Why do we teach girls that it’s cute to be scared?

Rick Weber Culture, Economics, Liberty, Philosophy , , , , , ,

I just came across this fantastic op-ed while listening to the author being interviewed.

The author points out that our culture teaches girls to be afraid. Girls are warned to be careful at the playground while boys are expected… to be boys. Over time we’re left with a huge plurality of our population hobbled.

It’s clear that this is a costly feature of our culture. So why do we teach girls to be scared? Is there an alternative? This cultural meme may have made sense long ago, but society wouldn’t collapse if it were to disappear.

Culture is a way of passing knowledge from generation to generation. It’s not as precise as science (another way of passing on knowledge), but it’s indispensable. Over time a cultural repertoire changes and develops in response to the conditions of the people in that group. Routines, including attitudes, that help the group succeed and that are incentive-compatible with those people will persist. When groups are competing for resources, these routines may turn out to be very important.

It’s plausible that in early societies tribes had to worry about neighboring tribes stealing their women. For the tribe to persist, there needs to be enough people, and there needs to be fertile women and men. The narrower window for women’s productivity mean that men are more replaceable in such a setting. So tribes that are protective of women (and particularly young women and girls) would have an cultural-evolutionary advantage. Maybe Brandon can tell us something about the archaeological record to shed some light on this particular hypothesis.

But culture will be slower to get rid of wasteful routines, once they catch on. For this story to work, people can’t be on the razor’s edge of survival; they have to be wealthy enough that they can afford to waste small amounts of resources on the off-chance that it actually helped. Without the ability to run randomized control trials (with many permutations of the variables at hand) we can never be truly sure which routines are productive and which aren’t. The best we can do is to try bundles of them all together and try to figure out which ones are especially good or bad.

So culture, an inherently persistent thing, will pick up all sorts of good and bad habits, but it will gradually plod on, adapting to an ever-changing, ever evolving ecosystem of competing and cooperating cultures.

So should we still teach our girls to be scared? I’d argue no.* Economics tells us that being awesome is great, but in a free society** it’s also great when other people are awesome. Those awesome people cure diseases and make art. They give you life and make life worth living.

Bringing women and minorities into the workplace has been a boon for productivity and therefore wealth (not without problems, but that’s how it goes). Empowering women in particular, will be a boon for the frontiers of economic, scientific, technical, and cultural evolution to the extent women are able to share new view points and different ways of thinking.

And therein lies the rub… treating girls like boys empowers them, but also changes them. So how do we navigate this tension? The only tool the universe has given us to explore a range of possibilities we cannot comprehend in its entirety: trial and error.

We can’t run controlled experiments, so we need to run uncontrolled experiments. And we need to try many things quickly. How quickly depends on a lot of things and few trials will be done “right.” But with a broader context of freedom and a culture of inquiry, our knowledge can grow while our culture is enriched. I think it’s worth making the bet that brave women will make that reality better.

* But also, besides what I think, if I told parents how to act… if I made all of them follow my sensible advice, I’d be denying diversity of thought to future generations. That diversity is an essential ingredient, both because it allows greater differences in comparative advantage, but also because it allows more novel combinations of ideas for greater potential innovation in the future.

** And here’s the real big question: “What does it mean for a society to be free?” In the case of culture it’s pretty easy to say we want free speech, but it runs up against boundaries when you start exploring the issue. And with billions of people and hundreds (hopefully thousands) of years we’re looking at a thousand-monkey’s scenario on steroids… and that pill from Flowers for Algernon.

There’s copyright which makes it harder to stand on the shoulders of giants, but might be justified if it helps make free speech an economically sustainable reality. There’s the issue of yelling “Fire!” in a crowded theater, and the question of how far that restriction can be stretched before political dissent is being restricted. We might not know where the line should be drawn, but given enough time we know that someone will cross it.

And the issue goes into due process and business regulation, and any area of governance at all. We can’t be free to harm others, but some harms are weird and counter-intuitive. If businesses can’t harm one another through competition then our economy would have a hard time growing at all. Efficiency would grow only slowly tying up resources and preventing innovation. Just as there’s an inherent tension in the idea of freedom between permissiveness and protection, there’s a similar tension in the interdependence of cooperation and competition for any but the very smallest groups.

