Showing posts with label elites. Show all posts
Showing posts with label elites. Show all posts

Thursday, June 4, 2015

Oenophilia Phobia

What is it about fine wine that enhackles the proletarian sentiments of the boorgeoisie? Sarah Miller investigates.

Her main point: all taste is acquired and if you've developed an eye for decent literature and an ear for good music, it's no more unusual to have worked on a palate for good wine. Cheap wine does indeed suck, I can aver. But that doesn't mean it can't be worth drinking. Hell, sometimes you feel like Olive Garden. Sometimes you want to watch Kevin Bacon in a lead role. Who am I to judge?

Is expensive wine euvoluntary? That's a trickier question. In last week's dipwad outrage of the moment, a typically semi-sentient politician made a hyperbolic remark along the lines of "why do we have X number of different kinds of deodorant when there are starving children in the world?" Or maybe it was "this country" since the moral sentiments of the typical politician can't see past their own constituency. I think that perhaps the same pedestrian intuition underlying this misapprehension of economics also supports anti-elitism aimed against wine lovers. What are you doing sipping fancy-pants fermented grape juice when there are children out there who go to bed hungry?

If that were the tradeoff, then of course it would be monstrous to drink good wine, or to buy a yacht, or to spend two months' salary on an engagement ring, or to really do much more than live hand-to-mouth and give away the remainder of your salary to hungry orphans. Every now and again, you do hear of someone doing that, but it's always noteworthy for its extreme rarity. It should be noteworthy for its long-term inefficacy, but I suppose I shouldn't expect too much of short news cycles.

Instead of worrying about what others spend their fairly-earned money on, perhaps it'd be more fruitful to examine what institutional barriers exist that prevent low-income earners from making a more comfortable living. Complaining about wine and deodorant doesn't help the poor the way eliminating licensing restrictions would, for example.

So go ahead and enjoy your fine wine. But if I catch you paying more than twenty bucks for a bottle of vodka, I'll know you're a poseur. Get the rotgut, send it through an activated charcoal filter a few times, and take the Pepsi challenge with top shelf neutral spirits. I guarantee you won't be able to taste the difference.

Thursday, January 1, 2015

Law Enforcement as Exchange

NYPD arrest tallies are up for the week ending 21 December 2014.

Yes, there are slight year-to-year declines for things like murder, felonious assault, and burglary, but those are small-numbers issues, and are consistent with the overall ongoing nationwide drop in violent crime. The line items that are creating headlines like this one from the NY Post are "transit" and "housing", i.e. the revenue-generators, the but-for-the-badge tricks an organized police force can use to most resemble a roving knot of bandits.

This suggests that there are indeed two broad implied contracts. One, signed between the police and the public, is being upheld: we will protect you from the worst elements of society, the muggers, the brutes, the murderers, the rapists. The other, signed between the police and the political elite, is in (temporary) breach: we will act as your goons, your hired muscle to extort the voiceless and the downtrodden.

This week, not without a hint of irony, New Yorkers can breathe. The cops haven't stopped getting dangerous criminals off the street, but they have stopped harassing innocent passersby. The arrangement is more euvoluntary.

Ordinarily, this would be cause for celebration. But it took the murder of two police officers to obtain this cease-fire. The game tree just sprouted a diseased branch. Let's hope someone has the temperance and prudence to lop it off before it poisons the trunk.

Redacted. The linked document lists complaints, not police actions. Apologies for the hasty, unsupported analysis. Mea culpa.

Thursday, December 11, 2014

Toward A Theory of Euvoluntary Political Exchange

I had a fun little back-and-forth with SMBC cartoonist and BAHFest organizer Zach Weiner yesterday on Twitter. You can read it here if you're so inclined, but be forewarned: it got silly and a bit scatological pretty quickly. The non-silly modified transcript went something like this:

Z: Are any lawmakers going to do anything about the CIA torture report?
S: What would you have them do?
Z: Punish transgressors. Credibly commit to punish future transgressors.
S: Torture has been around for thousands of years. How will a little extra punishment help?
Z: WTF are you talking about? We successfully outlawed slavery. We can successfully outlaw torture.
S: Slavery still exists, all we did was force it underground.

And then Adam G joined the conversation and it quickly devolved into jokes about the political economy of seasteads (check for yourself if you don't believe me).

It struck me that Zach and I must have very different game theoretic models underpinning our views of how and why the state exists. By suggesting that punishing torturers would produce better behavior, I think Zach basically subscribes to the notion that the telos of the state is to govern, that the sovereign is generally the product of Lockean bargaining, Hobbesian entrepreneurship, or Rousseauian foresight. Zach appears to hold a wildly popular view, both inside the academy and among the general public, that people who hold political power—the power to coerce others—are endowed according to the Enlightenment-era principles described by Jefferson in the DoI:
Governments are instituted among Men, deriving their just powers from the consent of the governed
To Zach, and indeed to any American you'd poll with probably greater than 95% likelihood, this sentiment is accurate. The government is legitimate if and only if it serves the interests of the people, if perhaps not always their direct will. How widespread is belief in this model? I've heard my patron here at EE [obliquely] reference it more than once. If there's anyone in the world I most closely agree with on matters of political economy, it's Michael C. Munger.

But on this matter, I part a bit with first-principles theories of political organization. It might be that the sovereign arises to solve some thorny collective action problem, but that doesn't say very much about what it does once it sticks around. In this sense, I find myself much more closely aligned with Hume, that the continued existence of the sovereign is to encrease his own opulence and dominion. If good public law and order happens to arrive along with this pursuit, all the better, all the more euvoluntary if you will. However, a lifetime of casually following politics, of noting the periodic lapses in ethical behavior of the political elites, of surveying historical episodes of malfeasance, of noting the curiously acceptable practices in politics that are outright illegal in the private sector (insider trading is the most benign example that springs to mind), I find it nearly impossible to conclude that the state exists to serve anyone other than itself.

