Law

Some ideas to guide your thoughts on health care

Rick Weber Economics, Law, Liberty, Politics , , , , , , ,

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.

Would regulation stop the mistakes of rating agencies that contributed to the 2008 crisis?

Kevin Kallmes Economics, Law, Liberty, Politics , , , , ,

I remember watching The Big Short and feeling great indignation at the S&P employee who told Steve Carell that rating agencies were pressured into issuing unreasonably high ratings because they were beholden to their customers. If true, this represented an unbelievable moral hazard, which is often cited as the reason for the failures of the ratings agencies–and as a reason for regulating these agencies.

However, more in-depth research and consideration reveals that this answer is incomplete and, in many ways, incorrect. Claire Hill, a law professor at the University of Minnesota Law School and director of the Institute for Law and Rationality, clearly and convincingly critiques this simplistic explanation by recognizing market influences and proposing alternate causes, which also means that if we are looking to avoid a future crisis, we need to look to alternative solutions to the regulatory measures that we currently employ. I don’t think it could be said better than she does in her abstract:

Why did rating agencies do such a bad job rating subprime securities? The conventional answer draws heavily on the fact that ratings are paid for by the issuers: Issuers could, and do, “buy” high ratings from willing sellers, the rating agencies.

The conventional answer cannot be wholly correct or even nearly so. Issuers also pay rating agencies to rate their corporate bond issues, yet very few corporate bond issues are rated AAA. If the rating agencies were selling high ratings, why weren’t high ratings sold for corporate bonds? Moreover, for some types of subprime securities, a particular rating agency’s rating was considered necessary. Where a Standard & Poor’s rating was deemed necessary by the market, why would Standard & Poor’s risk its reputation by giving a rating higher (indeed, much higher) than it knew was warranted?

Finally, and perhaps most importantly, giving AAA ratings to securities of much lower quality is something that can’t be done for long. A rating agency that becomes known for selling its high ratings will soon find that nobody will be paying anything for its ratings, high or low.

In my view, that issuers pay for ratings may have been necessary for the rating agencies to have done as bad a job as they did rating subprime securities, but it was not sufficient. Many other factors contributed, including, importantly, that rating agencies “drank the Kool-Aid.” They convinced themselves that the transaction structures could do what they were touted as being able to do: with only a thin cushion of support, produce a great quantity of high-quality securities. Rating agencies could take comfort, too, or so they thought, in the past – the successful, albeit short, recent history of subprime securitizations, and the longer history of successful mortgage securitizations.

“Issuer pays” did not so much make the rating agencies give higher ratings than they thought were warranted as it gave the agencies a “can do” mindset regarding the task at hand – to achieve the rating the issuers desired, working with them to modify the deal structures as needed. That the issuers were paying motivated the agencies to drink the Kool-Aid; having drunk the Kool-Aid, the agencies gave the ratings they did. My account casts doubt on the efficacy of many of the solutions presently being proposed and suggests some features that more efficacious solutions should have.

I very much recommend reading the full article, which gives more nuance and information about the weaknesses of proposed solutions for rating agency mistakes or malfeasance. This should also be food for thought concerning the general perspective we should have in examining “market failures,” as there are often market feedback systems that mitigate problems, and turning to regulation by reflex can cause unintended harm or even miss the mark entirely.

Reference: Hill, Claire. “Why Did Rating Agencies Do Such a Bad Job Rating Subprime Securities?” University of Pittsburgh Law Review (2010): 10-18. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1582539.

Where is the line between sympathy and paternalism?

Rick Weber Culture, Current Events, Law, Liberty, Philosophy , ,

In higher-ed news two types of terrifying stories come up pretty frequently: free speech stories, and Title IX stories. You’d think these stories would only be relevant to academics and students, but they’re not. These issues are certainly very important for those of us who hang out in ivory towers. But those towers shape the debate–and unquestioned assumptions–that determine real world policy in board rooms and capitols. This is especially true in a world where a bachelor’s degree is the new GED.

The free speech stories have gotten boring because they all take the following form: group A doesn’t want to let group B talk about opinion b so they act like a bunch of jackasses. Usually this takes place at a school for rich kids. Usually those kids are majoring in something that will give them no marketable skills.

The Title IX stories are Kafkaesque tales where a well-intentioned policy (create a system to protect people in colleges from sexism and sexual aggression) turns into a kangaroo court that allows terrible people to ruin other people’s lives. (I hasten to add, I’m sure Title IX offices do plenty of legitimately great work.)

A great article in the Chronicle gives an inside look at one of these tribunals. For the most part it’s chilling. Peter Ludlow had been accused of sexual assault, but the claims weren’t terribly credible. As far as I can tell (based only on this article) he did some things that should raise some eyebrows, but nothing genuinely against any rules. Nonetheless, the accusations were a potential PR and liability problem for the school so he had to go, regardless of justice.

The glimmer of hope comes with the testimony of Jessica Wilson. She managed to shake them out of their foregone conclusion and got them to consider that women above the age of consent can be active participants in their own lives instead of victims waiting to happen. Yes, bad things happen to women, but that’s not enough to jump to the conclusion that all women are victims and all men are aggressors.

The big question at the root of these types of stories is how much responsibility we ought to take for our lives.

Free speech: Should I be held responsible for saying insensitive (or unpatriotic) things? Who would enforce that obligations? Should I be held responsible for dealing with the insensitive things other people might say? Or should I even be allowed to hear what other people might say because I can’t take responsibility for evaluating it “critically” and coming to the right conclusion.

Title IX: Should women be responsible for their own protection, or is that akin to blaming the victim? We’ve gone from trying to create an environment where everyone can contribute to taking away agency. In doing so we’ve also created a powerful mechanism that can be abused. This is bad because of the harm it does to the falsely accused, but it also has the potential to delegitimize the claims of genuine victims and fractures society. But our forebears weren’t exactly saints when it came to treating each other justly.

Where is the line between helping a group and infantilizing them?

At either end of a spectrum I imagine caricature versions of a teenage libertarian (“your problems are your own, suck it up while I shout dumb things at you”) and a social justice warrior (“it’s everyone else’s fault! Let’s occupy!”). Let’s call those end points Atomistic Responsibility and Social Responsibility. More sarcastically, we could call them Robot and Common Pool Responsibility. Nobody is actually at these extreme ends (I hope), but some people get close.

Either one seems ridiculous to anyone who doesn’t already subscribe to that view, but both have a kernel of truth. Fair or not, you have to take responsibility for your life. But we’re all indelibly shaped by our environment.

Schools have historically adopted a policy towards the atomistic end, but have been trending in the other direction. I don’t think this is universally bad, but I think those values cannot properly coexist within a single organization.

We can imagine some hypothetical proper point on the Responsibility Spectrum, but without a way to objectively measure virtue, the position of that point–the line between sympathy and paternalism–its location is an open question. We need debate to better position and re-position that line. I would argue that Western societies have been doing a pretty good job of moving that line in the right direction over the last 100 years (although I disagree with many of the ways our predecessors have chosen to enforce that line).

But here’s the thing: we can’t move in the right direction without getting real-time feedback from our environments. Without variation in the data, we can’t draw any conclusions. What we need more than a proper split of responsibility, is a range of possibilities being constantly tinkered with and explored.

We need a diversity of approaches. This is why freedom of speech and freedom of association are so essential. In order to get this diversity, we need federalism and polycentricity–stop trying to impose order from the top down on a grand scale (“think globally, act locally“), and let order be created from the bottom up. Let our organizations–businesses, churches, civic associations, local governments and special districts–adapt to their circumstances and the wishes of their stakeholders.

