Towards a genuinely Inclusive, Liberal, and Open Global Agenda

The recent past has been witness to the increasing rise of ‘economic-nationalism’, anti-immigration policies, and increasing xenophobia. Countries which in the past have welcomed immigrants, and have been protagonists of Free Trade and open borders, while immensely benefiting from the same, are becoming more and more insular. While this point got strongly reiterated by the election of Donald Trump. Apart from the US and UK, many of the EU member states and Australia are also becoming more and more inward looking.

Germany and Canada have tried to develop an alternative narrative while being open to immigrants, and opening their doors to refugees. Justin Trudeau in Canada, like Angela Merkel, deserves immense credit for exhibiting courage and conviction and not capitulating before populist and ultra nationalist sentiments.

Both Trudeau and Merkel have opened their doors to refugees, with Trudeau opening his country’s doors to nearly 40,000 Syrian refugees. After the US imposed a ban on immigrants from certain Muslim countries, he tweeted:

“To those fleeing persecution, terror & war, Canadians will welcome you, regardless of your faith. Diversity is our strength #WelcomeToCanada.”

Angela Merkel, Chancellor of Germany, in spite of scathing criticism for her decision to admit over 1 Million refugees, since 2015, from Syria, Iran, and Afghanistan, has stuck to her guns. In an interview, the German Chancellor stated:

“It was an extraordinary situation and I made my decision based on what I thought was right from a political and humanitarian standpoint.”

The rise of the extreme right AfD, which emerged as the third largest political outfit, and which Merkel managed to beat by a lesser margin than usual, has been attributed to Merkel’s open door policy.

Along with Macron and Trudeau, one more leader who is trying to offer an alternative narrative is the Mayor of London, Sadiq Khan, who has started a campaign, ‘London is Open’. Said Khan in his message:

…Many people from all over the globe live and work here, contributing to every aspect of life in our city. We now need to make sure that people across London, and the globe, hear that #LondonIsOpen… 

Not restricted to any ideology or country

It would be pertinent to point out that while the rise of right-wing leaders like Trump and AFD in Germany is cited as one of the reasons for this growing insularity, even left leaning leaders have been equally inward looking, when it comes to economic and trade policies. One thing which was common between Trump and Bernie Sanders was their economic policies, which found resonance with the working class.

Not just Trump

While Trump has emerged as the mascot of ‘insularity’ and economic nationalism, it must be pointed out that not just the US, but other countries which have benefited from immigration, to have tended to look inwards on important issues.

Australia, which has opposed Trump’s withdrawal from the Trans Pacific Partnership TPP and has repeatedly spoken in favour of an ‘open’ Indo-Pacific, has brought in some tough laws to oppose immigration. This includes the abolition of the 457 Visa (for skilled migrants), replacing it with a new visa program which is far more stringent, and will make it tougher for workers from other countries.

Commenting on the abolition of the Visa, Australian Prime Minister Malcolm Turnbull stated:

“The migration program should only operate in our national interest. This is all about Australia’s interest.”

The second point to bear in mind is that some countries have spoken vociferously in favour of trade agreements, and open borders, but have played it safe on important human rights issues and immigration. This includes not just Syrian refugees, but more recently the Rohingya Issue. If one were to take the case of ASEAN for instance, a number of member states including the Chair for 2018, Singapore, have argued in favour of economic openness, and were critical of the US approach towards TPP. Yet, they have been cautious on the Rohingya Issue, not wanting to rub Aung San Suu Kyi the wrong way.

Conclusion

In conclusion, there can  not be a selective approach, countries which seek to benefit from globalization, need to be open to immigrants and at times shoulder onerous responsibilities. After all, it is not just immigrants who benefit economically, but countries which they have migrated too also benefit from their skills and productivity.

Secondly, an enlightened, liberal agenda cannot just be restricted to economic issues, important human rights issues, can not be obliterated and must get the attention they deserve.

Third, it is pointless, to blame any one country or ideology for insularity, everyone shares collective responsibility for the same.