If the popular model is correct, if Zach is correct, the CIA (and whatever other organizations who've not had extensively-redacted reports publicized) is acting aberrantly when its agents force food and water into the rectums of prisoners with sufficient vigor to result in hemorrhoids, anal fissures, and rectal prolapse. Punishing those who are not acting in concert with the fundamental principles of the organization is sufficient to ensure compliance. Contrarily, if my model is correct, if Hume was right, and the state exists to encrease the dominion of the sovereign, there was no wrongdoing. At least not in the hidden, hermeneutical mission statement of the agency. If I'm right, the only person committing heresy is the whistleblower. If I'm right, Snowden is a criminal, not Rogers. If I'm right, whistleblower statutes need to (a) exist and (b) have no real capacity to protect whistleblowers. If I'm right, prosecutions would be Soviet-style show courts. If I'm right, the only way to ensure that torture is ended is to abolish the CIA entirely, along with the numerous other unaccountable federal agencies that enjoy wide discretion and little Congressional oversight.

However, I am not the hegemon of Plato's Cave. I do not have the luxury of indoctrinating the young while calling it "social studies." I cannot convince you that my model is correct and the popular model is as fanciful as a chocolate unicorn riding a pumpernickel skateboard across a peppermint half-pipe. All I can do is gently encourage you to revisit from time to time the basic model you have for political authority and to ask if the patterns you see in political activity reflect your hypothesis or if they might be better explained by an alternative.

We all want a more euvoluntary relationship with those vested with political authority. To get there, it might be worth reconsidering the terms of the implicit contract. T/F, explain.

Thursday, November 13, 2014

We Can Land On A Comet, But We Can't Admit Gruber Was Right

Sometimes life throws you a softball. Still trending on Twitter is the unintentionally hilarious hashtag #WeCanLandOnACometButWeCant, an ode to the wonder of the human spirit and the tragedy of grave misclassifications. Here's an example of one that straddles the line between tragedy and comedy:
Rosetta and its probe Philae are very impressive engineering feats, which is to say that they've demonstrated their programmers' keen grasp of physics, chemistry, navigation, math, and sundry other deterministic disciplines. Unfortunately for anyone with a troy ounce of taste, including both myself and Mr. Burfield above, dickheads continue to achieve and maintain fame.

The fame of dickheads is not an engineering problem; it is a social problem.

Social problems arise because people have agency. They can make decisions of their own accord. And in a free society, we oblige ourselves to tolerate the banal, crass decisions of others because the alternative is the sort of totalitarianism seen in regimes like the DPRK. If you're a working class American you would no more want to be forced to attend polo matches against your will than a Rhode Island elite would enjoy being forced to go to NASCAR races unwillingly. Orwell was close, except the boot stomping on the human face forever has a Nike logo and is at the 30 yard line.

Ergo, Gruber. The other news of the day (which is hardly news) is that PPACA architect-in-arms Hans Jonathan Gruber took command of Nakatomi Plaza was caught on tape on three occasions making the uncontroversial (in the social sciences, anyway) claim that voters are stupid (or irrational, or ignorant, or mood affiliation to that effect). Tyler C comments here, B. Caplan retorts here. Me? I think both of them are right. Tyler says that Gruber broke political kayfabe, and that since he's not a career politician, he shouldn't be expected to lie continuously and adroitly. Bryan says that lying is wrong, and that since the constituency insists politics are treated as an extended morality play populated by cartoon characters, any contribution to the charnel house of deception is unethical. To me, these two opinions are not even remotely incompatible. Tyler's looking at an individual's rational response to the incentives he faces; Bryan's critiquing the entire institution, while condemning a man for taking part in it.

My unreliable utopia has no famous dickheads, no kayfabe in politics, and is probably well-suited to life on a comet in deep orbit. Until I can strap myself to the shuttle pod of Rosetta II, I'll probably have to accept my BATNA of the injustices of asset forfeiture, the militarization of police, the relentless non-stop low-grade wars abroad, the inhumane treatment of peaceful immigrants, the grotesque war on drugs, the awful criminalization of sex work, and whatever other petty tyrannies men and women in positions of political authority can muster. I suppose it could be worse. At least America hasn't gone full Venezuela.

Yet.

Tuesday, September 16, 2014

Strings

Are donations euvoluntary?

The Center for Public Integrity has recently released an expose on Florida State University's Economics Department and their dalliance with Koch Foundation money. The low-down: the Charles Koch Foundation made an offer with strings attached: hire libertarian professors, fund libertarian students, or no donation for you.

Assume for the moment that you've no dog in the fight. Consider if a strings-attached university donation could be euvoluntary. If not, which EE condition(s) are violated? Is there a BATNA desperation problem lurking in there? I'm well aware of the sorry tendency of a tiny few university faculty to claim that they're desperately underpaid (and for adjunct faculty, there might be a grain of truth to that), but largely, tenured professors enjoy excellent salaries, comfortable job security, intellectual stimulation, and high social status. Nothing short of a bloated excess of self-regard, an over-inflated ego, or an ostentation of peacocks' worth of preening vanity would cast the tenured university professor in the same category as a desperate Haitian highlander. Babies won't starve for want of a foundation grant.

Perhaps there's something to the BATNA disparity story. If the Koch Foundation doesn't send its millions to University X, they can as easily send it to University Y. Their BATNA is to absorb some piffling transactions costs and move their grasping tentacle elsewhere, yes? For FSU, the BATNA is to expend precious department resources (including, importantly, valuable time that could otherwise go towards research) in the pursuit of raising funds. Is this difference in opportunity cost morally relevant?

Perhaps the idea of modeling donations as exchange is perverse on its face. Academics are sacred; commerce is profane. Do strings-attached academic donations cross the same moral intuitions as the Citizens United ruling? If so, does it matter what the strings are? If political advocacy has no place on campus, then it is my sad duty to inform you that there's quite a bit of housekeeping to be done.

