Some Thoughts on Best of Enemies

I’ve been making an unnatural effort to stay abrest of American politics the last few months and I’m reaching the end of my rope. A while back I added Best of Enemies: Buckley vs. Vidal to my queue, and now seemed like a good time to watch it. I don’t know much about either but based on some vague recollection of offhanded comments by older professors, I expected I would be watching political discussion with class and/or depth.

I would not. 

While both are eloquent and poetical, neither seemed to offer much more than insults for each other. Their bickering was entertaining. But it was not enlightening. They were a fancier version of a modern poli-tainmemt show. 

The world’s definitely going to hell in a hand basket, but it always has been.

Update: I just finished the movie. The producers have a clear message: Buckley/Vidal was the beginning of the end. They are ending the documentary with clips of both men expressing skepticism at the wisdom of their now famous 1968 debates.

Vidal (in the 10th debate):

I think these great debates are absolutely nonsense. The way they’re set up, there’s almost no interchange of ideas, very little, even, of personality. There’s also the terrible thing about this medium that hardly anyone listens. They sort of get an impression of somebody, and they think that they’ve figured out just what he’s like by seeing him on television. 

Buckley (in some other context):

Does television ruin America? There is an implicit conflict if interest between that which is highly viewable and that which is highly illuminating.

There’s also a clip from this gem:

Update 2: I fixed some grammar and missing words after initially posting… Still figuring out the Android app for WordPress…

AI: Bootleggers and Baptists Edition

“Elon Musk Is Wrong about Artificial Intelligence and the Precautionary Principle” – Reason.com via @nuzzel

(disclaimer: I haven’t dug any deeper than reading the above linked article.)

Apparently Elon Musk is afraid of the potential downsides of artificial intelligence enough to declare it “a rare case where we should be proactive in regulation instead of reactive. By the time we are reactive in AI regulation, it is too late.”

Like literally everything else, AI does have downsides. And, like anything that touches so many areas of our lives, those downsides could be significant (even catastrophic). But the most likely outcome of regulating AI is that people already investing in that space (i.e. Elon Musk) would set the rules of competition in the biggest markets. (A more insidious possible outcome is that those who would use AI for bad would be left alone.) To me this looks like a classic Bootleggers and Baptists story.

Trump Jr.

Last school year I had to deal with a pair of students (Tweedledee and Tweedledum) I caught cheating on a takehome final. When confronted with the evidence, each insisted that it was the other’s fault, and that only that other student should face any consequences.

Bear in mind that if they complete their degrees, they would be in the top 30% of the population in terms of educational attainment. In today’s world, that basically means they’re among the best and brightest, they’re high status, and they’re “the future”. If we could meaure status on a linear scale, getting a college degree still pushes you high up on that scale. 

At the time I figured that they were at least towards the bottom of that top 30%. Certainly, I still hope they’ll grow out of it. Unfortunately, Draco Malfoy’s Junior’s latest scandal shows that being bad at cheating isn’t the social hinderance we might have hoped for.

Related link: http://reason.com/blog/2017/07/13/how-trump-apologists-will-defend-the-ind

Immigration and States’ Rights

Bryan Caplan (arguing the affirmative) and Christopher Wellman recently debated whether immigration is a human right.

Wellman won the debate according to audience votes, but I think his argument was significantly weaker. He made confused arguments that, when given second thought lend credence to Caplan’s position. But through hand waving he transitioned to “and therefore states’ rights!” I am far from convinced that state’s rights are valid, but I do want to explore an interesting issue he raised: the moral weight of collective phenomena.

Markets generate economic information more intelligently than any individual participant. Competition and collaboration in cultural spaces generate more and better art than any individual on their own. Society is the outcome of individual choices, but the collective is something apart from those individuals.

We have various collectives (e.g. cultural regions, markets, local communities, families, national identities, sports fandom, science, etc.), many of which are special. They provide club goods (sometimes club bads), and require the support of their members. These networks exhibit emergent properties–the whole is more than the sum of its parts.

So surely those members should have some say in the management of the collective?

