Saturday, March 11, 2017

How to Improve the Discourse on Education Policy

Is there a subject of policy debate in modern society more deranged than education? When it comes to primary and secondary education, the sheer sentimentality, mendacity and surreality of most policy proposals borders on incredible. We just need to Fix The Schools™, then everything will be alright with our wayward youth.

Education, curiously, is one of those subjects on which the divide between the reactionary mindset and the mainstream conservative mindset is starkest.

As far as I can tell, there seem to be three main explanations for why some schools perform poorly.

The leftist mindset is that the problem with "bad schools" (where this is usually taken to mean "schools with poor measures of student academic achievement) is a lack of resources. School funding is tied to property taxes, so rich schools get more money than poor ones, and that's why they perform better. More money will let them buy textbooks, and ipads, and hire better teachers, and have art programs which will distract kids from joining violent gangs, etc.

Of course, this runs up against the problem that we've been throwing money into education, hand over fist, for decades, with literally nothing to show for it. As Scott Alexander discussed a few weeks ago in his post on cost disease:

Maybe another 50% increase and we'll finally Fix The Schools™!

And then there's the mainstream conservative answer: the problem with bad schools is bad teachers and bad incentives. The teachers unions are powerful, and the Democrats are beholden to them, which means that there's no competition across schools, no ability to fire underperforming teachers, no incentives for better performance etc.

This of course runs into the problem that if this were the main driver of educational differences, then states where the Democrats have strong political power should do worse. Do they?

No. If you take, say 2015 NAEP 8th Grade Mathematics Scores (available here) and correlate them with 2016 Democratic Presidential Vote Shares (available here), you get a whopping correlation of  -0.0595. If you're a regression guy, if you regress mathematics test scores on vote percentage, the t-stat is a paltry -0.417, with an R-squared of 0.0035. 

But even this overstates the case, because DC is a huge outlier in vote share at 90.48%, and an absolute sinkhole in terms of test scores. If you take DC out, the correlation is actually positive, at 0.183 (though the t-stat on the regression is still insignificant, at 1.29). If you use 2012 vote shares, which were perhaps more usual, the correlation increases to 0.214 excluding DC, and the t-stat is 1.52. That is to say, more Democratic states do, if anything, slightly better, though the effect isn't particularly strong. You can see this just by ranking the states:

State NAEP Math Dem. Vote Share
Massachusetts 297 60.01%
Minnesota 294 46.44%
New Hampshire 294 46.98%
New Jersey 293 54.99%
Vermont 290 55.72%
Wisconsin 289 46.45%
North Dakota 288 27.23%
Virginia 288 49.75%
Indiana 287 37.91%
Montana 287 35.75%
Washington 287 54.30%
Wyoming 287 21.63%
Colorado 286 48.16%
Iowa 286 41.74%
Nebraska 286 33.70%
Utah 286 27.46%
Maine 285 47.83%
Ohio 285 43.56%
South Dakota 285 31.74%
Connecticut 284 54.57%
Idaho 284 27.49%
Kansas 284 36.05%
Pennsylvania 284 47.85%
Texas 284 43.24%
Arizona 283 45.13%
Maryland 283 60.33%
Oregon 283 50.07%
Illinois 282 55.83%
Missouri 281 38.14%
North Carolina 281 46.17%
Rhode Island 281 54.41%
Alaska 280 36.55%
Delaware 280 53.18%
New York 280 58.40%
Georgia 279 45.64%
Hawaii 279 62.22%
Kentucky 278 32.68%
Michigan 278 47.27%
Tennessee 278 34.72%
South Carolina 276 40.67%
Arkansas 275 33.65%
California 275 61.73%
Florida 275 47.82%
Nevada 275 47.92%
Oklahoma 275 28.93%
Mississippi 271 40.11%
New Mexico 271 48.26%
West Virginia 271 26.48%
Louisiana 268 38.45%
Alabama 267 34.36%
District of Columbia 263 90.48%

Admittedly there's a lot more variables you'd want to throw into the regression, but still, the univariate big picture doesn't look like the Republican story either.

So what's the reactionary position on why there are bad schools? 

Bad schools are primarily due to bad students. Some students are dumb, unruly, lazy, dysfunctional brats. They can't learn, won't learn, and don't learn. You don't even need to take a strong stance on why these differences arise, but just assume that by the time the kids arrive at school, some of them are just a drain and a menace on everyone around them.

And for some reason, this explanation is considered anathema to most right-thinking people. How can you say anything so mean? All students have the potential to succeed, if only they're given the right circumstances!

If the reactionary position strikes you as excessively unkind (especially if its unkindness makes you flinch from accepting its possible truth), I want you to try the following thought experiment.

When you think of "schools", what mental picture comes to mind?

I suspect you are thinking of an idealised brochure, a smiling child at a desk, something that would fit easily as an advertisement for a charity on the side of a bus. The kid is also likely to be young, probably around 5-8 years old, bright-eyed at the world.

Stop thinking of that. Schools aren't like that.

Okay, so what are schools like? 

You don't need me to tell you. You've been to one. 

To borrow an idea from the War Nerd (when he was explaining why it was easy to get young men to fight and die in wars): if you want to think of schools, think of your 9th grade PE class.

Who was in that class? There were some good students, some of your friends that you think fondly of. If you're reading this blog, chances are both you and your friends were pretty high achieving.

Then there were some middle of the road kids, who were nice enough, and filled out the fat part of the bell curve.

Then there was almost certainly a solid rump of kids best described as complete dickheads. Dumb, mean, idiots. That bully who liked to pick on the young kids. That big punk who stole your friend's bike tire. That guy who was thick as two planks, and boasted about taking a crap on some stranger's car while drunk one Saturday night.

Now, think of just those scumbags, because these are almost certainly the underperforming students we're trying to fix. Imagine that you're designing education policy. How can you improve the educational outcomes of those students? Are they suddenly going to apply themselves more if higher property taxes provide them with a free iPad? Are they about to dive into calculus if only they can find some inspiring young teacher with hip and fresh real world examples of differential equations?

Of course they're not. They're just idiots who will make life miserable for whoever is around them. 

If your school has too many such students, it is probably going to be a "bad school". Now, at this stage of argumentation, it is still a matter of conjecture that the scumbag kids of the world are not spread exactly uniformly across every single school district. But is the idea so outlandish? Do you think the adult scumbags are spread precisely uniformly across every neighbourhood and state? Perhaps this matches your experience of traveling around your city or country, but somehow I doubt it. If it were true, you should feel approximately equally happy moving to any neighbourhood in your city, or any state in the country, since everyone is basically the same! Yeah right. And if the annoying adults aren't distributed uniformly, why should the kids be? The first law of behavioral genetics doesn't go away just because you're feeling sentimental about all kids being nice at heart. And given the capacity of nasty kids to have enormous disruptive negative spillovers on the kids around them, it's not clear how much of a difference in distribution you would need to affect the aggregate outcomes. 

But even if you think of the whole distribution of students (rather than just the left tail), did that distribution seem like something pretty fixed over your schooling, or something with a lot of year-to-year variation? Did the students in the bottom third of the class in one year ever suddenly jump to the top third the next year as a result of a really good teacher? Or would you say that the personal traits, and relative test scores, of the students in your class were approximately stable in rank order over your whole school career? How confident are you that your treatment could upset last year's rank order by very much?

If your education policy doesn't seem like it will work on the ne'er-do-well kids in your 9th grade PE class, it's probably not going to work at all.

And thinking about those kids is an incredibly grounding reality check to cure multi-billion dollar sentimental nonsense that every kid is just wanting to get the best possible education in life. Some are. Some aren't. It's not that every child who does badly at school is also mean and of poor character. But thinking about the ones that are is the best cure for hazy, rose-tinted thinking on the subject. It makes it easier to focus on the sheer stubbornness of the problem at hand.

None of this means that the reactionary position is the only difference across schools, or that there isn't any role for other factors. But let's just say that it's a hypothesis that seems like it might be worth considering more than currently is done, at least in the public discourse.

It is self-evident that the world has a substantial fraction of dickheads in it.

All of those dickheads were 10 years old once. 

Most of them were probably dickheads back then too.

Saturday, February 25, 2017

On the Folly of Romanticising Dreams

I finally got around to seeing La La Land, apparently making me about the last person in America to do so. It was quite good, after all. But one thing that stuck out was the ever present Hollywood obsession with the idea of fulfilling one's dreams.