Of course, as we consider the costs of accepting tainted money, consider also the benefits. None other than Mungo himself points out that liberal students strengthen their arguments and hone their important critical thinking skills by exposure to alternative analysis, by wrestling with alternative worldviews. Surely this is an important function of a university education.

I asked you to suspend your skepticism. You may now restore it. It's fair to wonder whether or not I'd be so sanguine if the roles were reversed—if instead of the Koch Foundation wishing to pressure a department chair for libertarian funding, it were George Soros or the Gates Foundation pressuring a department chair for left-wing faculty. Would I defend that? It's cheap talk to say that I would, but I think I've made a case here and there on this ol' blog of ours in favor of robust protections for the First Amendment and the general rights of folks to transact as they see fit. As long as the research that comes of such funding meets the standards of the academy, I'm as fine with [left-leaning economist's name redacted] getting a grant as I am with [right-leaning economist's name redacted] getting a grant. I'm enough of a Humean to think there's a far greater danger in empowering the political elite to decide which ideas are fit for research and class discussion. Counter speech with speech, not with force, says I.

Caveat: strings-attached transfer payments for poverty relief imply a different analysis, one limited by liquidity constraints and truly desperate BATNAs. I am not blithely claiming that all strings are hunky-dory, but edge cases are particularly unlikely for university department endowments. Straight cash donations without riders for the desperately poor are the best way to go, both theoretically and empirically.

Friday, September 5, 2014

Showdown in Ely

High noon. Timber rattlers herald the jangling stomp of Councilman Setterstrom's boot-stomp just ahead of the last asthmatic rants of the dying sirocco hell-bent for licking the hem of the duly elected official's leather duster.

A groundhog chatters nervously.

Ely's mayor, one Melody Van Camp, glances at a filigreed pocketwatch, knowing that the appointed hour has come and gone. Rail Boss Mark Bassett has fled town, and it was time for a reckoning.

So they broke in.

At the coroner's a reedy Scot tapped the last nail into place for the coffin he'd just finished, took a swig of a dark liquid, wiped the corner of his mouth, narrowed his eyes, and asked the tumbleweeds: "people, if crap like this can happen, why do we even have a government at all?"

All was not quiet in Ely. The break-in had pitted honest folks' morals against each other. Some were saying the rail boss had it a-comin'. Some were saying the council had ought gotten a search warrant. Others were saying it was a breach of the rule of law.

Me? I'm a drifter in these parts, ma'am. I've got no sympathies one way or t'other. To me, it's a stretch to see how one part of the organization with a widely-recognized claim on the legitimate use of force in society can bully another part of the organization with a widely-recognized claim on the legitimate use of force in society and be any more or less obnoxious than they already are.

But then, I'm not the antihero of this little story. I'm sure from the point of view of the Seibei, the Ushitora and Yojimbo both were villains. And vice versa. What if life were more like a spaghetti western than a John Wayne morality play? To the city council, the railroad is naughty. To the railroad, the council is naughty. To the median constituent, you've really got to wonder if these public servants are really serving the public. If any duly constituted government has a hope of forming a euvoluntary institution, it should be local government. This is an illuminating test.

A sickly-looking carrion bird perches atop the saloon.

Thursday, July 31, 2014

The Enigma of Ford

Rob Ford, the "disgraced" mayor of Toronto, still enjoys an order of magnitude more public approval than the US Congress (I know, I know, apples to oranges). This despite rock-solid evidence that he's smoked crack while in office.

There was, in Tudor England, a habit of old that on the Twelfth Night (as popularized by Shakespeare's eponymous play) of Christmas, the night before Epiphany, peasants and nobility would swap roles, the former dining on... well, I'll let Dan D'Amico explain:


If you get the baby (or the bean, or whatever local variant you like), you get to pretend to be a lord until sunup. @danarchism's right on the money; cultural, social... human capital is the name of the game. This festive celebration obliged feudal constituents to adopt some variant on the very sort of sympathy championed by Adam Smith in his Theory of Moral Sentiments. If only for a day, the (un?)lucky peasant would have to don the pantaloons of the lord of the manor and hear the petitions of the governed. It was a great, rollicking joke with a great rollicking punchline and a great rollicking serious message embedded within. Using my Pete Leeson spectacles, Twelfth Night was an institution that, as cheaply as contemporary political technology allowed, permitted greater social stability.

And then there's this guy:



The gentleman behind the wheel is Deadmau5. He is a musical whiz, a Giorgio Moroder for the opening act of the 21st century. And he puts up a 30 minute video of him tooling around with his crack-smoking mayor.

Rob Ford governs as if every night were Twelfth Night. AND THE WORLD IS A BETTER PLACE FOR IT.

Politics minus governance equals politainment (plus ζ, some residual). Three cheers for the City of Toronto to have the courage to admit that politainment is valuable. The grimmest moments in human history were characterized by politics taken too seriously.

I'm none too fond of transactional theories of the state. The analytical fiction of the social contract suffers from Arrovian impossibility problems, and no written constitution can ever hope to bind an active sovereign ruling a clamorous constituency. Despite my reserves, I do still believe that voters basically get what they ask for, within a standard deviation or so. And in Toronto, they've asked for some non-standard deviance. And it seems they've gotten exactly what they want.

Long live the king.

In EE terms, this tests Toronto's Ford on the Shughart/Thomas scale, and I think it finds in favor of euvoluntary institutions. If anything coercion flows in the opposite direction. Conventional morality, conventional politics would have this guy (or Marion Barry before him) out on his ear. Yet buoyed by popular support, he thrives in office. Huzzah!

Friday, May 16, 2014

Cicero Is not Dead

I like Adam Smith's distillation of Plato via Cicero not just because Smith is the father of modern economics, but because the triapartite relationship between Plato, Aristotle, and Cicero reminds me a bit of the three big names in Japan's warring states period: Oda Nobunaga, Toyotomi Hideyoshi, and Tokugawa Ieyasu.

