Via the Peej, K.M. Parsons offers an op-ed defense of public funding for philosophers. Philosophy provides critical thinking, you see, and if citizens were unable to think critically, they'd be nothing but a mob of indoctrinated partisans, you see.
Let's assume that professor Parsons is correct and that the discipline of philosophy does indeed grant students durable, robust critical thinking skills. Let's assume further that the marginal philosopher (extend this to all of the social sciences and humanities if you like: political science, sociology, economics, take your pick) contributes meaningfully to students' ability to question and revise their unexamined beliefs. Assume, if you will, that the exchange between professors and students is euvoluntary.
Even if all of that is true, even if "philosophy is valuable" isn't just a naked assertion, even if the Republic Herself were at stake, a more convincing argument would include at least some mention of how peaceful exchange is insufficient to the task of making sure the next (and by "next" I don't mean Aristotle or Hume or even Sandel or Searle; I mean the third-string just-barely-made-tenure assistant professor at an unranked department) philosopher earns employment. A complete argument, in other words, includes at least some mention of public goods, in the rigorous sense, in that I benefit from your ability to think critically, or that anyone at all benefits from Peppy Not-Quite-Good-Enough-For-Tenure Professor's latest desk rejection. If public funds were supporting the next Summa Theologica, you'd probably be able to get away with hand-waving market failure rebuttals. But that's not what's being argued.
I tend to agree that education is among the new commanding heights. It would be churlish of me to assume that this didn't imply that a great deal of rack and ruin in the editorial pages were sure to follow. But if you must defend your discipline against reasonable objections to outrageous relative price increases, do yourself and your readers a favor and write as if you respected their intelligence.
Hugs,
Sam
Showing posts with label public good provision. Show all posts
Showing posts with label public good provision. Show all posts
Friday, April 10, 2015
Wednesday, March 11, 2015
Why "Uncompensated" Externalities?
If you've not done so lately, please turn your attention to the sidebar. Condition (4): no uncompensated externalities [emphasis added]. Why "uncompensated?" Why not just "externalities?" Why is it I get all a-fluster reading this here IGM forum (question (A))?
Question A: Declining to be vaccinated against contagious diseases such as measles imposes costs on other people, which is a negative externality.Why is it that in the responses, I am puzzled by respondents' failure to note the omission? Could it be that the sort of detailed parsing of externalities that is commonplace in the New Institutional Economics tradition is absent elsewhere? If so, please indulge me a quick tour of how I like to think about externalities. Here's my general typology:
- Compensated externalities. Adam injures, annoys, pesters, or tramples Brad. Adam makes it up to Brad through word, deed, or cash. Brad is satisfied.
- Uncompensated externalities. Chuck sullies, soils, or sabotages Denny's. Chuck does not fix his ruin, clean his mess, or repair his damage. Denny's is not satisfied.
- Uncompensatable externalities. Erick devastates, vexes, or bugs Frank. Erick cannot, because of (i.a.) difficulties of organization, identification, liquidity, or mortality, make like the Puck and restore amends. Frank is not only unsatisfied, but has little hope of redress via tort action.
(1) is the cartoon version of the Coase Theorem: everyone can play nice because we all have nicely-defined property rights, clear and unambiguous participants, and obvious harms. Because of this, there's no need to pester the sovereign over injuries. Reasonable, rational adults can settle disputes without state arbitration.
(2) is a problem, but it's a problem that can be fixed. Indeed, this is exactly why we have a civil law system and why people like Judges Judy, Wapner, and Joe Brown have such entertaining television programs. Some people crap on the floor at Arby's and don't clean up after themselves. I'm sorry to say that this is a simple fact of life. Some people are jerks. Alternatively, they're just normal and they are unaware that their actions offend their neighbors. Also alternatively, disputes can arise when new neighbors move into an existing arrangement. A lone chicken farm bothers no one, but when new condo owners move in downwind, they might find that the summer miasma they didn't notice when they moved in last March is now horrifically oppressive. Whose fault is that, the poultry farmer's or the new residents'? Anyway, this is where the meat of the actual Coase Theorem is. Identifying institutional frictions that prevent quick, reliable conflict resolution, analyzing organizational structure with an eye to how participants optimize to reduce transaction costs... this is where a lot of the industrial organization literature in the NIE tradition lies.
(3) is also a problem, and in the limit, represents some of the nastiest, thorniest public policy problems. To pick a totally non-controversial issue, a fetus cannot bargain with its mother to avoid being aborted, hence abortion imposes uncompensatable costs on unwilling participants. Or if you prefer, burning fossil fuels traps heat in the environment that future generations will have to deal with. Or if neither of those examples please you, every statute prohibiting commerce between consenting adults imposes an unavoidable cost on citizens who wish to indulge such commerce, no matter how carnally offensive to the tender imaginations of busybody prudes.
The IGM question makes no distinction between these, which I find troubling because the policy implications are very different depending on whether it's (1), (2), or (3). Amish communities, for example, solve the measles issue via de facto quarantine. Pennsylvania Dutch country isn't a disease vector the way the cosmopolitan Bay Area is. As far as externalities go, they self-compensate. For everyone else, the analytical and policy trick is how to get from the status quo arrangement of (3) to the much more tractable puzzle of (2) and eventually to (1). This is sort of what the second IGM question gets at, even though it's leading enough that any respectable attorney in a procedural drama would leap to her feat and bellow "OBJECTION YOUR HONOR. LEADING THE WITNESS" at the top of her lungs.
Careful analysis of the vaccine issue should include a detailed assessment of both ex ante measures to improve compliance and ex post remedies for opting out. Vague survey questions like this mislead casual readers, particularly when they're likely to be interpreted without nuance by journalists who haven't been exposed to more thorough concepts in the property rights literature. More accurate questions posed to panelists by Chicago Booth would provide a greater service to the public. If done properly, perhaps they might even improve general public economic literacy.
Perhaps.
Thursday, February 26, 2015
The End of Poverty Will Be Downloaded at 14kbps
Meet the Ghost Gunner, a home milling machine. Billed as your one-stop shop to craft AR-15 lower receivers, it's a lump of metal and code that turns raw metal into machines of killing. From the site:
But think of what the Ghost Gunner really is: an amateur, with no knowledge whatsoever of metallurgy, engineering, design, or gunsmithing can take a pile of scrap and make something useful out of it. Tech like this eliminates the highest barrier for the home manufacturer: expertise. The machine knows the proper milling technique. The machine runs the lathe. The machine knows the proper annealing soak temperature gradients.
Imagine that you're a farmer in rural Uganda. There's an antique tractor rusting at the corner of a field that you haven't been able to get replacement parts for thanks to supply route disruptions courtesy of the local tinpot warlord. Luckily for you, a foreign rogue piloting a nighttime zeppelin airdropped a repurposed Ghost Gunner into the center of the village complete with software to crank out all the pump/compressor/belt wheel/alternator casings you'll need to get your tractor running again. All you have to do is feed in the scrap metal and Bob's your uncle.
Yes, yes. I'm simplifying of course. But a big part of what leads to economic development is what economists call "capital deepening." Airlifting a two million dollar John Deere combine into rural Africa is a waste of perfectly good machinery because to get to the point where such a device can be used properly, farmers need extensive supply chains, commercial infrastructure (roads, rails, &c), and the expertise to use and maintain the thing properly. To get to that point, folks need to be able to start small, to be able to cheaply get their existing gear into working order and to upgrade appropriately (recall your Smithian sympathy & Hayekian humility: "appropriate" in this instance cannot be dictated from afar, as the local residents know best the constraints of their particular situation). Ghost Gunner and similar devices drastically reduce the cost of capital improvements. Demand curves still slope down, people.
Code for new blueprints can be published cheaply and easily by the many, many, many civic-minded engineers throughout the world. These plans can be downloaded cheaply and easily even at throttled rates by bargain-basement ISPs.
It's easy enough for me to be a scold to do-gooder, affluent Westerners who seek to ban sweatshop labor, it's much harder to actually improve the BATNA of the world's poorest. Open source hackers building cottage manufactoriums are doing just that. Instead of hobbling them by refusing to ship their wares, we should be buying them up and giving them away to the world's disenfranchised.