This is a theme that never seems to get tired - don't give up on one's dreams, keep working and eventually you'll achieve your dreams, don't sell out your dreams to mundane practical considerations, et predictable cetera.

There is, in other words, an ongoing preoccupation with the plight of how to disembarrass dreamers of their temporary obstacles.

Let us assume, charitably, that this is meeting a real need in society, for those with concrete ambitions and goals. In the world of cinema, everyone has a purpose that they have aspired to from a young age - opening a successful jazz club, becoming a famous actress.

But every time I see these messages, I always wonder: what fraction of the audience actually has dreams in the first place, at least in the way that Hollywood depicts them?

If the average person were asked, "Quick, what's your dream?" and forced to answer in two seconds, I would guess that a lot of answers would begin with "I don't know,…”, and the honest ones would probably end there as well.

What the average person has instead of fixed childhood dreams, I suspect, is a gnawing sense of ennui that they don’t really know what they want to do with their life, but whatever they’re currently doing isn’t quite it. They’d change, but they’re not sure to what, and even if they had a concrete aim they’re not sure they’d be able to achieve it.

That their hobbies and interests have more of the flavour of enjoyable diversions to pass the time in a rapidly vanishing life, rather than genuine passions.

That their hobbies and interests, when they are honest about it, are nearly all just forms of consumption – sex, movies, gadgets, food, alcohol, porn, weed. And like all consumption, the pleasure is relatively fleeting, and sense of purpose is minimal.

That the only hobby that doesn’t quite fit the previous list is hanging out with their friends, which at least has a social aspect to it. But if they’re older than 25, their most common thoughts regarding their friends are either that i) they don’t manage to see them as often as they’d like, and/or ii) they no longer live in the same city as the people they consider their best friends.

You may note that Hollywood has relatively little to say about how to find dreams if you don’t have them. The very concept almost sounds absurd, since dreams presuppose a fixed and concrete aim, which is the very thing lacking most of the time. And if you tried to push people to come up with some kind of dream, they're going to resort to retrieving some mentally cached entry for "what are the kinds of things people claim to dream of doing?". These usually have one of several predictable forms:

-Mindless Adventurism: I want to travel around the world!
-Fame: I want to be in a rock band or a movie star!
-Getting Paid for My Hobbies: I want to be a gossip columnist (because I like reading social media nonsense), a porn star (because I like banging), own a restaurant (because I like eating) etc.

I ask you, dear reader – do you think that the ennui that so characterises our modern existence is likely to be solved by more trips to Europe, aspiring actors, or failed restauranteurs?

What people are genuinely missing, rather, is a sense of purpose in their lives. And purpose is different from dreams in subtle but important ways.

You can find purpose in religion – in aims higher than egotism, and in understanding the human condition. You can find purpose in family – in raising children, in looking after your elderly parents, in loving and supporting your siblings. You can find purpose in community – in bonds with those around you, in brightening the day of neighbours or strangers. For a talented few, you can find purpose in art – in creating things of great beauty which may outlast you.

With the possible exception of art, the purposes listed above are within the reach of the average person, though finding them is far from straightforward. Religion and community have both been declining a lot in the west over the last few decades. Still, as the Last Psychiatrist puts it, you can always fake it until it becomes real - if your parents are still alive, you can call them, right now, and brighten up their day. 

But no one dreams of finding religion, or having children, or volunteering in their neighourhood. Because dreams are at heart about achievement, about individual ambition, about achieving success at the highest levels. And this is almost by definition not a possibility for the average person. Even where the subject matter coincides, like in employment, the emphasis is radically different. You can find purpose in an honest day’s work, and providing for your family, but you can only find success by being a CEO or an astronaut.

There is an extent to which human ambition makes for better stories, which is probably why Hollywood likes the idea.

But eventually, the subtext of the message gets internalized – to be worthy, you must have ambition, and succeed in it.

The left likes this idea, because the left believes in egalitarianism. We are all as good as each other, therefore we all have the same innate ability to achieve anything, if we just set our minds to it. Set our minds to what, exactly? Um, derp... never mind, let's just go with astronaut. How many of those are there again?

The negative consequences of this message never seem to get much contemplated. It does the left half the distribution no favours whatsoever to tell them that they can do things that they are incapable of, and that they are failures if they don’t aim at something incredibly difficult and succeed

What are they likely to conclude?

Well, if they are part of a designated victim group, they will latch on to another social message floating in the ether – that their lack of success is due to the malign influence of the interfering forces of -isms and -phobias. I am not a failure, you see. I have talent and skill, which a bigoted and hateful world has prevented from being realized! Is it any wonder that people to whom these messages apply find them seductive as a psychological balm for wounded pride and failed ambition?

Or if they’re just some white trash loser, for whom this excuse isn’t available, they drink and drug themselves into an anesthetized stupor and premature death.

Setting people up for inevitable failure is no kindness at all. And the reality is that even having concrete dreams is only feasible for those in the right half of the distribution of ambition and talent.

There is no right half of a distribution without a corresponding left half. Egalitarianism has destroyed most people's ability to think seriously about how to improve the lives of the left half through any mechanisms other than charity. The state of the art thinking is to keep reinforcing the message to the left half that they, too, can be the right half.

How much needless human misery do we create by pretending that the left half doesn’t exist?

Thursday, February 16, 2017

Carlyle Considered

After a shameful delay, at last I have joined the Froude Society! Previous installments covered Froude's "The Bow of Ulysses: The English in the West Indies" and Maine's "Popular Government". Today's subject is Thomas Carlyle, the grand old man of reaction, and his "Latter-day Pamphlets".

Reading Carlyle is often quite surprising, because while he is indubitably reactionary, it's not always in ways that one might expect. For instance, Carlyle places a lot of emphasis on the great men theory of both history and government.
Indisputably enough the meaning of all reform-movement, electing and electioneering, of popular agitation, parliamentary eloquence, and all political effort whatsoever, is that you may get the ten Ablest Men in England put to preside over your ten principal departments of affairs.
This emphasis means that there is relatively less discussion of detailed policy positions on particular issues of the day. Good government, to Carlyle, is a long way from a set of conservative talking points. It arises by appointing the most competent men to power, and giving them the authority to actually rule.

Carlyle wants, in other words, an aristocracy. But this is an aristocracy of talent and character, not one of inherited class. Men of low birth but noble character are singled out for praise, Robert Burns being a prominent example.
Choose well your Governor;—not from this or that poor section of the Aristocracy, military, naval, or redtapist; wherever there are born kings of men, you had better seek them out, and breed them to this work. All sections of the British Population will be open to you.
To the modern mind, one is more apt to evaluate governments by whether they their preferences accord with our own (and hence whether we want the same things implemented as the leaders do ) and whether they have the competence to actually carry the plans out. In this reckoning, a competent leader carrying out plans we hate is considerably worse than an incompetent leader trying and failing to carry out plans we hate.

But to Carlyle, competence involves the ability to understand the decrees of Nature or Nature's God, and thus know what will cause justice to be done. As a result, the distinction between competent government and just government is not of primary significance:
To prosper in this world, to gain felicity, victory and improvement, either for a man or a nation, there is but one thing requisite, That the man or nation can discern what the true regulations of the Universe are in regard to him and his pursuit, and can faithfully and steadfastly follow these. These will lead him to victory; whoever it may be that sets him in the way of these, —were it Russian Autocrat, Chartist Parliament, Grand Lama, Force of Public Opinion, Archbishop of Canterbury, M'Croudy the Seraphic Doctor with his Last-evangel of Political Economy,—sets him in the sure way to please the Author of this Universe, and is his friend of friends. And again, whoever does the contrary is, for a like reason, his enemy of enemies. This may be taken as fixed.
Perhaps the reason that we no longer talk this way is that most of us no longer believe in God (or anything else), and hence don't think of the aim of politics as being to implement his justice on earth. As a result, there's just preferences.

The above quote also illustrates that the focus on competent leaders making competent decisions takes precedence over designing mechanical schemes to implement decisions. As I noted in the discussion of Maine, early Moldbug (in the form of ideas like neocameralism) is a scientist of government, seeking the truth of optimal arrangements. Maine is an engineer of government, grappling with the messy practicalities of what produces generally stable outcomes. But in this taxonomy, Carlyle is an artist of government. Governing is a skill to be learned by able men, appropriately apprenticed to their trade. The only interest in systems and mechanisms is in the extent to which they correctly select the right men, and elevate them to power.