An old Shogun-era Japanese fable says that Nobunaga, Hideyoshi, and Ieyasu were sharing tea in a courtyard one spring evening. A nightingale lit upon a nearby cherry bough. Wishing to hear birdsong, Nobunaga drew a blade and said, "little bird, if you do not sing, I will kill you." Hideyoshi, a trifle less bloodlust in his voice, clenched a fist and cried, "little bird, if you do not sing, I will make you sing." Ieyasu took a sip of his tea, looked up into the tree and said, "little bird, if you do not sing, I will wait for you to sing." The punchline is of course, that the Tokugawa shogunate lasted for 265 years.

Though they wrote on similar topics, Plato, Aristotle, and Cicero impress Western political economy the way the three daimyo impressed Japanese political economy: if you squint hard enough, you see one idealist, one moderate, and one practical realist. Of course, squinting hard enough to mix up samurai armor with a toga might require a bit of vinegar in the eyes.

When, centuries later, Smith finds that Cicero the hardbitten realist has taken from Plato the vaporous idealist a distillation important enough to call a "divine maxim", the alert student should take note. Cicero found a 300-year-old bit of political philosophy important enough to annex for use in the Roman senate. That's important enough on it own. More to the point, a Scot near to two thousand years later thought this expropriation important enough to include in one of the most important passages in his most cherished work. I assert that this heuristic of governance, to "never to use violence to his country no more than to his parents" has passed two critical filters: salience and longevity. This rule is important enough to Plato to have developed it, important enough to Cicero to have adopted it, and important enough to Smith to have used it in an admonition against the natural hubris of political elites. It has survived for more than 2000 years, and since the 1890s or so, it has been tacitly found wanting.

Consider many of the results of laboratory psychology, or of experimental economics. In laboratory settings, participants demonstrate time inconsistency, valuation asymmetries, maladapative heuristics, and a rather startling capacity to be fooled, tricked, swindled, and hoodwinked. Hucksters have their own divine maxim: "a fool and his money are soon parted." Does not the panoply of non-euvoluntary, irrational exchange vitiate Plato's Divine Maxim?

Well, judging from the few times I've crossed sabers with Richard Thaler on Twitter, I think he'd say "no." His idea of soft paternalism is consistent with Plato, with Cicero, with Smith, with the durable traditions of personal autonomy in Western Civilization. I think the only fatal error bound in the choice architecture project is to imagine that legislatures are populated with modern-day Solons and Ciceros, that the median politician will temper legislation with decent Aristotelian phronesis. If actual flesh-and-blood politicians were reliably keen to adhere to a heuristic of doing no violence to constituents than they would to their parents, I'd be happier than a clam to hand over the design of choice defaults.

But if instead, politicians prove intemperate in their reign, if they are fallible, corruptible, or prone to err, I might be a bit more leery about aiming their truncheons in the direction of constituents' personal affairs. Do you really want Chris Christie nudging you?

Thursday, December 19, 2013

The Amber Apostaspiphatry of the Beautiful Baltics

Never let it be said this tiny blue-green globe I keep all my stuff on fails to regularly surprise. Case in point:
If you're wondering what it is you're looking at, that's a tweet from the current sitting president of the sovereign nation of Estonia. Yes, that president of Estonia. The unexpected Deadpool (that's a compliment, Toomas) showing up at the doorstep of Charles Xavier's School for Gifted Freshwater Macroeconomists.

Let me explain why I find this particular tweet worth sharing (almost none of it having to do with the shock of seeing a head of state pick a fight with an American economist of note). First off, the obvious. The link there is to a The Ümlaut piece, which as you know by now, is if not a big sister publication to EE, at least a kissing cousin. I'm irl pals with more than one of the authors there and their work is pretty frequently highlighted by yours truly. So that's cool.

But then there's this whole series I've only just started on about big bad regime changes, constitutional formation, heresy, apostasy, game theory, and the euvoluntary continuum as it applies to governance. Well, one of the wee little inspirational thumbtacks to the buttocks that got me going on this project was scotch-taped to my chair by Steve Horwitz (he of the band-who-must-not-be-named fandom). For the upcoming APEE, he's put together a panel on Francis Spufford's Red Plenty, a "novel" in the same same sense that a Herzog film is a "movie": they both fit the form, but the function is to reach an upturned hand into the light shone by an ecstatic truth. Those of you old enough to remember a befuddled Dan Rather covering the collapse of the Soviet Putsch in the brisk winter of 1991 should remember well the alacrity with which the noble Balts and Ugro-Finns (Latvia/Lithuania and Estonia, respectively) shrugged off the rusty scales of their musty Muscovite oppressors. Hence the timely academic appeal.

But it's the personal touch that really does it for me. My wife of 12 years, mother of my darling daughter, is Lithuanian. I lived in KlaipÄ—da and Jurbarkas for the better part of 2001, and of all the wonderful cities I visited while I lived there, the one that still sticks in my mind like no other is Tallinn. And yes, that includes crown jewels like Prague and Vienna. Don't get me wrong, I adore Prague (I merely kind of like Vienna), but I don't think I'd really want to live there full time. Not in walking distance of Prague 1 anyway. Tallinn is a totally different story. I'd move there tonight if I had a decent job waiting for me. And I don't even know how to say "hello" in Eesti keel. It's a Medieval deep sea port, and here's the amazing thing: its original walls and fortifications from when it was an outpost for Livonian knights are all still intact! Both Riga's and Vilnius's got blown to smithereens between Napoleon and Hitler marching back and forth, roughing the joint up. Seriously you guys, if you ever get the chance to visit the Baltic states, set aside at least a couple of days to hit Tallinn. You will not regret it.

