Friday, October 31, 2014

Did They Vote? A Petty Rant.

You can take the boy out of Oregon, but you can't take the... actually no. You can take the Oregon out of the boy. Witness, dear friends, what hath wrought Representative Ben Unger, D-Hillsboro: Did they vote? And what does this charming wee application do for yon Oregonians away in yonder Oregonia? It links up voter records to Facebook profiles. You can hop on there, and as long as you're a registered voter in the Beaver State, you can browse the other Beavers on your friends list to see who's already cast a ballot this year.

It's difficult for me to articulate how much I condemn this. It isn't so much that it bears the stench of the totalitarian tactic of turning brother against brother or children against parents. It isn't even so much that the party ostensibly opposed to oppression and domination would turn to a crude tool of distributed shame to achieve their craven ends. It isn't even that the sort of low-information voting this is likely to spur will do little more than put extra noise into an already noisy processing. No, the thing that gets my goat is that it turns both voting and public shaming into a game. There are leader boards—MOTHERF***ING LEADER BOARDS—that display how many finger wags folks have sent to "delinquent" citizens.

Long time readers of EE will know how seldom I deploy the term "apoplectic." Perhaps it's because I've had a somewhat hectic week and my natural defenses are down, but this news trifle comes dang close to making me apoplectic. I take informed voting seriously, as should any responsible citizen in a democracy. By all means, vote if you're informed about the candidates, their positions, and the likely impact your vote will have on policy. Vote if the issues are salient to you. Vote if you're not alienated by the unspeakable things politicians spend your money on. Vote if you think it will make a meaningful difference in your life. But if you head to the polls because your Facebook friends sent you a PM, it's time to re-evaluate your relationship with your system of government. And if you're one of the goons sending messages, perhaps it's time to pause and give some meaningful consideration to the sort of leadership you want to see in the nation's capital. Is someone who cheerfully turns a social network into a petty Red, White, and Blue version of the Stasi really the sort of person you want to see wielding the riding crop of power?

A peaceful society is one that invites. Embroidered on the stoop mat in front of a shop is a single, warm word: "welcome." You are welcome to come in and browse our wares. Find what you like, and we shall exchange value for value. In front of Congress is no such felicitous invitation. The Congress is by necessity an authoritarian assembly. Its pronouncements carry the weight of law and are each ultimately punishable by death. Using the cute little tricks (naming, shaming, gaming) of the marketplace in a fatal arena is a grotesque misapplication of scope, an unjust abuse of power, and a dishonorable act by any reasonable standard of conduct for free citizens in a democratic society.

If anything should be tenderly protected as a euvoluntary act in a system of representative government, it should be the ordinary act of of voting.

"What do you say, Angus?"

"People, if crap like this can happen, why do we even have a Federal Elections Commission at all?"

Wednesday, October 29, 2014


Okay, so this is a little bothersome. A trio of poli sci profs co-opt the seal of the state of Montana to do some hum-drum research on voter turnout (if you think the experimental design is exceptional, I urge you to attend an experimental econ seminar once in a while). Folks get upset, complain to the election boards, and now their universities are facing civil action (pending an attorney huddle).

Ordinarily, I'd go with the Angus-ism, but I think in this case I'll let Jeff Goldblum take this one.
It's a little strange though that folks would get bent out of shape about this, thinking that it would influence an election. If you're worried that voters are so easily led astray by a mailer, even one with the official seal of the state, perhaps you should retain a greater skepticism about the validity of choosing through elections. The fact that low-information voters might determine an election surely points to a dire flaw in the system, does it not?

Hm. Poor dudes. If this costs them tenure, they'll have to accept a nasty, brutish BATNA: adjunct.

Shiver me timbers.

Monday, October 27, 2014

Hillary Clinton was Correct. Businesses Do Not Create Jobs

Mrs. Clinton recently drew a little fire for the following comment made while shoveling red meat to her base (Reason has the video clip).
Don't let anybody tell you that it's corporations and businesses that create jobs. You know that old theory, trickle-down economics. That has been tried, that has failed. It has failed rather spectacularly. One of the things my husband says when people ask him what he brought to Washington, he says I brought arithmetic.
My excellent friend and professor Don B has already dismissed this remark as flippant political kayfabe, worthy of mention only to establish the economic illiteracy of a politician who later claimed that it was the benevolence of Prez 42 that so generously offered raises to the workers of America.

I'd like to parse the statement a little closer, if you'll indulge the conceit.

(1) "Don't let anybody tell you that it's corporations and businesses that create jobs."

This is correct. "Corporations and businesses" do not exist to create jobs. They exist to overcome the difficulties of contractual organization in order to produce. Jobs are a byproduct. If a corporation or business could produce exactly the same output with zero employees, they'd be insane not to. If a firm is operating correctly, they're matching labor and capital margins in order to destroy jobs. This is a very good thing: it means that firms are being creative, finding new ways to better and more cheaply satisfy customer desires. This also frees up labor to find new market opportunities.