For this reason, Carlyle is generally scathing about the modern implementation of democracy, but not because it is impossible to implement well. The main problem is the fact that the world is full of fools, most of whom know nothing about either government policy or selecting able men. The Laws of the Universe are not easily given up to every Tom, Dick and Harry, so averaging out their opinion with those of the wise is a recipe for disaster:
Your ship cannot double Cape Horn by its excellent plans of voting. The ship may vote this and that, above decks and below, in the most harmonious exquisitely constitutional manner: the ship, to get round Cape Horn, will find a set of conditions already voted for, and fixed with adamantine rigour by the ancient Elemental Powers, who are entirely careless how you vote. If you can, by voting or without voting, ascertain these conditions, and valiantly conform to them, you will get round the Cape: if you cannot,—the ruffian Winds will blow you ever back again; the inexorable Icebergs, dumb privy-councillors from Chaos, will nudge you with most chaotic 'admonition'; you will be flung half-frozen on the Patagonian cliffs, or admonished into shivers by your iceberg councillors, and sent sheer down to Davy Jones, and will never get round Cape Horn at all!
Ships accordingly do not use the ballot-box at all; and they reject the Phantasm species of Captains: one wishes much some other Entities,—since all entities lie under the same rigorous set of laws,—could be brought to show as much wisdom, and sense at least of self-preservation, the first command of Nature.
For democracy skeptics like me, there is much to enjoy. But Carlyle is not easily reduced to slogans, and gives a quite nuanced view on when voting will work better or worse. Latter Day Pamphlets is not wedded to a particular governing system.

For instance, the biggest surprise of the book was that Carlyle is relatively positive about Oliver Cromwell. To me, I had always thought of Cromwell as a disaster, the beginning of where things went badly wrong in English history, and the destruction of genuine monarchy in England. But this isn't how Carlyle portrays it. Cromwell's strong Christian belief is implicitly praised, as is competence in leadership. Remember, the key is greatness of leadership, not forms of government! In this respect, I part company with Carlyle in the importance of institutions and norms. Even if Cromwell were more competent than Charles I, the successor to Charles I would have been a much better bet than the successor to Cromwell. Institutions are not an idea that has much prominence in Latter-day Pamphlets, and the subject of Cromwell and Charles I is not covered in enough detail for me to fully understand the appeal or the implied argument, But the overarching point is still correct - having a crown does not make one a real king, and fake kings are a source of particular disgust to Carlyle. While he does not elaborate much on Charles I, he accurately predicts that constitutional monarchs will not be stable arrangement, nor should we wish them to be:
Imposture, be it known then,—known it must and shall be,—is hateful, unendurable to God and man. Let it understand this everywhere; and swiftly make ready for departure, wherever it yet lingers; and let it learn never to return, if possible!
The Kings were Sham-Kings, playacting as at Drury Lane;—and what were the people withal that took them for real? It is probably the hugest disclosure of falsity in human things that was ever at one time made.
...[The Common Englishman] has been used to decent forms long since fallen empty of meaning, to plausible modes, solemnities grown ceremonial,—what you in your iconoclast humour call shams,—all his life long; never heard that there was any harm in them, that there was any getting-on without them. Did not cotton spin itself, beef grow, and groceries and spiceries come in from the East and the West, quite comfortably by the side of shams? Kings reigned, what they were pleased to call reigning; lawyers pleaded, bishops preached, and honourable members perorated; and to crown the whole, as if it were all real and no sham there, did not scrip continue saleable, and the banker pay in bullion, or paper with a metallic basis ?"
Carlyle predicts, in other words, what I have mentioned before - that political arrangements which are no longer actively defended, which persist out of institutional habit and inertia, will not survive. The unprincipled exceptions, if not actively insisted on, will be made into principled disasters. My guess as to the big elephant in the room on this front is citizenship. With Politics as with life -  nature has made up her mind that what cannot defend itself shall not be defended, as Mr Emerson put it.

By contrast, Oliver Cromwell and the members of the Long Parliament were deadly serious. And Carlyle gives an outstanding Chesterton's Fence justification of what role Parliament actually used to fill (much better than my own poor efforts)

Reading in Eadmerus and the dim old Books, one finds gradually that the Parliament was at first a most simple Assemblage, quite cognate to the situation; that Red William, or whoever had taken on him the terrible task of being King in England, was wont to invite, oftenest about Christmas time, his subordinate Kinglets, Barons as he called them, to give him the pleasure of their company for a week or two: there, in earnest conference all morning, in freer talk over Christmas cheer all evening, in some big royal Hall of Westminster, Winchester, or wherever it might be, with log-fires, huge rounds of roast and boiled, not lacking malmsey and other generous liquor, they took counsel concerning the arduous matters of the kingdom.
...So likewise in the time of the Edwards, when Parliament gradually split itself into Two Houses; and Borough Members and Knights of the Shire were summoned up to answer, Whether they could stand such and such an impost? and took upon them to answer, "Yes, your Majesty; but we have such and such grievances greatly in need of redress first,"—nothing could be more natural and human than such a Parliament still was.
...For, in fine, the tragic experience is dimly but irrepressibly forcing itself on all the world, that our British Parliament does not shine as Sovereign Ruler of the British Nation; that it was excellent only as Adviser of the Sovereign Ruler; and has not, somehow or other, the art of getting work done
In the Carlyle telling, the Parliament worked for two reasons. Firstly, it was composed of men who were themselves Nobles and Rulers, and thus competent to advise on such matters. And secondly, it filled the role of discussing policy choices when there were few avenues available for this. As Carlyle notes, this task is much more competently carried out in modern times (both his and ours) in the press. But the presence of the press makes Parliament not only superfluous, but contemptible, as it turns Parliamentary speeches into performances marketed to the rubes, not serious policy debates. Parliaments, at best, make good advisers but bad sovereigns. Modern parliaments are bad at both. 

There are some parts of Latter Day Pamphlets, especially those that describe the actual workings of government, that read as eerily prophetic. One is forced to do a double-take when one reads the descriptions of how government in England actually worked at the time. For instance:

[I]t is felt that 'reform' in that Downing-Street department of affairs is precisely the reform which were worth all others; that those administrative establishments in Downing Street are really the Government of this huge ungoverned Empire
Much has been done in the way of reforming Parliament in late years; but that of itself seems to avail nothing, or almost less. The men that sit in Downing Street, governing us, are not abler men since the Reform Bill than were those before it.
The civil service, in the form of the Home Office, Foreign Office and Colonial Office was already thoroughly in charge of 1850. Not only that, but the civil service was also fast turning into a sclerotic mess of incompetent bureaucrats badly doing work that didn't really need to be done in the first place. Pause and let that sink in when you hear conservatives talking about how we need to scale back the size of bureaucracy. 

As a consequence, it doesn't matter much who is the Prime Minister, since the civil service makes all the important decisions anyway, and the election and political process is so chaotic and time-consuming that there isn't scope for much else for a leader to do. This is a point that Moldbug emphasises a lot, but the average democracy adherent simply cannot believe. The memorable description of being Prime Minister is that of trying to stay atop a wild bucking horse, with the effort towards not being thrown off crowding out any hope of controlling the direction:
[T]he Right Honourable Zero is to be the man. That we firmly settle; Zero, all shivering with rapture and with terror, mounts into the high saddle; cramps himself on, with knees, heels, hands and feet; and the horse gallops—whither it lists. That the Right Honourable Zero should attempt controlling the horse—Alas, alas, he, sticking on with beak and claws, is too happy if the horse will only gallop anywhither, and not throw him. ... This is what we call a Government in England, for nearly two centuries now.
...Really it is unimportant which of them ride it. Going upon past experience long continued now, I should say with brevity, "Either of them—Neither of them." If our Government is to be a No-Government, what is the matter who administers it? Fling an orange-skin into St. James's Street; let the man it hits be your man.
This has been the government ... for nearly two centuries before 1850.  If you think Carlyle might be right, rolling things back to the 1950's isn't going to cut it.