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The Dictator’s Handbook

I recently pointed you towards a book that has turned out to be a compelling and interesting read.

At the end of the day, it’s a straightforward application of public choice theory and evolutionary thinking to questions of power. Easy to understand theory is bundled with data and anecdotes* to elucidate the incentives facing dictators, democrats, executives, and public administrators. The differences between them are not discrete: they all face the same basic problem of compelling others’ behavior while facing some threat of replacement.

Nobody rules alone, so staying in power means keeping the right people happy and/or afraid. All leaders are constrained by their underlings. These underlings are necessary to get anything done, but they’re also potential rivals. For Bueno de Mesquita and Smith the crucial facts of a political order are a) how big a coalition (how many underlings) the ruler is beholden too and b) how replaceable the members of that coalition are.

The difference between liberal and illiberal orders boil down to differences in those two parameters. In democracies with a larger coalition and less replaceable coalition members, rulers behave better.

 

I got a Calculus of Consent flavor from Dictator’s Handbook. At the end of the day, collective decision making will reflect some version of “the will of the people… who matter.” But when we ask about the number of people who matter, we run into C of C thinking. Calling for bigger coalitions is another way of calling for an approach to an effective unanimity rule (at least at the constitutional stage).

In C of C the question of the optimal voting rule (majority vs. super majority vs. unanimity) boils down to a tradeoff between the costs of organizing and the costs of externalities imposed by the ruling coalition. On the graph below (from C of C) we’re comparing organization costs (J) against externality costs (I) (the net costs of the winning coalition’s inefficient policies). The idea is that a unanimity rule would prevent tyranny of the majority (i.e. I is downward sloping), but that doesn’t mean unanimity is the optimal voting rule.

Figure 18.  Click to open in new window.

But instead of asking “what’s efficient” let’s think think about what we can afford out of society’s production, then ask who makes what decisions. In a loose sense, we can think of a horizontal line on the graph above representing our level of wealth. If we** aren’t wealthy enough to organize, then the elites rule and maximize rent extraction. We can’t get far up J, so whichever coalition is able to rule imposes external costs at a high level on I.

But I‘s height is a function of rent extraction. Rulers face the classic conundrum of whether to take a smaller piece of a larger pie.

The book confirms what we already know: when one group can make decisions about what other groups can or must do, expect a negative sum game. But by throwing in evolutionary thinking it shed light on why we see neither an inexorable march of progress nor universal tyranny and misery.

As you travel back in time, people (on average) tend to look more ignorant, cruel, and superstitious. The “default state” of humanity is poverty and ignorance. The key to understanding economics is realizing that we’ve bootstrapped ourselves out of that position and we aren’t done yet.

The Dictator’s Handbook helped me realize that I’d been forgetting that the “default state” of political power is rule by force. The liberalization we’ve seen over the last 500 years has been just the first part of a bootstrapping process.

Understanding the starting point makes it clear that more inclusive systems use ideas, institutions, capital, and technology to abstract upward to more complex levels. Something like martial honor scales up the exercise of power from the tribe (who can The Chief beat up) to the fiefdom (now the Chief has sub-chiefs). Ideology and identity can tie fiefdoms into nation-states (now we’ve got a king and nobility). Wealth plus new ideologies create more inclusive and democratic political orders (now we’ve got a president and political parties). But each stage is built on the foundation set before. We stand on the shoulders of giants, but those giants were propped up by the non-giants around them.

Our world was built by backwards savages. The good news is that we can use the flimsier parts of the social structure we inherited as scaffolding for something better (while maintaining the really good stuff). What exactly this means is the tricky question. Which rules, traditions, organizations, and processes are worth keeping? How do we maintain those? How/when do we replace the rest? And what does “we” even mean?

