Author: Brandon Christensen

Financial Literacy Test

Brandon Christensen Current Events ,

I’ve been studying (a bit too long, to be honest) for the GRE and the LSAT (just in case…) over the past little while and as a result I have been more focused on testing and the logic behind it. I recently came across a financial literacy test (h/t Alex Tabarrok) that I think is worth taking.

After Warren’s trick question is the ‘comments’ threads, I was a little bit worried that my reasoning skills had abated but fortunately I got five out of five on the short test (and I’ve never even wanted to deal with mortgages!).

How’d you do?

From the Comments: A Puzzle About Percentages

Brandon Christensen Comments , , , ,

Dr Gibson hands out a tough quiz in the ‘comments’ thread of Jacques’s latest post on comparative advantage:

Quiz: last year I earned no money from writing. This year I expect to make $5,000. By what percentage will my writing income have risen?

Jacques is stumped. I am too, but I think I’ll take a stab at it anyway. The worst that can happen is that I’m wrong, right? Warren, by the way, has a PhD in engineering as well as an MA in economics, so math is his forte (he is also the math reader for Econ Journal Watch).

I speculate that the percentage of his writing income has risen by 100%. I don’t see how it could be anything else. If you start out at zero, then even if Warren only made $1 this year an increase from $0 to $1 would have to be 100%, right?

Am I right? I need help.

Digression: Jacques is right that the Romans got along fine without the zero, but that’s not saying much. Here is Tocqueville:

If the Romans had been better acquainted with the laws of hydraulics, they would not have constructed all the aqueducts which surround the ruins of their cities – they would have made a better use of their power and their wealth. If they had invented the steam-engine, perhaps they would not have extended to the extremities of their empire those long artificial roads which are called Roman roads. These things are at once the splendid memorials of their ignorance and of their greatness. A people which should leave no other vestige of its track than a few leaden pipes in the earth and a few iron rods upon its surface, might have been more the master of nature than the Romans.

Neoliberalism: When French philosophy thinks about American economics

Brandon Christensen Economics, History, Philosophy , , , ,

From an economic perspective, the vision of man becomes very, very poor. Man is a being who responds to stimuli from the environment, and we can modify his behavior with a choice of stimuli. And what government is, what power is, is the use of different kinds of stimuli. The economic theory gives a set of tools, a “good manner” to use stimuli to obtain the right comportment. In this respect, the result of the theory, perhaps, is to produce a vision of man that is very impoverished.

This is French philosopher François Ewald taking a moment away from his task of explaining Foucault’s thoughts on Gary Becker’s work to elaborate his own thoughts on the discipline of economics. Read the whole thing (pdf). It’s a short paper on Michel Foucault’s thoughts about American liberalism (or neoliberalism) and particularly Gary Becker’s work.

Change is on the way in India, but is this a good thing?

Brandon Christensen Current Events, Politics , , , , , , ,

From Niharika Mandhana in the Wall Street Journal:

India’s voters chose a Hindu-nationalist, pro-business politician to be their next prime minister—tossing out the party that has led the country for most of the past 67 years in a historic political realignment.

Riding a wave of voter discontent with the incumbent [and hard Left-wing] Congress party and a sharply slowing economy, the Bharatiya Janata Party [BJP], led by Narendra Modi, was on track Friday evening to win 282 of the 545 seats in the lower house of Parliament[…]

If so, it would be the first time in three decades that a single party has won so decisively and captured an outright legislative majority, something that would give the BJP a strong position from which to push its governing agenda.

And what, exactly, is the Hindu nationalist and pro-business BJP’s governing agenda?

Mr. Modi hasn’t detailed his economic plan, but in a country with a strong legacy of state economic control, his slogans for small government, private enterprise and reduced bureaucracy have excited pro-market economists and given Mr. Modi a right-of-center image.

Still, Mr. Modi and his party’s economic agenda is far from clear. The BJP, for instance, is unlikely to roll back expensive food subsidies and opposed foreign investment in the retail industry […] But economists and analysts expect Mr. Modi will try to rein in India’s famed bureaucracy, and stimulate international trade and investment in other areas. On the campaign trail he has talked about rolling out a “red carpet” for business rather than “red tape.”