Ghost Gunner is a general purpose CNC mill, built upon a large body of open source work, including the gshield 3 axis motion hardware, the grbl g-code parser and motion controller, and popular microcontrollers. All GhostGunner schematics and design files will be published into the public domain, and anyone can program anything for the machine.FedEx and UPS have elected to decline shipping the device. I understand why. It doesn't take particularly sophisticated game theory to pick out the implied threat posed by the ATF. "Nice shipping company you got there, pal. It'd be a real shame if we found contraband in your trucks."
But think of what the Ghost Gunner really is: an amateur, with no knowledge whatsoever of metallurgy, engineering, design, or gunsmithing can take a pile of scrap and make something useful out of it. Tech like this eliminates the highest barrier for the home manufacturer: expertise. The machine knows the proper milling technique. The machine runs the lathe. The machine knows the proper annealing soak temperature gradients.
Imagine that you're a farmer in rural Uganda. There's an antique tractor rusting at the corner of a field that you haven't been able to get replacement parts for thanks to supply route disruptions courtesy of the local tinpot warlord. Luckily for you, a foreign rogue piloting a nighttime zeppelin airdropped a repurposed Ghost Gunner into the center of the village complete with software to crank out all the pump/compressor/belt wheel/alternator casings you'll need to get your tractor running again. All you have to do is feed in the scrap metal and Bob's your uncle.
Yes, yes. I'm simplifying of course. But a big part of what leads to economic development is what economists call "capital deepening." Airlifting a two million dollar John Deere combine into rural Africa is a waste of perfectly good machinery because to get to the point where such a device can be used properly, farmers need extensive supply chains, commercial infrastructure (roads, rails, &c), and the expertise to use and maintain the thing properly. To get to that point, folks need to be able to start small, to be able to cheaply get their existing gear into working order and to upgrade appropriately (recall your Smithian sympathy & Hayekian humility: "appropriate" in this instance cannot be dictated from afar, as the local residents know best the constraints of their particular situation). Ghost Gunner and similar devices drastically reduce the cost of capital improvements. Demand curves still slope down, people.
Code for new blueprints can be published cheaply and easily by the many, many, many civic-minded engineers throughout the world. These plans can be downloaded cheaply and easily even at throttled rates by bargain-basement ISPs.
It's easy enough for me to be a scold to do-gooder, affluent Westerners who seek to ban sweatshop labor, it's much harder to actually improve the BATNA of the world's poorest. Open source hackers building cottage manufactoriums are doing just that. Instead of hobbling them by refusing to ship their wares, we should be buying them up and giving them away to the world's disenfranchised.
Thursday, January 1, 2015
Law Enforcement as Exchange
Tuesday, December 23, 2014
FYIAD, the Ecstasy of the Otherkin
One of my favorite non-Bakshi animated features growing up was a Don Bluth-helmed adaptation of Robert O'Brien's seminal children's novel, Mrs Frisby and the Rats of NIMH. You may have seen it yourself. The silver screen title was The Secret of NIMH, and it was a tale of escaped laboratory mice, told from the perspective of the mice themselves, much the way another of my favorite animated classics, Plague Dogs is told from the perspective of escaped canine test subjects.
What I didn't know at the time was that the very fanciful story featuring the charming voice talents of Dom DeLuise was inspired by a very real organization. NIMH is an acronym standing for National Institute of Mental Health, a subsidiary of the US Department of Health and Human Services. As a boy, I had thought the organization a flight of fancy, the product of an author's imagination, much like the organization responsible for the antics of James Bond, or the man from U.N.C.L.E.. To the contrary, it is a very real, very prolific research organization. Its Wiki page (for what it's worth) lists the 2010 budget as $1.5B.
In the early 60s, prominent NIMH researcher John B. Calhoun began an experiment (warning: the previous link contains out-of-sample remarks not necessarily supported by the data) in the dewy fields near Poolsville MD. This experiment would later serve as inspirational fodder for one of Wil Wheaton's earliest credits (see for yourself). The experiment was simple enough: introduce mice into an ideal environment with ample room, plentiful food, abundant nesting material, and unlimited water. See what happens.
The early stages were perfectly predictable: the mice reproduced enough to fill the enclosure to capacity, and somewhere in the aether Malthus grimaced in dour approval. The later stages, particularly right before the colony collapsed completely and the last mouse died, were (and remain) of great interest to amateur sociologists. Notably, the mouse Utopia exhibited a breakdown of standard social rules. Dominant males couldn't defend their territory, females became aggressive, and the one curious phenomenon that seems to have gained attention of late, some males withdrew completely, devoting all of their time to grooming, never getting into fights, never mating.
Calhoun called them "The Beautiful Ones."
If you're an amateur sociologist, and you find it tempting to map Calhoun's mice onto human societies, the Japanese Beautiful Ones are 草食(系)男子, soshokukei danshi, grass-eaters in the vulgate. These are pretty boys, passive, obsessed with fashion, often wearing makeup, groomed immaculately. In the US, you might identify Calhoun's Beautiful Ones with the so-called "metrosexual" males of a few years back, or with image-conscious normcore hipsters. You might even go a little more abstract and say that the two chief characteristics of the Beautiful Ones is (a) obsession and (b) withdrawal. If that's the case, Otherkin, Furries, Otaku, Bronies, even a certain stripe of stereotypical gamer would fit the description.
I do not find the hypothesis that a social experiment using mice can predict what will happen to human populations convincing. What I do find convincing is the claim that many post-industrial nations are in the midst of some troubling demographic concerns. What I do find convincing is that unfunded liabilities, public and private, loom shimmering on the time horizon. What I do find convincing is that productivity is slowly becoming decoupled from employment and that negative-marginal-product make-work government jobs are likely to take over as the dominant transfer scheme (unless Morgan Warstler can ever get GI/CYB off the ground, that is), since there is dignity in work, perhaps even the sort of work that has people burying jars of dollar bills in the desert so that others can dig them back up.
With that in mind, can I also consider Otherkin culture to be euvoluntary? If you believe in your heart of hearts that you are, in point of fact, not a human, but rather a dragon, or a hippogriff, or a gelatinous cube, and all my fancy rhetoric and book-learnin' can't convince you to the contrary, does that herald the End of Times? Or more prosaically, does that contribute to the fiscal difficulties implied in the off-balance-sheet accounting of the fisc? Do members of the younger generation have an obligation to support an older generation by procreation?
Individually, the idea sounds monstrous. If personal sovereignty means anything at all, it means that a person's choice to have children or not is up to that person and that person alone. "It is your civic duty to raise children" is a totalitarian sentiment, one you might expect in a Warhammer 40k codex or an Orwell short story. But collectively? Collectively, political elites have no problem fiddling with the tax code, or with workplace regulations, or even with outright bribery (hello, Finland) to encourage marginal births. The family, it seems, is a private arrangement, but a public institution. Do grass-eaters, do otherkin, do shut-ins threaten the wider social order by shirking or avoiding participation in this institution?
Or are they merely canaries in the coal mine, here to warn us of Total Social and Economic Collapse?
Curious. In the meantime, happy yiffing, everyone. Have a Merry Solstice.
What I didn't know at the time was that the very fanciful story featuring the charming voice talents of Dom DeLuise was inspired by a very real organization. NIMH is an acronym standing for National Institute of Mental Health, a subsidiary of the US Department of Health and Human Services. As a boy, I had thought the organization a flight of fancy, the product of an author's imagination, much like the organization responsible for the antics of James Bond, or the man from U.N.C.L.E.. To the contrary, it is a very real, very prolific research organization. Its Wiki page (for what it's worth) lists the 2010 budget as $1.5B.
In the early 60s, prominent NIMH researcher John B. Calhoun began an experiment (warning: the previous link contains out-of-sample remarks not necessarily supported by the data) in the dewy fields near Poolsville MD. This experiment would later serve as inspirational fodder for one of Wil Wheaton's earliest credits (see for yourself). The experiment was simple enough: introduce mice into an ideal environment with ample room, plentiful food, abundant nesting material, and unlimited water. See what happens.