Benefiting from this diversity requires open minds and epistemic humility. We stand on the shore of a vast mysterious ocean. We’ve waded a short distance into the water and learned a lot, but there’s infinitely more to learn!

(Sidenote: Looking for that Carl Sagan quote I came across this gem:

People are not stupid. They believe things for reasons. The last way for skeptics to get the attention of bright, curious, intelligent people is to belittle or condescend or to show arrogance toward their beliefs.

That about sums up my approach to discussing these sorts of issues. We’d all do better to occasionally give our opponents the benefit of the doubt and see what we can learn from them. Being a purist is a great way to structure your thought, but empathy for our opponents is how we make our theories strong.

Does business success make a good statesman?

Federico Sosa Valle Law, Philosophy , , , , ,

Gary Becker made the distinction between two types of on-the-job training: general and specific. The former consist of the skills of wide applicability, which enable the worker to perform satisfactorily different kinds of jobs: to keep one’s commitments, to arrive on time to work, to avoid disturbing behavior, etc.. All of them are moral traits that raise the productivity of the worker whichever his occupation would be. On the other hand, specific on-the-job training only concerns the peculiarities of a given job: to know how many spoons of sugar your boss likes for his coffee or which of your employees is better qualified to deal with the public. The knowledge provided by the on-the-job training is incorporated to the worker, it travels with him when he moves from one company to another. Therefore, while the general on-the-job training increases the worker productivity in every other job he gets, he makes a poor profit from the specific one.

Of course, it is relative to each profession and industry whether the on-the-job training is general or specific. For example, a psychiatrist who works for a general hospital gets specific training about the concrete dynamics of its internal organization. If he later moves to a position in another hospital, his experience dealing with the internal politics of such institutions will count as general on-the-job training. If he then goes freelance instead, that experience will be of little use for his career. Nevertheless, even though the said psychiatrist switches from working for a big general hospital to working on his own, he will carry with him a valuable general on-the-job training: how to look after his patients, how to deal with their relatives, etc.

So, to what extent will on-the-job training gained by a successful businessman enable him to be a good statesman? In the same degree that a successful lawyer, a successful sportsman, a successful writer is enabled to be one. Every successful person carries with him a set of personal traits that are very useful in almost every field of human experience: self confidence, work ethics, constancy, and so on. If you lack any of them, you could hardly be a good politician, so as you rarely could achieve anything in any other field. But these qualities are the typical examples of general on-the-job training and what we are inquiring here is whether the specific on-the-job training of a successful businessman could enable him with a relative advantage to be a better politician -or at least have a better chance of being a good one.

The problem is that there is no such a thing as an a priori successful businessman. We can state that a doctor, an engineer, or a biologist need to have certain qualifications to be a competent professional. But the performance of a businessman depends on a multiplicity of variables that prevents us from elucidating which traits would lead him to success.

Medicine, physics, and biology deal with “simple phenomena”. The limits to the knowledge of such disciplines are relative to the development of the investigations in such fields (see F. A. Hayek, “The Theory of Complex Phenomena”). The more those professionals study, the more they work, the better trained they will be.

On the other hand, the law and the market economy are cases of “complex phenomena” (see F. A. Hayek, Law, Legislation and Liberty). Since the limits to the knowledge of such phenomena are absolute, a discovery process of trial and error applied to concrete cases is the only way to weather such uncertainty. The judge states the solution the law provides to a concrete controversy, but the lawmaker is enabled to state what the law says only in general and abstract terms. In the same sense, the personal strategy of a businessman is successful only under certain circumstances.

So, how does the market economy survive to its own complexity? The market does not need wise businessmen, but lots of purposeful ones, eager to thrive following their stubborn vision of the business. Most of them will be wrong about their perception of the market and subsequently will fail. A few others will prosper, since their plans meet -perhaps by chance- the changing demands of the market. Thus, the personal traits that led a successful businessman to prosperity were not universal, but the right ones for the specific time he carried out his plans.

Having said that, would a purposeful and stubborn politician a good choice for government? After all, Niccolo Macchiavelli had pointed out that initiative was the main virtue of the prince. Then, a good statesman would be the one who handles successfully the changing opportunities of life and politics. Notwithstanding, The Prince was -as Quentin Skinner showed- a parody: opportunistic behaviour is no good to the accomplishment of public duties and the protection of civil liberties.

Nevertheless, there is still a convincing argument for the businessman as a prospect of statesman. If he has to deal with the system of checks and balances -the Congress and the Courts-, the law will act as the selection process of the market. Every time a decision based on expediency collides with fundamental liberties, the latter must withstand the former. A sort of natural selection of political decisions.

Quite obvious, but not so trite. For a stubborn and purposeful politician not to become a menace to individual and public liberties, his initiative must not venture into constitutional design. No bypasses, no exceptions, not even reforms to the legal restraints to the public authority must be allowed, even in the name of emergency. Especially for most of the emergencies often brought about by measures based on expediency.

Coup and Counter Coup VI: Presidential Authoritarianism in Turkey

Barry Stocker Current Events, Law, Liberty, Politics , , , , , , , , , ,

(Previous posts here, here, here, here and here). The state of emergency proclaimed by President Erdoğan in Turkey on 20th July last year, in response to the coup attempt of five days before, is not a situation that will come to an end in a return to normality. It is the model for the presidential system that Erdoğan has been pushing for since 2007, when he was still admired by many liberal minded people inside Turkey (though not me) and abroad. One of the key provisions of the state of emergency is that the President can issue decrees with the force of law. There are doubts about the constitutionality of this form of ‘law making’ but two members of the Constitutional Court were arrested after the coup attempt and the chances of the court starting up to executive power are now extremely remote. Judges and prosecutors have been demoted and even arrested after making the ‘wrong’ decision during the state of emergency and I do not think Erdoğan and his associates would have any scruples at all about further arrests of judges in the Constitutional Court.

The Presidential system, or one person rule system, which Turks will vote on, will retain the decrees as law powers of the Presidency. There are some limits on the decrees issued, but as the President will control the appointment of most of the senior judiciary there are serious questions about whether the Constitutional Court will put any effective break on these powers to legislate through decree. There is no sign of the state of emergency ending, though at least now everyone can see the deception in the original decision to declare a state of emergency for three months only instead of the six months maximum allowed in the Constitution. The state of emergency is renewed every three months with no debate and no indication of when it will come to an end. Does Erdoğan have any intention of ending the state of emergency before he becomes a President elected with the new powers? In principle these powers should only be implemented after the next presidential election in 2019, coinciding with elections to the National Assembly. Erdoğan may wish to bring these elections forward, particularly for the National Assembly if he loses the referendum. While it may seem outrageous for the Council of Ministers to keep prolonging the state of emergency until 2019, the AKP government has been doing more and more previously outrageous and even unimaginable things now for some years, particularly since the Gezi protests of 2013.

What the state of emergency also means is that suspects can be held without charge and access to lawyers if charged with ‘terrorism’, which is defined in absurdly broad ways to cover any kind of contact with the Gülenists or sympathy for the Kurdish autonomy movement. Torture has been making a return in Turkey after becoming relatively unusual since the PKK terror campaign began again in 2015. The state of emergency conditions have now normalised it completely and though the government denies torture charges, in the normal manner of authoritarian regimes, claiming the charges are terrorist propaganda, you have to wonder how seriously they expect anyone to take the denials. Photographs of the alleged coup plotters immediately after the coup attempt showed they had been badly beaten, though of course this is explained away as the result of ‘resisting arrest’, another time-honoured evasion. Consistent reports suggest prisoners are denied food, placed in stress positions for long periods of time, beaten and sexually assaulted. In the more moderate cases, the prison officials merely restrict prisoners to a diet of bread and bad quality tap water in conditions of psychological abuse. There is amongst everything else in Turkey a growing problem of mental and emotion health problems amongst the survivors of these ordeals, which are of course excluded from the mainstream media.