Changing the world involves uncertainty. There are complex interrelations between every part of reality. And the knowledge society needs is scattered through many different minds. To make society better, we need buy-in from our neighbors (nobody rules alone). And we need to realize that the force we exert will be countered by an equal and opposite force some plural, imperfectly identifiable, maybe-but-probably-not equal, and only-mostly-opposite forces. There are complex and constantly shifting balances between different coalitions vying for power and the non-coalitions that might suddenly spring into action if conditions are right. Understanding the forces at play helps us see the constraints to political change.

And there’s good news: it is possible to create a ruling coalition that is more inclusive. The conditions have to be right. But at least some of those conditions are malleable. If we can sell people on the right ideas, we can push the world in the right direction. But we have to work at it, because there are plenty of people pitching ideas that will concentrate power and create illiberal outcomes.


*I read the audiobook, so I’m basically unable to vouch for the data analysis. Everything they said matched the arguments they were making, but without seeing it laid out on the page I couldn’t tell you whether what they left out was reasonable.

**Whatever that means…

What classes are worth subsidizing?

A friend of mine has a great phrase that captures what’s wrong with about 1/3 of the population. They’re “people who would make good Nazis.” These are the obedient people who are ready to follow orders without thinking without having sufficiently high standards for whose orders they’ll follow.

My question is “what can I do to help my students not fall into this category?” The trouble is that these folks aren’t drawn to intellectual arguments. I need to get them in a more visceral way. I think the answer is art. These kids need to be watching TV shows and movies/shows like Donnie Darko and The Handmaid’s Tale (tell me your favorites in the comments!). They need something that will grab them by the lapels, shake them, and shout “question authority!”

Pragmatic folks (the sort of people who are normally excited to hear what a libertarian economist has to say) would usually think that schools should focus on pragmatic things. It’s certainly a good idea for kids to leave school with some ideas about how to manage their personal finances and research important issues. But the economic justification for subsidies rarely favors such pragmatic topics. Petroleum engineers don’t need their schooling subsidized because they’ll end up getting paid enough to pay off their student loans.

I like to think of myself as a pragmatic person*, but I’m increasingly coming around to the idea that art is worth subsidizing. Even (perhaps) if that means giving money to ridiculous people who argue incoherently against freedom.

Bildergebnis für ned flanders parents

As subsidies go, art is cheap. You don’t need to build anything as complicated as a particle accelerator. You just need to grab some kid out of the nearest Starbucks and give them a few bucks to make something.

You’ll end up paying for a lot of garbage, but life is full of waste (I’d bet good money that any good project involves a good amount of unrealized potential savings that are only obvious after the fact). For that matter, you’ll almost certainly do some degree of harm. If we threw money at art departments (the way we did with STEM departments during the cold war) the money spent on Che shirts could easily fuel the western hemisphere by attaching a generator to Guevara’s spinning corpse.

And the benefits will be vague and arguable. I’m not in the business of selling bonafide snake oil; this idea isn’t a magical cure-all.

In fact, the more you try to measure the benefits, the less benefit you might get. If we could measure important but intangible things like decency and thoughtfulness, we’d already have those things. But when we try to come up with proxies for important things, those proxies quickly become bad proxies. All the more so if we try to reward people for measurable achieving our goals. Funding should be unconditional (and focused on production rather than selection) if we want to avoid funding propaganda. We almost certainly will be funding propaganda, but if humanity is really worth saving, it’s a baby/bathwater tradeoff.

I’ve just spent three paragraphs convincing you that this might be a terrible idea. But I still think the net benefits could justify the cost. Imagine some imperfect estimate of the impact and an even more imperfect measure of the value created. What will we get out of this (on average)? In a word: more. More novels, web comics, paintings, podcasts, and films.

And with more art, there’s more cream to rise to the top. The best art typically encourages thoughtfulness and empathy. This is a “let a thousand flowers bloom” approach that would (at relatively low cost) saturate the public sphere with enough semi-thoughtful stuff to force usually-thoughtless people to think more clearly about the world around them.

If** we can subsidize free thought, this is how we’ll do it. And if it’s possible, it’s worth doing in a world where we clearly have too many people who would make good Nazis.