The early stages were perfectly predictable: the mice reproduced enough to fill the enclosure to capacity, and somewhere in the aether Malthus grimaced in dour approval. The later stages, particularly right before the colony collapsed completely and the last mouse died, were (and remain) of great interest to amateur sociologists. Notably, the mouse Utopia exhibited a breakdown of standard social rules. Dominant males couldn't defend their territory, females became aggressive, and the one curious phenomenon that seems to have gained attention of late, some males withdrew completely, devoting all of their time to grooming, never getting into fights, never mating.
Calhoun called them "The Beautiful Ones."
If you're an amateur sociologist, and you find it tempting to map Calhoun's mice onto human societies, the Japanese Beautiful Ones are 草食(系)男子, soshokukei danshi, grass-eaters in the vulgate. These are pretty boys, passive, obsessed with fashion, often wearing makeup, groomed immaculately. In the US, you might identify Calhoun's Beautiful Ones with the so-called "metrosexual" males of a few years back, or with image-conscious normcore hipsters. You might even go a little more abstract and say that the two chief characteristics of the Beautiful Ones is (a) obsession and (b) withdrawal. If that's the case, Otherkin, Furries, Otaku, Bronies, even a certain stripe of stereotypical gamer would fit the description.
I do not find the hypothesis that a social experiment using mice can predict what will happen to human populations convincing. What I do find convincing is the claim that many post-industrial nations are in the midst of some troubling demographic concerns. What I do find convincing is that unfunded liabilities, public and private, loom shimmering on the time horizon. What I do find convincing is that productivity is slowly becoming decoupled from employment and that negative-marginal-product make-work government jobs are likely to take over as the dominant transfer scheme (unless Morgan Warstler can ever get GI/CYB off the ground, that is), since there is dignity in work, perhaps even the sort of work that has people burying jars of dollar bills in the desert so that others can dig them back up.
With that in mind, can I also consider Otherkin culture to be euvoluntary? If you believe in your heart of hearts that you are, in point of fact, not a human, but rather a dragon, or a hippogriff, or a gelatinous cube, and all my fancy rhetoric and book-learnin' can't convince you to the contrary, does that herald the End of Times? Or more prosaically, does that contribute to the fiscal difficulties implied in the off-balance-sheet accounting of the fisc? Do members of the younger generation have an obligation to support an older generation by procreation?
Individually, the idea sounds monstrous. If personal sovereignty means anything at all, it means that a person's choice to have children or not is up to that person and that person alone. "It is your civic duty to raise children" is a totalitarian sentiment, one you might expect in a Warhammer 40k codex or an Orwell short story. But collectively? Collectively, political elites have no problem fiddling with the tax code, or with workplace regulations, or even with outright bribery (hello, Finland) to encourage marginal births. The family, it seems, is a private arrangement, but a public institution. Do grass-eaters, do otherkin, do shut-ins threaten the wider social order by shirking or avoiding participation in this institution?
Or are they merely canaries in the coal mine, here to warn us of Total Social and Economic Collapse?
Curious. In the meantime, happy yiffing, everyone. Have a Merry Solstice.
Monday, December 15, 2014
Area Man Demands You Pay for His Breakfast
Perhaps you've already encountered the unlovely neologism "hangry." If you haven't, it's an unfortunate portmanteau of "hungry" and "angry," and it describes the irritability that naturally accompanies low blood sugar and elevated cortisol. Even if you've never heard the term before, you've almost certainly experienced the phenomenon. We've all skipped breakfast once or twice for one reason or another, and we've all delayed lunch. We've all felt the comforting tide of digestion ebb to expose the craggy rocks underneath, and even if we're scrupulously diligent about minding our food intake, we all know someone less cautious.
My crabby mood can ruin your good day. If my crabby mood is the direct result of skipping my morning bagel (cream cheese and lox are the only proper toppings for a bagel; anyone who utters otherwise shall be branded a heretic and shunned) then there's an uncompensated externality there. My failure to exchange makes you worse off. You should be willing to subsidize my breakfast, right?
No? You don't owe me breakfast you say? You don't want to reward my inattentiveness you say? You don't want to encourage future episodes of reckless fasting you say? You don't want me to take advantage of you you say? I see. Even though my mood has certain public goods aspects to it, namely that it is not excludable (and indeed, non-rival to some extent). it's still pretty widely recognized that my mood is my own responsibility.
Of course, when I say "widely recognized" I mean in the culture in which I live. It's a social convention. Contrast forager cultures in which the entire day's haul is shared proportionally among the entire group. And like other social conventions, they are subject to change. Terms and conditions apply and all that.
So it goes, it seems, with education. Education, like nutrition, is largely a private good: through my education, I earn higher wages, enjoy greater productivity, and so forth. There are many happy outcomes of education for which I am well-compensated. However, I am not well-compensated for my refined mannerisms (don't laugh), my keen ability to vote responsibly (okay, that one you can laugh at), nor my new-found propensity to conform to those social conventions that are coeval with an advanced university education. My college education unintentionally benefits you the same as my Moons Over My Hammy™.
As a fraction of total expenditures, higher education is subsidized (chiefly through non-dischargeable-in-bankruptcy lending) far more than food (SNAP, food banks & al). Unfortunately, just like me being a crankypants hold-out, subsidized students have less incentive to behave prudently in higher education.
So the Andrea's Question puzzle: we want students to be prudent in their decisions to seek education. Shuttering Sallie Mae is a political non-starter, and I struggle to imagine how to overcome what seems like an impossible pro-college bias among high school guidance counselors. I have faith in the power of rhetoric, and I give all the applause I have in my frail mortal form to Mike Rowe for doing his best, but I worry that attempting to raise the relative status of skilled physical labor is up against some extreme institutional barriers. What do you suppose the most effective prudence-enhancing approach still in the choice set might be? Suggestions welcome in the comments, because I confess myself with very few ideas of my own here.
My crabby mood can ruin your good day. If my crabby mood is the direct result of skipping my morning bagel (cream cheese and lox are the only proper toppings for a bagel; anyone who utters otherwise shall be branded a heretic and shunned) then there's an uncompensated externality there. My failure to exchange makes you worse off. You should be willing to subsidize my breakfast, right?
No? You don't owe me breakfast you say? You don't want to reward my inattentiveness you say? You don't want to encourage future episodes of reckless fasting you say? You don't want me to take advantage of you you say? I see. Even though my mood has certain public goods aspects to it, namely that it is not excludable (and indeed, non-rival to some extent). it's still pretty widely recognized that my mood is my own responsibility.
Of course, when I say "widely recognized" I mean in the culture in which I live. It's a social convention. Contrast forager cultures in which the entire day's haul is shared proportionally among the entire group. And like other social conventions, they are subject to change. Terms and conditions apply and all that.
So it goes, it seems, with education. Education, like nutrition, is largely a private good: through my education, I earn higher wages, enjoy greater productivity, and so forth. There are many happy outcomes of education for which I am well-compensated. However, I am not well-compensated for my refined mannerisms (don't laugh), my keen ability to vote responsibly (okay, that one you can laugh at), nor my new-found propensity to conform to those social conventions that are coeval with an advanced university education. My college education unintentionally benefits you the same as my Moons Over My Hammy™.
As a fraction of total expenditures, higher education is subsidized (chiefly through non-dischargeable-in-bankruptcy lending) far more than food (SNAP, food banks & al). Unfortunately, just like me being a crankypants hold-out, subsidized students have less incentive to behave prudently in higher education.
So the Andrea's Question puzzle: we want students to be prudent in their decisions to seek education. Shuttering Sallie Mae is a political non-starter, and I struggle to imagine how to overcome what seems like an impossible pro-college bias among high school guidance counselors. I have faith in the power of rhetoric, and I give all the applause I have in my frail mortal form to Mike Rowe for doing his best, but I worry that attempting to raise the relative status of skilled physical labor is up against some extreme institutional barriers. What do you suppose the most effective prudence-enhancing approach still in the choice set might be? Suggestions welcome in the comments, because I confess myself with very few ideas of my own here.