This is where Wellman went off track. Yes, these collectives are important. Yes, they require some form of governance. But that doesn’t unambiguously imply involvement of government.

Consider an excellent example Wellman gives: families. Families are an essential part of the structure of society and one we are each deeply familiar with. If there’s a collective entity with moral weight, surely it’s the family.

Wellman posed the hypothetical around the 32:45 mark: what if he returned home and found that his wife had unilaterally adopted a new child? Clearly this is freedom of association run amok! But the example doesn’t imply the need for state involvement; it implies the need for couples therapy! If he and his wife together decide to adopt, then the question remains, “why should the government have a say in this?” Currently it does, which means that whatever the median voter is cool with is acceptable, even if that means preventing this adoption that clearly doesn’t affect them. That seems untenable unless we have strong evidence that adoptions tend to create large negative spillovers.

The moral weight of a family doesn’t imply either state involvement or democratic decision making. Members can be added to a family through birth or marriage. The decision is made by the one or two individuals most directly involved (perhaps with some role for other family members). And those decisions are made non-coercively. Parents may intervene to prevent teenage Romeos and Juliettes from getting married, but adults are basically allowed to make their own decision.

I’m guessing here, but I’d bet that 90% of people would agree that the way we do freedom of association in families is basically the right way to do things.

Polycentrism!

The scope of a family does not fit neatly into the boxes drawn on a map, nor do most other collective phenomena. Red Sox Nation isn’t just Boston. Regional cultures overlap. Languages cross borders.

We want the collective decision making institutions to reflect the area of spill-overs. Decisions affecting a family should be made within the family. I shouldn’t be directly involved in decisions about how to provide local public services in San Diego. Global spillovers justify global decision making, but local spillovers don’t.

When it comes to immigration, we have to ask:

  1. What collectives will they affect? (certain labor markets, local communities)
  2. Are they likely to create large negative spillovers?
  3. What is the current form of institutions governing those collectives?

There are high stakes for many potential immigrants (especially those coming from places typical Americans are most afraid of), so we should probably go a step further: if there’s a solution to some potential spillover problem that isn’t significantly more costly than immigration restrictions, we should feel obliged to use that solution. For example, it should be easier to come here to live and work than it is to get welfare benefits (although getting that policy to work raises a host of other questions).

Rights imply action

Let’s agree on this: there are collective phenomena that are special. We want to take care of these phenomena which means figuring out the appropriate form of governance for each case.

Wellman gives another family example that blows his own argument out of the water: what if he was put in an arranged marriage? This would deny him important scope for self-determination. And therefore (he argues) states, being important collective phenomena, have a right to self-determination.

How did the audience not notice this?! Immigration restrictions deny me choice over who to voluntarily associate with and so deny me scope for self-determination.

Even if it feels weird from a rational-individualist perspective, there is something special about (e.g.) a country. But that doesn’t mean we should abandon methodological individualism. We know that only individuals make choices, even if they make those choices for the sake of collectives. A collective can have moral weight but still lack the ability to choose. To my mind, this kills the idea of states’ rights (as in “right to do x” or “right to self-determination”) in general.

What we’re left with is the original question: how do we manage the collective? What decisions do we make collectively, and what do we decide piecemeal?

For many (most?) collectives, including the most important ones, we allow freedom of (dis)association and leave the state out of it. Wellman did not answer the question of “why should immigration be different?” I suspect there are strong arguments to be made, but the closest I heard in this debate is that we can think of this as a question of governance, and that government sometimes provides governance.

As Wellman points out (around the 30:00 mark) there is (sometimes) a tension between rules favoring individual freedom and rules requiring collective decision making. There are plenty of examples of scenarios where we uncontroversially prefer to limit some individual rights–we do this automatically with negative rights by denying you the freedom to murder in support of your right to life.

It’s not clear to me that the expected effects of immigrants are widespread enough to justify as sweeping a policy as “only the following people are allowed in these particular thousands of square miles.” For immigration (but not access to the welfare state), the presumption of liberty seems the way to go.

tl;dr: We have various collective goods that are special (e.g. the “character” of a community). This calls for some form of governance to allow the individuals directly involved to manage collective goods. This frequently calls for constraints on individual freedoms for the benefit of the community, but that doesn’t mean that the special collective identity of a country justifies a presumption of closed borders.