*If that was really true I’d work in a bank.

**Do I really think this would work? I’m not remotely sure. But I think it’s an idea worth discussing. I teach economics because I hope the marginal return (in terms of improving the “civic quality” of my students) is high. But it feels Sisyphusian at times, and some students are clearly not ready to get it. I worry that they’ll go out into the world ready to follow any maniac’s orders. In terms of the stability of a free and peaceful society, doing something about those people seems important.

What if we have already been ruled by an Intelligent Machine – and we are better off being so?

Common people and even reputed scientists, such as Stephen Hawking, have been worrying about the very menace of machines provided with Artificial Intelligence that could rule the whole human genre in detriment of our liberty and welfare. This fear has two inner components: the first one, that the Artificial Intelligence will outshine human intellectual capabilities; and the second one, that the Intelligent Machines will be endowed with their own volition.

Obviously, it would be an evil volition or, at least, a very egotistic one. Or maybe the Intelligent Machines will not necessarily be evil or egotistic, but only as fearful of humans as they are of machines – although more powerful. Moreover, depending on their morality on a multiplicity of reasonings we cannot grasp, we could not ascertain whether their superior intelligence (as we suppose the feared machines would be enabled with) is good or evil, or just more complex than ours.

Nevertheless, there is still a additional third assumption which accompanies all the warnings about the perils of thinking machines: that they are a physical shell inhabited by an Artificial Intelligence. Inspired by Gilbert Ryle’s critique of Cartesian Dualism, we can state that the belief of Intelligent Machines provided with an autonomous volition rests upon the said assumption of an intelligence independent from its physical body: a self-conscious being whose thoughts are fully independent from the sensory apparatus of its body and whose sensations are fully independent from the abstract classification which its mind operates by.

The word “machine” evokes a physical device. However, a machine might as well be an abstract one. Abstract Machines are thought experiments compounded by algorithms which delivers an output from an input of information which, in turn, could be used as an input for another circuit. Theses algorithms can emulate a decision making process, providing a set of consequences for a given set of antecedents.

In fact, all recent cybernetic innovations are the result of the merging of abstract machines with physical ones: machines that play chess, drive cars, recognize faces, etc.. Since they do not have an autonomous will and the sensory data they produce are determined by their algorithms, whose output, in turn, depends on the limitation of their hardware, people are reluctant to call their capabilities “real intelligence.” Perhaps the reason of that reluctance is that people are expecting automata which accomplish the Cartesian Dualism paradigm of a thinking being.

But what if an automaton enabled with an intelligence superior to ours has already existed and is ruling at least part of our lives? We do not know of any being of that kind, if for a ruling intelligent machine we regard a self-conscious and will-driven one. But the ones who are acquainted with the notion of law as a spontaneous and abstract order will not find any major difficulty to grasp the analogy between the algorithms that form an abstract machine and general and abstract laws that compound a legal system.

The first volume of Law, Legislation, and Liberty by Friedrich A. Hayek, subtitled “Norms [Rules] and Order” (1973), is until today the most complete account of the law seen as an autonomous system, which adapts itself to the changes in its environment through a process of negative feedback that brings about marginal changes in its structure. Abstract and general notions of rights and duties are well-known by the agents of the system and that allows to everyone to form expectations about the behaviour of each other. When a conflict between two agents arises, a judge establishes the correct content of the law to be applied to the given case.

Notwithstanding our human intelligence -using its knowledge about the law- is capable of determining the right decision to each concrete controversy between two given agents, the system of the law as whole achieves a higher degree of complexity than any human mind might reach. Whereas our knowledge of a given case depends on acquiring more and more concrete data, our knowledge of the law as a whole is related to more and more abstract degrees of classifications. Thus, we cannot fully predict the complete chain of consequences of a singular decision upon the legal system as a whole. This last characteristic of the law does not mean its power of coercion is arbitrary. As individuals, we are enabled with enough information about the legal system to design our own plans and to form correct expectations about other people’s behaviour. Thus, legal constraints do not interfere with individual liberty.