Friday, December 5, 2014
Marriage: Private Good, Public Institution
Two friends recently wed. When I first met Pamela, her surname was the same as mine. She was kind enough to grant me the rare luxury of shortening her name to "Pam" for the sake of the rhyming scheme. As of earlier this week, she and BH have merged to form the Voltron we now call #TeamByrmela.
Okay, maybe it's just me that does that.
At any rate, congratulations you guys. And a well-timed one, as Justin Wolfers has been getting some really good press over his latest (impeccable, as always) empirical work on the role of the divorce regime as it relates to marriage stability. The tl;dr version: divorce rates have tanked. People who choose to marry these days tend to stay married. Of course, people have been delaying marriage and having kids out of wedlock and all that stuff. But for those folks who do tie the knot, they seem to be better at forward induction. There are fewer social pressures to wed hastily, therefore the rate of euvoluntary marriage is greater. That's fantastic news, so long as you're in a euvoluntary marriage.
Consider the following distribution:
The right tail has always been good to go. They marry, they stay married, they have decent jobs, live in good neighborhoods, obtain good educations, contribute plentifully to their retirement accounts, get regular checkups, and eat kale. The left tail has always been doomed, and the evidence for that is in the dismal failure of longstanding New Deal and Great Society programs to eradicate measured poverty. Life in the left tail is characterized by periodic joblessness, substance abuse, negative savings rates, unplanned reproduction, you know—pretty much most of the chronic gripes you hear from social conservatives.
But the grey area is what's contentious here. Wolfers is picking up a tendency for these folks to (marginally) postpone marriage until they've found a better match. No hasty marriage at 19 means no messy divorce at 35. My hunch is that the reasons for this are some admixture of both cultural and regime reform. There's less social stigma to being unwed, and that's related, probably by both cause and effect, to the advent of no-fault divorce.
The benefits of a good, stable marriage are unquestionable. The folks in the right tail have better lifetime earnings, more satisfaction, and usually a legacy they take pride in (see some of Double-D's posts on end of life regret for counterexamples). If the folks in the middle of the distribution would simply be more prudent and diligent about participating earnestly in the marriage market, they would find that the discounted present value of a successful marriage far outweigh the costs of obtaining one.
The empirical question is this: how receptive to treatment is that "if"? As Wolfers and Stevenson have noted in other research, the costs of at-fault regimes include higher rates of domestic violence and spousal suicide. Yikes. Restoring the old regime would hit the left side of the gray zone pretty hard.
There are maybe some tax incentives that could encourage the grey zone to shrink, at least a little, and probably only on the right side. But having one mortgage instead of two is already a pretty strong financial incentive, ne c'est pas?
So what remains? The institution of marriage is a public good: it has all the characteristics of a non-rival, non-excludable good. Individual marriages, contrarily, are precious private goods. Typically, when we want to encourage good behavior without the downsides of relying on coercion, we default to rhetoric, to persuasion. In the misty days of my youth, we watched felicitous families on television like The Waltons, or the Cunninghams, or the Ingalls clan out there in that little house on the... I dunno what to call it... savanna I suppose... veldt maybe. As I grew older, Ward Cleaver gave way to Al Bundy. TV families stopped being aspirational and became more cynical. Long time readers might accurately predict that I prefer cynicism in my own entertainment fare, given my cruel and unforgiving temperament, but if Deirdre McCloskey and Virginia Postrel are right, we get more of what we respect, we get more of what we glamourize. Perhaps we'd see more stable marriages out there if viewers would consume more content that raised the relative status of durable marriage.
A public service, if you will, in support of a euvoluntary institution.
Just watch out for hammy tropes though. Audiences know when they're being preached to, and they don't much like it.
Okay, maybe it's just me that does that.
At any rate, congratulations you guys. And a well-timed one, as Justin Wolfers has been getting some really good press over his latest (impeccable, as always) empirical work on the role of the divorce regime as it relates to marriage stability. The tl;dr version: divorce rates have tanked. People who choose to marry these days tend to stay married. Of course, people have been delaying marriage and having kids out of wedlock and all that stuff. But for those folks who do tie the knot, they seem to be better at forward induction. There are fewer social pressures to wed hastily, therefore the rate of euvoluntary marriage is greater. That's fantastic news, so long as you're in a euvoluntary marriage.
Consider the following distribution:
But the grey area is what's contentious here. Wolfers is picking up a tendency for these folks to (marginally) postpone marriage until they've found a better match. No hasty marriage at 19 means no messy divorce at 35. My hunch is that the reasons for this are some admixture of both cultural and regime reform. There's less social stigma to being unwed, and that's related, probably by both cause and effect, to the advent of no-fault divorce.
The benefits of a good, stable marriage are unquestionable. The folks in the right tail have better lifetime earnings, more satisfaction, and usually a legacy they take pride in (see some of Double-D's posts on end of life regret for counterexamples). If the folks in the middle of the distribution would simply be more prudent and diligent about participating earnestly in the marriage market, they would find that the discounted present value of a successful marriage far outweigh the costs of obtaining one.
The empirical question is this: how receptive to treatment is that "if"? As Wolfers and Stevenson have noted in other research, the costs of at-fault regimes include higher rates of domestic violence and spousal suicide. Yikes. Restoring the old regime would hit the left side of the gray zone pretty hard.
There are maybe some tax incentives that could encourage the grey zone to shrink, at least a little, and probably only on the right side. But having one mortgage instead of two is already a pretty strong financial incentive, ne c'est pas?
So what remains? The institution of marriage is a public good: it has all the characteristics of a non-rival, non-excludable good. Individual marriages, contrarily, are precious private goods. Typically, when we want to encourage good behavior without the downsides of relying on coercion, we default to rhetoric, to persuasion. In the misty days of my youth, we watched felicitous families on television like The Waltons, or the Cunninghams, or the Ingalls clan out there in that little house on the... I dunno what to call it... savanna I suppose... veldt maybe. As I grew older, Ward Cleaver gave way to Al Bundy. TV families stopped being aspirational and became more cynical. Long time readers might accurately predict that I prefer cynicism in my own entertainment fare, given my cruel and unforgiving temperament, but if Deirdre McCloskey and Virginia Postrel are right, we get more of what we respect, we get more of what we glamourize. Perhaps we'd see more stable marriages out there if viewers would consume more content that raised the relative status of durable marriage.
A public service, if you will, in support of a euvoluntary institution.
Just watch out for hammy tropes though. Audiences know when they're being preached to, and they don't much like it.
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.
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.
Wednesday, May 28, 2014
Provision is not Finance
The government doesn't produce anything.
Well, that's not entirely accurate. The government produces services like law and order, restraint, or defense. But not things like cheese, bicycles, or galoshes. Or medicine, for that matter. Well, except for military doctors and corpsmen. They are government employees that produce medicine. Still, that's not what normal people think of when someone says "publicly provided health care." Or more typically, when somebody says "single payer."
"Single payer," you see, is a euphemism for state-run, state-funded provision. In the US, we have state-run, state-funded public education. Single-payer education, if you will. Except that the running and the funding are separate things. This is the point that charter school boosters make: state-run schools are a monopoly and are vulnerable to all the bad downside risks (and they are risks, not certainties) that come with monopoly. If the democracy chooses to mandate universal education, then is it not more humane to at least attempt to break the monopoly power that state provision of education has? Isn't that why we have anti-trust statutes enforced by the FTC?
The chief error I recall hearing in 2008 was that the PPACA was going to turn the nation's hospitals into dingier versions of the VA. Folks on the right pointed to some horror stories from the UK and Canada, citing these as evidence against single-payer. Of course, that's not the issue, since the UK and Canada are both single-payer and single-provider. What if it's the single-provider that's the problem? What if the NHS suffers the same fragility threats as America's school districts?
Single-payer really isn't all that scary without single-provider. Without competitive alternatives available, state-run enterprises have a rather shocking track record of quickly falling into grave obsolescence, staffed by sinecures, stifled by imprudent re-investment. If for whatever reason, undergirded by whatever moral intuitions private funding is not politically feasable, the attentive voter should be quite keen indeed to keep the distinction between funding and provision clear.
Don't get fooled again. Your BATNA can't handle it.