I think Prime Minister Modi will probably not be able to get through India’s massive  parliament as easily as his supporters hope. On foreign policy Mandhana reports:

On the world stage, Indians have also grown frustrated with a foreign policy that some saw as too soft on rival neighbors Pakistan and China. Mr. Modi is expected to build a more robust one based on trade, particularly with countries in South and Southeast Asia.

Analysts generally view Mr. Modi as more hawkish than his predecessors from Congress, a reputation some say gives Mr. Modi a better shot at making peace with Pakistan.

This, I think, is the most troubling aspect of Modi’s election victory. The BJP is, as the article states, a Hindu nationalist party (nevermind for the moment that Hinduism is a religion, not a nation) and its nuclear-armed neighbor (Pakistan) is basically a “Muslim nationalist” (again, bear with me in the horrible terminology) state.

If Modi lets the radicals in his party take the lead on foreign policy, and Mamnoon Hussain (a member of the center-right – for Pakistan – Pakistan Muslim League)  in Pakistan lets the radicals dictate foreign policy in Islamabad, the world could suddenly get a lot hotter in South Asia.

Still, I think Modi’s election is a good thing overall for India (and South Asia). The Left-wing Congress Party has been impoverishing India for half a century now, so even if the BJP is pro-business rather than pro-market I think prosperity will increase slightly and the potential for better foreign policy decisions is definitely there.

Addendum 5/17: Here is Geeta Anand and Gordon Fairclough with more on India (also in the Wall Street Journal).

Around the Web

Brandon Christensen Current Events, Links , , , , , , , , ,
  1. A Riddle Wrapped in a Mystery Inside of an Enigma
  2. Gary Becker on François Ewold on Michel Foucault on Gary Becker (pdf)
  3. Check Your Obedient Privilege
  4. Political scientist Jason Sorens on the difference between states and governments
  5. Rational expectations don’t require smart people
  6. The State as a Metanarrative (when post-modernism meets libertarianism; h/t Mark Brady)
  7. Twisting Libertarianism (a great debunking of the most recent prominent straw man attack on libertarianism)
  8. A Liberty Society versus a Status Society

Are libertarians more intelligent than conservatives and liberals?

Brandon Christensen Liberty , , , , , , , , , ,

The short answer is “yes.”

Jonathan Haidt, a moral psychologist at NYU’s Stern School of Business, published a paper in 2012 with three colleagues exploring libertarian morality. Dr Haidt is well-known for his work on studying morality among conservatives and liberals in the US, but has become increasingly interested in libertarians (or, at least, he can no longer ignore us).

Among the factors that Haidt and his colleagues explore and compare with liberals and conservatives is intelligence, or at least one common measure of it:

The Cognitive Reflection Task is a set of 3 logic questions that have correct and intuitive answers. Correct answers on these questions is said not just to measure intelligence, but also to measure a person’s ability to suppress an intuitive response in service of the cognitive reasoning required to solve these problems.

[…]

Results.

Table 3 shows that libertarians find the correct answers to these questions at a slightly higher rate than liberals and moderately higher rate compared to conservatives (also see Figure 4).

Interpretation.

The cognitive reflection task provides a behavioral validation of the hypothesis that libertarians have a more reasoned cognitive style. In our dataset, this measure inter-correlates with both Need for Cognition […] and Baron-Cohen Systemizer […] scores, with libertarians scoring higher than both liberals and conservatives on all three measures. Taken together, a convergent picture of the rational cognitive style of libertarians emerges.

Although the Cognitive Reflection Task is just one test among many that attempts to measure intelligence, and although I am not a big believer that intelligence tests are any good at detecting intelligence (they are, however, great for analyzing structural issues within a society or across different societies), it’s hard to argue with the results: Libertarians score higher on intelligence tests than either liberals or conservatives. Here is the paper. I’d be very interested in reading through more literature that deals with this, but libertarians are new to a lot of scholars (which is why Haidt’s “common-sense” approach is being considered groundbreaking for including libertarians).

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You don’t really need to read the paper though. Dr Amburgey, the house liberal of this blog, explains well why liberals tend to score slightly lower on intelligence tests than libertarians. Here, for example, is Dr Amburgey trying to tell me that the CIA is not really arming rebels in Syria if it goes through proxies like Qatar and Saudi Arabia. It’s an intelligent response, to be sure, but a libertarian – slightly more superior in his cognitive abilities, according to science – knows better.