The existentialist origins of postmodernism

Bruno Gonçalves Rosi Liberty, Philosophy, Religion , , , , , , , , , , , , , , , ,

In part, postmodernism has its origin in the existentialism of the 19th and 20th centuries. The Danish theologian and philosopher Søren Kierkegaard (1813-1855) is generally regarded as the first existentialist. Kierkegaard had his life profoundly marked by the breaking of an engagement and by his discomfort with the formalities of the (Lutheran) Church of Denmark. In his understanding (as well as of others of the time, within a movement known as Pietism, influential mainly in Germany, but with strong precedence over the English Methodism of John Wesley) Lutheran theology had become overly intellectual, marked by a “Protestant scholasticism.”

Scholasticism was before this period a branch of Catholic theology, whose main representative was Thomas Aquinas (1225-1274). Thomas Aquinas argued against the theory of the double truth, defended by Muslim theologians of his time. According to this theory, something could be true in religion and not be true in the empirical sciences. Thomas Aquinas defended a classic concept of truth, used centuries earlier by Augustine of Hippo (354-430), to affirm that the truth could not be so divided. Martin Luther (1483-1546) made many criticisms of Thomas Aquinas, but ironically the methodological precision of the medieval theologian became quite influential in Lutheran theology of the 17th and 18th centuries. In Germany and the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) Lutheranism became the state religion after the Protestant Reformation of the 16th century, and being the pastor of churches in major cities became a respected and coveted public office.

It is against this intellectualism and this facility of being Christian that Kierkegaard revolts. In 19th century Denmark, all were born within the Lutheran Church, and being a Christian was the socially accepted position. Kierkegaard complained that in centuries past being a Christian was not easy, and could even involve life-threatening events. In the face of this he argued for a Christianity that involved an individual decision against all evidence. In one of his most famous texts he makes an exposition of the story in which the patriarch Abraham is asked by God to kill Isaac, his only son. Kierkegaard imagines a scenario in which Abraham does not understand the reasons of God, but ends up obeying blindly. In Kierkegaard’s words, Abraham gives “a leap of faith.”

This concept of blind faith, going against all the evidence, is central to Kierkegaard’s thinking, and became very influential in twentieth-century Christianity and even in other Western-established religions. Beyond the strictly religious aspect, Kierkegaard marked Western thought with the notion that some things might be true in some areas of knowledge but not in others. Moreover, its influence can be seen in the notion that the individual must make decisions about how he intends to exist, regardless of the rules of society or of all empirical evidence.

Another important existentialist philosopher of the 19th century was the German Friedrich Nietzsche (1844-1900). Like Kierkegaard, Nietzsche was also raised within Lutheranism but, unlike Kierkegaard, he became an atheist in his adult life. Like Kierkegaard, Nietzsche also became a critic of the social conventions of his time, especially the religious conventions. Nietzsche is particularly famous for the phrase “God is dead.” This phrase appears in one of his most famous texts, in which the Christian God attends a meeting with the other gods and affirms that he is the only god. In the face of this statement the other gods die of laughing. The Christian God effectively becomes the only god. But later, the Christian God dies of pity for seeing his followers on the earth becoming people without courage.

Nietzsche was particularly critical of how Christianity in his day valued features which he considered weak, calling them virtues, and condemned features he considered strong, calling them vices. Not just Christianity. Nietzsche also criticized the classical philosophy of Socrates, Plato, and Aristotle, placing himself alongside the sophists. The German philosopher affirmed that Socrates valued behaviors like kindness, humility, and generosity simply because he was ugly. More specifically, Nietzsche questioned why classical philosophers defended Apollo, considered the god of wisdom, and criticized Dionysius, considered the god of debauchery. In Greco-Roman mythology Dionysius (or Bacchus, as he was known by the Romans) was the god of festivals, wine, and insania, symbolizing everything that is chaotic, dangerous, and unexpected. Thus, Nietzsche questioned the apparent arbitrariness of the defense of Apollo’s rationality and order against the irrationality and unpredictability of Dionysius.

Nietzsche’s philosophy values courage and voluntarism, the urge to go against “herd behavior” and become a “superman,” that is, a person who goes against the dictates of society to create his own rules . Although he went in a different religious direction from Kierkegaard, Nietzsche agreed with the Danish theologian on the necessity of the individual to go against the conventions and the reason to dictate the rules of his own existence.

In the second half of the 20th century existentialism became an influential philosophical current, represented by people like Jean-Paul Sartre (1905-1980) and Albert Camus (1913-1960). Like their predecessors of the 19th century, these existentialists criticized the apparent absurdity of life and valued decision-making by the individual against rational and social dictates.

Famine and Finance: Credit and the Great Famine of Ireland

Vincent Geloso Economics, History , , , , , ,

41YjUSWp3JL._SX351_BO1,204,203,200_I have recently finished reading Famine and Finance by Tyler Beck Goodspeed. While short, it should have a prominent place on the shelves of economic historians interested (obviously) in Irish history and (less obviously) in Malthusian theory.