Yet despite these similarities in description of some parts of the world, one sees that Moldbug's description of Carlyle as a reactionary is entirely correct:
A reactionary is not a Republican, a Democrat, or even a libertarian. It is not even a communist, a fascist, or a monarchist. It is something much older, stranger, and more powerful. But if you can describe it as anything, you can describe it as the pure opposite of progressivism. True reaction is long since extinct in the wild, but it lives in Carlyle.
Indeed, reading through Latter Day Pamphlets, one continues to be struck by statements that defy description on the standard modern political spectrum. Authority is not only necessary, but wise and just:
I say, it is the everlasting privilege of the foolish to be governed by the wise
Carve it in stone. This is so far outside the Overton Window that we barely have words to describe it.

But if you were hoping for a defense of mainstream capitalist economics, you will not find it here. Carlyle is shocked and appalled by the level of poverty evident in Ireland. But unlike the left, he is appalled not only because of the suffering, but mostly because the indigence and misery is a sign of a catastrophic failure of governance. The problem with poverty is not ultimately the money, but the wasted lives.
The Idle Workhouse, now about to burst of overfilling, what is it but the scandalous poison-tank of drainage from the universal Stygian quagmire of our affairs? Workhouse Paupers; immortal sons of Adam rotted into that scandalous condition, subter-slavish, demanding that you would make slaves of them as an unattainable blessing! My friends, I perceive the quagmire must be drained, or we cannot live.
If our Chancellor of the Exchequer had a Fortunatus' purse, and miraculous sacks of Indian meal that would stand scooping from forever,—I say, even on these terms Pauperism could not be endured; and it would vitally concern all British Citizens to abate Pauperism, and never rest till they had ended it again. Pauperism is the general leakage through every joint of the ship that is rotten. 
Carlyle is decidedly cool on the ability of markets, not only to solve these problems, but also to generate wise decisions in general. His scathing essay on the possibility of making a statue of railway baron George Hudson, who is presented as a seller of worthless scrip and dubious economic schemes, makes clear why. A democracy of dollars is not much more likely to recognise genuine human worth than a democracy of votes, for much the same reasons. This is not a matter Carlyle takes lightly:
If the world were not properly anarchic, this question 'Who shall have a Statue?' would be one of the greatest and most solemn for it. Who is to have a Statue? means, Whom shall we consecrate and set apart as one of our sacred men?
And he walked the walk too, founding the National Portrait Gallery to make sure that great men were properly commemorated too. 

One is also reminded in odd ways that the world itself was very different in 1850, and not just in the ways that get frequently remarked on. For instance, in an essay discussing the enormous prominence given to people who had the gift of good speech, Carlyle states the following:
Our English careers to born genius are twofold. There is the silent or unlearned career of the Industrialisms, which are very many among us ; and there is the articulate or learned career of the three professions, Medicine, Law (under which we may include Politics), and the Church. Your born genius, therefore, will first have to ask himself, Whether he can hold his tongue or cannot ?
Two questions arise, both linked. Firstly, what criteria do we now use to evaluate truth, apart from rhetoric, which gets little discussion in the essay? And secondly, what is the large class of learned careers not discussed in the above list?

The answer to both is: science. One can see that the intellectual impact of the scientific method had not yet permeated much of society, and that science itself was practiced by a small number of mostly independently wealthy people like Lord Kelvin. The rest of innovation was merely lumped in with industrialism, and not at all considered to be an important or primary method of understanding the universe. If you were actually transported back to the world of 1850, it would almost certainly strike you as utterly alien in far more ways than you imagine. As Moldbug said of Larry Auster, it is equally true of Carlyle - he is gone, and so is the country he was born in. To complain of either would be as superfluous.

But the underlying truth of his words still remains. To those of us skeptical about modernity, Carlyle speaks across the ages, addressing our misgivings and pointing a way forward through the morass:
My friends, across these fogs of murky twaddle and philanthropism, in spite of sad decadent 'world-trees,' with their rookeries of foul creatures,—the silent stars, and all the eternal luminaries of the world, shine even now to him that has an eye. In this day as in all days, around and in every man, are voices from the gods, imperative to all, if obeyed by even none, which say audibly, "Arise, thou son of Adam, son of Time; make this thing more divine, and that thing,—and thyself, of all things; and work, and sleep not; for the Night cometh, wherein no man can work!" He that has an ear may still hear.
Just so.

Monday, February 6, 2017

The Conservation of Group Conflict

While I find watching sports generally boring, the psychology of why people watch sports is fascinating.

Not so much the fact that people want to watch exciting athletic endeavors, which doesn’t need much explanation. Watching the X-games or parkour is simply pleasure at athletic skill. But the most ubiquitous sporting events have a strong aspect of tribal loyalty to them. People don’t just like watching football in general, they mostly like supporting a particular team. You might say that this is just local civic pride, and to a certain extent this is true (though it still raises the question of why civic pride is invested in a sports team in the first place).

But the cleanest psychological natural experiment comes from foreigners who move to a city. I had an Australian friend who moved to the US, and wanted to watch American football. Since he didn’t have a team already, he picked one, literally at random. Now he’s a Green Bay Packers fan, and watches all their games. His choice is arbitrary, but I think he’s just more honest about what he wants. The underlying choice of who to support is always arbitrary. What people really want is the thrill of battle, of tribal allegiance and the raw passion of shared purpose. The only real reason to organize this along city or country lines is that it’s more fun to be part of a shared tribe with your friends, who usually happen to be the people living near you.

Sports tribalism is to actual tribalism what masturbation is to sex. The act being simulated is that of tribal battle. Of course, real tribal battle is generally frightening. You’ve got a high chance of being killed or maimed, and lots of people are too old, fat or weak to be usefully involved. So we’ve innovated ways to produce the same feeling by turning up and screaming for men to do ritualized battle on our behalf. There is a reason that live sports games are so much more exciting than televised games, and why televised games in a pub are more exciting than televised games in your home, and why televised games in your home with friends are more exciting than televised games in your home alone. The main attraction is the tribal shared purpose. The more visceral, the better. It’s no surprise that in Europe, soccer hooliganism takes the simulated version to its logical real-life conclusion.

It might be tempting to view this as a critique of sports, as being vulgar and base. Which is partly true. But there’s another, bigger angle at play.

The rise of mass audience participation in sports came after World War II, coinciding with a) the decrease in actual mass involvement in armed conflict, and b) the increased demonization of any racial or ethnic allegiance by western whites.

As the average young western male had less opportunity to actually engage in martial combat, and had no other tribe with which to bond, his appetite had to be sated with ritual simulated combat and arbitrary tribal sports loyalty.

In other words, when tribal allegiance and conflict did not exist, someone had to invent them. Because they fill a very primal need in the average psyche.

You can see this pattern operating in wider conflicts. There seems to be something approximating a conservation of group conflict. Obviously, there's periods of high and low average levels, so it's not a strict conservation. But there does seem to be a rough equilibrium, created by forced pushing in opposite directions. When the background level of tribal conflict gets too low, people seek it out. But when there threatens to be too much, some of the people who were previously tribal enemies become acceptable again.

In terms of the first, there are some wars in history that are simply difficult to explain, even in hindsight. For instance, the War of 1812 between Britain and America. Be honest, have you ever read a succinct account of what the hell it was all about? Here’s Wikipedia:
The United States declared war for several reasons, including trade restrictions brought about by the British war with France, the impressment of as many as 10,000 American merchant sailors into the Royal Navy, British support for Native American tribes fighting European American settlers on the frontier, outrage over insults to national honor during the Chesapeake–Leopard Affair, and interest in the United States in expanding its borders west.
 Ooookay. That sounds totally incoherent. Compare it to the far more compelling account from The War Nerd's excellent series 'The 12 Days of 1812'
So why go to war with a great power when you know it’s in a bad mood? And Britain was in a very, very bad mood in the early 19th century, scared out of its wits by France, creeping democracy, disrespectful servants, and the whole revolutionary trend.
Mostly because the US was in a good mood--too good for its own good. We had a big birthrate—rich families were bigger than poor families in those days, partly because more of their kids made it to adulthood—and that made for a lot of young, ambitious “gentlemen” who wanted to add “officer” to their resumes, and “wartime officer” at that.
We went to war because we (meaning, as the academics would say, “a handful of wealthy white males, bla bla bla”) wanted to. The happiest memories anybody had were the stories—not always totally factual, naturally—of how we kicked British ass in Washington’s day. Most of the elite still had a vaguely pro-French feeling, thanks to the French saving our ass in the Revolution, and not in the mood to excuse all the Royal Navy’s high-handed behavior. America knew it was much bigger and stronger than it had been in 1780, and wanted everybody to know it. Nothing like a war to make an impression.
Lastly, the factor you won’t see mentioned in any of the standard list: War envy. You see this a lot when a war goes big: everybody wants to get in on it. Later, they usually want to get out, but it’s too late then. War meant much more to most upper-class Americans in 1812 than it does now. Decent families were supposed to produce officers, and officers wanted battle creds. Everybody in Europe was getting them; they’d been at it for 20 years, in fact. It was just plain time for another war. The Brits were overextended and impolite; Canada was there for the taking, or looked to be; and a whole new generation of Americans who’d had to listen to dad’s and granddad’s stories about Lexington and Saratoga wanted some material of their own, to bore their grandkids with, the way God intended.
Brecher, who knows more about the psychology of these matters than the vast majority of writers on the subject, is dead right. It's not that the listed casus belli weren't somewhat involved. It's just that they don't add up to a coherent explanation without a significant component that basically amounts to 'people just wanted it to happen'.