But personal jubilance aside, consider seriously the underlying game theory leading up to January 13, 1991. Ask if the backwards-looking resentments that had been brewing since re-annexment in 1945 contributed to the drama at the Vilnius TV tower. Ask if the two-faced political kayfabe dripping like venom from the forked tongues of party elites had anything to do with the quiet, dignified, white-hot rage that prompted unarmed men and women, descendants of the doughty pikesmen who bent the point of Genghis Khan himself as he was stabbing westward, to stand up to a tank brigade atop a well-worn hill, plant their earthen feet and glower, "no more." Ask if overthrowing tyranny is a prudence-only endeavor, or if it might, just might draw on the strength afforded by the faith of a mighty ancestry, a strength given vigor by the hope for a future free of the twisted talon of oppression, a strength shared through the love of a shared identity, yet a strength tempered by a patient resolve, a clear dedication to justice, and the sort of prudence that comes from surviving first the Blitz then the Purges. My hat is well and fully off to the people of the Baltic states. It has been ever since I lived there. I eagerly await the day my own countrymen show the same unwillingness to toil under increasingly coercive domestic institutions. Till then, I'll simply giggle and titter to myself that my little network of cherished friends isn't going unnoticed by my home away from home.

Tuesday, November 5, 2013

Euvoluntary Monopoly?

John McManus wrote a memorable (if too-infrequently cited) article in the 1975 Canadian Journal of Economics titled "The Costs of Alternative Economic Organizations." In it, he describes a team of laborers hauling boats along a stretch of the Yangtze overseen by a whip-lashing taskmaster. The wrinkle? The coolies themselves had hired the supervisor. The fellow with the whip was the employee of the team. Mind-blowing stuff, eh?

It's a curious puzzle, perhaps governed partly by timing, partly by the behavior of competitors and customers, partly by luck that determines the optimal organizational form of firms. Questions like, "should I buy out the competition", "should I divest this part of my supply chain", "should I be listening to more Curtis Mayfield" are all necessarily contextual. It depends on the relative scarcity of all the production factors and what's right for GM in 1968 might be very wrong for Ford in 2014. It's a tough business to scry from afar, harder still to second-guess.

And far harder yet when faced with the intransigent laws of public choice. Consider the curious position of the FTC. Nominally tasked (in part) with:
Under this Act, the Commission is empowered, among other things, to (a) prevent unfair methods of competition, and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress.
Note that the Commission reports to Congress. Which means by the transitive property of politics, that the Commission reports to a melange of special interests, irrational voters, elite technocrats, and the press. It's pretty easy to imagine a case where the meet and proper organization of a firm within an industry is entirely euvoluntary draws the attention of FTC pettifoggers buoyed by legislators out to tend the interests of their constituents.

Anti-trust is a cudgel. Sometimes you want to give a cudgel to officers of the peace because you want delinquents trammeled. But when it comes to firm organization, as opposed to deceptive practices, the prima facie case for anti-trust legislation may be considerably weaker than folks might imagine. It could very well be that one or two large, dominant firms is precisely the best way to deliver the lowest-cost bundle of goods to the consumer. And it could be that anti-trust browbeatings contribute more to the re-election prospects of a Senator or two rather than the greater public interest.

Edi(o)t: in my haste, I misattributed the source of the riverboat worker claim. The original source was Steven Cheung. I apologize for the sloppy scholarship.

Steven N.S. Cheung, The Contractual Nature of the Firm,@ Journal of Law and Economics 26
(Apr. 1983),1-21 at 8

Tuesday, October 8, 2013

Adult Literacy

Alex Tabarrok presents some fascinating OECD research on basic skills (source). In a relative ranking, and esp. over time, the US estimate (I think it's the mean, but I can't find the figure from the Times piece in the OECD paper; most of the tables in the appendix present the mean) drags behind the rest of the world.

Is adult basic skill erosion important? Maybe. Take a look at this graph from the source piece:


You'll note of course that apart from the very weird transformations they need to make this work (just look at that: "one standard deviation change in years of education" as if years of education share similar distributions across these countries. And don't get me started on sheepskin effects, people), the point estimates are pretty unimpressive. Naturally, this is made all the more difficult when you want to consider the marginal contribution of one extra year of education or one extra standard deviation in the ability to distinguish "they're" "their" and "there" towards productivity.

All that is very interesting, and if my point was to don my reviewer's visor, I'm sure I'd have plenty to say about what constitutes careful analysis. More importantly, please consider for a moment the interaction of adult literacy and the institutions that govern trade. Without actually seeing the distribution of the literacy scores (and I'd be very cautious about the limits of statistical inference in this case), my first instinct is to assume that those smaller countries with less cultural and economic heterogeneity will probably have narrower distributions than nations with relatively more liberal immigration policy, more geographic mobility, and bigger returns to network economies of scale.

I like to think about Lithuania for this, since I used to live there. One of the most memorable experiences of my time there was being accosted by a panhandler who spoke five languages.

Let that sink in for a moment. This isn't a contest of statistical moments, this is an example of institutional failure. For all its horrible faults, the Soviet Union was pretty good at universal literacy. Everyone my wife's age speaks both a native tongue and Russian at a bare minimum. Many also speak one or two other languages. Informal polling by me shows that the fraction of Lithuanians who know at least three languages exceeds the fraction of Americans who know the Konami code. Fat lot of good it does you to be able to read both Goethe and Dante in the original if you're left begging foreigners for bread money.

So what is important? I'll admit that it's pretty easy to read this report and worry that the elite ought to redouble efforts to improve education, but what if we've got is a search and matching problem? What if the danger is that policy is slowly but surely scrubbing marginally productive work from sea to shining sea? Take for granted for a moment that an adult might only read at an 8th grade level. Does it strike you as wise to prevent her from making ends meet as a manicurist by heaping on her years of licensing requirements and attendant fees?