Famine and Finance is a study of the response of Irish farmers to the potato blight. As it is known to many, many individuals simply left Ireland. However, where micro-credit was available, Goodspeed finds that farmers adapted by shifting to different types of activities – notably livestock. These areas experienced a smaller decline in population. Basically, where the institution of micro-credit was present, the demographic shock was much less severe. If only for this nuance, the book makes a sizeable contribution to the historiography of Ireland. The methods used are also elegantly simple and provide an interesting road map for anyone interested in studying the responses of local population to environmental shocks.

However, the deeper point comes from it tells us about institutions. In Goodspeed’s story, the amplitude of the collapse of the Irish population in the 19th century depends on the presence of the institution of micro-credit. Basically, the institution determined the amplitude of the shock. Since Ireland’s potato blight is often presented as the textbook case of Malthusian pressures, Goodspeed’s results are particularly interesting. In his chatper titled”Was Malthus Right?”, he shows that when controls for the institution of micro-credit is present, the typical Malthusian variables fail to explain population changes. In other words (i.e.  my words) , Malthusian pressures (the change in population) are in fact institutional failures.

This is a point I have often made elsewhere (see here, here and here and a blog post here). And because Goodspeed backs this point of mine, he has earned himself a place on my shelf of “go-to” books.

The Latin American tropism

Jacques Delacroix Books, History , , , ,

Below is an excerpt from my book I Used to Be French: an Immature Autobiography. You can buy it on amazon here.

The Paris in which I grew up (outside of the long summer vacations), was a gray, dank and dark place. It was an easy locale from which to fantasize about the sun-drenched tropics. Palm-trees were our favorite trees because we never saw any except at the movies. Of all the tropics, the Latin American tropics took pride of place. Perhaps that was because France had negligible colonial entanglement there and therefore, no colonial retirees to mug our fantasy with their recollections of reality. Or perhaps, it was because, well after the emergence of rock-and-roll in France, close dancing was still taking place to the sound of Latin music: Rumba, Samba, Tango. One sensuous experience easily becomes grafted onto another; the clinging softness of girls’ flesh became associated in our minds with that particular kind of music and thence, with a whole unknown continent. This cocktail of sensations biased me until now in favor of that continent.

At one of the stops where several foreign student buses met, I became smitten with a Bolivian girl and she with me. We were to each other the most exotic thing ever touched. She had luscious brown skin, thick, black, lustrous Indian hair, swinging hips, and a lovely round chest. Our buses met again several times and the passion was renewed each time. Although those encounters involved little more than many sloppy deep kisses and some furious mutual groping, indirectly, they were to shape an important part of my mental life, a favorable disposition toward the otherness of others, “xenophilia,” if you will.

The Heights of French-Canadian Convicts, 1780 to 1830

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

A few days ago, it was confirmed that my article with Vadim Kufenko and Alex Arsenault Morin on the heights of French-Canadians between 1780 and 1830 was accepted for publication in Economics and Human Biology. In that paper, we try to introduce French-Canadians before 1850 to the anthropometric history literature by using the records of the prison of Quebec City. Stature is an important measure of living standards. As it is heavily related to other aspects of health outcomes, it is a strong measure of biological living standards. More importantly, there are moments in history when material living standards and biological living standards move in opposite directions (in the long-run, this is not the case).

We find three key results. The first is that the French-Canadians grew shorter throughout the era when living standards did not increase importantly (and were very volatile). This puts them at odds from other places in North America where increases in stature were experienced up until the 1820s. Furthermore, stature stops falling around 1820 when economic growth picked up. This places the French-Canadians in a unique category in North America since it seems unlikely that they experienced a strong version of the antebellum puzzle (decline in stature with increases in material living standards which is what the US experienced). The second key result is that the French-Canadians are the shortest in North America, shorter even than Black Americans in slavery. However, they are considerably taller than most (save Argentinians) Latin Americans. More importantly, they are considerably taller than their counterparts in France. The third key result is related to the second key result. Today, French-Canadians are noticeably shorter than other Canadians. However, the gap was more important in the late 19th century and early 20th century. Pegged as a “striking exception” within Canada, we do not know when it actually started. Thanks to our work, we know that this was true as far back at the early 19th century.

The working paper (dramatically different than the accepted version) is here and I am posting key results in tables and figures below.  Moreover, I will be talking about anthropometric history and economic history with Garrett Petersen of Economics Detective Radio this Tuesday (I do not know when the podcast will be made available, but you should subscribe to that show anyways).

