and the livelihood of people,” an administration official said.

PS: Am I going a little too crazy with the links etc? Zemanta makes it really tempting.

Debt is Weakness

Tyler Cowen raises an interesting point:

At some sufficiently high debt-gdp ratio, it becomes a foreign policy issue and a big one. Postwar UK had a high debt to gdp ratio, and to this day it is a fine place, but that debt meant the end of England as a world power, for better or worse. The U.S. for instance used financial issues to push England around and they basically had to give up on their overseas commitments. A very high debt ratio here would mean the end of the U.S. as a global world power, again even if gdp does OK. A global power needs the option of spending a lot more, quickly, without asking for anyone’s permission. Your mileage on a U.S. retreat from the global policeman role will vary, but it’s the elephant in the room which hardly anyone is talking about.

I don’t know if I really agree with the chain of reasoning, but it’s worth considering. I have been thinking about whether the effect is utility-enhancing or detracting from the POV of humanity in general for a while now. In some senses, having no “global policeman” seems to be a good thing, and at least when you phrase it that way, it certainly appeals to my anarchic tendencies. On the other hand, if you had to have a global policeman-not because it’s necessary, perhaps simply because that is the stable equilibrium- who would you really prefer? China? I sincerely hope not.

Those Crazy Europeans

So, all the EU countries have finally come together and decided to establish what is essentially a failed-government bailout fund of nine hundred and fifty seven billion dollars. The Wall Street Journal article contains the following sentence:

Since it became clear that Greece would not be able to meet its financial obligations and fears spread that other indebted nations like Spain, Portugal and Ireland would have similar troubles, Europe has responded fitfully.

In an article that seems otherwise supportive of the move, with only a little bit at the end about how the problems that caused this are still very much present, and everyone is basically hoping Greece et al learn to control themselves real quick, did they actually mean fitfully, meaning in an irregular or unsteady manner? Or did they mean to write fittingly , which means appropriately? Anyway, it is interesting that both interpretations would fit.

(Sorry, I couldn’t resist.)

PS: Tyler Cowen has some thoughts on Europe, here.

WTF!

I can’t believe that I live in a country where the Supreme Court, the highest judicial body in the land, says THIS.

How f**king primitive do you have to be to say that a woman cannot be a rape victim just because she is promiscuous?

The next box on the same page about women who are married in UP having to go through “virginity tests”. And the story on the facing page of the newspaper was about how the Christian front in Mizoram wants to question the HC order legalizing homosexuality. Really. It just proves that for all our technical expertise and thousand-years tradition of “synthesis” and “tolerance”, vast parts of the country still continue to be ignorant bigots.