If what we're looking at is a wide distribution of adult skills, the sorts of policies that will maximize the opportunity for euvoluntary exchange are those that best permit people from securing work that best suits their abilities. There is no Blue Fairy, but we can lift nonsense licensing requirements, freeze the minimum wage, enforce an impartial rule of law towards labor relations, and adopt a friendlier attitude towards entrepreneurship. Governing by statistical artifacts as if GDP or national literacy is some sort of international contest drafts peaceful people to serve against their will to satisfy the vanity of cynical elites. Misery is born from robbing people of their agency. Please resist the temptation to conclude from this report that what the US needs is more and stronger central control of education. Education isn't euvoluntary as is. Making it less so is needlessly cruel.

Tuesday, August 6, 2013

Meta-EE and the Constitution Part 18: Twenty-Second Amendment

Term limits.
Section 1. No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once. But this article shall not apply to any person holding the office of President when this article was proposed by the Congress, and shall not prevent any person who may be holding the office of President, or acting as President, during the term within which this article becomes operative from holding the office of President or acting as President during the remainder of such term.
Section 2. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of three-fourths of the several States within seven years from the date of its submission to the States by the Congress.



At about 3:45 in the above video, there's a paean to the adequate, forgettable, occasionally regrettable caretaker presidents of the USA.

I won't bother listing the usurpations the unforgettable presidents have wrought for considerations of space, but recall the apocryphal Chinese curse: may you live in interesting times. Lemma to the Curse (A): may you be subject to an interesting chief executive. The 22nd is at least a nod at cooling the ambition of an over-interesting Commander-in-Chief.

Look ye upon the price controls and rationing of the 30s and 40s for a hint whether a zealous presidency curtails the scope of euvoluntary exchange, and you should have an idea about whether this amendment helps steer the course of things towards a sturdier raft of EE.

Ceteris paribus, naturally.

Thursday, May 9, 2013

Euvoluntary Exchange, Coercion, and the Burden of Proof

Talking on his new book today at GMU, Chris Coyne made a claim that made my hair stand on end. It's the supercharged precursor to Andrea's Question. In so many words, he asserted that the burden of proof is on those who would employ the coercive power of the state to effect change.

To an audience populated by liberty-friendly economists steeped in the traditions of Public Choice and the New Institutional Economics (eg your friendly authors here at EE), this comment raised about as many eyebrows as a village of Inuit discovering that polar bears poop on the ice.

But the way I see it (and Great Googly-Moogly, you should have been there to hear Bob Higgs' answer to my challenge on this point), the converse position is so deeply buried in the inframargins of both the political elite and the public that that particular point in spacetime is one of the few places anywhere or anywhen you can make that claim without eliciting at a bare minimum some sleeve-snickering.

And boy oh boy, this is central to what we discuss here. This is what we call a value disagreement. This is not a difference of interpretation that can be remedied by brute facts. It is a fundamental parting of the moral ways grounded in what entities have standing, legitimacy, or authority in society. This is some foundational stuff here. I fancy myself to imagine that the EE project is an attempt to map some common ground with folks who disagree with this basic principle, then to sketch out what happens when we deviate from this lil' circumscribed area, but sooner or later, we all have to confront upon whom falls this onus.

Right now, the overwhelming majority opinion holds that it's not on the political or intellectual elites who propose policy intervention.

So yeah, after that, Andrea's Question: what can we do about that?

Suggestions?

Tuesday, May 7, 2013

Education is not Euvoluntary: Obscure Constituents Edition

Everyone gets to channel her little inner Pollyanna from time to time. When it's my turn, I indulge the fantasy that education is a mutual discovery endeavor, where bright, eager adults share what they've learned about the world with curious, engaged youngsters (defendants if you will).



A little introspection puts baby in the corner. I'm not cynical about the classroom relationship between teacher and pupil. I'm not cynical about the office-hours relationship between parents and teachers. I'm not even all that cynical about the disciplinary relationship between the principals and students. I am cynical however about all those relationships we never see in toto (no, I won't embed the smash 1982 hit Africa here; Joe Pesci will have to tide you over).

It was bad enough prior to NCLB that two states, California and Texas were close enough to monopsony buyers of standardized textbooks (and had strong political interests in their contents) that civics and history textbooks (and the associated curricula) were next to useless. It was bad enough that religious elites felt they had some say in how science education was conducted that they attempted out ban the teaching of evolution in public schools. It was bad enough that vapor-prone Victorian dowagers took to the voting booth to pull books from library shelves (and occasionally to pitch them onto pyres). It was bad enough even when people became convinced of the unlimited veracity of the "I pay your salary therefore I have final say over what you teach" model of teacher accountability. But now? Now we can't even clearly trace all of the constituents.

Education is a rent-seeking free-for-all. Somehow, children have become a extra-superior good, where the wealthier we become, the greater the share of wealth is consumed either by or on the behalf of kids [citation needed]. I don't necessarily see this as dysfunctional. I'm a parent and my daughter is the apple of my knees, the bees in my eye. I'm not ashamed to want what's best for her. But that doesn't imply I'm comfortable with outlandish development contracts for giant sports arenas or the feeding frenzy that constitutes school nutrition programs or salubriously generous pensions for an alarmingly corpulent administrative leviathan. I worry yet more about what's to come.

Look people. Grandparents dote. It's what they do. In the US, we've got piles upon piles of grandparent-aged (voting!) Baby Boomers with their hands on the sluiceboxes of tax monies. Political elites have to convince them of the grievous need for National Security (interpret this as foreign entanglement after foreign entanglement), though to be fair folks born before, say, 1965 grew up with "duck and cover" as an ordinary part of their daily lexicon. But nobody has to do much convincing when it comes to blindly pouring the wealth of others towards the nominally noble goal of Providing For The Future of our children. The personal cost of voting in favor of "educational reform" approaches zero, which implies that flowery words rather than hard results will dominate voters' minds. Which also means that the jackals can sup alongside the swine with impunity come slopping time. Rent-seeking is the natural companion of politics. The joint product of a) putting education in the hands of the political process and b) elevating the importance of the classroom is c) institutionalized corruption.