The rhetoric and abuse used by police ‘special teams’ invading the media and political offices of ‘terrorist’, that is Kurdish autonomy and other leftist groups, involve extreme nationalism and Ottomanism. Kurds are insulted as covert Armenians. Actual Armenians are told that the Ottomans destroyed the Armenians and that Turks are the masters of Armenian. A particularly disgusting reference to the massacre of 1 500 000 Armenians during World War One. These are not aberrations, this behaviour reflects the deep ideology of the AKP, mixing extreme nationalism and Ottomanism, of course ignoring the tensions between these positions. The torture and abuse is legitimated in the minds of perpetrators by a political rhetoric and government measures which present opponents as terrorist and part of international conspiracies against the ‘innocent’ Turks who are so good they are naive. This I am afraid is no exaggeration of the political discourse of the moment.

There is no reason to think the abuse and political extremism will end, though of course we should hope it does. If all Gülenists – real and imagined – and all sympathisers with Kurdish autonomy or the far left are targeted, then there are essentially endless opportunities for authoritarianism, polarising dehumanising rhetoric and abuse. I can only presume the current atmosphere will last indefinitely, as Erdoğan has found it a successful strategy for staying in power and increasing his power.

It is of course not just a question of his own political power. There is the question of how his family occupy places of privilege in large Muslims NGOs (at the same time as non-AKP oriented NGOs come under increasing pressure) with huge budgets and sit on the boards of major companies in Turkey. Erdoğan does not envisage any situation in which these activities are placed under mainstream media examination, and even less legal investigation. The issue of legal immunity is a huge one in Turkish politics. The amended constitution would allow the President to appoint anyone to two vice presidential positions and to the cabinet. Like the President all these people would have lifetime immunity from prosecution for activities undertaken while in office. Though the National Assembly would have the power to send the President to the Constitutional Court, this requires a very high threshold, clearly designed to protect Erdoğan even if the AKP loses a large part of its support.

As mentioned above, there is an expectation that Erdoğan will call an early National Assembly election if he loses the referendum. It seems likely on current polling that two out of the three opposition parties currently in the National Assembly would fail to meet the electoral thresh hold of 10%. This means the National Action Party, which has split over the referendum, and the Kurdish radicals who have lost some of their more moderate support since the revival of PKK violence. In such a National Assembly, the AKP could certainly put any constitutional proposal to referendum and very possibly could have enough votes to amend the constitution without referendum. So even if Erdoğan loses the election, he could get the same measures, or close enough, through other means.

(Last post in the current series, though I will post an appendix on Ottomanist and Atatürkist legacies in Turkey, along with comments on related political thought.)

Coup and Counter Coup IV The Kurdish issue in Turkey

Barry Stocker Current Events, Law, Liberty, Politics , , , , , , , , , ,

Previous parts here, here and here. As mentioned in the last post, in the immediate post coup atmosphere President Erdoğan appeared to have the support of some significant part of Kemalist (as in Kemal Atatürk who shaped the Turkish republic with reference to secularism, modernisation, national sovereignty and statism) opinion, the more hard core part, seeing shared enemies in both violent Kurdish separatists and Gülenist (members of a religious community, see previous posts) infiltrators into the state apparatus. The return of PKK (the Kurdish acronym for Workers’ Party of Kurdistan) violence against state forces and civilians (the latter largely undertaken by the Freedom Falcons of Kurdistan, TAK in the Kurdish acronym, a product of the PKK) in the summer of 2015 already placed the AKP, hardcore Kemalists, and the Nationalist Action Party (MHP, rooted in a ‘Grey Wolf’ or ‘Idealist’ ideology of absolutist state nationalism and Pan-Turkism) on the same side advocating a militant response including support for the army-led destruction of whole urban areas in PKK strongholds in the southeast. Previously the latter two groups had regarded the AKP as treasonous for holding talks with Abdullah Öcalan, the imprisoned founder-leader of the PKK, fearing a federalised Turkey with a southeast federal region under strong PKK influence. The talks were not at all public, no attempt was made to prepare public opinion for possible evolution in the Turkish state tradition, or to hold any kind of open discussion on the issues at stake.

The talks collapsed with Öcalan returned to strict prison conditions. Despite the MHP and hardcore Kemalist fears about federalisation on PKK terms, it seems likely that Erdoğan never intended more than token concessions to Kurdish identity and autonomy for the southeast, in exchange for operating for the PKK and a party with a common origin as an external support of the AKP. The party which has a common origin with the PKK is DBP (Turkish acronym for Democratic Regions Party) and the umbrella party it formed to accommodate small leftist groups (which don’t have specific Kurdish origins). It appears that the DBP hardcore does not like accommodating non-Kurds so the survival of HDP is not guaranteed. It poses a very happy image to leftist educated Turks, of interest in social liberalism, minority rights and left socialist policies. This reflects a historical feeling of marginalisation, because the CHP (Republican People’s Party: Kemalist/social democratic something like the French Socialist Party in merging Jacobin, social democratic and socialist traditions) is seen as too nationalist and not ‘really’ leftwing.

It tells you something about Turkish politics that there are people who insist that HDP is not leftwing despite its obvious leftwing policies and roots in the Maoist orientation of the PKK. This insistence is rooted in the belief that all left polices must be non-ethnic, that raising ethnic issues is inherently divisive and chauvinistic, reflecting of course a blindness to how some people experience the Turkish state as unaccommodating of, and even hostile to, expressions of identity by those people in Turkey who have a first language, and associated culture, other than Turkish. The Maoist and terrorist origins of the main expressions of Kurdish autonomy politics supports that majoritarian blindness and even chauvinism. Clearly they feed off each other.

The HDP has been turned into an effectively semi-legal party since the summer of 2015, which is not the right state reaction from the point of view of constitutional democracy and individual liberty. However, the HDP has to some degree brought this on itself, because while condemning the acts of terror directed from mountains in Iraq by the current PKK leader Cemil Bayık, it has never rejected the PKK as such, treating Öcalan as the symbolic leader of Kurds in Turkey, and adhering to a political rhetoric of ‘autonomy’ shared with the PKK.

The government has now used the state of emergency to take over the administration of all HDP led local government, that is local government throughout the southeast, appointing ‘trustees’ to run these municipalities. All media with an HDP orientation has been closed down and blocked online if based abroad.

Accusations have been made of the HDP using local government as infrastructure and a source of money for the PKK. This has yet to be proven in court. If it was, we would certainly have to consider the HDP to have taken a very bad path. As things stand, this has not been proven and the persecution of HDP politicians along with the takeover of HDP municipalities is highly premature, serving political power goals and grossly overriding any idea that guilt only exists if and when proven in court, preferably with judges under less political pressure than is the case at present in Turkey.

Immigration and Jobs

Jacques Delacroix Current Events, Law , , , , , , , ,

A couple of thoughts about immigration. It seems that there is a widespread belief in the US that immigrants take jobs from Americans. It makes superficial sense if you also assume that the number of jobs to be filled is fixed and that just about anyone can do any kind of work.