Well, that's not entirely accurate. The government produces services like law and order, restraint, or defense. But not things like cheese, bicycles, or galoshes. Or medicine, for that matter. Well, except for military doctors and corpsmen. They are government employees that produce medicine. Still, that's not what normal people think of when someone says "publicly provided health care." Or more typically, when somebody says "single payer."
"Single payer," you see, is a euphemism for state-run, state-funded provision. In the US, we have state-run, state-funded public education. Single-payer education, if you will. Except that the running and the funding are separate things. This is the point that charter school boosters make: state-run schools are a monopoly and are vulnerable to all the bad downside risks (and they are risks, not certainties) that come with monopoly. If the democracy chooses to mandate universal education, then is it not more humane to at least attempt to break the monopoly power that state provision of education has? Isn't that why we have anti-trust statutes enforced by the FTC?
The chief error I recall hearing in 2008 was that the PPACA was going to turn the nation's hospitals into dingier versions of the VA. Folks on the right pointed to some horror stories from the UK and Canada, citing these as evidence against single-payer. Of course, that's not the issue, since the UK and Canada are both single-payer and single-provider. What if it's the single-provider that's the problem? What if the NHS suffers the same fragility threats as America's school districts?
Single-payer really isn't all that scary without single-provider. Without competitive alternatives available, state-run enterprises have a rather shocking track record of quickly falling into grave obsolescence, staffed by sinecures, stifled by imprudent re-investment. If for whatever reason, undergirded by whatever moral intuitions private funding is not politically feasable, the attentive voter should be quite keen indeed to keep the distinction between funding and provision clear.
Don't get fooled again. Your BATNA can't handle it.
Wednesday, March 26, 2014
Is Contraception Euvoluntary?
The SCOTUS case on crafting emporium Hobby Lobby's owners' discomfort at being forced to provide contraception coverage for employees has revealed some interesting moral intuitions. A parade of blogs, tweets, and status updates have informed me of the inviolable rights of each party, of the immoral coercion imposed (again, by each party), and of the nasty overreach of the [company owners|government (pick one)].
Here's where I'm confused, and perhaps you can help me. I don't know for sure if contraception is a public good.
Let me be more clear here. Recall that a public good is one where the end user can't stop others from enjoying the benefits of its consumption. If Art paints a mural on Betty's building, Carl gets to enjoy it without paying for the privilege. In the case of contraception, if Betty is on the Pill, she and Art can make the beast with two backs to their heart's content and Carl won't have to worry about his tax money going towards the upkeep of the fruits of that union.
True, it's not a public good in the classic sense. Any spillover costs from an unwanted pregnancy exist only because of legislation, but let's ignore that for the moment and take the legislation as given. The thing that confuses me is that if contraception (or indeed, any form of health care) is a public good, why on earth should the costs redound to someone's employer? How in the nine hells are these two things even remotely related? Well, okay, given today's podcast, maybe there are some industries where it's salient, but arts and crafts? Nope.
Look folks, I'm not all that convinced that health care is a public good, but if you want to make the claim that it is, stop pussyfooting around the issue already and make it well and truly public. Go single payer or go home. This weird chimera fails to serve the public interest, it throttles euvoluntary exchange, and it wastes the court's resources. Shame shame and treble shame.
Here's where I'm confused, and perhaps you can help me. I don't know for sure if contraception is a public good.
Let me be more clear here. Recall that a public good is one where the end user can't stop others from enjoying the benefits of its consumption. If Art paints a mural on Betty's building, Carl gets to enjoy it without paying for the privilege. In the case of contraception, if Betty is on the Pill, she and Art can make the beast with two backs to their heart's content and Carl won't have to worry about his tax money going towards the upkeep of the fruits of that union.
True, it's not a public good in the classic sense. Any spillover costs from an unwanted pregnancy exist only because of legislation, but let's ignore that for the moment and take the legislation as given. The thing that confuses me is that if contraception (or indeed, any form of health care) is a public good, why on earth should the costs redound to someone's employer? How in the nine hells are these two things even remotely related? Well, okay, given today's podcast, maybe there are some industries where it's salient, but arts and crafts? Nope.
Look folks, I'm not all that convinced that health care is a public good, but if you want to make the claim that it is, stop pussyfooting around the issue already and make it well and truly public. Go single payer or go home. This weird chimera fails to serve the public interest, it throttles euvoluntary exchange, and it wastes the court's resources. Shame shame and treble shame.
Monday, February 24, 2014
Fiscal Externalities are not Real Externalities: Baby Execution Edition
A-Cast points us to a provocateur JME piece on "after-birth abortion" aka infanticide. ATSRTWT.
Money quote:
Swiftian pro-life arguments are fun to contemplate, but they'd be a lot better if they refrained from making explicitly fallacious appeals to fiscal externalities. The "burden on society" argument is one of public choice. That is, the level of care of the poor or infirm funded through public expenditure is made by the sovereign. If welfare payments are the problem with "burdensome" children, advocate for reforming the welfare system. The median voter only supports poor families by express political choice.
Of course, a Straussian reading of this piece would suggest that this frippery is what the authors want you, dear reader, to cluck your tongues at, but this is in the Journal of Medical Ethics. My priors are that they're sincere on the fiscal externalities point. More's the pity.
But on the chief argument: does birth impart full moral status on a person? Or is there more of a spectrum starting at conception and increasing logarithmically to adulthood (however that might be measured)? If early infanticide were completely legal, what would be the actual outcome? Do you suppose there would be a rash of baby murders o'er the land?
Raising children is not euvoluntary (for infants—think of their BATNA). Let's not compound the issue by confusing legitimate externalities with politically chosen "externalities". It's so rare that it's practically unheard of for a healthy human to be a net lifetime negative externality on society, and when he is, it's probably because he's chosen either a life of crime or of politics.
Money quote:
[T]o bring up such children might be an unbearable burden on the family and on society as a whole, when the state economically provides for their care. On these grounds, the fact that a fetus has the potential to become a person who will have an (at least) acceptable life is no reason for prohibiting abortion. Therefore, we argue that, when circumstances occur after birth such that they would have justified abortion, what we call after-birth abortion should be permissible.The authors essentially claim that the birth event is not morally relevant in the decision to terminate a pregnancy. If abortion is morally permissible, it's a non-sequitur to hold that infanticide (the authors object to the use of this word for rhetorical purposes) is immoral, so long as the only salient difference in the decision is that the organism is now located outside of the womb.
Swiftian pro-life arguments are fun to contemplate, but they'd be a lot better if they refrained from making explicitly fallacious appeals to fiscal externalities. The "burden on society" argument is one of public choice. That is, the level of care of the poor or infirm funded through public expenditure is made by the sovereign. If welfare payments are the problem with "burdensome" children, advocate for reforming the welfare system. The median voter only supports poor families by express political choice.
Of course, a Straussian reading of this piece would suggest that this frippery is what the authors want you, dear reader, to cluck your tongues at, but this is in the Journal of Medical Ethics. My priors are that they're sincere on the fiscal externalities point. More's the pity.
But on the chief argument: does birth impart full moral status on a person? Or is there more of a spectrum starting at conception and increasing logarithmically to adulthood (however that might be measured)? If early infanticide were completely legal, what would be the actual outcome? Do you suppose there would be a rash of baby murders o'er the land?
Raising children is not euvoluntary (for infants—think of their BATNA). Let's not compound the issue by confusing legitimate externalities with politically chosen "externalities". It's so rare that it's practically unheard of for a healthy human to be a net lifetime negative externality on society, and when he is, it's probably because he's chosen either a life of crime or of politics.
Thursday, January 23, 2014
Are Anti-Abortion Payments Exploitation?
Angie C sends us a story on Save Unborn Life, an organization that pays expectant mothers to refrain from terminating their pregnancies.
I wonder if anyone would be willing to defend the position that SUL is exploiting women to forward their agenda. Ordinarily, the clash over abortion is mostly sound and fury, with plenty of speech but few real resources on the line. This is different: this pro-life group works not through coercive political channels, but by market(ish) incentives. But poor young unwed mothers are still in dire straits. There's no disengaging that bit of moral intuition.