Adam G's Umlaut piece this week is an ode to the Internet. It is very good, but it would have been utterly unfathomable even a couple of generations ago when something like 80% of Americans were farmers. The destruction of jobs has been a truly lovely thing, allowing the flower of modernity to blossom in serene comfort under plentiful, warm electric light.

(2) "You know that old theory, trickle-down economics. That has been tried, that has failed."

Also correct. There is no such economic theory called "trickle-down," but there is some political kayfabe that uses the term. The economic argument is that lower marginal tax rates (particularly capital gains taxes) will reduce the cost of borrowing, allowing firms to grow and produce more stuff. There's nothing in the economic theory that has anything to say specifically about the quantity of labor employed. The theory predicts productivity. Since Mrs. Clinton was referring to employment specifically, it's not unreasonable that when she claims "failure," the metric she's using is cyclically-adjusted total civilian employment (or an alternative measure; follow IW for KE's excellent labor market analysis). Since "trickle-down economics" was interpreted as "lower marginal tax rates on earned income," rather than capital gains, and also included a whole host of other regulatory interventions, it probably did not produce the effects it was never intended to have, apart from the economic ignorant ravings of career politicians.

(3) "It has failed rather spectacularly."

Political kayfabe without exaggeration is hardly political kayfabe at all.

(4) "One of the things my husband says when people ask him what he brought to Washington, he says I brought arithmetic."

I'll leave this one to Adam Smith.
The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.
 Economics is not arithmetic, people. But if you expect a political elite to speak otherwise, then perhaps you need a clearer idea of the incentives they face and the institutions that govern their pronouncements. From the point of view of the career politician, their pronouncements are not euvoluntary; a mis-utterance could reduce them to a terrible BATNA of actually having to work for a living.




Friday, October 24, 2014

Lifehacker on Euvoluntary Exchange.

They don't use the word "euvoluntary," but the moral intuitions are all there.


Pay attention to the links at the bottom. Just because a business can fleece distracted or desperate customers doesn't mean help isn't available. A chronic market asymmetry is also an entrepreneurial opportunity for more virtuous merchants.

Exegesis in the Springtime

 There's good discussion appended, so I encourage you to click through for more.

For my readers unfamiliar with Leo Strauss, his main claims were that philosophers, poets, scribes, translators, and playwrights encode hidden messages and secret knowledge in their writing. Naive readers can enjoy the surface meaning of books, plays, poems, whatever and walk away content. But for the initiated, the hidden wisdom is what matters. Finding the hidden meaning of coded text is called "exegesis." The discipline of finding the hidden meaning in any work, written or otherwise is called "hermeneutics." As you might imagine, it's a tough claim to test empirically, though there are good game theoretical reasons to believe that writers with little direct political clout might wish to hide heretical ideas inside coded text.

The question then is: why should anyone bother to look for Straussian encoding in more modern works? There is no longer an Inquisition interested in strapping heretics to a dunking stool. Anyone in the secular west can write as they wish, without fear of state reprisal.

Answer (1): Straussian writing is a skill, and like any skill, it needs to be practiced lest it atrophy. Sure, there's little political suppression of disfavored speech these days, but forward induction urges risk-averse writers to keep their nibs sharp in case a totalitarian regime takes over, burns the books, and marches the heretics up the gallows scaffolding.

Answer (2): Straussian writing is a defense against the soft coercion of tribal exclusion. Are you a Team Blue partisan wishing to criticize the Chief Executive ca. 2009? Are you a Team Red partisan wishing to criticize the Chief Executive ca. 2002? Maybe you'll be gently dis-invited to write for DailyKos/NRO if you make your criticism plain. Even if the BATNA is not dire, it still remains unattractive.

Answer (3): Straussian writing is fun. Contrast a Straussian message with outright satire. Satire is an outrageous caricature of a position, with a very obvious exegesis; no special training is required to understand the "hidden" message. You simply have to be not-stupid. Straussian exegesis, to the contrary (when done properly) needs a key to unlock the mysteries held within. For example, if I'm guilty of Strausianism from time to time, the key is a passing familiarity with public choice economics. For the Tao Te Ching, the key is obtained after solving a series of koans. For Seussian Straussians, you need merely eat it in a box with a fox.

Answer (4): Straussian writing is accidental. Exegesis is prone to Type I errors, especially if the reader is actively on the hunt. Joe McCarthy was a hermeneutical Communist hunter. If you have the stomach for it, perform a search for "Illuminati" and browse what you find.

Answer (5): Straussian writing keeps out the riff-raff. If you want to go Full Nietzsche (never go Full Nietzsche), hidden knowledge should be reserved only for the eyes of those courageous few who have the fortitude to pass through the crucible of enlightenment. This is perhaps reasonable for some select religious texts. Recall that much of the Gospels are parables.

Get lost, Richard O'Brien
The risk of censure, be it political, religious, or secular, means that writing that could be salient to elites is not euvoluntary: writing plainly could result in outcomes unfavorable to the author. Straussian encoding is a partial defense against that. Hermeneutics makes writing more euvoluntary.


Thursday, October 23, 2014

Big Bad Heteroskedasticity: Bezos vs Krugman vs Andreessen Edition.