And on the flip side, among the odd if largely unremarked developments of the second half of the 20th Century is the enormous decline in military antagonism between European nations. Contra the bureaucrats in Brussels, the prospect of a war between the major European powers is incredibly remote, EU or no EU. There simply isn't the anger for it any more.

As the rising tide of diversity brought more and more minorities into Europe, the primary tribal conflict was completely transformed. The nativists who might have previously been agitating for war with France or Germany, who were the traditional tribal enemies, now had their entire focus absorbed by third world populations in their midst. Correspondingly, the globalist left was far more concerned with destroying nativist opposition at home than with fighting other countries. As the progressive elites pushed further and further into continent-wide alliances to advance the EU idea, the conservatives and nationalists realised that they actually had a lot in common with the nationalists from other countries.

Partly this is just a matter of tactics - if you try to fight everyone at once, you inevitably lose. But still, the idea that nativists in lots of European countries would be all allied with each other, rather than agitating for wars against each other, would be highly surprising to Europeans 100 years ago. As indeed would the currency of the idea 'European' itself. One might be British or German or Polish, but nobody was just 'European'. You can only do so when there is a real, non-European group against which to distinguish yourself.

And this suggests something puzzling about the pan-European nationalism of people like Richard Spencer. Specifically, suppose Spencer et al actually get their way, and the European nations revert to being comprised mostly of people ethnically associated with that region - Anglo-Saxons in Britan, Teutons in Germany, etc. Don't ask me how this happens, but just assume it. What do you think would happen next?

My guess is that there's a good chance that the pan-European sentiment would quickly dissolve without the glue of intra-country conflict to hold it together. The European countries would soon end up a lot more antagonistic to each other than they are now. We had a period where Europe was filled with only white people, and 'pan-European nationalism' sure isn't the way to describe the prevailing mood at the time'. Maybe it would be different this time around, but would you bet on it? And if so, why?

At heart, starting up another tribal conflict it would be the only way to keep the game going. Nativists want to fight other tribes. Globalists want to fight nativists, and feel virtuous by defusing the nativist/outgroup conflict (as they see it). But everyone involved needs there to be a tribal enemy in order to be able to enjoy playing their part in the game, which is the only thing they all agree on.

The economists will tell you that we can't have world peace and disarmament because it creates massive incentives for one country to defect and invade everyone else.

But the psychologists might add another reason. We can't have world peace and disarmament because people would get bored and start conflicts up again.

Sunday, January 22, 2017

The Birth Control Basilisk

An ongoing question I've talked about a few times before is that at least some of our toughest social problems are really technology problems. That is, not problems of a lack of technology, but of a surfeit of neutral or even beneficial technology which is having unexpected negative side effects. Mass illegal immigration is mostly a problem of cheap transport, for instance.

I mostly think about the declining birthrates in much the same way as I think about the increase in obesity (which deserves its own post for sure). Specifically, that technology has produced an environment so unlike that to which we’re evolutionarily adapted that people’s instincts no longer produce reliably good outcomes.

In other words, reliable contraception and abortion has been like a basilisk. It short circuits what had previously been a very successful evolutionary adaption which used to have high reproductive fitness. It leaves humans like the moth circling the light bulb, thinking it is the moon and flying in circles until it drops of exhaustion.

What are the instincts that people have with respect to children and reproduction?

1. People have a very strong, uncomplicated and concrete desire to have sex, ideally right now. They don't need marketing campaigns to make them want to do this. Oddities like Japan aside, people seem to have no problem getting laid.

2. People have a somewhat strong, but quite complicated, abstract and malleable, desire to have children, at some point in time.

3. People have a very strong, uncomplicated desire to love and care for the children they have.

#2 and #3 are deliberately split into two parts. As the great Gary Becker put it, you don't love your children as much as you learn to love your children once they arrive. There was usually the option to have one more child, which you chose not to do, often as part of a quite sensible cost/benefit tradeoff. Of course, if people had an unplanned pregnancy and had another child anyway, they'd still love and care for the child. But the fact that each child gets loved intensely once it arrives doesn't cause people to want as many children as possible. The love only kicks in after they arrive, and the prospect of loving another child in the abstract does not exert nearly the same overwhelming pull.

In other words, traditional reproduction worked primarily through #1 and #3. A strong desire to have sex ensures children are produced with fairly high regularity, because birth control is either non-existent or unreliable. A strong desire to care for children once they arrive ensures they live to adulthood if resources allow. #2 served mostly as a general background reinforcement. This is the environment we all lived in from 10 million BC until the 1950's or so.

The whole idea of it being a contentious question whether you chose to have kids or not is, as far as I can tell, a shockingly recent question. If the only way you could so choose would be to either a) not get laid, or b) rely on methods that require practice, discipline in the heat of coital moment, forward planning and/or health risks, the discussion would be largely moot.

With birth control, childbirth has been largely disconnected from being a necessary consequence of getting laid. It seems that most unplanned pregnancies are teenagers who are still learning the ropes of birth control, the very poor who simply can't afford it, or people with very low forward planning skills. But regardless of how you cut it, in the modern era it is very easy to take precautions that mean you can have sex for an extended period and not get pregnant.

As a result, we’re now expecting the second, weaker desire to do the job where previously the heavy lifting was done by the first. You have to choose to have children. Is it a wonder that this doesn’t wholly succeed?

This doesn't mean that the problem is impossible - social pressure can be a powerful force, if the right motivations and incentives are set up. But make no mistake, we're expecting new social engineering to reproduce a result that was previously done just by our evolutionary adaptions.

I suspect that we are only recently finding out that the majority of human survival and reproduction was actually driven by unplanned or unwanted pregnancies. We now suffer from a want of unwanted pregnancies, and we don't know how to make up the difference.

Wednesday, January 11, 2017

The Leader as King, the Leader as CEO

Of all the ideas in Unqualified Reservations, perhaps the one I found most compelling is the comparison of the state with a corporation.

In the Moldbug view, the state, in any meaningful sense, already is a corporation - a group of individuals working for a shared purpose under an agreed-upon structure. It's just that the modern democratic state is a very oddly run corporation. This was satirised very well in the Moldbug theory of rotary management, where he described how bewildering democratic governance would look if applied to a regular company.

But behind the parody was a serious, and brilliant, point. Most educated people in the west think that the way we run corporations is approximately optimal, given their tasks. That is, being run with dispersed shareholders separate from the customer base, elections of board members who appoint an all-powerful CEO who is subject to board dismissal, and a share price to monitor performance. And most educated people in the west similarly think that the way we run governments is approximately optimal, given their tasks - that is, with democratic elections, a permanent civil service, judicial review etc.

But it is not at all clear that the tasks of the two organisations are that different. And since they are governed in such totally different ways, if you think that they are both optimal, it is incumbent upon you to explain what specifically about the differences between the organisational tasks requires such totally different structures.

The Moldbug answer is quite simple - there is no difference. Companies fill essentially similar functions to countries, and we can thus judge the expected success of difference governing structures by the relative success of different company structures. Sovereign corporations would likely outcompete sovereign democracies, in much the same way that regular corporations outcompete co-operatives (which is approximately what democracies are, but with more dysfunction). They just haven't been tried.

But there is another aspect to this metaphor that gets less emphasis.