The pro-choice folks I know lean in the direction of seeing the downside of state coercion on (at least this one particular) highly contextual personal decisions. I think they'd be okay with private subsidies to poor folks struggling to make ends meet. It'd be nice if many of them (again, the ones I know personally) would take this insight and apply it more broadly, but that's neither here nor there for now.
And it's not just BATNA engaged:
And I'd again encourage you to think about Basic Income.
PS: could this be an enforceable contract? I don't mean in a legal sense, but in a practical sense. SUL probably wouldn't be able to recoup in the event of a breach. How marginal are abortion decisions, on average?
Save Unborn Life exists for the sole purpose of offering abortion-minded women money to bring their babies to term. After a meeting with Merriott, Hope was offered $3,000 not to go through with the abortion, which was scheduled for the next day. She immediately accepted the offer.The anecdote in the piece is stuffed to the gills with woe. BATNA despair on full display.
I wonder if anyone would be willing to defend the position that SUL is exploiting women to forward their agenda. Ordinarily, the clash over abortion is mostly sound and fury, with plenty of speech but few real resources on the line. This is different: this pro-life group works not through coercive political channels, but by market(ish) incentives. But poor young unwed mothers are still in dire straits. There's no disengaging that bit of moral intuition.
The pro-choice folks I know lean in the direction of seeing the downside of state coercion on (at least this one particular) highly contextual personal decisions. I think they'd be okay with private subsidies to poor folks struggling to make ends meet. It'd be nice if many of them (again, the ones I know personally) would take this insight and apply it more broadly, but that's neither here nor there for now.
And it's not just BATNA engaged:
Merriott said that SUL also encourages poor women to sign up for federal assistance programs such as Medicaid and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and that adoption is often the best option for women who cannot afford to care for their children. But SUL’s main objective, she made clear, was to save one life from death and another from a lifetime of regret.Regret too.
And I'd again encourage you to think about Basic Income.
PS: could this be an enforceable contract? I don't mean in a legal sense, but in a practical sense. SUL probably wouldn't be able to recoup in the event of a breach. How marginal are abortion decisions, on average?
Saturday, September 28, 2013
Toward a Euvoluntary Military Service
From Anthony Gregory, writing in Reason:
This is actually part of Chapter 3 of my dissertation, so I could discuss it at length. I'm cruel, but I'm not that cruel. Instead, I want you to ask yourself if the nature of a fixed labor contract for military service is necessarily coercive on net. Be sure to show your work. Remember that in order to establish systematic bias, you need to have some evidence of fraud or of an admixture of excess kurtosis coupled with excessively high discounting.
It's easy enough to model a coercive military service using an extensive form game, but it might be less easy to provide empirical evidence to support that theory. How would you build your case?
Rather than reinstating the draft, a less drastic proposal exists, one more consistent with human rights, more conducive to peace, and more respectful of those on the front lines: a truly voluntary military. Today, unlike most any other U.S. institution, the armed forces practice indentured servitude: Employees agree to a term of service and face imprisonment or even execution should they quit. We do not consider it a "voluntary" job if a warehouse or factory forcibly prevents workers from quitting at will. Those who wish to honor the humanity of America’s soldiers should agitate not for conscription but for the freedom to resign. The remaining soldiers would be there by choice, and if they continued fighting unjust, counterproductive wars, it would be harder to regard them as victims of bad leadership and an apathetic populace.ATSRTWT
This is actually part of Chapter 3 of my dissertation, so I could discuss it at length. I'm cruel, but I'm not that cruel. Instead, I want you to ask yourself if the nature of a fixed labor contract for military service is necessarily coercive on net. Be sure to show your work. Remember that in order to establish systematic bias, you need to have some evidence of fraud or of an admixture of excess kurtosis coupled with excessively high discounting.
It's easy enough to model a coercive military service using an extensive form game, but it might be less easy to provide empirical evidence to support that theory. How would you build your case?
Tuesday, August 27, 2013
Retirement
If you'll permit me to channel the latest econ-themed Twitter parody account for a moment, let me state bluntly that retirement ain't a public good. Just get that nonsense out of your head right now (maybe something about your kids too).
The most expansive definition of a public good carries with it two criteria (one of which is suspect as-is, and the other is suspect over a long enough time horizon), so let's judge retirement against the most stringent criteria: rivalry and excludability.
I admit to feeling a little foolish for this, but I want you to ask yourself if your consumption of your own retirement prevent others from consuming your retirement? Now, you might claim that state-provided pension funds mean that your drawing from a common-pool fund means that I have fewer funds available for my retirement, but that's not rivalry in retirement, it's an aspect of public funding of retirements. It's a fiscal externality, if you will. Your retirement is your lunch. No one can eat it for you. It's completely rival.
Now ask yourself if (again, apologies for the silliness of the question) you can exclude others from consuming your retirement. Is your snowbirding in Boca Raton tantamount to busking?
Your retirement is rival and excludable. It is not a public good. So it's odd to me that economists so quickly fret over the "sustainability" or solvency of SSI. Worries about unfunded liabilities seem to tacitly accept that it's meet and proper for the state to supply something for which there is no market failure either theoretically or empirically.
Now then, you might claim that retirement planning is non-euvoluntary since we know of hyperbolic discounting and have heard plenty of stories of ex post regret. Okay, well that's another story. Individuals can be unlucky or short-sighted. Perhaps there's some other moral intuition going on outside of the strict economics. And that's cool. But the arguments (for and against!) don't typically start from there. And when they do, it still seems a mighty leap to claim systematic error.
Remember, people: widespread and systematic are two very different things. To be systematic, the decisions of one person must necessarily influence the decisions of other people. You know how to make that happen? Nationalize retirement accounts.
Now, perhaps there is room for coercion in there somewhere. I actually think it would be a fine, fine idea to have opt-out quasi-mandatory personal retirement accounts. This is a perfect opportunity for the nudge folks to shine. But OASDI as is? It's the opposite of euvoluntary, whatever that is.
ULAFT: unfunded liabilities are future taxes, and boy howdy are they ever substantial.
Also recall that a better ratio of fiscal health is (total discounted future liabilities)/(total discounted collectible tax receipts). This debt/GDP ratio is a red herring, and you know it.
The most expansive definition of a public good carries with it two criteria (one of which is suspect as-is, and the other is suspect over a long enough time horizon), so let's judge retirement against the most stringent criteria: rivalry and excludability.
I admit to feeling a little foolish for this, but I want you to ask yourself if your consumption of your own retirement prevent others from consuming your retirement? Now, you might claim that state-provided pension funds mean that your drawing from a common-pool fund means that I have fewer funds available for my retirement, but that's not rivalry in retirement, it's an aspect of public funding of retirements. It's a fiscal externality, if you will. Your retirement is your lunch. No one can eat it for you. It's completely rival.
Now ask yourself if (again, apologies for the silliness of the question) you can exclude others from consuming your retirement. Is your snowbirding in Boca Raton tantamount to busking?
Your retirement is rival and excludable. It is not a public good. So it's odd to me that economists so quickly fret over the "sustainability" or solvency of SSI. Worries about unfunded liabilities seem to tacitly accept that it's meet and proper for the state to supply something for which there is no market failure either theoretically or empirically.
Now then, you might claim that retirement planning is non-euvoluntary since we know of hyperbolic discounting and have heard plenty of stories of ex post regret. Okay, well that's another story. Individuals can be unlucky or short-sighted. Perhaps there's some other moral intuition going on outside of the strict economics. And that's cool. But the arguments (for and against!) don't typically start from there. And when they do, it still seems a mighty leap to claim systematic error.
Remember, people: widespread and systematic are two very different things. To be systematic, the decisions of one person must necessarily influence the decisions of other people. You know how to make that happen? Nationalize retirement accounts.
Now, perhaps there is room for coercion in there somewhere. I actually think it would be a fine, fine idea to have opt-out quasi-mandatory personal retirement accounts. This is a perfect opportunity for the nudge folks to shine. But OASDI as is? It's the opposite of euvoluntary, whatever that is.
ULAFT: unfunded liabilities are future taxes, and boy howdy are they ever substantial.
Also recall that a better ratio of fiscal health is (total discounted future liabilities)/(total discounted collectible tax receipts). This debt/GDP ratio is a red herring, and you know it.