Notes  On Liberty‘s house conservative*, Dr Delacroix, amply demonstrates why conservatives are not in the same league as liberals or libertarians.

With the fact that libertarians are more intelligent than liberals and conservatives in mind, I’d like to take a moment to a) bask in the glory of it all, and b) go back to Rick’s question about the One Big Change that I’d like to make.

I think that there is a way to incorporate open borders into a One Big Change-style reform while also leaving room for other improvements such as financial competition in the markets (rather than between governments) and competing tax regimes. I’d dig deeper and go a little more structural. I’d federate the entire world, and I wouldn’t make the federation out of the current agglomeration of nation-states, either. I would destroy the states currently in place and federate the administrative units that currently operate underneath the nation-state.

This, I think, would do a great job of incorporating open borders (everyone is part of the same federal union now), financial competition (no more national banks), tax regimes (you can more easily vote with your feet), and a common legal system that protects individual rights such as private property and freedom of religion.

*Dr Delacroix is, of course, a libertarian. He just calls himself a conservative out of spite for liberals, and because he mistakenly thinks of himself as a paternalistic defender of the common man from Leftist condescension and aggression.

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Open Access Gary Becker papers, and a couple of thoughtful links on him

Brandon Christensen Current Events, Economics , , , , , , , , , , , ,

Nobel Prize-winning economist Gary Becker died Saturday. For those of you who don’t know about his work, go here. For the rest of you, economist Tyler Cowen has compiled a great list of articles by Becker that you can read:

    1. “Irrational Behavior and Economic Theory.”  Can the theorems of economics survive the assumption of irrational behavior? (hint: yes)
    2. “Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology.”  The title says it all, from 1976.
    3. “A Note on Restaurant Pricing and Other Examples of Social Influence on Price.”  Why don’t successful restaurants just raise the prices for Saturday night seatings?
    4. “The Quantity and Quality of Life and the Evolution of World Inequality” (with Philipson and Soares).  The causes and importance of converging lifespans.
    5. “Competition and Democracy.“  From 1958, but most people still ignore this basic point about why government very often does not improve on market outcomes.
    6. “The Challenge of Immigration: A Radical Solution.”  Auction off the right to enter this country.

Cowen also linked to sociologist Kieran Healy’s fascinating take on Michel Foucault’s thoughts about Gary Becker’s work over at Crooked Timber (and here is a pdf of Becker on Foucault on Becker).

And economist Mario Rizzo shares some short thoughts about Becker’s work in relation to the Austrian School of Economics (Becker is associated with the Chicago School of Economics). Rizzo’s account of the early 1960s debate on rationality between Becker and Kirzner is worth a look.

Update: Here is Gary Becker’s 1992 Nobel Prize lecture (pdf)

“The Economic Origins of Territorial States”

Brandon Christensen History , , , , , , , ,

That’s the title for a paper by Scott Abramson in the Department of Politics at Princeton. Among the gems in this excellent paper:

[…[ before the French Revolution, before the era of the mass conscript army, wealth could not only purchase the technologies of violence, but also the manpower required to prosecute major wars. That is, rather than being an age when large states dominated militarily, this was a period where the population and natural resource advantages of territorial states provided little benefit in the production of violence. Leaders of states could, for a negotiated price, hire a Hessian colonel or an Italian condotierro and retain their men for a campaign season just as they could use these resources to purchase the most advanced technologies of coercion like siege artillery or rearms. It was by virtue of their economic capacity city-states like Genoa and Florence or groups of independent towns like the Swabian league could raise armies that matched or even exceeded those of territorial states like France or England

and

[…] the relationship between geographic scale and survival probability is the opposite of what war-making theories predict. Over this span small states were more likely to survive than their larger counterparts. In other words, rather than being an age of the territorial state” the period between 1500 and 1800 was one in which small political communities not only persisted but remained the typical form of political organization.

Read the rest of the paper here. So small territorial units dominated much of Europe during the initial phase of modernity and industrialization. What I’m trying to piece together is a way to incorporate the ability of small states to provide for themselves while at the same time maintaining ties with multiple neighbors in a way that binds them economically and politically, but without the coercive apparatus of a central government.