Both assumptions are mostly false. Here is an example that illustrates why.

I keep hearing native-born Americans trained in various high-tech fields who claim that they are unemployed because of competition from low-cost H1B visa holders. H1B visas go to foreigners with skills deemed to be needed by the American economy. A large number of H1B visa holders are from India and many are from China; they also come from a wide variety of other countries, including Russia, France, Bulgaria, etc. The implicit affirmation is that were such visas stopped completely, those who complain would step right into the vacant jobs.

Two things. First the claim that foreign H1B visa holders work for less is largely unsubstantiated although it should be easy to investigate such abuse. Second, I think it’s illegal to pay H1B holders less than Americans. Why would many employers risk a distracting lawsuit? Of course, a few might because there are irrational people everywhere.

Next and last: Hundreds of thousands of high-tech jobs are going begging as I write. Are employers so vicious that they would rather have the work not done at all than to give it to a credentialed American? Or is it more likely that the unemployed native-born high-tech workers have skills that do not match demand? If the second supposition is correct, ending the H1B visa program would cause even more high-tech positions to remain empty. Of course, this would have a negative effect on everyone, on every American’s prosperity.

Missing from this narrative: the possibility that high power, accelerated re-training programs would bring unemployed Americans the skills the high-tech sector requires.

I have to begin a confession that’s going to make me even more unpopular locally than I already am. I mean unpopular among my conservative friends. I taught in an MBA program in the middle of Silicon Valley for 24 years, two quarters each year. It was an evening program squarely directed at the ambitious hard-working. During that span of time, I must have had 150 students from India. I remember only one who was a bad student. I was intrigued, so I made inquiries. Sure enough, he had an Indian first name and last name, and the corresponding appearance but he was born in the US.* I cannot report so glowingly about other, non-Indian students that sat in my classroom through the years.

This little narrative proves nothing, of course. Consider it food for thought. Do it especially if you voted for Pres. Trump – as I did.

Reminder: H1B visas are awarded to individuals with an occupational qualification deemed to be in short supply in the US. Right now, it’s likely that most of those who get an H1B are trained in some IT area but that’s not all. For a long time, farriers from everywhere could easily get one. (If you don’t know what a farrier is, shame on you and look it up.)

There are other – presumably non-specialized – categories of immigrants who are widely suspected of taking jobs from Americans. The truth is not always easy to discern, not even conceptually. Five or six miles from where I live in Santa Cruz, there are growers who are tearing off their hair. Their problem is that they can’t figure out who is going to pick the crops they are now putting into the ground. As I have said repeatedly, the Mexicans they counted on in years past have largely stopped coming.

A quarter of a mile from where I live, and in the same direction, there are dozens of perfectly healthy US-born Americans who are working as “sales associates.” The apparent conceptual issue is this: sales associates earn $10/hr while a moderately experienced crop picker earns $15. The question arises of why we don’t see a full exodus from the sales positions to jobs that pay 50% more?

I think it’s lazy to call the US-born sales associates “lazy.” The reality is that the Mexicans who came, and are still coming, to pick vegetables and fruits in California overwhelmingly came from a rural population. They were reared under conditions where almost everyone around them labored in the fields. When they arrive in the US – legally through family reunion – or illegally, they are ready to take picking jobs. They then just do here more or less the same work they would do at home but for five times the pay or more.

In American society that kind of population disappeared several generations ago through mechanization and, of course, through the importation of foreign labor, precisely. Native-born Americans won’t do the work because it’s alien to their background. I think US-born people of Mexican ascendancy whose parents labored in the field won’t do the work either. Their parents do what they can to make their own work experience alien to their children. I am not surprised, that’s another expression of the American dream. It’s  what many would do back in Mexico but then, why emigrate?

I am pretty sure that any immigration reform should include a temporary agricultural program, a sort of H1A ( “A” for “Agriculture”) visa. It would allow foreigners to come to the US legally, just to work in the fields and for a set period only. It would not lead to permanent residency, nor, of course, to citizenship. Such a program existed between the forties and the early sixties, if memory serves. It was called the “Bracero program.” I don’t know why it was terminated. (Perhaps a reader can tell us.)

Mexicans would be the first to take advantage of such a program. As Mexico’s economy develops, they may be replaced by Central Americans and, eventually, by Africans. Such a program would sidestep the kind of assimilation problem France, for example, is facing right now with its North African population.

PS Personally, I think Mexicans make good immigrants to the US. I would bet than in ten years we will be begging them to come.

* Disclosure: I am married to an Indian woman. She is not in high-tech unfortunately.

Illegal Immigration: Pres. Trump’s New Measures

Jacques Delacroix Current Events, Law , , ,

I can’t wait for the raging assaults by the pseudo-cultural elite and by the media against Pres. Trump to stop to begin criticizing some of his decisions, as I would with any other president.

I have heard and read reports that the president intends to launch a policy of accelerated repatriation of illegal aliens. It will single out criminals for priority deportation (as was the case under Mr Obama). At this point, almost everybody agrees about getting rid of illegal aliens who are real criminals, especially the violent ones. Again, the new policy sounds a lot like Mr Obama’s, with a few details different. The details often matter when it comes to human lives, also when it comes to traditions of government. Here are two such details.

First, I have heard that even traffic tickets qualify an illegal alien for quick deportation. Make a wrong u-turn and your life gets broken up.

Second, I have heard and read that even being merely charged with a crime places you at the head of the line for deportation. Someone who looks like you steals a car. You get charged by mistake. You are gone.

The first detail seems awfully rough to me. I would feel better if the word “recidivist” were included. A person who breaks driving rules repeatedly is a trouble-maker we can do without. A guy who is too distracted to interpret the U-turn sign (could be me – once) is not exactly a criminal in the real sense of the word.

It’s true that such extreme severity would improve the driving of all illegal aliens. The claim is probably also correct however that it would interfere with aliens’ (legal and not) willingness to cooperate with the local police. Aside from this, I would bet it would involve significant law enforcement costs just to process traffic tickets through to the Immigration Service. I am a conservative, I am against big government, even against big government at the local level. I don’t want tax money, federal, state, or local, to be wasted processing a U-turn violator. It seems irrational to me.

The second, detail concerns the treatment of people only charged with a crime. It’s simple. I just don’t want any of them to be included in the priority list. Having any branch of government treating the accused as guilty simply goes too strongly against everything I believe. It’s un-American.

Yes, I have not forgotten that the subjects have no right to be in the country in the first place. I don’t care. It’s not about illegal aliens’ rights. Immigrants, legal or not, have no rights as a category as far as I am concerned. They only possess the ordinary human rights of anyone under American jurisdiction.

It’s about a slippery slope for all. If we begin officially thinning out the traditional wall between “charged” and “guilty,” where are we going to stop?

I understand that a lawyer would argue that the person is technically not being deported for the imaginary crime of being charged but because he has no right to be in the country, period. Do you know the one about the lawyer….

Welfare Costs are not a Good Argument Against Immigration

Zachary Woodman Current Events, Economics, Law , , , , , , , ,

Note: A version of this was initially posted on my old, now defunct blog. However, has become increasingly relevant in the age of Trump, and is worthy of reconsideration now.

It’s one of the most common arguments against looser immigration going back to Milton Friedman to Donald Trump. It is commonly claimed that even though loosening immigration restrictions may be economically beneficial and just, it should be opposed due to the existence of the welfare state. Proponents of this claim argue that immigrants can simply come to this country to obtain welfare benefits, doing no good for the economy and adding to budget deficits.