The debate over whether the nation state is violating human rights by restricting immigration (with caveats made for “obviously” reasonable restrictions like keeping out known murderers) is not closed by pointing out that there is a collective good associated with the nation state. States can be special without having states’ rights.

An argument against Net Neutrality

First off, Comcast sucks. Seriously, screw those guys.

But let’s assume a can opener and see if that doesn’t help us find a deeper root problem. The can opener is competition in the ISP network. Let’s consider how the issue of Net Neutrality (NN) would play out in a world where your choice of ISP looked more like your choice of grocery store. Maybe a local district is set up to manage a basic grid and ISPs bid for usage of infrastructure (i.e. cities take a page out of the FCC’s playbook on spectrum rights). Maybe some technological advance makes it easy to set up decentralized wireless infrastructure. But let’s imagine that world.

Let me also assume a bit of regulation. The goal is to create some simple rules that make the market work a bit better. Two regulations that I’d like to see are 1) a requirement that ISPs have a public list of any websites they restrict access to*, and 2) a limitation on how complicated end user agreements can be. I’m not sure these things would be possible in my anarchist utopia, but in a second best world of governments I’m pretty comfortable with them.

Let’s also create a default contracts for content providers with ISPs. “Unless otherwise agreed to, content providers (e.g. YouTube, my crazy uncle Larry, the cafe around the corner, etc.) relationship with ISPs is assumed to take the following form:…” An important clause would be “access/speed/etc. to your content will meet ______ specifications and cannot be negatively altered at the request of any third party.”

A similar default contract could be written for ISPs and end users. “Universal access under ____________ conditions will be provided and cannot be negatively altered at the request of any third party.”

Explicitly and publicly setting neutral defaults means we can get NN by default, but allow people the freedom to exchange their way out of it.

Do we need, or even want, mandated NN in that world? There are some clear potential gains to a non-neutral Internet. Bandwidth is a scarce resource, and some websites use an awful lot of it. YouTube and Netflix are great, but they’re like a fleet of delivery trucks creating traffic on the Information Super Highway. Letting them pay ISPs for preferred access is like creating a toll lane that can help finance increased capacity.

Replacing NN with genuine competition means that consumers who value Netflix can pay for faster streaming on that while (essentially) agreeing to use less of the net’s bandwidth for other stuff. We should encourage faster content, even if it means that some content gets that extra speed before the rest.

Competing ISPs would cater to the preferences and values of various niches. Some would seem benign: educational ISPs that provide streamlined access to content from the Smithsonian while mirroring Wikipedia content on their volunteer servers. Bandwidth for sites outside the network might come at some price per gigabyte, or it might be unlimited.

Other ISPs might be tailored for information junkies with absolutely every website made available at whatever speed you’re willing to pay for. Family friendly ISPs would refuse to allow porn on their part of the network (unsuccessfully, I suspect), but couldn’t stop other ISPs from anything. Obnoxious hate group ISPs would probably exist too.

There would be plenty of bad to go along with the good, just like there is in a neutral network.

I’m okay with allowing ISPs to restrict access to some content as long as they’re honest about it. The Internet might not provide a universal forum for all voices, but that’s already the case. If you can’t pay for server space and bandwidth, then your voice can only be heard on other people’s parts of the Internet. Some of those people will let you say whatever you want (like the YouTube comments section), but others are free to ban you.

Similarly, big companies will be in a better position to provide their content, but that’s already the case too. Currently they can spend more on advertising, or spend more on servers that are physically closer to their audience. A non-neutral net opens up one more margin of competition: paying for preferred treatment. This means less need to inefficiently invest physical resources for the same preferred treatment. (Hey, a non-neutral net is Green!)