Paul Krugman accuses Amazon of asserting monopsony power by pressuring publishers to reduce prices, likening Jeff Bezos to J.D. Rockefeller.
Does Amazon really have robber-baron-type market power? When it comes to books, definitely. Amazon overwhelmingly dominates online book sales, with a market share comparable to Standard Oil’s share of the refined oil market when it was broken up in 1911. Even if you look at total book sales, Amazon is by far the largest player.
The econ 101 explanation is in the following graf:
So far Amazon has not tried to exploit consumers. In fact, it has systematically kept prices low, to reinforce its dominance [that's one hypothesis, anyway -SLW]. What it has done, instead, is use its market power to put a squeeze on publishers, in effect driving down the prices it pays for books — hence the fight with Hachette. In economics jargon, Amazon is not, at least so far, acting like a monopolist, a dominant seller with the power to raise prices. Instead, it is acting as a monopsonist, a dominant buyer with the power to push prices down.
Amazon is a mancgere, a merchant that neither improves nor alters its wares, but rather offers the conveniences of transporting goods from seller to buyer with as little fuss as possible for buyers. By being the largest middleman, Amazon is (ostensibly) able to extract monopoly/monopsony rents on multiple margins. If you're a publisher, your BATNA is to try to get books out in tottering brick-n-mortar joints. If you're a reader, maybe you can look around for a pirated .pdf or something (hands up if there's a Barnes & Noble in a 20 minute drive of where you are right now, let alone the good ol' mom and pop book store).

What's more, their very size allows them the luxury of discriminating on multiple margins. Krugman identifies an editorial margin related to partisan politics and delivery times:
Last month the Times’s Bits blog documented the case of two Hachette books receiving very different treatment. One is Daniel Schulman’s “Sons of Wichita,” a profile of the Koch brothers; the other is “The Way Forward,” by Paul Ryan, who was Mitt Romney’s running mate and is chairman of the House Budget Committee. Both are listed as eligible for Amazon Prime, and for Mr. Ryan’s book Amazon offers the usual free two-day delivery. What about “Sons of Wichita”? As of Sunday, it “usually ships in 2 to 3 weeks.”
I'd add that you don't even have to reach that far. One of the unintended upshots of the fragmented local book markets is that micro-markets could thrive. As other-Sam notes, the content curation issue is extremely important. Book store owners anticipate customers' purchases, and stock the shelves accordingly. This sends production signals back to publishers to tell them the sort of talent they should be scouting. These days, the signals are chiefly coming from a single retailer. If this retailer is non-neutral, future content could be skewed. If this retailer rejects tail risks, future content could be leptokurtotic. Either one of these is unjust, especially for our descendants.

Krugman recommends swift government intervention. I do not. A wise and benevolent sovereign might remedy the content curation problem, but wise and benevolent sovereigns are sadly in short supply. An agency chartered with the sort of authority required to monitor the business operations of a bookseller of all things is, in other regimes, called a "censor." The question the careful analyst (and entrepreneur!) should ask is: "is there an alternate institutional arrangement that would solve the problems of content curation, monopsony coercion, & al without creating greater systematic risks?"

I think the answer is "yes." At the risk of being glib, consider an Uber of books; a bitcoin of books. Or of any non-durable consumer goods. Amazon provides a centralized service. They're so large because they're able to cheaply solve the very difficult problem of how to match buyers and sellers. This problem can be solved in an algorithm, perhaps on the blockchain. Warehousing and delivery are entirely separable from the core competency of Amazon.

Is Amazon euvoluntary? I guess the answer depends on what you want to compare it to.

See Marc Andreessen's commentary here.

h/t the ST Gang

Wednesday, October 22, 2014

Pixellated Peace

At Popehat, Clark takes an orbital view of the recent dust-up over ethics and morality in the video game industry. His point: the scuffle is just the latest battleground between the two factions that have been duking it out since time immemorial. Call it blue vs red, freedom vs authority, or forager vs farmer if you want, but it's just more of the same. Meet the new boss, same as the old boss.

Curiously omitted is some pretty good news; as far as deep cultural conflicts go, this tempest-in-a-teakettle is remarkable for being so peaceful. Yes, there's a lot of hot rhetoric going around, and some threats of violence serious enough to inconvenience some people, but there is a pointed lack of the taking up of arms or indeed, much of anything that could rouse partisans to do much else besides lose a little sleep as they incessantly tweet he-said/she-said vitriol at each other.

Has the great increase in public luxury shifted the battlefield of deep social conflicts to Mountain Dew and Chee-to stained keyboards? Is this explosion of peace a happy result of the great bounty brought by a massive boost to the volume of trade available to the common man? If so, is it not in the interest of global peace to trade felicitously with members of all tribes on earth so that they might beat their swords into oculus rifts?

What could be more euvoluntary than to distract rowdy, otherwise murderous crowds of angry young men with 1080p boobs at 60 fps? Drop trade barriers, spread peace through commerce. We may not be able to quash discontent, but if GamerGate has shown us anything, it's shown us that discontent can be effectively neutered. Let that put a spring in your step, and a smile on your lips.