Though this claim is on its face plausible, welfare is not nearly as much of a compelling reason to oppose immigration as so many argue. It is ultimately an empirical question as to whether or not the fiscal costs of immigration significantly outweigh the fiscal benefits of having more immigrants pay taxes and more tax revenue economic growth caused by immigration.

Before delving into the empirical studies on the matter, there is one very important fact that is too often neglected in these discussions: there are already heavy laws restricting all illegal immigrants and even the vast majority of legal ones from receiving Welfare. As the federal government itself–specifically the HHS–notes:

With some exceptions, “Qualified Aliens” [ie., legal immigrants] entering the country after August 22, 1996, are denied “Federal means-tested public benefits” for their first five years in the U.S. as qualified aliens.

If we were to allow more immigrants, there are legal mechanisms stopping them from getting welfare. There are some exceptions and even unlawful immigrants occasionally slip through the cracks, but this is already a major hole in the case that welfare means we should hold off on immigration reform. The vast majority of immigrants cannot receive welfare until years after they are legalized.

However, for the sake of argument, let us ignore that initial hole in the case against increased immigration. Let’s generously assume the majority of immigrants–legal and illegal–can somehow get their hands on welfare. There is still little reason to expect that additional immigrants would be any more of a fiscal drag on welfare programs for the vast majority of our population simply because they are not the type of people who typically wind up on welfare. Our welfare programs are primarily designed to protect a select few types of people: the sick and elderly (Social Security and Medicare), and women and children (SCHIP, SNAP, TAMPF, etc.) If one looks at the demographics of immigrants coming into the country, however, one finds that they do not fit in the demographics of those who typically qualify for welfare programs. According to the Census Bureau, the vast majority (75.6%) of the total foreign-born population (both legal and illegal immigrants) are of working age (between 25 and 65).  Most immigrants, even if they were legal citizens, would not qualify for most welfare programs to begin with.

On the other hand, poverty rates are higher among immigrants and that means more would qualify for poverty-based programs. However, most immigrants are simply not the type to stay in those programs. Contrary to common belief, immigrants are mostly hard-working innovators rather than loafing welfare queens. According to Pew Research, 91% of all unauthorized immigrants are involved in the US labor force. Legal immigrants also start businesses at a higher rate than natural born citizens and file patents at almost double the rate of natives. As a result, immigrants have fairly high social mobility, especially intergenerationally, and so will not stay poor and on welfare all that long.

Put it together, and you find that immigrants generally use many major welfare programs at a lower rate than natives. Immigrants are 25% less likely to be enrolled in Medicare, for example, than citizens and actually contribute more to Medicare than they receive while citizens make Medicare run at a deficit. From the New York Times:

[A] study, led by researchers at Harvard Medical School, measured immigrants’ contributions to the part of Medicare that pays for hospital care, a trust fund that accounts for nearly half of the federal program’s revenue. It found that immigrants generated surpluses totaling $115 billion from 2002 to 2009. In comparison, the American-born population incurred a deficit of $28 billion over the same period

Of course, nobody would advocate restrictions on how many children are allowed to be born based on fiscal considerations. However, for some reason the concern becomes a big factor for immigration skeptics.

If you are still not convinced, let us go over the empirical literature on how much immigrants cost fiscally. Some fairly partisan studies, such as this one from the Heritage Foundation (written by an analyst who was forced to resign due to fairly racist claims), conclude that fiscal costs are very negative. The problem, however, is that most of these studies fail to take into account the dynamic macroeconomic impact of immigration. Opponents of immigration, especially those at the Heritage Foundation, generally understand the importance of taking dynamic economic impacts of policy changes into account on other issues, e.g. taxation; however, for some (partisan) reason fail to apply that logic to immigration policies. Like taxes, immigration laws change people’s behavior in ways that can increase revenue. First of all, more immigrants entering the economy immediately means more revenue as there are more people to tax. Additionally, economic growth from further division of labor provided by immigration increases tax revenue.  Any study that does not succeed in taking into account revenue gains from immigration is not worth taking seriously.

Among studies that are worth taking seriously, there is general consensus that immigrants are either a slight net gain fiscally speaking, a very slight net loss or have little to no impact. According to a study by the OECD of its 20 member countries, despite the fact that some of its countries have massive levels of immigration, the fiscal impact of immigration is “generally not exceeding 0.5 percent of G.D.P. in either positive or negative terms.” The study concluded, “The current impact of the cumulative waves of migration that arrived over the past 50 years is just not that large, whether on the positive or negative side.”

Specifically for the United States, another authoritative study in 1997 found the following as summarized by David Griswold of the Cato Institute:

The 1997 National Research Council study determined that the typical immigrant and descendants represent an $80,000 fiscal gain to the government in terms of net present value. But that gain divides into a positive $105,000 fiscal impact for the federal government and a negative $25,000 impact on the state and local level (NRC 1997: 337).

Despite the slight negative impact for states, as Griswold notes, there is no correlation between immigration and more welfare for immigrants:

Undocumented immigrants are even more likely to self-select states with below-average social spending. Between 2000 and 2009, the number of unauthorized immigrants in the low-spending states grew by a net 855,000, or 35 percent. In the high-spending states, the population grew by 385,000, or 11 percent (U.S. Census 2011; NASBO 2010: 33; Passel and Cohn 2011). One possible reason why unauthorized immigrants are even less drawn to high-welfare-spending states is that, unlike immigrants who have been naturalized, they are not eligible for any of the standard welfare programs.

The potential fiscal impact of immigration from the Welfare state is not a good reason to oppose it at all. There are major legal barriers to immigrants receiving welfare, immigrants are statistically less likely to receive welfare than natives for demographic reasons, and all the authoritative empirical evidence shows that immigrants are on net not a very significant fiscal drag and can, in fact, be a net fiscal gain.

On Gentrification, Inequality and Zoning

Vincent Geloso Current Events, Economics, Law , , , , ,

On the CityLab blog, Richard Florida posted a piece pointing out that gentrification has virtually no effects on homeowners. I can buy that result, especially since I wrote a policy piece for a think tank back in the summer of 2016 on the issue. The important point that Florida underlines (by citing a paper by Martin and Beck in Urban Affairs Review) is that homeowners are not being displaced, but renters are more likely to be. This will probably fuel some people who are concerned about inequality. I disagree.

I want to point out that my interest in the issue is entirely related to the issue of inequality which some individuals have tried to tie to gentrification (sometimes without understanding that causality can run both ways). If you want to tie the two issues together, then you must realize that there are four “types” of gentrification. First of all, gentrification always appear in an area that is poor and it is always a result of a shift in demand for land in that area. However, that area can be largely unoccupied or heavily inhabited. It can also be in a district where zoning is lax or burdensome. In each of these situations, you will different effects with different interpretations for inequality.

  • Scenario 1 (largely vacant, lax zoning laws): in this situation, demand shifts right but there is slack in the local housing market and in any case, supply can adjust easily. In that case, the effects on rents will be minimal and will probably be smaller than the economic gains in terms of local economic activity. In this situation, there is little displacement and there is in fact a reduction in inequality.
  • Scenario 2 (largely vacant, heavy zoning laws): same happens, except that the restrictions on construction and building conversions put a ceiling on the capacity of a local area to adapt. The effect on rents is ambiguous and depends largely on the relative quantity changes (how many people relative to empty units). There are probably small to moderate gains in the area. There are ambiguous effects on inequality.
  • Scenario 3 (heavily occupied, lax zoning laws): in this situation, the influx of individuals creates a temporary surge in rents. This is because, in the short-term, housing supply is inelastic. In the long-run, the supply is more elastic and new units can be added to counterbalance the price effects. So, there is a long-term benefit that comes after a small bump. More individuals will be displaced than in scenario 1. Overall, a reduction in inequality might occur.
  • Scenario 4 (heavily occupied, heavy zoning laws): in this situation, the influx happens in a market where the supply is highly inelastic (short and long-run). In that case, the shift in demand creates a substantial increase in rents. This is where gentrification can hurt and be tied to inequality.