Heights.png

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Immigration, Cultural Change, and Diversity as a Cultural Discovery Process

Zachary Woodman Culture, Liberty, Politics , , , , , ,

I have spent a couple of posts addressing various spurious economic and fiscal arguments against looser immigration restrictions. But, as Brandon pointed out recently, these aren’t really the most powerful arguments for immigration restrictions. Most of Donald Trump’s anti-immigrant rhetoric revolves around strictly alleged cultural costs of immigration. I agree that for all the economic rhetoric used in these debates, it is fear of the culturally unfamiliar that is driving the opposition. However, I still think the tools of economics that are used to address whether immigration negatively impacts wages, welfare, and unemployment can be used to address the question of whether immigrants impact our culture negatively.

One of the greatest fears that conservatives tend to have of immigration is the resulting cultural diversity will cause harmful change in society. The argument goes that the immigrant will bring “their” customs from other countries that might do damage to “our” supposedly superior customs and practices, and the result will be a damage to “our” long-held traditions and institutions that make “our” society “great.” These fears include, for example, lower income immigrants causing higher divorce rates spurring disintegration of the family, possible violence coming from cultural differences, or immigrants voting in ways that are not conducive to what conservatives tend to call “the founding principles of the republic.” Thanks to this insight, it is argued, we should restrict immigration or at least force prospective immigrants to hop through bureaucracy so they may have training on “our” republican principles before becoming citizens.

There are a number of ways one may address this argument. First, one could point out that immigrants face robust incentives to assimilate into American culture without needing to be forced to by restrictive immigration policies. One of the main reasons why immigrants come to the United States is for better economic opportunity. However, when immigrants are extremely socially distant from much of the native population, there a tendency for natives to trust them less in market exchange. As a result, it is in the best interest of the immigrant to adopt some of the customs of his/her new home in order to reduce the social distance to maximize the number of trades. (A more detailed version of this type of argument, in application to social and cultural differences in anarchy, can be found in Pete Leeson’s paper Social Distance and Self-Enforcing Exchange).

The main moral of the story is that peaceable assimilation and social cohesion comes about through non-governmental mechanisms far more easily than is commonly assumed. In other words, “our” cultural values are likely not in as much danger as conservatives would have you think.

Another powerful way of addressing this claim is to ask why should we assume that “our” ways of doing things is any better than the immigrant’s home country’s practices? Why is it that we should be so resistant to the possibility that culture might change thanks to immigration and cultural diversity?

It is tempting for conservatives to respond that the immigrant is coming here and leaving his/her home, thus obviously there is something “better” about “our” cultural practices. However, to do so is to somewhat oversimplify why people immigrate. Though it might be true that, on net, they anticipate life in their new home to be better and that might largely be because “our” institutions and cultural practices are on net better, it is a composition fallacy to claim that it follows from this that all our institutions are better. There still might be some cultural practices that immigrants would want to keep thanks to his/her subjective value preferences from his or her country, and those practices very well might be a more beneficial. This is not to say our cultural practices are inherently worse, or that they are in every instance equal, just that we have no way of evaluating the relative value of cultural practices ex ante.

The lesson here is that we should apply FA Hayek’s insights from the knowledge problem to the evolution of cultural practices in much the way conservatives are willing to apply it to immigration. There is no reason to assume that “our” cultural practices are better than foreign ones; they may or may not be, but it is a pretense of knowledge to attempt to use state coercion to centrally plan culture just as it is a pretense of knowledge to attempt to centrally plan economic production.

Instead of viewing immigration as a necessary drain on culture, it may be viewed as a potential means of improving culture through the free exchange of cultural values and practices. In the market, individuals are permitted to experiment with new inventions and methods of production because this innovation and risk can lead to better ways of doing things. Therefore, entrepreneurship is commonly called a “discovery process;” it is how humanity may ‘discover’ newer, more efficient economic production techniques and products.

Why is cosmopolitan diversity not to be thought of as such a discovery process in the realm of culture? Just as competition between firms without barriers to entry brings economic innovation, competition between cultural practices without the barrier to entry of immigration laws may be a means of bettering culture. When thought of in that light, the fact that our cultural traditions may change is not so daunting. Just as there is “creative destruction” of firms in the marketplace, there is creative destruction of cultural practices.