On the other hand, the absolute boundary to the knowledge of the legal system as a whole works as a limitation to the political power over the law and, thence, over individuals. But, after all, that is what the concept of rule of law is about: we are much better off being ruled by an abstract and impersonal entity, more complex than the human mind, than by the self-conscious -but discretional- rule of man. Perhaps, law is not at all an automaton which rules our lives, but we can ascertain that law -as a spontaneous order- prevents other men from doing so.

Words on the Move

I just listened to a recent(ish) episode of Econ Talk: John McWhorter on the Evolution of Language and Words on the Move.

I particularly enjoyed this episode because:

  1. Emergent order (duh!).
  2. It shed new light (for me) on a category of words that serve a function but don’t really mean anything. “Well” doesn’t really mean anything. Well, sometimes it means a hole filled with water, but in this sentence I’m using it as a “pragmatic.” Other pragmatics like eh, and huh feel like filler, but they’re really a part of oral communication where the speaker can casually and non-disruptively check in with the listener. Pretty cool, huh?
  3. And the discussion of accents was interesting in light of an experience I had just the other day. I’ll get to that at the bottom, but let me set the stage…

I’ve been particularly aware of my own accent since a young age because kids have always been quick to point out how different I’ve always sounded. At around age 7 I moved from the prairies to southern Ontario and I remember some kid asking me if I was British. They might have been picking up on regional variation in the Canadian accent, or it might be that my accent was affected by the movies and TV shows I had watched to that point (I suspect watching Monty Python at a young age deeply affected me).

Later (aged 17) I moved from Canada to Texas where I worked very hard to ditch my Canadian accent and gain some Southern drawl. When I moved to California I kept trying to lose the Canadian parts of my accent but gave up on trying to gain the drawl. When I moved to Boston I picked up some affectations that now makes me stand out on Long Island. I drink kahfee instead of quofee, but since I never did like the mwahll, my pronunciation of “mall” is probably the slightly-off version I would have picked up in my youth.

The other day I was talking to a student and noticed something especially bizarre–as our conversation moved from seafood (note to self: soak calamari in buttermilk for 3 days) to boar hunting I found myself involuntarily moving back into my Texas voice! (You’ve probably already guessed that this was an econometrics student.) I have zero experience with hunting, but I had to suppress this reflexive change in my accent. Somehow, all the automatic processes in my brain have lined up in such a way that made it clear that not only do I have a lot of tacit knowledge, but I even have unseen triggers for how I communicate.

India-US relations and engaging with Trump

Ivanka Trump jointly inaugurated the GES Summit in Hyderabad (November 28-29) along with Prime Minister Narendra Modi, and she lauded the latter for his phenomenal rise. Modi had invited Ivanka during his US visit in June 2017. The US President’s daughter and Adviser was quick to accept the invite, and tweeted:

Thank you, Prime Minister Modi, for inviting me to lead the U.S. delegation to the Global Entrepreneurship Summit in India this fall.

During her address, Ivanka also highlighted India’s economic achievements in recent years, while also praising the country’s democratic credentials.

Said Trump:

‘You are celebrating it as the world’s largest democracy, and one of the fastest growing economies on earth…Through your own enterprise, entrepreneurship, and hard work, the people of India have lifted more than 130 million citizens out of poverty – a remarkable improvement, and one I know will continue to grow under the leadership of Prime Minister Modi.’

Why India reached out to Ivanka

By reaching out to Ivanka Trump, India has done the right thing, given the fact that all countries – including China, Saudi Arabia, Japan, and South Korea – have realized the importance of business interests, as well as personalized diplomacy with Trump.