"For the children" is the watchword for moral hazard.

Monday, April 29, 2013

Shall We Crucify Mankind on a Cross of Austerity?

My post on the 17th Amendment got me thinking about William Jennings Bryan. What a character that guy was. He enjoys lingering fame for his efforts to force a newly-strengthened Washington DC to acknowledge and reflect the Will of the People. But most interestingly, he's also possessed of his fair share of infamy thanks to his participation in The State of Tennessee v. John Thomas Scopes and the embarrassing drubbing he got on the stand at the hands of Clarence Darrow: "We have the purpose of preventing bigots and ignoramuses from controlling the education of the United States." Ouch.

It's not my purpose here to dredge up the ugliness of the early Progressives. Instead, consider Bryan's approach to free exchange between consenting adults: those exchanges against which he bore enmity were to be the subject of control by the state. He did not champion for the virtue of temperance, he championed for the vice of wrath, channeled through the iron truncheon of the 19th Amendment.

In retrospect, we look back at the moral shortcomings of Bryan and men like him and chortle at their bucolic, benighted values, smirking and patting ourselves on the back at our obviously superior morality.

Yet still we turn to the unremitting power of the state to ossify our evaluations of euvoluntarity, expecting the eschaton ere long. Scott Sumner tries to sell monetary policy as a free lunch. Paul Krugman says that anyone who disagrees with him is a liar, a fool, or worse.

W.J. Bryan's arrogance did a lot of damage. Apart from being a prohibitionist, he was a war hawk. Sumner and Krugman probably won't be responsible for the rise of a large criminal underclass or the deaths of hundreds of thousands of young men in the cold Continental mud, but is it at least possible that history will judge each of us poorly? Is it possible that our grave certitude is inexact? Is it possible that we're wrong?

Therein lies the comparison: what are the relative consequences between a) being right and failing to act and b) being wrong and acting. This is a hardheaded question that deserves clear, hardheaded thinking. The euvoluntarity of future generations depends on it.

What are your null hypotheses?

Wednesday, March 6, 2013

This Is the Dawning of the Age of Majority

Declare 'var' variable string() /*default NULL*/

While var in (tax, education, agriculture, currency, road subsidy, law enforcement, drug, intellectual property,  energy, occupational safety, environmental protection, wage, housing, fishery management, near-earth object monitoring, climate, seismic event protection, medical, banking, monetary, fiscal, common law, et al)

begin
What is the ideal [var] policy zone?
end

Each one of the items in my variable list above is the object of state provision or regulation. I am confident that any of my readers could easily add to the list. What I find curious is in matters of scale. I think there's a good case to be made that corrective action should match the scale of the problem. Maybe I have an odd sense of justice, but I find it inappropriate to punish the whole class when one kid sticks his chewing gum under the desk or when the police attempt to seize a motel because they suspect that marijuana was sold on the premises at some point. Similarly, it strikes me as erroneous that existential threats like (catastrophic) meteorite strikes or super-volcanoes are completely ignored by international orgs like the UN.

How about the age of majority? Different ages of majority exist even within the same policy zone. In the US, citizens [men] can be conscripted for military service at age 18, tried for violent offenses in grown-up court as young as 10 (in Kansas and Vermont), can't legally purchase alcohol until 21, must generally remain in school until 16, and can't operate a motor vehicle on public roads under the age of 15 (there seems to be no statutory age restrictions on airplane pilot licenses in the US). The American political process still seems to be willing to grant at least a little discretion to smaller organizations on the details of raising children (compared to some European countries, anyway). Are these different standards evidence that the "age of majority", such as it is, has partitionable optimal policy zones? Do political elites understand that there might be some variation in kids' ability to estimate the euvoluntarity of particular types of transactions? If so, why do they seem unwilling to grant that there might be variation in learning ability or educational desire? I can't recall major party political commentary on education in the past quarter century that didn't bemoan relative STEM performance or talk about "standards", as if education were comparable to the missile gap charts used to scare Americans at the height of the Cold War. It's almost as if nations' relative rankings in educational performance was some sort of bizarre international contest.

What is the ideal age of majority policy zone? Given that there's not a lot about being a child that could be considered euvoluntary, how much individual sovereignty should children retain? How much sovereignty should parents retain? Extended families? Voluntary associations? Local districts? Why has the median voter consistently answered "less" on each of these over the past couple decades? Why is Franklin K. Beltway now assumed to know what's better for Jimmy F. Cornhusker than his parents are? What's changed? Has being a kid suddenly become less euvoluntary than it was before NCLB was signed?

Tuesday, February 26, 2013

Meta-EE and the Constitution Part 6: Eighth Amendment

Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.
There's a puzzle confronting anyone set with the task of crafting ex ante rules: how much discretion ought we grant? Credible rules bind capricious elites, allowing constituents to better plan. Rules civilize. In the language of the New Institutional Economics, rules provide expropriable quasi-rents: people can be more productive thanks to constraints on the tendencies of the political class to meddle. Discretion in the hands of the wise, the temperate can lend itself to a tolerable administration of justice. Discretion in the hands of fools is the fountain of tyranny. Which of these ought rules restrain?

"Excessive" is a weasel word. Is it "excessive" to condemn a man to twenty years in prison for possession thanks to minimum sentencing legislation? Is it "excessive" to throw a man into jail for close to half a year for the "crime" of notifying potential jurors of their right of jury nullification? Is it cruel or unusual for police to shoot family pets while conducting drug raids?

It's fair to interpret Amendment VIII as a check against a runaway judiciary, but the moral and legal sentiments behind it are meant to lash the whole of the state to the mast. The power to punish, to confiscate, to run amok is seductive. Employed recklessly, discretion scorches the forest of euvoluntary exchange. Only you can prevent forest fires.