Conservative critics of immigration may object that such cultural diversity may cause society to evolve in negative ways, or else they may object and claim that I am not valuing traditions highly enough. For the first claim, there is an epistemic problem here on how we may know which cultural practices are “better.” We may have our opinions, based on micro-level experience, on which cultural practices are better, and we have every right to promote those in non-governmental ways and continue to practice them in our lives. Tolerance for such diversity is what allows the cultural discovery process to happen in the first place. However, there is no reason to assume that our sentiments towards our tradition constitute objective knowledge of cultural practices on the macro-level; on the contrary, the key insight of Hayek is it is a fatal conceit to assume such knowledge.

As Hayek said in his famous essay Why I’m Not a Conservative:

As has often been acknowledged by conservative writers, one of the fundamental traits of the conservative attitude is a fear of change, a timid distrust of the new as such, while the liberal position is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead. There would not be much to object to if the conservatives merely disliked too rapid change in institutions and public policy; here the case for caution and slow process is indeed strong. But the conservatives are inclined to use the powers of government to prevent change or to limit its rate to whatever appeals to the more timid mind. In looking forward, they lack the faith in the spontaneous forces of adjustment which makes the liberal accept changes without apprehension, even though he does not know how the necessary adaptations will be brought about. It is, indeed, part of the liberal attitude to assume that, especially in the economic field, the self-regulating forces of the market will somehow bring about the required adjustments to new conditions, although no one can foretell how they will do this in a particular instance.

As for the latter objection that I’m not valuing tradition, what is at the core of disagreement is not the value of traditions. Traditions are highly valuable: they are the cultural culmination of all the tacit knowledge of the extended order of society and have withstood the test of time. The disagreement here is what principles we ought to employ when evaluating how a tradition should evolve. The principle I’m expressing is that when a tradition must be forced on society through state coercion and planning, perhaps it is not worth keeping.

Far from destroying culture, the free mobility of individuals through immigration enables spontaneous order to work in ways which improve culture. Immigration, tolerance, and cultural diversity are vital to a free society because it allows the evolution and discovery of better cultural practices. Individual freedom and communal values are not in opposition to each other, instead the only way to improve communal values is through the free mobility of individuals and voluntary exchange.

On power-display bias and the historians

Vincent Geloso Books, History , , , , , , ,

This is an excerpt from my upcoming book at Palgrave McMillan which discusses Canadian economic history. This excerpt relates to a point that I have made numerous times on this blog regarding the bias for power held by historians and how it often leads them to inaccurate conclusions (here and here):

When the great historian Lord Acton warned that, “absolute power corrupts absolutely,” he was not only referring to imbuing certain fallible humans with excessive powers, but also as a caution to historians for their assessment of politicians. Too often, politicians become known for “greatness” because of their actions, regardless of how much they impoverished society or put in place measures that would ultimately erode their citizens’ quality of life. By the same token, some eminent figures remain unknown, relegated to a footnote in the history books, even though they have contributed in a more significant way to economic enrichment, cultural development, and social cohesion. Grand gestures and large-scale social projects inspired by good intentions do not always yield great results – or desirable ones.

If we truly want to assess the Quiet Revolution and the “Great Darkness” with any clarity, we must consider politicians’ actions in a more realistic scope, and sift through the quantitative and qualitative data that show how people thought and acted in the everyday. Through the use of rigorous tools, statistical methods and economic theories, we ought to consider how things might reasonably have developed otherwise without the Quiet Revolution. This is what I have tried to do in this book. (…)

The discourse on Quebec modernity that emerged along with the Quiet Revolution coincided with the emergence of a strong interventionist State. When we compare Quebec to other Western countries, however, our analysis reveals that the State did not play a major role in modernization here. After all, it was in a period when Quebec’s State apparatus was less active compared to the rest of Canada that it was able to progress in leaps and bounds. Of course, the State must have had some effect in certain areas, but the Quiet Revolution was not responsible for the bulk of positive outcomes that came to term during this period. Analyzing trends, causes, explanations and secondary forces at play in Quebec society’s metamorphosis definitely requires a degree of patience and effort. It would be much less onerous to take the easier path of only looking at the State’s activities as worthy of attention in this regard. If we fail to make these efforts, we risk succumbing to the “Nirvana Fallacy.” In order words, we tend to put the State on a pedestal: it becomes a kind of disembodied entity in a virtual reality where it plays the VIP or starring role. Comparing reality with a utopia necessary leads us to conclude that utopia is better, but this approach is utterly fruitless.

 

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….