Every country has to recognize its own interests, and the Trump Administration has been quite vocal on a number of issues including its tough stance on terrorism emanating from Pakistan, as well as a larger role for India in the Indo-Pacific. The US President, during his recent visit to Asia used the expression Indo-Pacific on more than one occasion (as opposed to the earlier expression Asia Pacific), while US Secretary of State Rex Tillerson has also spoken for a greater role for India in Asia Pacific. China took strong exception to the usage of ‘Indo-Pacific’ as opposed to Asia Pacific.

It is important however to bear a few points

First of all, while those who support Trump praise him for being a realist, at times what is dubbed as his transactionalism is a bit too simplistic. The US President is also not just unpredictable, but fickle. While some unpredictability is good, there are limits to this. Trump’s approach towards China, as well as other serious issues is a strong reiteration of his fickleness. While during his election campaign he used harsh language for Beijing, said Trump during an election rally in 2016:

‘We can’t continue to allow China to rape our country, and that’s what we’re doing.’

The warm reception he received in China was enough for Trump, to not only praise the Chinese, but even criticize previous US governments. While he lambasted Pakistan in a speech in August, a few weeks later he was all praise for the Pakistan army, after it helped in rescuing an American-Canadian couple who had been kidnapped by the Haqqani terrorist network. While rigidity is not good in diplomacy, and election campaigns do not translate into policy actions, it is important to understand the broad thrust of the US foreign policy.

It is not just policy issues, but even his relations with key members of his cabinet which are important to watch. The latest instance being of Rex Tillerson, the aforementioned Secretary of State who has tried to adopt a more realistic stance on issues like Iran. If Tillerson is changed as is being speculated, other countries who have built a strong rapport with him and sought to understand his orientation will need to now start from scratch.

Second, Trump is more inward looking than earlier Presidents, and that is advantageous for China in the strategic sphere, especially in the context of Asia.

While the Chinese will humor him through sweeteners such as FDI commitment, and this will help in influencing not just Trump, but even some of his key advisers like Jared Kushner, ultimately Beijing will have the last laugh in the strategic sphere, especially in the Indo-Pacific region. A number of countries in ASEAN have already subtly expressed their reservations with regard to Trump’s isolationist approach towards not only Asia but the rest of the world.

Third, unlike his predecessors, including Obama, Trump has no strong convictions with regard to democracy. While it is true that every country should see its own interests, a lot of countries have been more comfortable with the US because of the emphasis it places on democracy and civil liberties. During his recent visit to Myanmar for instance, Tillerson did refer to the Rohingya Issue, and the need for the NLD government to ensure the well being of the Rohingya committee.

Democracy and plural values drive the bilateral relationship between many countries , and in the context of India and the US, these should not be kept out. If Trump is totally indifferent to the nature of regimes, there is not much to distinguish the US from China, and American indifference towards issues such as democracy and civil liberties will only reduce an important component of its Soft Power.

What India needs to do

It is thus important for India to use innovative ways for reaching out to Trump, but also have a clear stand on key foreign policy issues. The Quad alliance (US, Japan, Australia and India), for instance, is important with Japan and Australia taking a clear stance against Chinese expansionist tendencies. While the US is part of this alliance, it is tough to predict whether the Trump Administration will really play a pro-active role, especially if Beijing objects to the alliance.

Similarly, India is doing the correct thing by maintaining an independent stance on Iran given its own strategic and economic interests. The Chabahar Port Project, which India is funding, is India’s gateway to Central Asia and Afghanistan, and by going ahead with the project even with the souring of ties between Washington and Tehran it has sent a clear message that it will not blindly tow Washington’s line.

In conclusion, while New Delhi has to see to its own interests, and explore synergies with the Trump Administration, there are likely to be some significant challenges given Trump’s simplistic approach towards complex issues, and the lack of any sort of consistency.

Lunchtime Links

  1. Delacroix in Morocco | Delacroix in Mexico
  2. The Jews in Europe | The Jews in Europe
  3. Barbarianism ain’t that bad | Barbarian liberty
  4. Why did we start farming? |  Why farms die (and should die)
  5. Daily hell of life in the Soviet bloc | reading Bertrand Russell