These four scenarios are important because they show something important that some people have to understand. Gentrification can increase inequality. However, that depends on the context and the institutions (zoning) surrounding the area in which it happens. In all cases, gentrification is a normal process that can’t really be stopped but turns sour because of zoning laws. Thus, if you really want to tie gentrification to inequality, it should twice removed since the first parents are zoning laws and construction limits.

Castro: Coercing Cubans into Health

Vincent Geloso Economics, History, Law, Liberty , , , , , , ,

On Black Friday, one of the few remaining tyrants in the world passed away (see the great spread of democracy in the world since 1988). Fidel Castro is a man that I will not mourn nor will I celebrate his passing. What I mourn are the lives he destroyed, the men and women he impoverished, the dreams he crushed and the suffering he inflicted on the innocents. When I state this feeling to others, I am told that he improved life expectancy in Cuba and reduced infant mortality.

To which I reply: why are you proving my point?

The reality that few people understand is that even poor countries can easily reduce mortality with the use of coercive measures available to a centralized dictatorship. There are many diseases (like smallpox) that spread because individuals have a hard time coordinating their actions and cannot prevent free riders (if 90% of people get vaccinated, the 10% remaining gets the protection without having to endure the cost). This type of disease is very easy to fight for a state: force people to get vaccinated.

However, there is a tradeoff to this. The type of institutions that can use violence so cheaply and so efficiently is also the type of institutions that has a hard time creating economic growth and development. Countries with “unfree” institutions are generally poor and grow slowly. Thus, these countries can fight some diseases efficiently (like smallpox and yellow fever), but not other diseases that are related to individual well-being (i.e. poverty diseases). This implies that you get unfree institutions and low rates of epidemics but high levels of poverty and high rates of mortality from tuberculosis, diarrhea, typhoid fever, heart diseases, nephritis.

This argument is basically the argument of Werner Troesken in his great book, The Pox of Liberty.  How does it apply to Cuba?

First of all, by 1959, Cuba was already in the top of development indexes for the Americas – a very rich and healthy place by Latin American standards. A large part of the high levels of health indicators were actually the result of coercion. Cuba actually got its very low levels of mortality as a result of the Spanish-American war when the island was occupied by American invaders. They fought yellow fever and other diseases with impressive levels of violence. As Troesken mentions, the rate of mortality fell dramatically in Cuba as a result of this coercion.

Upon taking power in 1959, Castro did exactly the same thing as the Americans. From a public choice perspective, he needed something to shore up support.  His policies were not geared towards wealth creation, but they were geared towards the efficient use of violence. As Linda Whiteford and Laurence Branch point out, personal choices are heavily controlled in Cuba in order to achieve these outcomes. Heavy restrictions exist on what Cubans can eat, drink and do. When pregnancies are deemed risky, doctors have to coerce women to undergo abortion in spite of their wishes. Some women are incarcerated in the Casas de Maternidad in spite of their wishes. On top of this, forced sterilization in some cases are an actually documented policy tool.   These restrictions do reduce mortality, but they feel like a heavy price for the people. On the other hand, the Castrist regime did get something to brag about and it got international support.

However, when you look at the other side of the tradeoff, you see that death rates from “poverty diseases” don’t seem to have dropped (while they did elsewhere in Latin America).  In fact, there are signs that the aggregate infant mortality rates of many other Latin Americans countries collapsed toward the low-levels seen in Cuba when Castro took over in 1959  (here too). Moreover, the crude mortality rate is increasing while infant mortality is decreasing (which is a strong indictment about how much shorter adult lives are in Cuba).

So, yes, Cuba has been very good at reducing mortality from communicable diseases and choice-based outcomes (like how to give birth) that can be reduced by the extreme use of violence. The cost of that use of violence is a low level of development that allows preventable diseases and poverty diseases to remain rampant. Hardly something to celebrate!

Finally, it is also worth pointing two other facts. First of all, economic growth in Cuba has taken place since the 1990s (after decades of stagnation in absolute terms and decline in relative terms). This is the result of the very modest forms of liberalization that were adopted by the Cuban dictatorship as a result of the end of Soviet subsidies. Thus, what little improvements we can see can be largely attributed to those. Secondly, the level of living standards prior to 1990 was largely boosted by the Soviet subsidies but we can doubt how much of it actually went into the hands of the population given that Fidel Castro is worth 900$ million according to Forbes. Thus, yes, Cubans did remain dirt poor during Castro’s reign up to 1990. Thirdly, doctors are penalized for “not meeting quotas” and thus they do lie about the statistics. One thing that is done by the regime is to categorize “infant deaths” as “late fetal deaths” – its basically extending the definition in order to conceal a poorer performance.

Overall, there is nothing to celebrate about Castro’s dictatorship. What some do celebrate is something that was a deliberate political action on the part of Castro to gain support and it came at the cost of personal freedom and higher deaths from preventable diseases and poverty diseases.

H/T : The great (and French-speaking – which is a plus in my eyes because there is so much unexploited content in French) Pseudoerasmus gave me many ideas – see his great discussion here.

The legacy of autocratic rule in China

Mark Koyama Economics, History, Law , , , , , , , , , ,

What is the long-term legacy of political persecutions? Here I want to present the main findings of my recent research with Melanie Meng Xue (UCLA Anderson). Our research is an attempt to undercover how a legacy of political persecution can shape social capital and civil society by studying imperial China. The full version of the paper is available here.

We know from other research that particular institutions, policies, and events can have a detrimental and long-lasting impact on economic and political outcomes (e.g. Nunn 2011, Voigtländer and Voth, 2012). But it is hard to find a setting where we can study the long-run impact of autocratic institutions. A key feature of autocracy is the use of persecutions to intimidate potential opponents. In our paper, Melanie and I argue that the intensification of imperial autocracy that took place in the High Qing period (1680-1794) provides an ideal setting to study the impact of such persecutions.

Qing China

The High Qing period was one of great political stability, imperial expansion, and internal peace. Economic historians like Bin Wong and Ken Pomeranz have shown that China possessed a flourishing market economy during this period; it experienced Smithian economic growth and a massive demographic expansion. Rulers such as the Kangxi (1661-1722) and Qianlong Emperors (1735-1794) are seen as among the most successful in Chinese history. Nevertheless, as ethnic Manchus, these rulers were extremely sensitive to possible opposition from the Han Chinese. And during this period Qing tightened control over the gentry and implemented a policy of the systematic persecution of dissent. (Figure 1 depicts the Manchu conquest of China.)

chinamingqing
The Qing conquest of China

The Literary Inquisitions

The focus of our paper is on the impact of persecutions conducted by Qing China against individuals suspected of expressing disloyalty. We study the impact of these state-orchestrated persecutions on the social fabric of society. This allows us to speak to the kinds of concerns that authors like Hannah Arendt and George Orwell expressed about the long-run impact of totalitarianism in the 20th century.

