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.

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Able Abel and Post-Scarcity

Bryan Caplan has an extremely thought-provoking post over on his blog:

Suppose there are ten people on a desert island.  One, named Able Abel, is extremely able.  With a hard day’s work, Able can produce enough to feed all ten people on the island.  Eight islanders are marginally able.  With a hard day’s work, each can produce enough to feed one person.  The last person, Hapless Harry, is extremely unable.  Harry can’t produce any food at all.

Questions:

1. Do the bottom nine have a right to tax Abel’s surplus to support Harry?

2. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day.  Do the bottom nine have a right to force Abel to work more to support Harry?

3. Do the bottom nine have a right to tax Abel’s surplus to raise everyone‘s standard of living above subsistence?

4. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day.  Do the bottom nine have a right to force Abel to work more to raise everyone‘s standard of living above subsistence?

Do click the link, there’s more to the post, not to mention some rather interesting comments.Leave aside all the very important questions (which other people have already brought up) over how much of the fruits of Abel’s labour are, in fact, solely the fruits of his labour, the value Abel derives from the very existence of the social fabric, and so on. The question I was wondering about was this: what level or ratio of ability would overturn our intuitions (I say our under the assumption that most of you feel the same way, but I don’t know how justified that is) on forcing Abel into “slavery”?

What if the total level of the economy is far above subsistence level in the aggregate, as I think we can agree most Western countries are? Assume the others’ abilities remain roughly constant: at what level of Abel’s ability to create wealth/resources could we claim to have hit “post-scarcity”? A hundred times subsistence? A thousand? A million? Does it not matter? If the other 8 demand that Abel work an extra second so that Harry doesn’t starve, or even so they can enjoy some chunk of the incredible wealth that this “economy” has accumulated, would we still consider it slavery?An extra minute? An extra hour?

Most people would consider “how big a chunk” and “how much more work” the more important questions here, I think, and insofar as most discussions of taxation seem to revolve around it I think the “status quo” sees things more clearly than Caplan. My intuitions suggest that the size of the chunk should vary with the level of the aggregate economy over subsistence more than the actual distribution of wealth within the economy. Presumably this is where we could use some actual economics to guide us.

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.

Things I don’t get

I think this post has something for all the classes of people that I know have ever read my blog.

1) Why free speech advocates reject the “but it will offend Muslims!” argument as if it were clearly not worth considering.

Personally, I preferred the bear suit.

Don’t get me wrong, I think the idea that you should not be able to draw a picture or write an article about something because somebody might find it offensive really is inherently stupid. I think blasphemy laws suck, that they’re a disgrace to a civilised world and that they’re taking us back to the dark ages. But the idea that some things can offend us simply by existing is not in fact particularly new or unconventional, as much as it might go against my libertarian principles. Few people demand the categorical repeal of obscenity laws, which are essentially just that. Here is a Less Wrong article asking a similar question.

My theory is that this is a problem that inevitably arises in heterogenous societies. Most of us don’t object to a law that bans public masturbation because we share the same instinctual reaction to it, and we don’t share the reaction of an observant Muslim faced with a cartoon of Mohammed. Of course, I still say the offended Muslim can go poke his/her eyes out if he cares that much, but then I’m also perfectly comfortable to generally push “enlightenment values” and secular traditions in the face of local cultures everywhere.

2) Why people cried for Steve Jobs

English: Steve Jobs shows off the white iPhone...

Steve Jobs and a device people now identify with Steve Jobs.

Which is an entirely different question from why people exhibit such strong emotions for their Apple devices. Because let’s be fair, Apple makes a lot of good products. They have great designs and generally trouble-free, marvelously smooth interfaces, and the customer support in Apple stores is wonderful (or so I’m told).  But Jobs himself was never the most savoury of characters. The man was horrible to work for, stole ideas all over the place, never gave significantly to charity despite his vast wealth, promoted quack medicine until it almost killed him, and cared little for how his subcontractors treated workers.

Of course he was smart. And of course he had a good eye for design and had vision and was a good executor and gave good speeches. If I owned a tech company-ok, pretty much any company- and Zombie Jobs offered to run it I would jump at the chance. But since when does any of that lead people to care so deeply about a total stranger?