I think Madison was thinking about the same thing when he drafted the federal republic of the US, but it seems to me there is a right way to do federal republics (US) and a wrong way (Latin America). Does this make sense?

In Utah

Brandon Christensen Current Events ,

Hello loyal readers. I’ve been in Utah for the last couple of weeks. It’s beautiful and cold here. I don’t know if I like the combination (reminds me of too many ex-girlfriends).

There is still snow on the mountain tops here. Weird. Beautiful but weird.

From the Comments: Open Borders and Substantial Increases in GDP

Brandon Christensen Comments, Politics , , , , , ,

Dr Delacroix gives us a great review of the most recent literature on the relationship between open borders and substantial increases in GDP (50%-150%):

A Long Comment on The Big Thing (open borders)

Thank you, Rick, for causing me to read this very good paper (and thanks to Brandon for making it easily available). I did not find the 150% increase in GDP you promised . That’s OK because it helps me point to one weakness of this paper that should be relevant to any discussion of emigration/immigration focused on policies. The author seems to have been unable to extract from the others articles on which his is based any coherent time dimension. A temporal dimension seems to be lacking. When discussing public policy it ‘s always necessary to consider: “In the short run, in the long run.” An increase of world joint GDP of 150% in fifty years thanks to relaxed immigration seems plausible; the same rise by next year is out of the question, of course.

On several issues, the author comes close to confusing “absence of evidence” with “evidence of absence.” This may be fine for a scholarly article in the discipline of economics. Difficulty to measure or to act upon should not constrain blog discussion however. Five things.

1 “Begin with the country of origin. The departure of some people such as the skilled or talented from a poor country might reduce the productivity of others in that country.”

“might”?

Qualitative differences between those who emigrate and the population of origin may be very large: This is “cream of the crop” vs “bottom of the barrel” issue. This should be obvious with respect to easily measured age and health status for example. The young and stalwart go first. It may be as true with respect to difficult to measure but obviously existing qualities such as the propensity to take economic risks, for example. Thus, I would be surprised if current Mexican illegal immigrants to the US where not economically more desirable immigrants than their own siblings of the same sex who stayed put. I mean more desirable from my viewpoint, someone who is already inside a country of destination. The risks the illegals took to move act like a beneficial sift in this respect, it seems to me.

Periodically African immigrants drown off Lampedusa in the Mediterranean just for a chance to set foot in the EU where medial jobs expect them. They all have close relatives living in the same economic circumstance at home who did not join them.*

The author calls these considerations a kind of externalities and mentions that they are difficult to measure. Difficult to measure does not mean non-existent; it does not even mean small, as he implies. Passion is also difficult to measure, and so is the wrath of a woman scorned. Neither is small in any sense of the word. Stuff that you do not enter into the equation does not show up in the results except in an unclear, residual sort of way. Those who should be in charge of measuring them, the government bureaucracies of countries of origin, are often inept, corrupt, uninterested or discouraged from doing so by government that prefer slogans to facts. Yet, that’s no reason to write these thing off from our thinking.

2 Author asks sensibly:

“Is productivity mostly about who you are, or where you are?”

Productivity clearly has a lot to do with where you are. (Take a man’s shovel in Sonora, teach him how to drive a backhoe in Brooklyn….) I don’t know what the proportions are between it and the answer to the “who” question but I think it would be absurd to set the “who” at zero. Even national origin may matter on the average: If you absolutely must choose between an unknown Englishman and an unknown Frenchman for a cook, which would you chose?

3 Author is too quick to dismiss the argument of impoverishment caused by emigrants’ departure in their countries of origin. He even uses a logically flawed argument, I think:

“But if human capital externalities from health workers were a first order determinant of basic health conditions, African countries experiencing the largest outflows of doctors and nurses would have systematically worse health conditions than other parts of Africa. In fact, those countries have systematically better health conditions (Clemens, 2007).”

Or, is it more likely that: African countries possessing quality health personnel training programs enjoy superior health conditions as a result (I am thinking vaccinations) and some of the health personnel they train are employable in rich countries.