Sunday, August 25, 2013
Journalism
When "reporting" becomes ancillary to the regime, how many commonplace transactions become non-euvoluntary?
Will it or no, and I make no character assessments whether you do or don't, your commerce o'er amber waves of grain suffuses agents of the state with the lard they seek to pack the bearings of the war engines sent abroad to rain fire and death.
Don't get me wrong. I admit some bias as a pacifist, but I acknowledge that with unbiased (and by this, I mean the technical definition bit where omissions are random rather than systematically skewed) information, the median voter could still pretty easily come to the conclusion that violence against foreign nationals could be consistent with a rational moral and economic calculus. I might disagree with the rationale that leads to such an outcome, but the thing is, when (h/t Abby Hall) the Secretary of Defense refers to "intervention" in Syria as an option, it beggars belief that a responsible journalist would parrot this language. Or ever stoop to using the term "kinetic action" or any of the other kayfabe-laden doublespeak that oozes from between the lips of politicians.
Commerce that sends tax money to DC to fund fluffy bunny wars isn't euvoluntary.
Commerce that sends tax money to DC to rain hellfire on schools and orphanages is euvoluntary, provided that a) you're aware that this is part of the cost of war and b) you agree that the marginal benefits outweigh the marginal costs.
That the news organizations have selected for editors and journalists who dutifully refrain from approaching the regime with such skepticism suggests to me that the median voter, if better informed, would more likely find foreign aggression to lie a bit further afield from the national interest.
Also, this is probably more of a tweet than a blog comment, but if you really worry deeply about the plight of the oppressed, perhaps a better solution is to offer asylum instead of marching off to war. Just sayin'.
Will it or no, and I make no character assessments whether you do or don't, your commerce o'er amber waves of grain suffuses agents of the state with the lard they seek to pack the bearings of the war engines sent abroad to rain fire and death.
Don't get me wrong. I admit some bias as a pacifist, but I acknowledge that with unbiased (and by this, I mean the technical definition bit where omissions are random rather than systematically skewed) information, the median voter could still pretty easily come to the conclusion that violence against foreign nationals could be consistent with a rational moral and economic calculus. I might disagree with the rationale that leads to such an outcome, but the thing is, when (h/t Abby Hall) the Secretary of Defense refers to "intervention" in Syria as an option, it beggars belief that a responsible journalist would parrot this language. Or ever stoop to using the term "kinetic action" or any of the other kayfabe-laden doublespeak that oozes from between the lips of politicians.
Commerce that sends tax money to DC to fund fluffy bunny wars isn't euvoluntary.
Commerce that sends tax money to DC to rain hellfire on schools and orphanages is euvoluntary, provided that a) you're aware that this is part of the cost of war and b) you agree that the marginal benefits outweigh the marginal costs.
That the news organizations have selected for editors and journalists who dutifully refrain from approaching the regime with such skepticism suggests to me that the median voter, if better informed, would more likely find foreign aggression to lie a bit further afield from the national interest.
Also, this is probably more of a tweet than a blog comment, but if you really worry deeply about the plight of the oppressed, perhaps a better solution is to offer asylum instead of marching off to war. Just sayin'.
Monday, July 29, 2013
For ye Publick Goode: Blackmaile Moust Foule
Here's one for all you recreational game theorists out there. Solve this and then ask yourself where on the euvoluntary spectrum blackmail should sit.
Player 1: the sovereign.
Player 2: a trusted agent of the sovereign, with access to sensitive, embarrassing documents.
Strategies available:
P2 first selects (blackmail; not blackmail)
P1 then selects (pay; not pay)
P2 then selects (leak; not leak)
P1 then selects (punish; not punish)
You could extend this game by adding a pre-selection stage where P1 chooses (hire; not hire) and then nature assigns (trustworthy; not trustworthy) with some probability, but Bayesian games get confusing pretty quick, so let's instead consider our moral intuitions behind some of the payoff combinations.
Here's the thing, if we're the public and we're interested in the dynamics of this game, we may want to maximize the probability that agents of the sovereign will leak information that demonstrates violations of public trust. That is to say that if the crown is spying on honest yeomen, the sheriff who blabs performs an act of public charity. This act of public charity is necessarily worth something. Perhaps the individual value isn't all that much. I might value this knowledge at 25 cents, Mungo at a buck and a half, and ol' JR that keen-eyed goshawk at $3.75. Add all this up all the way across the population and you've got the dollar-denominated value of a leak. Note that in some cases, this value could well easily be negative.
With this knowledge in hand, and working her way up the game tree, P2 sets about deciding whether to blackmail the state and if so, how much to charge. Here's the curious thing: there's no way to judge the economic efficiency of this transaction ex ante. I can't suss if I actually value this knowledge at $0.25 until I know what it is. To us, it's worth a total of five and a half bucks. So the blackmail then becomes a bet between P1 and P2. The blackmailer wants to pick the maximum value without going over what she believes the sovereign estimates the public value to be. The sovereign should be willing to transfer up to the public value of the information to keep it a secret. And then to punish, of course. That's almost another game tree in itself.
It's obvious that as long as there's a positive public value for a leak then the (not blackmail | leak) strategy is more or less okay when it comes to our moral intuitions. Sure, there are plenty of folks for whom any leak of classified state documents is costly, no matter how malfeasant the program, but we're looking at adding up value across all constituents, not just at those loud wagging tongues we hear on the ol' teevee.
But what about a blackmail bet gone south? How should we feel about (blackmail | leak)? Does attempted blackmail so tarnish the character of the leaker that the leaked information itself loses value? If we have some instrumental preferences over good governance, shouldn't we actively encourage insiders to do as they must to increase the probability of a righteous leak, even if it means blackmailing the state?
I think the answer is at least partly in that final stage. There's a combination of the probability of detection and the severity of the punishment that will allow escape from sunk cost risks. There's also the question of lowering these frictions in general. In a competitive market, the price of a commodity is equal to its marginal cost. Competition in leaking government secrets mean that even mundane crap with very low public value could be up for bid. Is it in the public's interest to haggle over marginal secrets?
And perhaps more interestingly, is there a substantial difference between private blackmail and government blackmail? Which one is more offensive? Why? Are the ethical analyses substantially different? If so, how? Also, how would you model this game if you were using it in class?
Player 1: the sovereign.
Player 2: a trusted agent of the sovereign, with access to sensitive, embarrassing documents.
Strategies available:
P2 first selects (blackmail; not blackmail)
P1 then selects (pay; not pay)
P2 then selects (leak; not leak)
P1 then selects (punish; not punish)
You could extend this game by adding a pre-selection stage where P1 chooses (hire; not hire) and then nature assigns (trustworthy; not trustworthy) with some probability, but Bayesian games get confusing pretty quick, so let's instead consider our moral intuitions behind some of the payoff combinations.
Here's the thing, if we're the public and we're interested in the dynamics of this game, we may want to maximize the probability that agents of the sovereign will leak information that demonstrates violations of public trust. That is to say that if the crown is spying on honest yeomen, the sheriff who blabs performs an act of public charity. This act of public charity is necessarily worth something. Perhaps the individual value isn't all that much. I might value this knowledge at 25 cents, Mungo at a buck and a half, and ol' JR that keen-eyed goshawk at $3.75. Add all this up all the way across the population and you've got the dollar-denominated value of a leak. Note that in some cases, this value could well easily be negative.
With this knowledge in hand, and working her way up the game tree, P2 sets about deciding whether to blackmail the state and if so, how much to charge. Here's the curious thing: there's no way to judge the economic efficiency of this transaction ex ante. I can't suss if I actually value this knowledge at $0.25 until I know what it is. To us, it's worth a total of five and a half bucks. So the blackmail then becomes a bet between P1 and P2. The blackmailer wants to pick the maximum value without going over what she believes the sovereign estimates the public value to be. The sovereign should be willing to transfer up to the public value of the information to keep it a secret. And then to punish, of course. That's almost another game tree in itself.