Brazil six months after Dilma Rousseff

Bruno Gonçalves Rosi Current Events, History, Liberty, Politics , , , , , ,

Six months after President Dilma Rousseff’s impeachment, Brazil remains plunged into one of the biggest crises in its history. Economically the outlook is worrisome, with little chance that the country will grow again anytime soon. Politically the government of President Michel Temer has little credibility. Although brought to power by a process whose legitimacy cannot be questioned (even if groups linked to the former president still insist on the narrative of the coup – although without the same energy as before), Temer has no expressive popular support and is attached to oligarchic interests difficult to circumvent. In other areas, the crisis is also present: urban violence is increasing, unemployment, especially among the young, remains high, and education is among the worst in the world, among other examples. It is surprising that Brazil, considering its GDP, is one of the largest economies on the planet.

As I predicted in a previous article, Dilma Rousseff’s departure from power, however just and necessary, would not be the solution to all Brazil’s problems. Rousseff, although president of the country, was far from having a leading role in the Brazilian reality. As local press often put it, she was just a pole put in place by former President Luis Inacio Lula da Silva hoping to one day return to power (which he never completely left). Today, however, Lula is the target of several corruption investigations and is expected to go to jail before he can contest new elections. Meanwhile, the government of Michel Temer offers little news compared to the previous.

Michel Temer is a lifelong member of PMDB. PMDB was formed during the Military Government that lasted from the early 1960s to the early 1980s. It was the consented opposition to the military, and eventually added a wide variety of political leadership. Leaving the military leadership period, some tried to keep the PMDB united as a great democratic front, but this was neither doable nor desirable. Keeping the PMDB together was not feasible because what united its main leaders was only opposition to the military government. In addition, the party added an irreconcilable variety of political ideas and projects, and it was not desirable to keep them together because it would be important for Brazilian political leaders to show their true colors at a moment when internationally the decline of socialism was being discussed. After a stampede of many of its most active leadership to other parties (mainly to the PSDB), the PMDB became a pragmatic, often oligarchic, legend and without clear ideological orientation, very similar to the Mexican PRI.

Being a party of national expression, the PMDB had oscillating relations with all Brazilian governments since the 1980s, but with one certainty: the PMDB is a party that does not play to lose. Eventually a part of the party leadership understood that the arrival of the PT to the presidency of the country was inevitable and proposed an alliance. This explains the presence of Temer as Rousseff’s vice president. But it would be wrong to say that the PMDB simply joined the winning team: the PT was immeasurably benefited by the alliance, and probably would not have reached or remained in power without the new ally. The alliance with the PT also showed that, despite the ideological discourse, the PT had little novelty to offer to Brazilian politics.

Although he has waved with reforms in favor of economic freedom, Temer has done little that can considered new so far. The freezing of government spending, well received by many right-wing groups, does not really touch the foundations of Brazilian statism: the government remains almost omnipresent, only without the same money to play its part. The proposed pension reform, similarly, does not alter the fundamentals of the state’s relationship with society. Finally, Temer put the economic policy in the hands of Henrique Meirelles, who had already been President of the Central Bank of Lula. Meirelles is one of the main responsible for the crisis that the country faces today, and its revenue to get around the problems remains the same: stimulus spending. In other words, do more of what brought us to the current situation in the first place.

A positive aspect of the current Brazilian crisis is the emergence or strengthening of right-wing political groups. Although the Brazilian right still is quite authoritarian, there are inclinations in favor of the free market being strengthened. Of course, strengthening a pro-market right annoys the left, and this is perhaps the best sign that this is a political trend gaining real space. While it is still difficult to see a light at the end of the tunnel, the 2018 presidential election may be the most relevant to the country since 1989.

A hidden cost of the war on drugs

Vincent Geloso Economics, Liberty , , , ,

AI just completed another paper (this time with my longtime partner in crime Vadim Kufenko) where we question an hypothesis advanced by Samuel Bowles regarding the cost of inequality. In the process, we proposed an alternative explanation which has implications for the evaluation of the war on drugs.

In recent years, Samuel Bowles (2012) has advanced a theory (well-embedded within neoclassical theoretical elements while remaining elegantly simple) whereby inequality increases distrust which in turn magnifies agency problems. This forces firms to expend more resources on supervision and protection which means an expansion of the “guard labor force” (or supervisory labor force). Basically, he argues there is an over-provision of security and supervision. That is the cost of inequality which Bowles presents as a coordination failure. We propose an alternative explanation for the size of the guard and supervisory labor forces.

Our alternative is that there can be over-provision of security and supervision, but this could also be the result of a government failure. We argue that the war on drugs leads to institutional decay and lower levels of trust which, in turn, force private actors to deploy resources to supervise workers and protect themselves. Basically, efforts at prohibiting illicit substances require that limited policing resources be spread more thinly which may force private actors to expend more resources on security for themselves (thus creating an overprovision of security). This represents a form of state failure, especially if the attempts at policing these illicit substances increase the level of crime to which populations are vulnerable. To counteract this, private actors invest more in protection and supervision.