By the way, this raises the general problem of losing at – least temporarily – the benefits associated with the cost of rearing labor. When a Filipina arrives in the US at 19, ready to work in a hospital, the fact is that I contributed nothing to the cost of bringing her up to that point. Someone else has, in the Philippines, most likely. It’s possible that on the average, the home remittances of such immigrant workers more than covers the cost of rearing and training them. I don’t know if it’s true, or how often. I would like to find out.

Author’s savant discussion of externalities seems (seems) to conclude that even if there is a loss to the country of origin, not much can be done. Of course, something can be done: Let the country of destination pay fees to someone or something in the country of origin that supported the cost of training the immigrant worker; in other words, re-imburse at low cost the expense incurred in creating an unearned benefit in the country of destination.

4 Policy makers in Europe are much exercised over the “lifeboat effect.” Even if immigrants’ arrival results in superior economic growth, even if it solves long term problems, as in Social Security, a sudden influx of large numbers may quickly overwhelm destination societies. It may markedly lower their standards of living. (Think of elementary school classes suddenly crowded with children who don’t know the teachers’ language.) I did not find that this article deals with this matter except between the lines, in an implied manner.

[Wholly theoretical Figure 1 does not help me with this although I am attracted to its curves.]

5 Author does his job as an economist well. He writes about the economics of emigration/immigration and he reports on solid research within the constraints of the discipline of economics discourse. But here are also political consequences of immigration we are free to discuss on this blog. (That’s what blogs are for, I think.) This is especially true for a libertarian blog because it poses squarely the problem of national boundaries, of the respect they are owed or not, of their convenience or inconvenience vis-a-vis libertarian aspirations.

Political consequences of immigration loom large in the imaginations of many people in the countries of destination. The manifestations of their concern are not all vacuous or ignorant, or hysterical. The 8 million Swiss -including many immigrants – may have good reason to wonder how many people they can absorb who think that separation of church and state is not only a bad idea but a major sin. Many French people of old French origin are openly racist. Among those responsible French people who are not racist at all, it’s common to worry about the short-term consequences of the legitimate burden high fertility immigrants place on their already sinking welfare system. (The high fertility is documented; it’s not a rumor.) Many American conservatives are worried about Mexican immigrants’ high propensity to vote Democratic. In the end, it’s possible to imagine a scenario where, in combination with other factors,** Mexican immigration helps turn the United States become a one-party state for all intents and purposes. Incidentally, I like Mexicans and I think they make first-rate immigrants. See my co-author articled with Nikiforov on my – Facts Matter – blog.

Sometimes, author handles humor a little too lightly: “Mayda (2006) finds that it is the wealthier, better educated, and less nationalist individuals in rich destination countries who have more favorable attitudes toward immigration.” Sure thing, I am thinking! They want a steady supply of maids and gardeners.

* As some readers already know ad nauseam, I am an immigrant myself. I had four siblings brought up in pretty much the same micro and macro environments as I. They all shared my mediocre level of educational attainment (high school or less). Three of my siblings never tried to move to a richer country as I did; another tried and failed. The difficulties inherent in emigration must select in favor of the desperate, the brave, and of the sociopathic. (Ask me for a good recent book on the latter.)

** The Republican Party’s current striking political incompetence (small p) looms large on my mind as I write this

Around the Web

Brandon Christensen Links , , , , , , , , ,
  1. Criminal defense attorney Ken White has the most thoughtful take on the recent SCOTUS ruling that pit Clarence Thomas against Antonin Scalia
  2. Ayn Rand versus evolutionary psychology. Economist Bryan Caplan explains why Ayn Rand was wrong
  3. Why were American Economics textbooks so Pro-Soviet? A great question from Caplan (again)
  4. Inequality: Haven’t we had this discussion before? Economist Peter Boettke, a specialist in the history of economic thought, asks the question
  5. Remembering Why Hayek Mattered. A political scientist from Princeton, Keith Wittington, provides a great example

George Keenan’s racism *AND* affinity for the Democratic Party confuses Left-wing journalist

Brandon Christensen Current Events, History , , , ,

From the New Republic‘s David Greenberg:

Normally a supporter of Democrats—in the diaries, he voices support for the presidential bids of Adlai Stevenson, John F. Kennedy, Eugene McCarthy, Frank Church (“promptly regretted it deeply”), and Bill Clinton (“without enthusiasm”)—Kennan was nonetheless profoundly conservative in his worldview.