It's obvious that as long as there's a positive public value for a leak then the (not blackmail | leak) strategy is more or less okay when it comes to our moral intuitions. Sure, there are plenty of folks for whom any leak of classified state documents is costly, no matter how malfeasant the program, but we're looking at adding up value across all constituents, not just at those loud wagging tongues we hear on the ol' teevee.
But what about a blackmail bet gone south? How should we feel about (blackmail | leak)? Does attempted blackmail so tarnish the character of the leaker that the leaked information itself loses value? If we have some instrumental preferences over good governance, shouldn't we actively encourage insiders to do as they must to increase the probability of a righteous leak, even if it means blackmailing the state?
I think the answer is at least partly in that final stage. There's a combination of the probability of detection and the severity of the punishment that will allow escape from sunk cost risks. There's also the question of lowering these frictions in general. In a competitive market, the price of a commodity is equal to its marginal cost. Competition in leaking government secrets mean that even mundane crap with very low public value could be up for bid. Is it in the public's interest to haggle over marginal secrets?
And perhaps more interestingly, is there a substantial difference between private blackmail and government blackmail? Which one is more offensive? Why? Are the ethical analyses substantially different? If so, how? Also, how would you model this game if you were using it in class?
Wednesday, July 10, 2013
Of Hume and Bugs Bunny
If Hume is to be believed, the states of antiquity would hoard treasure to be spent in times of war. By the time he penned Of Public Credit, Wm. of Orange had long ascended the throne and debt financing of state-led aggression was well-established. It is in this post-Glorious Revolution environment that he wrote:
There are also, we may observe, in ENGLAND and in all states, which have both commerce and public debts, a set of men, who are half merchants, half stock-holders, and may be supposed willing to trade for small profits; because commerce is not their principal or sole support, and their revenues in the funds are a sure resource for themselves and their families. Were there no funds, great merchants would have no expedient for realizing or securing any part of their profit, but by making purchases of land; and land has many disadvantages in comparison of funds. Requiring more care and inspection, it divides the time and attention of the merchant; upon any tempting offer or extraordinary accident in trade, it is not so easily converted into money; and as it attracts too much, both by the many natural pleasures it affords, and the authority it gives, it soon converts the citizen into the country gentleman. More men, therefore, with large stocks and incomes, may naturally be supposed to continue in trade, where there are public debts; and this, it must be owned, is of some advantage to commerce, by diminishing its profits, promoting circulation, and encouraging industry.If you recognize the theme here, it's a proto-MMT argument, that liquidity is important. Debt financing supports commerce. In our terms here, it features positive externalities. It's good.
But much like Hume anticipated Keynes and Sumner, so too he anticipated Bastiat and Hayek.
But, in opposition to these two favourable circumstances, perhaps of no very great importance, weigh the many disadvantages which attend our public debts, in the whole interior œconomy of the state: You will find no comparison between the ill and the good which result from them.He then goes on to list five shortcomings of debt financing, including: redistribution from the modest to the elite, an early version of Gresham's Law, oppressive ex post taxation, obeisance to foreign bondholders, and an argument ad segnitium (that bondholders will live an indolent life and produce little).
ATSRTWT
The rest of the essay is set to mockery of public credit and those who enjoin to live lives of culpable comfort on the rents claimed by the excise of taxes. He warns of the perils of sovereign default and contrasts nicely the bankruptcies of the crown with the private landowner.
So what does this have to do with B. Bunny? With euvoluntary exchange?
During the big, early-20th century wars, ordinary folks would go see shorts like the one above before their feature films and know that Johnny who had gone off to fight Hitler or Tojo would have a few extra bullets in the chambers of their M1 Garands or a fresh set of tracks draping their (notably crappy) M4 Shermans. Euvoluntary. Sure, there might be a fungibilty filter as the purchase twists its way through the general fund on its way to the Pentagon, but folks pretty much knew what they were getting with the ossification of their savings: an increased probability of battlefield victory.
How about debt financing in peacetime? When you snag a T-bill these days, what are you buying? Liquidity? Funding for regulatory agencies? Stimulus? Do you even know? How would the post-Space Jam Bugs sell QE? I guess part of the point of the apparatus of modern banking is that he doesn't have to.
I wonder if anyone else has ever attempted to link Mel Blanc and David Hume. Hm.
Wednesday, June 19, 2013
World Cup Woe
To get more of something, subsidize it.
An easy enough platitude, yes? Subsidies sound great when the thing subsidized is something everybody wants. Or something enough people want to justify the burden slung on the shoulders of the unwilling. Isn't that the purpose of taxation? To get the free riders to start pedaling? And hey, who doesn't like futbol? What are you, a Yanqui?
TANSTAAFL. There Ain't No Such Thing As A Free Lunch. Subsidies aren't free money. They are transfers, often from poor to rich. If professional sports aren't euvoluntary enough to survive on their own merits, then maybe more of us should hit the big orgs like FIFA, the NFL, and the NCAA where it hurts: right smack dab in the pocketbook. We may not have favelas in the States, but we do have a large, nearly unanimous literature that clearly states: "independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development." (Siegfried & Zimbalist, JEP 2000)
We're paying for this through taxes why, exactly?
An easy enough platitude, yes? Subsidies sound great when the thing subsidized is something everybody wants. Or something enough people want to justify the burden slung on the shoulders of the unwilling. Isn't that the purpose of taxation? To get the free riders to start pedaling? And hey, who doesn't like futbol? What are you, a Yanqui?
TANSTAAFL. There Ain't No Such Thing As A Free Lunch. Subsidies aren't free money. They are transfers, often from poor to rich. If professional sports aren't euvoluntary enough to survive on their own merits, then maybe more of us should hit the big orgs like FIFA, the NFL, and the NCAA where it hurts: right smack dab in the pocketbook. We may not have favelas in the States, but we do have a large, nearly unanimous literature that clearly states: "independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development." (Siegfried & Zimbalist, JEP 2000)
We're paying for this through taxes why, exactly?
Saturday, February 2, 2013
Look! I volunteer at the homeless shelter!
Look! I volunteer at the homeless shelter! Now please sleep with me, ma'am.
Men behaving nicely: Public goods as peacock tails
Mark Van Vugt & Wendy Iredale
British Journal of Psychology, February 2013, Pages 3–13
Abstract:
Insights from sexual selection and costly signalling theory suggest that competition for females underlies men's public good contributions. We conducted two public good experiments to test this hypothesis. First, we found that men contributed more in the presence of an opposite sex audience, but there was no parallel effect for the women. In addition, men's public good contributions went up as they rated the female observer more attractive. In the second experiment, all male groups played a five round public good game and their contributions significantly increased over time with a female audience only. In this condition men also volunteered more time for various charitable causes. These findings support the idea that men compete with each other by creating public goods to impress women. Thus, a public good is the human equivalent of a peacock's tail.
So many questions....If in fact female attention is a selective incentive, then mixed-sex groups should be better able to overcome the collective problem.
On the other hand, the "contributions" are not really voluntary. These guys making contributions are trying to hustle some action.
Still, it rings true. PJ O'Rourke always claims that the reason he hung with the lefties in the 1960s is that is where one found all the really attractive women.
Men behaving nicely: Public goods as peacock tails
Mark Van Vugt & Wendy Iredale
British Journal of Psychology, February 2013, Pages 3–13
Abstract:
Insights from sexual selection and costly signalling theory suggest that competition for females underlies men's public good contributions. We conducted two public good experiments to test this hypothesis. First, we found that men contributed more in the presence of an opposite sex audience, but there was no parallel effect for the women. In addition, men's public good contributions went up as they rated the female observer more attractive. In the second experiment, all male groups played a five round public good game and their contributions significantly increased over time with a female audience only. In this condition men also volunteered more time for various charitable causes. These findings support the idea that men compete with each other by creating public goods to impress women. Thus, a public good is the human equivalent of a peacock's tail.
So many questions....If in fact female attention is a selective incentive, then mixed-sex groups should be better able to overcome the collective problem.
On the other hand, the "contributions" are not really voluntary. These guys making contributions are trying to hustle some action.
Still, it rings true. PJ O'Rourke always claims that the reason he hung with the lefties in the 1960s is that is where one found all the really attractive women.
Subscribe to:
Posts (Atom)