Using some of the work of Jeffrey Miron and Katherine Waldock, we show that increases in the intensity of prohibition enforcement efforts (measured in dollars per capita) have significant effects on the demand for guard labor. Given that guards represent roughly 1 million individuals in the US labor market, that is not a negligible outcome. We find that a one standard deviation increase in the level of drug enforcement efforts increases the ratio of guards to the population by somewhere between 12.92% and 13.91% (which is the equivalent of roughly 100,000 workers).

While our paper concentrated on proposing an alternative to the argument advanced by Bowles regarding the cost of inequality, we (more or less accidentally) measured a hidden cost from the war on drugs. The insecurity (increased crime rates and spillovers from illegal markets into formal markets) brought forth by drug prohibition  forces an over-provision of security and supervision (our supervision measure which includes workers that supervise other workers were smaller than with the security guard measure).

Basically, a hidden (private cost) of the war on drugs is that we must reallocate resources that we could have used otherwise. Its a little like when I say that it is meaningless to compare healthcare expenditures to GDP in Canada and the United States because Canadians assume costs in a hidden manner through rationing. Waiting lists in Canada are longer than in the US. The cost is lost wages and enduring pain and that cost will not appear in measures of expenditures to GDP. The war on drugs works the same way. There is a fiscal cost (expenditures dedicated to it and the taxes that we must impose), there is a crime cost (destruction of lives and property) and there is a reallocation cost of privately providing security which is hard to measure.

*The paper is available here. 

Communist Yugoslavia

Jacques Delacroix History , ,

Below is an excerpt from my book I Used to Be French: an Immature Autobiography. You can buy it on amazon here.

I was led into a large cell with an arching stone ceiling I would have called a dungeon except that it was harshly lit. There were about twenty-five men in the room, mostly in their late twenties. They greeted me loudly in their language. An older man who looked vaguely middle class because he wore a suit (without a tie) asked me in Italian where I was from. There were five or six blankets altogether. A tall, bony guy with the ravaged face of an operetta brigand requisitioned two and handed them to me. Then, we all lined up for whole-grain bread and soup. (Yes, whole-grain used to be the cheapest before it became fashionable, in the seventies.) The brigand pushed me to the head of the line. Then he showed me that you had to dunk the hard bread into the soup to soften it. After dinner, I had a long, civilized conversation with the old man, he speaking Italian and I, French. He told me that most of my cellmates were returning from Germany where they had gone to work without a proper Yugoslav exit visa, and that they were awaiting trial for that low-grade offense. “Why don’t they look more worried?”- I asked. (The mood was, in fact, downright merry.) He told me each would get a few months in the poker but that the cars they had bought in Germany with their earnings would be awaiting them when they got out. In fact, he said, the jail had a parking lot reserved for that usage. Real communism, communism as it existed, communism with a small “c,” was not simple!

As evening came, the inmates prepared for bed in their own rudimentary ways. There was tenseness when the brigand signaled for me to set down my two blankets next to him, on a raised wooden platform. I was old enough to doubt a free lunch existed. I perceived that I was the cutest thing in the joint, and the youngest! With no gracious way to escape, I did as he suggested. Tension turned into panic when he took my head into the crook of his arm. I withdrew brusquely. He delivered himself of a vociferous and loud speech that I guessed was at once re-assuring and reproachful. There was probably no ambiguity in his gesture. Yugoslavia was the beginning of the mysterious Orient, deep into Western Europe, with different customs. Later, I saw soldiers, and once, a pair of policemen, walking peaceably hand in hand. The brigand had just adopted me as a brother. He was no jail predator. For all I know, he had protected me from the real thing.

The Enforcement Costs of Immigration Laws are Greater than Alleged Welfare Costs

Zachary Woodman Current Events, Economics, Politics , , , , ,

As I mentioned in my note yesterday, the common argument that immigration is significantly costly through welfare is mostly empirically falsified. The fact of the matter is immigrants usually aren’t qualified for such programs, illegal immigrants mostly cannot and do not receive them, and immigrants as a whole wind up contributing more to the government’s balance sheet through economic growth and tax receipts than they take through welfare transfer payments.