How on earth could a Democrat be a conservative? The logic of Progressives continues to astound me. Kennan, in addition to being an ardent supporter of Democratic Party candidates, also expresses adulation for ugly racist stuff like eugenics and even goes so far as to express sympathy for Apartheid in South Africa.

Libertarians and honest conservatives have long known about the intricate links between institutional and scientific racism and Left-wing political causes. The logical outgrowth of this subtle racism can be found in many of the Left’s pet political causes, such as Affirmative Action or government housing projects. These are inherently racist policies and if you read the justifications for such policies you can see why they are a natural  outgrowth of Progressivism.

The New Republic‘s David Greenberg is unable to put two and two together, however. To him, the fact that Kennan was a racist and an imperialist and a Democrat does nothing to show him why the Democratic Party is the party of reaction, of conservatism writ large in the United States.

By the way: Just because I think Affirmative Action and government housing projects are racist does not mean I do not support reparations for the US government’s theft of labor from slaves and theft of land from Native Americans. I just think there are better ways of atoning for our government’s sins than engaging in even more fruitless, racist policies.

Delacroix’s Autobiography is now out on Kindle

Brandon Christensen Books, Current Events , , ,

After fat far too long, Dr Delacroix’s memoirs I Used to Be French: an Immature Autobiography are finally out. You can find it on amazon.com for $7. The print version should be available shortly.

You can find a short excerpt of his memoirs here.

Congrats Dr J!

PS: Dr J is turning 72 sometime this week. Be sure to wish the young man a happy birthday.

Around the Web

Brandon Christensen Current Events, Links , , , , , , , , , , , , ,
  1. The Globalization of Apartheid from anthropologist Keith Hart. I have a critique (as well as lots of praise) in process.
  2. Kapital for the Twenty-First Century: A review of Thomas Piketty’s new book by James K Galbraith.
  3. The Many Problems with “Equal Pay”: Legal scholar Richard Epstein brings his usually clarity to the table
  4. Taxes Are Much Higher Than You Think: A great op-ed from Nobel Prize winner Edward Prescott and UCLA economist Lee Ohanian in the Wall Street Journal
  5. An open letter to President Obama from a prominent center-Left economist (and Democratic Party member): Give Us Back Our Statistical Data
  6. Scratching the Surface: Some proposals for campaign finance reform from a law professor guest blogging at the Volokh Conspiracy

 

Short blurb on Murray Rothbard

Brandon Christensen History, Liberty ,

Murray Rothbard (1926-1995) was an economist at UNLV and is considered to be one of the most important figures of the post-war libertarian movement. Rothbard earned his BA and PhD from Columbia (his dissertation on the banking panic of 1819 is still cited by economic historians), so it’s not like he was some hack with an unwarranted vendetta against the government. His contributions to a more libertarian world can be felt in numerous ways, from think tanks to economics graduate programs to the presidential campaigns of Ron Paul in 2008 and 2012. His daring foray into anarchy is, of course, his most important contribution to the scholarly world. However, I don’t see why this man has such a cult classic following within the libertarian movement. Could somebody explain this to me?

My best guess is that Rothbard’s strategy of appealing to the intelligent layman with well-disguised fallacies instead of discussing his research with the scholarly community has something to do with it, but this is only a guess.

His work just has “Cold War” written all over it. For instance, the first book of Rothbard’s that I cracked open, Conceived in Liberty Volume 1, read like a 1970s Marxist diatribe on economic development (by the way: see Dr Delacroix’s “The Export of Raw Materials and Economic Growth: A Cross-National Study” in the American Sociological Review for an excellent rebuttal of Marxist development theory). Again, I think part of this can be blamed on the time period he was writing in (mid-1970s), but even though it must have really sucked to be a scholar during the Cold War era there is really no good excuse for Rothbard’s present-day status as a saint within libertarian circles.

Not only has his scholarship become a stepping stone rather than a shrine (as all scholarship inevitably becomes), but the cult-like attitudes of some of his fans makes me cringe as a libertarian. At any rate, I’d really like to know why he has such a devoted following, and why his followers seem to think that their devotion to him is a good thing for the movement.