These persecutions are referred to by historians as ‘literary inquisitions’. Existing scholarship suggests that the resulting fear of persecution elevated the risks facing writers and scholars, and created an atmosphere of oppression and a culture of distrust which deterred intellectuals from playing an active role in society. But these claims have never been systematically investigated. Putting together several unique datasets for historical and modern China, we explore the impact of literary inquisitions on social capital in Qing China and trace its long-run impact on modern China through its effect on cultural values.

spence
Jonathan Spence provides an excellent account of one of the most famous and unusual inquisition cases in his book Treason by the Book

To conduct our analysis, we use data on 88 inquisition cases. We match the victims of each case (there are often multiple victims per case) to their home prefecture. This data is depicted in Figure 1. Since prefectures varied greatly in their economic, social, and political characteristics we conduct our analysis on a matched sample. This ensures that the prefectures “treated” by a literary inquisition are similar in terms of their observables to those we code as “untreated”. As our data is a panel, we are able to exploit variation across time as well as variation in space.

While individuals could be persecuted for a host of reasons, these were all but impossible to anticipate ex ante. Cases were referred to the emperor himself. Frederic Wakeman called this “the institutionalization of Imperial subjectivity.” The standard punishment in such cases was death by Lingchi or (slow slicing) and the enslavement of all one’s immediate relatives. In some cases, however, the guilty party would be executed by beheading. These persecutions aimed to deter opposition to Qing rule by signaling the ability of the Emperor to hunt down all potential critics or opponents of the regime.

Map.jpg

The Impact of Literary Inquisitions on Social Capital

We initially focus on the impact of persecution on the short and medium-run using our historical panel. We first examine the effects on the number of notable scholars.  In our preferred specification we find that a literary inquisition reduced the number of notable scholars in a prefecture by 33 percent relative to the sample mean.

We go on to show the effect of persecutions on collective participation among the gentry in China. Our measure of collective participation in civil society is the number of charitable organizations. Charitable organizations played an important role in premodern China providing disaster relief and local public goods such as repairing local roads. They were non-governmental organizations and played an important role alongside the government provision of disaster relief. In our preferred empirical specification, we find that a persecution number of charitable organizations by 38 percent relative to the sample mean.

These results are in keeping with the argument that literary inquisition had a major psychological impact on Chinese society. They are consistent with the rise of “inoffensive” literary subjects during the Qing period that have documented by historians. To reduce the risk of persecution, intellectuals scrupulously avoided activities that could be interpreted as constituting an undermining of Qing rule. Instead they “immersed themselves in the non-subversive “sound learning” and engaged in textual criticism, bibliography, epigraphy, and other innocuous, purely scholarly pursuits” (Wiens, 1969, 16).

The Impact of Literary Inquisitions on 20th Century Outcomes

We go on to examine how the effects of these persecutions can be traced into the 20th century. In particular, we focus on the provision of basic education at the end of Qing dynasty. In late 19th and early 20th century China, there was no centralized governmental provision of primary schools.  Basic education remained the responsibility of the local gentry who ran local schools.

Thus the provision of education at a local level was dependent on the ability of educated individuals to coordinate in the mobilization of resources; this required both cooperation and trust. We therefore hypothesize that if the persecution of intellectuals had a detrimental impact on social capital, it should also have negatively affected the provision of basic education.

We find that among individuals aged over 70 in the 1982 census – hence individuals who were born in the late Qing period – a legacy of a literary inquisition is associated with lower levels of literacy. This reflects the impact of literary inquisition on the voluntary schools provided by the gentry and is not associated with lower enrollment at middle school or high school. We show that result is robust to controlling for selective migration and for the number of death caused by the Cultural Revolution.

Finally, we show that literary inquisitions generated a cultural of political non-participation. Drawing on two datasets of political attitudes – the Chinese General Social Survey (CGSS) and the Chinese Political Compass (CPoC) – we show that individuals in areas in which individuals were targeted during literary inquisitions are both less trusting of government and less interested in political participation.

Finally, we find that individuals in prefectures with a legacy of literary inquisitions are less likely to agree that: “Western-style multi-party systems are not suitable for China” (Q 43.). This suggests that in areas affected by literary inquisitions individuals are also more skeptical of the claims of the Chinese government and more open to considering alternative political systems. Similarly, individuals in affected prefectures are more likely to disagree with the statement that: “Modern China needs to be guided by wisdom of Confucius/Confucian thinking.”

In summary, our analysis suggests that autocratic rule reduced social capital and helped to produce a culture of political quietism in pre-modern China. This has left a legacy that persisted into the 20th century. These findings have implications for China’s current political trajectory. Some scholars anticipate China undergoing a democratic transition as it’s economy develops (Acemoglu and Robinson, 2012). Others point to China as an example of “authoritarian resilience.” By showing that a long-history of autocratic rule and political persecutions can produce a culture of political apathy, our results shed light on a further and previously under-explored source of authoritarian resilience.

Words and Actions of Trump the Horrible

Jacques Delacroix Current Events, Law, Politics , , , ,

I spent yesterday listening in horrified fascination to the mass media creating a crude amalgam of Trump’s sins in the so-called video, yes, that old video.

Nearly all the media, including, I am afraid, the Wall Street Journal, put together or often mix in the same sentence two elements of Trump’s objectionable aspects: words and possible actions. The two deserve completely different treatments. There is no excuse for confusing them except a desire to win at all costs.

Words first: Trump referred to women in obscene terms. This is not in dispute. Calling women “pussies” may tell you something about his present character. (Although that happened fifteen years ago, when he was a registered Democrat.) I don’t see what it tells you that’s new. The man is crude. He is crude in precisely the same way that millions of American men are. I am completely innocent of that particular sin myself (because I was raised overseas) but I have several friends who qualify. It’s interesting that they are, by and large, the same male friends I would describe as “pussy-whipped.” (This is another topic, an interesting one I can’t deal with here: Married American men are exceptionally submissive.) I think the brouhaha about Trump’s obscene words is completely hypocritical and massively promoted by media that lost their intellectual self-respect some time ago. Public discourse also stopped being sensitive a long time ago irrespective of what the current neo-Victorians would have you believe: A young woman I have never met except on-line a couple of days ago, a Clinton supporter, recently invited me on Facebook to “suck my dick!” (She meant her own non-existent appendage.)

Then, there are Trump actions as revealed on the video. Fact is, the video reveals no, zero, objectionable acts. Instead, it reveals Mr Trump bragging about engaging in sexually assaultive behavior. The report is not a fact. Fake confessions are legion, especially within a bragging context. Donald Trump may have never, not once, done the things he says in the video he does, not even the slightest crotch grab. Now, if he is guilty of this kind of boasting, characteristic of teenage boys everywhere, you may decide he is too immature for the job but he is not (NOT) an unpunished criminal.

A stupid braggart and a rapist are different creatures. If you think they are more or less the same, you are full of shit and we need someone like Trump to clean house, because of you, precisely. You are poison while he, Trump, is only moronic.

Let’s focus on various forms of sexual assault. Trump committed some, at least one, or (OR) he did not. There is nothing in between. The function of the amalgam I heard all day yesterday is to spread the credibility of the reports of obscene talk onto the supposition of sexual assault: It’s true that he referred to women in a sexually crude manner, therefore, (THEREFORE), he must have assaulted women sexually. This kind of verbal ploy sometimes actually works. It works with fools and with fanatics.