However, there is one fact I neglected to mention yesterday worthy of its own post: if those opposed to immigration on the grounds of welfare costs were really sincere in that argument, they also need to consider the fiscal costs of enforcing their beloved immigration laws. As the New York Times editorial board pointed out yesterday, these costs are not insignificant:

The Migration Policy Institute reported in 2013 that the federal government spends more each year on immigration enforcement–through Immigration and Customs Enforcement and the Border Patrol–then on all other federal law enforcement agencies combined. The total has risen to more than $19 billion a year, and more than $306 billion in all since 1986, measured in 2016 dollars. This exceeds the sum of all spending for the Federal Bureau of Investigation; the Drug Enforcement Administration; the Secret Service; the Marshals Service; and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

These fiscal costs get worse when you consider that Donald Trump wants to expand ICE’s budget even further and, of course, the $8-$12 billion dollar wall.

Further, if you are a civil liberties type concerned with the social and fiscal costs of mass incarceration, immigration enforcement looks even bleaker:

ICE and the Border Patrol already refer more cases for federal prosecution than the entire Justice Department, and the number of people they detain each year (more than 400,000) is greater than the number of inmates being held by the Federal Bureau of Prisons for all other federal crimes.

The war on immigrants makes the war on drugs look tame.

Of course, these costs are pretty small when compared to the welfare state, but immigrants are not the ones driving up those welfare costs and they might even reduce it with more tax receipts. The truth is that furthering immigration restrictions and enforcement is truly fiscally irresponsible, not respecting the right to freedom of movement and contract.

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.

Inequality and Regional Prices in the US, 2012

Vincent Geloso Economics , , , , , , , ,

I have just completed a short piece on the impact of regional prices on the measurement and geographic distribution of low income individuals. Basically, Youcef Msaid and myself* used the March 2012-CPS data combined the BEA’s regional purchasing power parities database to correct incomes.

We found is that the level of inequality is very modestly overestimated (0.5%). Now this is a conservative estimate since we used state-level corrections for price differences. This means that we took price corrections for New York state as a whole even if there are wide differences within New York state. Obviously, with more fine-grained price-level adjustments we would find a bigger correction but it is hard to imagine that it could surpass 1-3%.

That was not our most important result. Our most important result relates to where the bottom decile of the income distribution is geographically located. We find that instead of being found disproportionately (relative to their share of the total US population) in poorer states, the bottom decile is disproportionately found in rich states. The dotted black line in the figure below illustrates the change in the number of individuals who are, nationally, in the bottom 10%. New York and California have significant increases while West Virginia has a large decrease. The dark black line shows the same for the top 10%.

fig2

Another way to grasp the magnitude of this change is to relate the change to the population shares of each decile by state. For example, New York had 6.29% of the US population in 2012 and 6.61% of all Americans in the bottom 10% of the income distribution before adjusting for regional purchasing parities. After adjusting however, New York’s share of the bottom 10% surges to 7.88%.

Why does it matter? Because most of the cost difference adjustments come from differences in housing costs. The first obvious point is that housing is a crucial aspect of any discussion of inequality. The second, but less obvious point,  is that these differences are massive barriers to migration within the United States and the poorest are those for whom these barriers are the heaviest. Unfortunately, the high-cost areas are also high-productivity areas (New York, San Francisco for example) whose high costs are largely the result of restrictions on the supply of housing. This means that high-productivity areas – which would raise the wages of low-skilled and low -income workers are inaccessible to them. It also means that those who were present before the increase in productivity of these areas capitalized the gains in more valuable real estates (even if this means lower real incomes).

In this light, the geographic reallocation of the bottom 10% is consistent with an emerging literature that argues that inequality is in great a result of housing policy (see notably Rognlie’s reply to Piketty in the Brookings Papers).  This small modification (I consider it small) that me and Youcef made has important logical ramifications.

* Thank you to my friends Rick Weber (who blogs here at NOL and whose research can be seen here) and Ryan Murphy (whose research can be found here) who provided good comments to bring the paper to the stage where we are ready to submit.

Wedding date and superstitions

Vincent Geloso Economics , , , , , ,

There is a neat new paper in the most recent edition of the Journal of Population Research by Gabriele Ruiu and Marco Breschi on wedding dates and superstitutions in Italy. Here is the abstract:

In Italy, it is believed that Tuesdays and Fridays are particularly unlucky days for weddings as well as the 17th day of each month. Previous studies realized in the aftermath of the Second World War have shown the strong influence that these superstitions had in determining the wedding dates in the entire country. We have used exhaustive data collection of all marriages celebrated in Italy in the years 2007–2009 to investigate whether superstitions are still able to influence the choices of spouses. We find that this influence is still present after the great economic, social and demographic transformation of Italian society. We also show that a wife’s education reduces the influence of superstition on the choice of the date of marriage while those who opt for a religious rite are also those who are more careful in avoiding inauspicious days.