My answer is a combination of the media’s increasing tendency towards hagiographic obituaries, the fact that he had very consciously developed a personality cult and tied the company and its products strongly to himself, and the simple truth that he was a very well-known figure and there will be someone who cries for just about any celebrity, just because it means a change in their world. I remain unsatisfied at the idea that so many people the world over chose him as the only corporate titan to connect to in such an emotional way, though.

3) Why people care about the US elections

Like the first one, this is a bit of a tease, because I find myself reading a fair bit about it and I’ll probably continue to, if only because I won’t be able to escape it. But from a purely utilitarian viewpoint it’s a pointless exercise.

I mean, look at him.

“But Nikhil!” , you protest. “Perry’s a whore, Santorum’s santorum, and Gingrich is such an obvious prick: wouldn’t it be horrible if one of them won?” And I say: it won’t, because they won’t. The truth is that none of them have a real shot, let alone the gallery of buffoons (Cain, Bachman, and oh God, Palin) that have sprung up and dropped out one by one. Mitt Romney is the only real Republican candidate who has a chance- sorry, Ron Paul- and no matter what he says in the primary to appease the raving horde, his actions as president are unlikely to be significantly different from Obama’s. Of course he’ll be a little to Obama’s right but on most things we would care about-foreign policy, Internet regulation, general IP regulations/agreements, free trade agreements- that isn’t saying much. As long as he isn’t stupid enough to start a new war-and however much you might despise his views, he shows all signs of being a rather intelligent man- the rest of the world could easily close their eyes to this entire circus.

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.

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

Wikileaks and other things

Logo used by Wikileaks

Could work for the news about the job too, huh?

First, if anyone still hasn’t read Clay Shirky’s article on wikileaks, please do so, here. It’s not that long, and it is written and reasoned well enough that anyone from any side of this conflict should be able to at least appreciate his arguments.

Why does no one seem to get the fact that Assange is, essentially,a journalist? He’s not the one that leaked the papers after swearing to keep them quiet: whether that was brave/necessary or not, we can at least accept that it is a crime. But Assange is simply the man who distributed the cables, and one can barely even claim that he is distributing it in an irresponsible manner, considering the limited nature of the disclosures so far. (On the other hand, was I ever wrong about them probably not containing anything interesting!). His arrest warrant is of course for an entirely different crime, but the way in which all wikileak‘s lifelines, in terms of hosting space, DNS providers, and money have been cut off, is ridiculous. Shame on Paypal, Amazon, Visa and MasterCard! The charges themselves are a little dubious: the details seem to be just a little bit off.

Oh well. I have a lot more to say, but other people have already said it better than I could. The Guardian has been doing really excellent coverage of this whole affair, and liveblogging it with some frequency, so keep your eyes tuned there. And of course on twitter.

In other news: I got a job! A job offer, rather, to work as a Junior Field Engineer in Schlumberger, which is a company that specializes in oil-field services. It’s a fairly tough job, in terms of both mental and physical demands- half of my interview was the panel trying to scare me out of the job, and there were a few horror stories during our celebration dinner, too – but it’s also a “life of adventure”, at least in some ways, and there are lots of opportunities for travel. Not to mention, the pay isn’t bad, at least by Indian standards, or even standards here on campus.

PS: I have just realized that I have unironically shared a video by Glenn Beck. I’m sorry, my feminist friends. I don’t agree with him, but it IS funny, and more importantly, it puts the “Assange’s a rapist!” allegations in some context. Unless he’s making it up, of course. I don’t think the alleged victims are making it all up, but I do think it’s likely that they’re being pressured in some way, regardless of the Swedish prosecutor’s objections.