Suppose we have a family-owned firm. All the shares are owned in their entirety by the male head of the family, the father. The father is both the sole shareholder and the CEO. He passes both the CEO position and his equity stake, simultaneously, to his eldest son upon his death. In this corporation, the two roles are inextricably linked by company by-laws - if at any point the father ceases his role as CEO and transfers it to someone else, then the shares and any cash flow rights are transferred to his successor, except those periodic payments given as a gratuity by the new CEO who may keep him on as an informal adviser. This has some beneficial effects, since the principal-agent problem is basically solved - the CEO now has the strongest possible incentives to maximise the value of his shares.

The father does not have to make every single decision - as CEO, he can hire advisers and delegate certain decisions, but ultimate authority must remain with him in order for him to retain his ability to reap the profits of the company. As both CEO and sole shareholder, there is no board to either evaluate his performance as CEO, or provide external opinions - the only opinions he will hear are those of subordinates directly employed by him, and who may be fired by him at any moment. Indeed, as CEO he is wary of delegating too much, lest people misinterpret these actions under the company by-laws as meaning that his delegate is actually the new CEO and shareholder. As a result, it is hard for him to reap the profits of the company without actively managing it. At first this works okay, but he has to keep doing this even when he is old and feeble - retirement means losing his equity stake.

Because the CEO must hold all the shares, he is prevented from raising outside equity. If he wants to raise capital for a project, only debt financing is available. As a result, if the CEO has a firm that is short in pledgeable assets, he may find it difficult to raise external funds for capital projects. This occasionally makes it difficult for him to ward off competitor firms.

While the father naturally has affection for his son and successor, he loves his other children too, and ideally would like to arrange to transfer his shares to a formal trust to provide for all of them. Unfortunately, company by-laws prevent the shares from being transferred to a trust. Most of the time, he can rely on his oldest son to treat the rest of the family fairly well, but it's always a gamble. In addition, he occasionally suspects that the total profits would be greater if he transferred power to his smarter, younger son, rather than his oldest wastrel son. But the by-laws are fairly strict on that point.

Every so often in the corporate history, the father becomes completely evil, incompetent, or mad. Since this threatens not only the value of his shares, but the livelihoods of his senior employees and the welfare of the customers, they occasionally take drastic action. But since the by-laws don't allow for the removal of a bad CEO, and since there's no way for the CEO to transfer control without impoverishing himself, this usually means that the current CEO has to be killed. Since this is a risky move, which the current CEO has the highest conceivable incentives to prevent, it's only attempted in the most dire circumstances.

There are other unscheduled transfers of power. Sometimes, the eldest son gets impatient, and kills off the father. Sometimes, a junior son will kill off the eldest in a deniable manner, in order to be further in line for the CEO job. You'd think that the by-laws would explicitly preclude someone from benefiting in this manner, and the shares and CEO job would be taken away, but oddly this isn't the case.

Because the parallels are more straightforward, and because I lack the cleverness and imagination of Moldbug, it's probably quite apparent that I'm describing a simplified version of absolute monarchy. I have defended absolute monarchy before, and think that it probably worked a lot better than people today tend to think. But like before with democracy, we can use the history of corporate governance to judge the merits of monarchy versus neocameralism, or sovereign corporations.

Reader, suppose that we unleashed our monarchical corporation into the world, to compete with the firms in the S&P 500. Do you suppose it would succeed? True, it has its advantages. If it started in office with a great CEO, it might do quite well for a while, since it wouldn't suffer from the standard principal agent problems of managers empire-building, or enriching themselves at the expense of shareholders. But how long do you think such an arrangement would last, especially past the first CEO? Most CEOs, even good ones, are only at the top of their game for a short number of years, and when they screw up, they have to get replaced by someone else, who is picked from among the top managers across the whole planet. The advantages here are fairly plain.

It seems quite apparent that our monarchical firm would struggle to compete. Most of the world's successful coprorations have structures that are nothing like the one we describe above. They look more like our regular, familiar public firms.

"But," you may protest, "there are successful family firms too!"

This is true. In the world today, there are large, successful family-run firms. But they tend look more like regular public companies than our monarchical corporation. Many of them are publicly traded as well, like Wal-Mart, with the family retaining only a controlling stake. Out of the rest, the shares can be distributed across family members or held a trust. The CEO job can be kept within the family, or transferred to an outsider (even if the outsider is "adopted" into the family, like in Japan). The firm can raise equity financing.

And for the families that own such firms, they don't seem to be in a huge hurry to change their corporate by-laws to those of a monarchical corporation. By revealed preference, they seem to prefer more modern arrangements.

Out of the various aspects of an absolute king, it seems beneficial that the executive has absolute authority over personnel, budget, operations, and other kinds of organisational decisions. Divided power in this regard mostly just causes problems and inefficiencies. But the linking of absolute organisational authority (which both the King and CEO share) with sole inalienable equity ownership (which only the King has) is not nearly so obviously beneficial. And the process of removing a bad CEO seems far preferable to the process of removing a bad king.

Moreover, if the CEO is not to be the sole shareholder, then it seems misguided to make the CEO the sole judge of his own performance. Having a board, who lacks any major organisational authority except the power to appoint and remove the CEO, along with other major structural changes, seems fairly benign as far as divided power goes, and is very beneficial in the event that you need to change the CEO. It's possible that the board might become meddlesome, but most of the charges against boards made by economists are that they rubber stamp the CEO's decisions too much, not that they're overly combative.

And finally, dispersed shareholders also go a decent way to combating the problem of an owner with perverse or evil preferences. When the sole shareholder in a country is the king, it's possible that the king just has preferences for evil, nasty stuff. Sure, he'd like more profit, but perhaps he's more interested in droit du seigneur, even though it's value-destroying and the citizens hate it.

But if we take the preferences of a multitude of shareholders, and ask what set of preferences can they agree upon, it's typically to just get paid more. In other words, maximise dividends, and let each shareholder buy whatever he wants. There's not usually cross-subsidisation of shareholders in their purchases from the company. It's possible that shareholder citizens in a sovereign corporation might also vote for droit du seigneur, but it seems easier and cheaper to just get hookers or groupies with the extra dividends.

Sovereign corporations have their problems, no doubt. But if your plan for how you'd like a government to be run varies wildly from how you'd like a regular corporation to be run, then you at least want to know the specific reasons why, lest the ghost of William of Occam haunts your country's fortunes.

Thursday, December 22, 2016

On Power and Coordination

Occasionally, as Paul Samuelson once noted, one is tempted to write something that one can’t decide whether it’s something important, or something completely obvious. So it is here – if in doubt, go with humility and bet on the latter.

Power, in general, is the ability to impose one’s own preferences on somebody else, overriding whatever the person’s own preferences are.

So how does that come about?

It seems that there are two main ways.

The most straightforward way is to have some attribute that the other person lacks – in other words, there can be inherent differences between people. You can be stronger, or smarter, or better looking, or trained in a specific skill. This is the simplest form of power – the bully. I am stronger than you, therefore I can impose my will upon you. This kind of power is readily apparent, and understandable instinctively even to small children.

But this only gets you so far. Think about Hillary Clinton. She came close to having the ability to annihilate most of the human race with nuclear weapons. On what personal attributes did this arise? She has a certain wily cynicism, and a will to power. But she is so frail that she could barely stand up. She is so unlikable that even those voting for her now admit that nobody really liked her. She’s above average intelligence, but you could take a randomly chosen math professor from a top 200 college in the US and they’d be considerably smarter. So something is missing.

Indeed, there is a second, and broader way.

Most power comes from coordination.

Coordination at heart, is the power of other people’s beliefs. The belief among the members of a group that they will all act together, or all act at the command of a leader. The belief of the dominated group that they will be punished severely for any resistance.

The simplest form is cooperation – an explicit agreement to help each other out. This can create power even if everyone is otherwise equal. A criminal gang combined creates much more power for each of its members than they would have if they were acting alone. Four people together can gang up on another person while taking much less damage than one quarter of what they’d sustain in a one on one fight. So they have a force multiplier –the gang of four can win more than four uneven fights.

With basic co-ordination, the equivalent of ‘having inherent strength’ is having the power of numbers –inherent attributes and coordination are complements, as people generally want to coordinate with the strongest person. But co-ordination can outstrip inherent differences in numbers quite easily. Four bullies in a schoolyard can terrorize the entire rest of the student body, even though the latter are much more numerous, and their combined strength is greater. This is just another way of saying that if everyone else could coordinate, they would actually hold the power. How do they do that? How do they agree to a plan, and get everyone to stick to it? It seems like such a trivial thing to surmount, but it is in fact the entire thing.