I suppose the question centers on the sort of person we'd expect to take the reins of political power. Does political service attract the wisest, most judicious among us? Should a constitutional convention enshackle a bevvy of philosopher kings? Or do we live in a second-best world, where knaves seek authority over men? In a world where the moral authority is not necessarily vested in the offices of the state, will encalming the sword hand of Lady Justice increase the scope of euvoluntary exchange?

Speaking of USFS mascots, I haven't seen feather nor beak of Woodsy the Owl for ages. I wonder if that campaign is still alive.


Friday, February 22, 2013

Holy Conscripted Mercenaries, Batman!

Ever since I wrote that post on coercion in the three estates, the idea of elite collusion keeps rattling around in my head. As Timur Kuran will doubtlessly testify, Sharia Law expressly unifies politics, religion, and business. Similarly, I might be easily persuaded that the Indian caste system is a way of integrating and partitioning the state, the church, and the marketplace. Soviet political economy attempted to bulldoze the first estate and lash the second and third together. Contrast these with Adam Smith (and many other Enlightenment thinkers) who issued dire warnings of the abuses wrought by collusion between princes and guildmasters, between dukes and cardinals.

The topic of conscription happened to come up in conversation the other day. You may not be shocked to discover that I don't find pacifist arguments in favor of conscription convincing. In case you've yet to run across the argument, it goes a little something like this: the median voter has little interest in the conduct of wars waged abroad. Since military service is voluntary, there is little incentive for the public to raise much outcry over American-led violence abroad. With conscription, Suzy Midwest risks her son being sent to a war zone, so she'll be more prone to campaign against wars overseas and to vote for candidates that pledge peace. Now, apart from conscription merely being economically inefficient and morally reprehensible, this analysis is at odds with common biases and the historical record. It is my experience that the ability to see through political kayfabe is limited to a rarefied few. The median voter will shrug at a reinstated draft and basically agree that it's for the good of the country.

Anyway, this all got me to thinking about attitudes towards different sorts of military service. Recall how much contempt dripped from Princess Leia's lips when she derided Han Solo as being "quite a mercenary". Libertarian types (including me) are quick to point out that the alternative to paid military service is armed slavery. You're either a paid volunteer or a victim of pressed service. Which is more morally objectionable?

But thinking about it more, I think that this dichotomy is a shade too facile. It's not the exchange of money that matters so much, it's the estate. During the Bush the Dubya years, there was no shortage of support for the troops, nor was there a dearth of contempt for Blackwater employees. Both sets of Soldiers were paid to deliver violence, only one was for political elites, the other for business elites. I can recall from my elementary school education that the Hessian forces employed in America's Revolutionary War were regarded with skepticism even though they were on our side.

Then there's the attitude folks have towards the enemy. Which is scarier: holy warriors, Soldiers in service of the state, or hired swords? Which fights with more moral legitimacy? How do opinions change when estates collude? Where would you put soldiery on the euvoluntary spectrum? Why?

And what about vigilantism? Should Batman be measured alongside the armed forces?

Tuesday, February 12, 2013

Meta-EE and the Constitution Part 3: Third and Fourth Amendments

Protection of private property, people. The third amendment restrains the state in times of armed conflict, the fourth in times of peace...
No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.
and
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized
Modern day violations to these amendments (more specifically, the fourth) are tentatively justified (at least in a series of decisions by the Supreme Court) by appeals to common law. Civil asset forfeiture was an anti-piracy measure used by British courts to try pirate captains in absentia. Drug-sniffing dogs snooting the perimeter of your automobile isn't considered an unreasonable search of your effects.

Activities of the Transportation Security Administration aren't inconsistent with the fourth amendment.

These two amendments are meant to shield citizens from tyranny. It seems trivially obvious that institutions that bless the state confiscation of property should harm folks' ability to plan, to truck/barter/exchange, to promote the common weal. It seems to me that there's a curious puzzle in constituents' complicity in eroding  the protections afforded by these amendments.

Very curiously, I find that when I ask many of my non-economist friends, they often seem more worried about Google gathering and tracking their data than the NSA or the FBI. I admit that I'm utterly baffled at this; the worst Google can do is abet price discrimination. Government agencies can seize your property, curb your liberty, even terminate your life. What is the moral intuition behind regular folks' abandonment of the fourth amendment and their simultaneous aversion to privacy breaches by online retailers?

This is not a rhetorical question. I am genuinely flummoxed. Any clarity you might provide would be greatly appreciated.

At any rate, when they're observed, the third and fourth amendments are pretty plainly meta-euvoluntary.

Monday, January 28, 2013

Euvoluntary Truck (Sixteen Tons)


North, Wallis and Weingast (NWW) refine concepts of violence and social orders in their instant classic “A Conceptual Framework for Interpreting Recorded Human History” (2006, available from NBER) by modeling what they call “limited access orders”, in which elites curb private predation by establishing well-guarded rents and “open access orders”, in which elites abdicate strict control over the portals to political and economic activity. 
Some people say a man is made outta mud
A poor man's made out of muscle and blood
Muscle and blood and skin and bones
A mind that's a-weak and a back that's strong
 Limited access orders feature a panoply of picayune practices that drive those of us immersed in open access orders to mercilessly, (and as I shall argue) mindlessly mock. Well-heeled Westerners see squabbling bazaars, chicken-and-bead in-kind haggling over barter goods, even wink-wink nudge-nudge under-the-table black or gray market trades and shake their heads ruefully at the poor, benighted rubes who don’t know how to conduct civilized business. As you might predict, I think such mockery is hogwash.  Folks in limited access orders labor under alien institutional constraints that are easy for folks in open access orders to miss. After all, good institutions are invisible: we don’t have to meditate on each point of coordination that tells us to drive on the correct side of the road before getting behind the wheel. Sloppy thinking draws conclusions from mere practices.