Now I imagine I might be on a jury regarding Mr Trump’s sexual assault(s) (one or several). I would not have the option to find him a “little bit guilty,” or “sort of guilty,” or “mostly guilty,” or “not actually guilty but he might have done it; look how he refers to women.” The only options available are guilty/not guilty. That’s it. For once, judicial conventions correspond well with logic: He did it (any “it”), or (OR) he did not. There are almost an infinity of offenses a person can be charged with so, there is no reason to come up with unclear verdicts. The prosecutor can charge with attempted sexual battery, sexual battery, aggravated sexual battery, different kinds of rape, etc., exactly so a clean verdict is possible without violating factual evidence. Those who do not know this to be true don’t understand either the US Constitution nor basic fairness. They are temperamentally fascists. (There are other forms of fascism on the Clinton side, following Mr Obama.)

What we see right now is a massive and concerted display of hypocrisy on the part of the bulk of the kind-of-educated class, beginning with the media. It’s so obvious that I think that if Jesus were around today, He would be for Trump. Fact is, there is no record of his speaking up against obscenity while he repeatedly and vehemently attacked hypocrisy.

PS I am wavering in my support of Trump. It’s not because Clinton has become less than a total horror but because he falls too easily into her traps. It bothers me.

Pornography, virtual reality and censorship [I]: presidents and feminism

Bill Rein Culture, History, Law, Liberty , , , , , , , , , , , , , , , , , ,

Oculus Rift, recently purchased by Facebook and partnered with Samsung, and HTC Vive, manufactured by HTC with Valve technology, have lead the 2010 wave in developing virtual reality headsets. These technologies, innovative by today’s standards but primitive by science fiction’s, mark the beginning of a differently structured society. They also mark a starting point for a new debate about privacy, the social affects of videogames, and especially censorship in media.

Virtual reality (in its not-too-distant actuality) offers an opportunity to behave outside of social norms in an environment that is phenomenologically the real world. The only comparable experience for humankind thus far is lucid dreaming, for which the rewards are less intense and the journey less traversible than the quick promises of virtual reality machines. One inevitable development for these machines is violent, sexually explicit experiences, available for cheap and accessible 24/7. To see how VR might be received, the closest industries to analyze are the videogame and pornography industries.

Interestingly, pornography has a very liberal history, in comparison to other “societal ills,” like drugs. Erotica dates back to ancient cultures — notably, the Kama Sutra, hardcore by today’s standards, is still a staple of contemporary sexual experimentation — and today’s perversions were common themes: bestiality, pedophilia, etc., although pornography with an emphasis on violence might be a more modern trend. This isn’t to ignore, however, the roles typically played by women in ancient Western folklore and mythology, which are degrading by today’s feminist standards.

The case could be made that today’s censorial views on pornography come from a far more malevolent or oppressive stance toward women than two millennia ago. The free expression that pornographic media once enjoyed was severely deflated over the 20th century. Only two years ago, a plethora of activities were banned from pornography in the United Kingdom. Reacting to the legislation, commentators were quick to criticize what was seen as policy that was specifically anti-female pleasure. Female ejaculation, fisting, face-sitting, and many forms of spanking or role-play were among the restrictions. There are puritanical, “moral outrage” elements to the restriction, but many noticed the absurdity of banning face-sitting: said one producer, “Why ban face-sitting? What’s so dangerous about it? … Its power is symbolic: woman on top, unattainable.” (There has been well-intended censorship as well. Los Angeles county passed Measure B in 2012 to require condom use during any pornographic scene with anal or vaginal contact, to combat the spread of venereal disease.)

Nowadays, there are plenty of porn directors that have learned to focus on both male and female pleasure, and reintroduced artistic merit to their directions. With the equalizing force gaining momentum in porn, it’s curious what the vehement, persistent condemnation springs from, when not focused exclusively on abusive sex scenes. In addition, the negative effects of pornography’s presence in society are still being debated. Just the other day, a study which led to headlines like “Porn doubles the risk of divorce” and “porn signifies a death knell for marriage” was criticized by Reason magazine for failing to address important underlying factors that more plausibly contribute to both pornography consumption and an unhappy marriage leading to divorce. There seems to be an obsession on behalf of the great majority of the public in assigning pornography to some sort of social harm.

Research on photographic pornography’s effect on society began early and aggressively. The Meese Report (1986), commissioned by Reagan and still frequently cited by anti-pornography advocates, determined pornography to be detrimental to society and family relations, and especially for women and children. Arguments built on similar reports attempt to connect sexually explicit material with rapes and domestic violence, alleging that the desensitization to rough sex carries over from the depictional world into the real one. Henry E. Hudson, the Chairman of the Meese Commission, alleged that pornography “appears to impact adversely on the family concept and its value to society.” The Meese Report, however, has been challenged extensively for bias, and is not taken seriously as a body of research any longer. One criticism by writer Pat Califia, concluding a traditionalist narrative embedded in the research, states that the report “holds out the hope that by using draconian measures against pornography we can turn America into a rerun of Leave It to Beaver.”

The United States’ Commission on Obscenity and Pornography, preceding the Meese Report and commissioned by Lyndon B. Johnson and Nixon, was unable to find evidence of any direct harm caused by pornography. (Although Nixon, despite the evidence under his administration, believed porn corrupted civilization.) It is curious that a new federal study was requested only sixteen years after the first extensive one, but maybe not too unusual given the growth of porn with technology (from adult stores and newsstands to unlimited free online access; the internet just celebrated its quarter-centennial birthday); also not too unusual given the absurd and expensive studies already undertaken by the federal government. It is also worth pointing out that pornography, though often connected to feminism, is a divisive issue within 20th century and contemporary feminism: some thinkers, like Andrea Dworkin, condemned it as intrinsically anti-women; others feminists like Ellen Willis argued for pornography as liberating and its suppression as moral authoritarianism. The debate along lines of sexuality, online or otherwise, culminated in the feminist “sex wars,” with groups like Feminists Against Censorship and Women Against Pornography popping up. Thus, the debate is open across every ideological camp, and support of pornography is neither necessarily liberal nor necessarily feminist.

[In the next post, I discuss violent pornography’s cross-media transformation into videogames, more sociological research and the general point, and insecurity, of prohibitory measures.]

Rick solves the gun crisis

Rick Weber Current Events, Law, Liberty ,

My best (uninformed) reading of the data is that gun ownership is slightly positively correlated with successful suicide attempts but little else, and that sounds about right to me. I’ve met (other) gun owners, and for the most part they aren’t likely to turn into Rambo in an emergency situation just because they’ve got a sweet gun.

But the 30 seconds of Facebook commentary on this last event before I had to close the tab led me to a revelation. I’ve said before that there’s no such thing as no gun control. Throw that together with the notion that government is a monopoly on coercion, and you’ve got my recent insight: a liberalized gun policy is equivalent to deputizing just about everyone.

Frankly, if I threw a Nerf ball into a crowd, I wouldn’t be likely to hit someone who should own a gun, but I also wouldn’t hit someone who should vote. (That hypothetical person’s vote would probably do more harm than their gun.) And that responsibility problem is similar in both cases. Everyone should have a right to vote and own a gun, but both rights should come with a heavy responsibility.

I can imagine a universe where the bouncers are armed and deputized as a routine matter. And I think that in such a world it would be relatively easy to have a liberalized 2nd amendment combined with a cultural understanding that a gun is a powerful tool to be wielded carefully rather than an entitlement.

The Right would do well to focus on their strong point here: responsibility is key. And the Left as well: barbaric intolerance is bad. Both sides confuse amoral tools with moral judgments.