Or if that’s trite, how did the ~35% Sunni population of Iraq rule over the ~65% Shiite population for so long? It could be that the Sunnis are better fighters, but the subsequent developments don’t seem to immediately support this – the Iraqi government may or may not survive American withdrawal, but the Shiites successfully expelled the Sunni from Baghdad, and I doubt that ISIS car bombs are sufficient to reverse this.

Beliefs often create self-fulfilling prophesies. When everyone knows that Saddam is in charge, and that dissent is ruthlessly punished, it becomes very difficult for the Shiite to all know when and how to rise up at once (even the first American arrival in 1991 wasn’t enough to generate this). The army will always be co-ordinated in their response, but the mob lacks the discipline and certainty to know that actions will be followed through. So everyone wonders if they start lobbing Molotov cocktails at the police, will the rest of the people join them, or abandon them to the tender mercies of Saddam and his industrial shredders? This uncertainty greatly benefits the incumbent government – that is to say, the better co-ordinated group.

As a result of this, smart leaders worry a lot about preventing opposition groups from organizing. Gary King’s research about Chinese internet censorship reveals that the ChiComs understand this principle very well. Most people seem to think that it’s risky to criticize the government, but this isn’t what actually gets you censored. You can say that a governor is worthless, or corrupt, or a crook. You can say that he’s having an affair, and give the name of his mistress. This kind of information is actually quite useful to the Communist party. Like any organization, they have to measure the performance of their subordinates, and promote the competent. Finding out which local officials are pissing off lots of citizens is something you’d like to know.

What you can’t say, however, is “…and so let’s go protest”. That is what gets you censored. And it turns out this holds true even for positive statements that involve collective action. “Let’s have a rally in support of the new environmental policy” also gets you censored. When lots of people turn up in the streets at once, moods can change very quickly. Remember, co-ordination (where we all think and do the same thing) doesn’t need to be co-operation, where we all explicitly agree to help each other. It’s enough if a single event makes a mob all get angry at once, there doesn’t need to be a central controlling figure or an organized plan.

This paper finally explained to me why the Chinese government was so paranoid about Falun Gong. Aren’t they just a meditation group? Probably, but it turns out it doesn’t matter. If you can get 10,000 people to all turn up at once in Tienanmen Square, you are a potential existential threat to the government, even if all you’re doing is meditating.

This is also the story of the Gulen movement in Turkey. As a mutual advancement society and cult of personality, they had strong loyalty to Gulen and each other. But so did Erdogan’s supporters, and they had the advantage of both the incumbency of government, and a superiority of numbers. So how did the Gulenists come close to pulling off a coup? They held one considerable co-ordination advantage over Erdogan – they knew who all the key Erdogan supporters were, but Erdogan didn’t know who the Gulenists were. This meant that even though Erdogan knew he was being undermined, and had the numbers to crush them, he didn’t know who to strike. So he was strong, but blind.

The story I heard (though all such stories out of Turkey are speculation) was that the key development that took place earlier in the year was that Erodgan had finally cracked the communication system by which the Gulenists were able to communicate with each other. And suddenly the game changed very quickly. Once he knew who they were, the Gulenists were in a tight spot. The story goes that they had to rush forward plans for the coup, because they knew that Erdogan was planning a big purge of them. In some sense, this was obvious – why in God’s name would you start a coup on a Friday night, rather than at 4am? Subsequent events bear this out too – within days of the coup’s failure, there were long lists of people fired or imprisoned. This means that they had at least some of the lists in advance.

But even so, it was a near thing. Because beliefs are fragile, if one can decisively change everyone else’s opinions, the Gulenists could have turned into the Baathists of Iraq, ruling over a much larger population. The key moment, as I wrote about before, was Erdogan’s facetime press conference. By getting the message out to lots of people to take to the streets, suddenly the Gulenists had a much harder time, because the government supporters now had both numbers and co-ordination – the self-fulfilling prophesy of the coup succeeding starts to turn around, people desert, and you end up dead or in prison. Until the last few months, the Gulenists looked like a very savvy model of how to build power to subvert and overthrow a government with a smaller force. Usually, guerrilla movements appeal to the numbers of the people, and their discontent. Almost pulling off a coup without popular support, and without being the army itself, is quite an impressive feat, even if they ultimately failed.

Viewed from this angle, we can suddenly see why formal systems of government are so difficult to achieve, whether this is in the form of an all-powerful king or an all-powerful constitution. Saying that the king will have absolute authority is presuming the conclusion you’re trying to reach. The king doesn’t fight off armies single-handedly, he rules because his subjects believe that it’s in their interests to follow his orders. Does this hold true for every possible order? If the order hasn’t been given yet, it might be hard to say. But if orders stop being obeyed, either he stops being an all powerful king and becomes merely one center of power in the system of government, or stops being king altogether, most likely killed by the general who disobeyed him.

We thus have a basis for Maine’s striking observation about the British crown – that some of its powers were probably lost through lack of use. If the nature of power is people’s beliefs, these are hard to measure. And while past history is a good guide to what people think now, how do you know the world hasn’t changed in the interim? Even the ruling flag must continue to be run up the flagpole from time to time in order to know that people will continue to salute.

Because cooperation requires us to agree upon a plan, it usually requires hierarchy. Somebody is at the top, and gives orders. This way, everyone knows what they need to do. And so gangs nearly always have a leader.

As I noted before, the first king is the king because he is a great leader of men, and able to upset the old order. And these traits get passed on to subsequent generations, giving them a fundamental advantage over other men. But still, subsequent monarchs are primarily the king simply because they are the son of the old king, and everyone believes that this is the basis for government, so orders get obeyed. In this regard, succession planning and institutional rules are very important in maintaining power. Monarchies make this process very simple, as rules of succession are familial and well-laid out. If they create bad incentives, it’s for potential offspring of the king to kill each other, but at least the general populace is relatively well insulated from such issues. One-party states, like the Chinese Communists, sometimes are able to manage the process pretty well. But this usually involves handing over power before the leader dies. Otherwise there’s uncertainty about who will take over, which can lead to infighting and difficulties when the leader dies, or mass purges in the leadup.

Moreover, the orderly handing over of power becomes incredibly important in getting leaders to step aside when the time is right. If there is a strong tradition of treating past rulers fairly, then current rulers will be more willing to step down when they get old and frail. If there is a history that rulers get killed and replaced, the incentive is a to pull a Mugabe, and hang on until they carry you out in a box. In this regard, the most important development of the American revolution was George Washington’s decision to step down after two terms, as it encouraged the other leaders to follow suit, rather than setting up a dictatorship because they knew that if they didn’t, the next guy would do it.

And finally, we have part of an answer to the puzzling fact that major political developments are often entirely unpredicted even a short period beforehand – World War I sweeping away the monarchies, for instance, or the fall of the Berlin Wall. Hemingway's observation about bankruptcy 0 that it happens gradually, then suddenly - is especially true of governments. It turns out that both ‘The government is stable’ and ‘the government has collapsed’ are self-fulfilling beliefs. As a result, discontent builds slowly, but can stay at a high level for quite a long time, because of the incumbency advantage of the self-fulfilling belief in stable government. These kinds of shifts will likely have a substantial degree of randomness to them –an East German official mistakenly announces that the border with West Berlin will be opened immediately, and this sets off an avalanche that brings down the whole system.

In other words, you could be years or months away from a seismic shift in government, and you probably wouldn’t know it.

Change beliefs and you change the power structure, because beliefs are the power structure.

Friday, December 2, 2016

An Economist's Cautionary Note on Free Trade

Among most economists (among whom I count myself as one), free trade is a pretty strongly favoured policy.

The reasons for this are fairly good, and fairly straightforward, in the standard case for free trade.

Under the standard theory, the main basis for the benefits of free trade is comparative advantage. If Australia is relatively more efficient in producing iron ore (that is, if it has a comparative advantage in iron ore), and China is more efficient at producing manufactured goods, then at the country level both Australia and China are better off if Australia specialises in iron ore, China specialises in manufactured goods, and the two countries trade with each other. Then both countries are able to obtain more consumption of each good than they would alone, given whatever initial resources they have. This is an economic benefit, understood since David Ricardo wrote about it in 1817.