There might be reason to still be somewhat worried about the free speech implications of a non-neutral net. As consumers, we might prefer networks that suppress dissident voices. And those dissident voices might (in the aggregate) be providing a public good that we’d be getting less of. (I think that’s a bit of a stretch, but I think plenty of smart people would take the point seriously.) If that’s the case, then let’s have the Postal Service branch out to provide modestly priced, moderate speed Internet access to whoever wants it. Not great if you want to do anything ambitious like play Counter Strike or create a major news network, but plenty fine for reading the news and checking controversial websites.

tl;dr: I can imagine a world without Net Neutrality that provides better Internet service and better economizes on the resources necessary to keep the Information Super Highway moving. But it’s not the world we currently live in. What’s missing is genuine market competition. To get there would require gutting much of the existing regulatory frameworks and replacing it with a much lighter touch.

What I’m talking about seems like a bit of a pipe dream from where we’re sitting. But if we could take the political moment of the Net Neutrality movement and redirect it, we could plausibly have a free and competitive Internet within a generation.


*Or maybe some description about how they filter out websites… something like a non-proprietary description of their parental filters for ISPs that (attempt to) refuse adult content access.

Some ideas to guide your thoughts on health care

This post is meant to help my non-economist friends think more clearly about how we pay for health care. I’ll talk about markets, but the truth is that the American system is built of deeply bastardized markets. If our car markets worked like our health markets, most of us would walk to work. I’m trying to focus on the essential logic of the situation which is going to sound Utopian because Congress isn’t going to give us any sort of logical policy any time soon. But we aren’t going to get a logical solution until we as voters understand the logic of health care finance.

I’ve got a few big points to make:

  1. Trying to health insurance also work like charity is bound to end poorly for everyone.
  2. A single-payer system has a lot of nice features for individuals, but a lot of systemic problems.
  3. It’s fundamentally impossible to insure pre-existing conditions. Insurance is about sharing risk, not unavoidable expenses.

(This post is longer than I’d like, so thanks for your patience!)

Markets and Charity

I’ve said it before, and I’ll say it again: we don’t have to ruin markets to do charity.

The essence of markets is that they aggregate knowledge about the relative costs and benefits of different goods based on the preferences of the real people involved in producing and consuming those goods.

The demand side of markets provide information by giving you (as a consumer) a choice between more of something you like and more money to spend on other stuff. On the supply side they give you (as a supplier–probably of your own labor) the choice between providing more of what people are willing to pay for or having less money to buy the stuff you want. Markets crowdsource cost-benefit analysis.

Prices also give suppliers an incentive to produce things that consumers want while trying to save resources (i.e. cut costs). In other words, a price is a signal wrapped up in an incentive.

So what about fairness? The bad news is that markets are a system of “from each according to their ability, to each according to how much other people are willing to pay for the product of their ability.” (Not very catchy!) It’s mostly fair for most of us, but doesn’t do much good for people who are just unlucky (e.g. kids born with genetic defects). Here’s the good news: we can use charity alongside markets.

We can debate how much role government should play in charity some other time. For now, let’s whole-ass one thing instead of half-assing two things. We have to appreciate that interfering with markets interferes with the ability of those markets to function as sources of reliable information. It doesn’t matter how good our intentions are, we face a trade off here… unless we do something to establish a functioning charity system parallel to the health care finance system.

Single Payer

Anecdotes about the merits of a single-payer health care system are powerful because they shed light on the biggest benefit to such a system: individual convenience.

Part of the appeal has to do with the general screwiness of the American system. It’s a cathedral built of band-aids. But even in an idealized market system, a single-payer system has the advantage of not making me go through the work of evaluating which plan best suits my needs.

A single-payer system is, from an individual perspective, about as ideal as having your parents pay for it. But we don’t really  want our parents buying our stuff for us.

Single payer system sacrifice the informational value of markets (probably even more so than America’s current system of quasi-price controls). Innovation would be harder as long as new treatments had to be approved by risk-averse bureaucrats (and again, we already face a version of this with Medicare billing codes and insurance companies).

Essentially, a single payer system creates a common pool problem: each of us gets the individual benefit of being able to be lazy. But then we’re left trusting bureaucrats, special interest groups, and think tanks to keep an eye on things. It could be an improvement over the current American system, but that’s like saying amputation is better than gangrene.