Rationality and Libertarianism: Why Nobody Loves Us

Will Wilkinson went through a paper written by Jon Haidt and interpreted it to mean (fairly, I think) that “Libertarians are liberals who like markets”. It had quite interesting results:
Libertarian Moral Psychology

Haidt et al found that the results supported their hypothesis about liberals and conservatives. Liberals care most about the Harm/care and Fairness/reciprocity foundations and accordingly largely refused to make trade-offs on the items that reflected these concerns, but were more willing to perform actions that violated the three “binding” foundations — Ingroup, Authority, and Purity. Conservative concern was spread more evenly over the five foundations, and they were less willing than liberals to violate Ingroup, Authority, and Purity for money.

What about libertarians? Here’s what they say:

Because we had a large sample of libertarians, who are usually ignored in political-psychological research, we compared their sacredness reactions to those of liberals and conservatives. Overall, libertarians showed less refusal to violate the five foundations for money that did liberals or conservatives. Each of the five average never scores for libertarians was lower than the corresponding score for conservatives, and each was lower than the corresponding concern for liberals.

Further down they report:

A further novel finding of the present study was that libertarians had the lowest sacredness scores on all five foundations. This finding supports Tetlock’s predictions [see here] that free-market libertarians would be the least outraged and most open to contractualizing moral violations. The differences were particularly stark between libertarians and conservatives on the three binding foundations. Libertarians may support the Republican Party for economic reasons, but in their moral foundations profile we found they more closely resemble liberals than conservatives. [Emphasis added]

Jon Haidt commented on the post to discuss his new paper, which also sounds quite interesting.

Will:
Great post, great use of our findings. We actually had a lot more information on libertarians in the original draft, but the editor asked us to cut it, thought it wasn’t important enough, wanted us to focus on liberal conservative differences. So now we’re writing a paper comparing libertarians to liberals and conservatives on dozens of scales, and finding so many interesting things. Here’s a preview: Libertarians are liberals who lack bleeding hearts. Libertarians look much more like liberals than like conservatives on most measures, EXCEPT those that have anything to do with compassion, on which libertarians are lower than liberals AND conservatives. The lower levels of compassion, and higher levels of need for cognition and tendency to “systemize” rather than empathize, are probably related to the love of markets.

Thanks again,
Jon Haidt

This also totally explains why, say, Eliezer Yudkowsky is a “better libertarian” than I am 🙂

Gambling Lives

Came across this from a link on twitter:

Right now, your company could have a life insurance policy on you that you know nothing about. When you die — perhaps years after you leave your employer — the tax-free proceeds from this policy wouldnt go to your family. The money would go to the company.
…Hundreds of companies — including Dow Chemical, Procter & Gamble, Wal-Mart, Walt Disney and Winn-Dixie — have purchased this insurance on more than 6 million rank-and-file workers…. These policies, nicknamed dead janitors or dead peasants insurance, soared in popularity after many states cleared the way for them in the 1980s.

The article takes a rather strong position against the practice. Obviously, the fact that a company is essentially making money off an employee’s death without doing anything to help his/her family(besides whatever is already in its labour contracts/policies, that is) is a little repugnant. The prime motive is not, apparently, “insurance” against losses caused by key personnel leaving but purely profit, since these are basically tax-free returns:

Sales of the policies came to a virtual standstill in September 2003, according to the insurer trade group ACLI, when the Senate Finance Committee approved legislation that would have taxed payouts made to companies if the employee had left more than a year earlier. That indicates that most policies aren’t being sold to protect companies financially against the loss of key current employees.

However, try as I might, I can’t come up with any reason to condemn this from a libertarian perspective. What it amounts to is two entities-the company and the insurer- making a contractual agreement based on some uncertain event. You can call this gambling (which again I find nothing wrong with, so I shouldn’t need to justify that at all), but it works exactly like other perfectly legal, even encouraged contracts (i.e. insurance in pretty much any other situation). As long as the company does not work the employee to death- a factor that is mentioned in the article, but surely there are other laws to take care of that explicitly, not just as it relates to insurance- what’s the harm? I agree that they should probably tax the income earned, though, given that society needs taxes to function and that this behaviour is not something we want to subsidize. The fact that that would apparently wipe out the market is not something I would necessarily lose sleep over, since I don’t see any other justification to not tax it.

OK. Since that is almost the same thing as condemning it anyway, I have no idea why I wrote this post.