If one thinks of the economic units in terms of countries, free trade between China and Australia is Pareto improving. Both countries are made better off, and no one (in this limited model) is made worse off. This is the Holy Grail of economic policy. The optimal level of tariffs is thus zero, as restrictions on free trade harm both countries.

But if one thinks instead at the level of individuals within a country, then free trade is no longer Pareto improving relative to tariffs. In the example above, if I'm a worker in an Australian manufacturing firm which was previously protected by tariffs, and these get eliminated, then I really do get screwed. It's not just complaining - as my firm goes broke, I lose my job, and the previous skills I have are no longer economically useful in my country. Even if I get another job, I likely will have a lower future wage for quite a while, if not permanently.

The steel workers in Ohio complaining about free trade aren't just making it up. Things really did get a lot crappier when tariffs were eliminated.

But economics has an answer here. Free trade isn't Pareto improving, but it is Kaldor Hicks improving. In other words, the total gains to the economy are sufficiently large that the beneficiaries could organise a transfer payment to those who lost their jobs which would made the Ohio steel workers also better off. 

As a matter of political economy, this transfer doesn't actually happen. You'd have to pay the losers from free trade a very large sum of money if they have to transition to years of unemployment, or a permanently lower future income. 

Of course, this isn't really a problem of economics, more just politics. Is it the economist's fault that his prescriptions don't get followed?

So much for the standard theory. It's actually pretty good, as far as it goes. Like good economic proofs, it flows from assumptions to conclusions. If it's wrong, it's because there's something in the model that's being left out, or one of the assumptions is questionable.

There are a number of possible extensions one can make, like depreciating human capital. But to me, it's the base assumptions that are the most interesting. What are they?

We have the following:

1. Consumption is a good. You're better off consuming more goods and services than fewer goods and services, all else equal.

2a. Leisure is a good, or equivalently


2b. Work is a bad.

In other words, for any given level of consumption, you'd rather work less than work more. 

These are not terrible assumptions. #1 seems probably true. You may hit a point of satiation with consumption, but over most ranges of wealth that people operate on, having more stuff beats having less stuff, unless the stuff poses other costs (like screwing up your children, in which case all else isn't equal).

But what about #2?

Going from a 14 hour work day to a 10 hour work day, with the same wages and consumption, is surely an improvement in welfare.

Going from a 10 hour work day to a 6 hour work day, with the same wages and consumption, is also almost surely an improvement in welfare. 

But the big question is the following: is it still an improvement in welfare to go from a 6 hour work day, to a zero hour work day in perpetuity?

In other words, if your consumption stayed exactly the same, would you prefer to have some sort of job, or no job, ever?

You may think work sucks, but be careful what you wish for.

What if it turns out that people actually need some sense of purpose, some reason to get up in the morning?

Admittedly, having a job isn't always a fun purpose. But it's a structure, and a discipline, and a set of people you can interact with, and a routine that, if it works well, results in the satisfaction of providing for yourself.

What would life look like if you had basic consumption needs provided for you, no strings attached, without any need to work?

Well, as it turns out, we have many decades of data on that question. They're on display in a housing estate or ghetto near you. And the results ain't pretty. Ask Theodore Dalrymple, who wrote about this extensively

Every few months, doctors from countries like the Philippines and India arrive fresh from the airport to work for a year's stint at my hospital. It is fascinating to observe their evolving response to British squalor.
At the start, they are uniformly enthusiastic about the care that we unsparingly and unhesitatingly give to everyone, regardless of economic status. For a couple of weeks, they think this all represents the acme of civilization, especially when they recall the horrors at home. Poverty—as they know it— has been abolished.
Before very long, though, they start to feel a vague unease. A Filipina doctor, for example, asked me why so few people seemed grateful for what was done for them. What prompted her question was an addict who, having collapsed from an accidental overdose of heroin, was brought to our hospital. He required intensive care to revive him, with doctors and nurses tending him all night. His first words to the doctor when he suddenly regained consciousness were, "Get me a fucking roll-up" (a hand-rolled cigarette). His imperious rudeness didn't arise from mere confusion: he continued to treat the staff as if they had kidnapped him and held him in the hospital against his will to perform experiments upon him. "Get me the fuck out of here!" 
My doctors from Bombay, Madras, or Manila observe this kind of conduct open- mouthed. At first they assume that the cases they see are a statistical quirk, a kind of sampling error, and that given time they will encounter a better, more representative cross section of the population. Gradually, however, it dawns upon them that what they have seen is representative. When every benefit received is a right, there is no place for good manners, let alone for gratitude.
By the end of three months my doctors have, without exception, reversed their original opinion that the welfare state, as exemplified by England, represents the acme of civilization. On the contrary, they see it now as creating a miasma of subsidized apathy that blights the lives of its supposed beneficiaries. They come to realize that a system of welfare that makes no moral judgments in allocating economic rewards promotes antisocial egotism. The spiritual impoverishment of the population seems to them worse than anything they have ever known in their own countries. And what they see is all the worse, of course, because it should be so much better. The wealth that enables everyone effortlessly to have enough food should be liberating, not imprisoning. Instead, it has created a large caste of people for whom life is, in effect, a limbo in which they have nothing to hope for and nothing to fear, nothing to gain and nothing to lose. It is a life emptied of meaning.
"On the whole," said one Filipino doctor to me, "life is preferable in the slums of Manila." He said it without any illusions as to the quality of life in Manila.

I skipped the most striking descriptions of the problem, because if I started, I'd end up quoting the whole thing. Read it all, if you haven't before.

A question, dear reader.

Do you think the problems of the people described above stem from a lack of consumption? They don't have to do any work, so in a standard model, the only problem left is that they must be consuming too little.

Suppose that Dalrymple is describing his subjects in the above article honestly, and you have two policy choices to consider for the above recipients.

Option A - Increase their welfare payments by 50%

Option B - Find them a not unpleasant job for 6 hours per day, and require them to do honest work in order to receive the same welfare payments as before.

Which of these two policies would result in a larger improvement in human welfare for such people?

In the standard model, the answer is obvious. Given our assumptions, Option A is far preferable. Do you believe that?

Would it change your mind to find out that lower class whites in America (especially in rust belt parts of the US that have been worst hit by job losses from free trade) in recent decades have been so despondent that their life expectancy has actually been dropping as they kill themselves with alcohol, opiates, and suicide?

The standard answer to this is that we have an opiate problem. And a drinking problem. These are "substance abuse" issues. But why now? Alcohol was always there. Why is it only now that people decide there is no other purpose or hope in their lives, and start drinking themselves to death?

To turn these concerns back into the language of economics, the Holmes conjecture is that if leisure is not always a good, and work is not always a bad, then it is no longer obvious that the optimal level of tariffs is zero.

Sometimes, you might prefer to have some restrictions on trade in order to keep jobs in America.

But you have to be honest about why you're doing this.

Targeted tariffs won't raise consumption. They won't spur economic growth. They will lead to more expensive goods, and less consumption. David Ricardo was right on all that. Comparative advantage still exists, and be very wary of anyone who talks about free trade without acknowledging this.

But they might also lead to more employment. And this may well be worth it in terms of the quantity that the economist's social planner is meant to care about, namely total welfare.

It might lead to fewer rust belt whites killing themselves with opiates, because their communities are totally hollowed out with everybody sitting around on welfare without any purpose in their lives.

If steel products cost slightly more as a result, personally that doesn't strike me as the end of the world.

Of course, this is a cautionary note, not a case for tariffs-a-go-go. To say that the optimal level is not zero does not imply that the optimal levels is high, or across-the-board. And it's also not clear that tariffs versus free trade is the only solution to this, or even the best one.

I personally think that automation is a much bigger worry in this regard than free trade. I have similar questions about automation, which also doesn't strike me as everywhere and always welfare improving.

These aren't straightforward questions. If you ban the automobile, we get stuck with horses and carts forever.

And yet... and yet...

The Deaton and Case finding seems to me to be one of the most important findings in social science in recent years, and portends an enormous and growing problem. There are lots of workers who simply do not seem to be economically useful anymore, and in communities where lots of these people have ended up on welfare as a result of the endless grind towards replacement by robots, life is purposeless and miserable.

There are many other purposes that can be fostered - community, charity, art, religion, family.

But until we have a handle on how to solve the torrent of lives being sucked into the abyss of misery, as large as the AIDS epidemic, I remain open to a range of different policies in response.