Insurance

Premium = expected cost + overhead

Consider two alternatives. In scenario A you start with $150, flip a coin, and if it comes up tails you lose $100. In scenario B you get $90. The expected value of A is $100, but most of us would still prefer the sure thing.

Here’s how insurance works: You start with $150, give $60 to the insurance company, then flip the coin. If it comes up tails, you lose $100, but the insurance company gives you back $40. You’ve just gotten the sure thing. And by taking on thousands of these bets the insurance company is able to make enough money to pay their employees.

But here’s the thing: the premium they charge is fundamentally tied to that expected value. Change the odds, or the costs (i.e. the claims they have to pay for) and you’ll change the premium.

(BTW, Tim Harford did a nice ~8 minute podcast episode on insurance that’s worth checking out.)

Pre-existing conditions are the equivalent of changing our thought experiment to a 100% chance of flipping tails. No amount of risk sharing that will get you to the $90 outcome you want. You can’t insure your car after you’ve been in an accident and you can’t insure a person against a loss they’ve already realized. If you’re Bill Gates, that’s no big deal, but for many people, this might mean depending on charity. That’s a bummer, but wishful thinking can’t undo that.

If we insist that insurance companies cover pre-existing conditions* the result can only be higher premiums. This is nice for people with these pre-existing conditions, but not so great for (currently) healthy poor people. Again, charity matters needs to be part of the debate, but it needs to be parallel to insurance markets.

Covering more contingencies also affects premiums. The more things a policy covers, the higher the expected cost, and therefore the higher the premium. We each have to decide what things are worth insuring and what risks we’re willing to face ourselves. Politics might not be the best way to navigate those choices.

High deductibles and catastrophic care

Actuaries think about the cost of insuring as a marginal cost. In other words, they know that the odds that you spend $100 in a year are much higher than the odds that you spend $1000. So the cost of insuring the first dollar of coverage is much higher than the cost of insuring the 5000th dollar. This is why high deductible plans are so much cheaper… they only pay out in the unlikely situation where something catastrophically bad happens to you. This is exactly why most of us want insurance. We aren’t afraid of the cost of band-aids and aspirin, we’re afraid of the cost of cancer treatment.

For those of us firmly in the middle class, what we really need is a high-deductible plan plus some money in the bank to cover routine care and smaller emergencies. (Personally, my version of this is a credit card.) Such a plan has the added benefit of encouraging us to be more cost conscious.

A big problem with our current system is that it’s set up like an all-you-can-eat buffet. You pay to get in (your premiums) but once you’re in the hospital, any expenses are the insurance company’s problem (read: everyone else on your health plan). The logic here is the same as with pollution. When I drive my car I get the benefits of a quick and comfortable commute but I also suffer a little bit more pollution. But I don’t have incentive to think about how that pollution affects you so I pollute more than would be ideal. Multiply that by millions of people and we can end up with smog.

tl;dr

If I were trying to put together a politically palatable alternative to our current system, I’d have an individual mandate with insurance vouchers for the poor (it’s not very libertarian, and it’s far from my Utopian ideal, but I think it would be a huge improvement over what we’ve got now). I would also expand the role of market competition by encouraging high deductibles plus flexible health savings accounts.

Reality is complicated, but I’m trying to get at the fundamental logic here. We don’t have a properly functioning market system. To get there we need competition, transparency, and a populace with the mental tools and mathematical literacy necessary to understand what their insurance can and can’t do. That’s a tall order, but it doesn’t mean we shouldn’t keep trying to move in that direction.

To have a fruitful debate we need to understand what we want from our healthcare system: help for the poor (charity), convenience, and efficiency from an individual and social perspective. By trying to lump all these things together we muddy the waters and make it harder to understand one another.


*I don’t know what the deal is with the idea that the AHCA will treat rape as a pre-existing condition. Some webpages give a bunch of random tweets as evidence of this, and others call bullshit. Let’s just leave it at this: in a competitive market this would be considered terrible marketing and savvy companies wouldn’t do it. The lesson then is to keep calling companies on bad marketing, and avoid protecting politically powerful companies from market competition.