Watson my mind today: labor markets

And how ‘bout them Dodgers, hunh? Actually, how about each division’s top team? That’s a lot of winning!

— A partial response to Marx’ claim that managers are expropriating the value produced by the workers while providing nothing themselves: “The study showed that managers didn’t just influence the results their teams achieved, they explained a full 70% of the variance. In other words, if it’s a superior team you’re after, hiring the right manager is nearly three-fourths of the battle.”

— Boudreaux wonders what supposedly-enormous transaction cost prevents firms from offering workers a choice of pay packages – buying more parental time for a lower wage, for instance. One commenter notes their firm does just that, letting workers buy back vacation time. This is also, of course, standard practice in much of academia, where faculty are allowed to reduce their teaching load in exchange for a salary cut – usually funded by a research grant.

— Sumner on how labor market reforms (including cutting unemployment benefits) helped Germany and Israel to lower average unemployment rates and increase economic growth.

— But there appears to be a great deal that only deregulation will not be able to change. A new paper by Berger and Engzell finds correlation between the European-country-of-origin of people in modern US and the level of inequality and intergenerational mobility. Institutions persist for a very, very long time … again. (Homework: How does this apply to the reparations debate?)

— Another new paper by Fone, Sabia, and Cesur finds that higher minimum wages increase property crime arrests – contra expectations – so that “a $15 Federal minimum wage could generate criminal externality costs of nearly $2.4 billion.”

— A history of civil asset forfeiture tells how the British Crown’s attempt to encourage the Royal Navy to enforce trade restrictions and tariffs became so widely used in modern America.

— Summers and Sarin show that wealth taxes will take in much less than their proponents hope.

From the Comments: How can we not consent to government if we obey it voluntarily?

Irfan Khawaja has a good argument on Yoram Hazony’s new book on nationalism, which is being thoroughly and thoughtfully dissected by Arnold Kling:

Does anyone understand the point that Kling and/or Hazony are making about the relation between legitimacy based on voluntary acceptance, and consent? On the one hand, the claim is that in a legitimate government, we obey the law “voluntarily”; on the other hand, the claim is that we do not consent to government. How can we not consent to government if we obey it voluntarily? Coming the other way around: how can we obey it voluntarily if we don’t consent to it? Even if Hazony wants to broaden consent beyond the Lockean account, that’s still a broadening of the conditions of consent, not a nullification of the role of consent. The combination of claims that Kling attributes to Hazony does not seem coherent.

Well?

As a reminder, this is not a philosophical argument. Well, it is but it isn’t. I suspect this is about Israel and Palestine as much as it is about logical rigor. Stay tuned, and don’t be shy about having your say!

The news cycle vs. current events

The other day, while badgering my fellow Notewriters to blog more often, I mentioned that current events are different from the news cycle, and are still important to dissect and blog about. This distinction between the news cycle and current events was sparked by economist Arnold Kling’s recent post on where he gets the news (found in one of last week’s Nightcaps). Basically, the news cycle is terrible. I rarely pay any attention to it. CNN, a left-of-center media outlet that almost everybody has heard of, has on its front page today (the wee morning hours of 4-23-17) a great example of the news cycle:

  • Kellyanne Conway to Dana Bash: OK, you went there
  • Conway says asking about her husband’s anti-Trump tweets is a ‘double standard’
  • Analysis: Trump’s score-settling creates jarring contrast
  • WSJ: Trump to ask North Korea to dismantle nuclear arsenal before talking sanctions relief
  • Opinion: Macron’s bromance with Trump will come at a price
  • Biographer: Trump has lied since youth
  • Melania Trump plans state dinner on her own
  • Stelter: One Trump lie is crystal clear

You get the idea, and remember that CNN is a well-established, long-running media outlet. Other media outlets that focus on the news cycle are just as bad, if not worse (at least CNN pretends, most of the time, to wrap its clear bias in a cloth of objectivity). This is a far cry from the concept of “current events.” Current events, in my view, are arguments about ideas, events, or even people that take place between at least two sides in specific time frame. Most of the time, “current events” involve using events (usually) or people (rarely) to defend or attack an idea. You see the difference? Have a better definition?

The news cycle is largely garbage, but it can still be useful, especially for international news. I never visit RealClearPolitics, for example, because it focuses on the news cycle, but I stop by RealClearWorld, which usually conveys the news cycles of other countries, once or twice a day. Even though I’m consuming a news cycle, I’m still learning something because it’s a news cycle about a place very different from my own.

Five or ten years from now, the bullet points from CNN will be useless and forgotten, but the arguments put forth into the stream of current events will be useful and maybe even prized. What baffles me is that the news cycle, while almost universally loathed, is far more popular in terms of consumption than current events. Doesn’t everybody know how to use Google by now?

Nightcap

  1. A profile of new NY Fed Chairman John Williams Tate Lacey, Alt-M
  2. How to win a trade war Oliver Roeder, FiveThirtyEight
  3. The road to Iranian democracy Luma Simms, Law and Liberty
  4. Where Arnold Kling gets his news Arnold Kling, askblog

From the Comments: Intervention, Blowback, and Bad Faith

I find the debate they’re having somewhat confused. Your response to Kling is on the right track, but I would question the terms of the debate from the outset.

The relevant question is whether US intervention produces armed resistance, and whether that resistance counts as blowback. It does, on both counts. Whether that resistance/blowback counts as “terrorism” by some narrow definition is really beside the point. And whether the resistance is morally justified is yet another issue altogether.

Kling mentions US intervention in Latin America and claims that there’s been no “terrorism” in response. How would he characterize the Cuban-Soviet precipitation of the Cuban Missile Crisis, which was a response to the Bay of Pigs invasion? Soviet positioning of nuclear weapons system was meant to strike fear in us (and did). “Fear” is a synonym for “terror.” The Cuban-Soviet policy was a response to our intervention. That’s blowback.

Re Asia, you’re right to adduce the Saigon counterexample you come up with, but that understates the relevant point. The relevant point is that the whole Tet Offensive was blowback for our intervention! The NVA and Vietcong may not have attacked the mainland of the US, but they killed more Americans than Al Qaida did, so again, I don’t see the point of a narrow fixation on a particular tactic, terrorism.

While we’re at it, why not try US intervention in…the US? Think Wounded Knee 1973 and generally, the armed confrontations between the American Indian Movement and the FBI in the mid 1970s (which most Americans regarded as terrorism on the part of the Indians). AIM regarded Indian reservations as occupied land and acted in kind. That was blowback for our Indian policy.

This is not to deny that terrorism can arise from causes unrelated to blowback or perceived blowback. Nor is it to deny that Islamist terrorism may have distinctive features. But it’s very misleading to suggest that Middle Eastern terrorism is sui generis, and confusing to distinguish “Middle East” and “Asia,” as you correctly point out in your post.

This is from Dr Khawaja (of Policy of Truth infamy). I found the dialogue somewhat confusing, too. I think the fact that economists, who are used to thinking in terms of costs and benefits, were stepping outside of their comfort zones (something I wish more of them would do, by the way) goes a long way towards explaining why there is so much confusion.

Yet I also think that there is much to learn from narrowing the terms of the debate. Kling wants to talk about “terror” rather than “armed resistance,” and I think it’s good to meet him on his own terms. This way it is easier to knock down ignorant arguments for all to see. Dr Khawaja broke down a complex misunderstanding (or simply Kling’s bad faith) in a straightforward manner, but sometimes I find that arguing on Mr Bad Faith’s own terms  – knowing full well that his argument is being made in bad faith – leads to useful outcomes. Jacques, for example, has become noticeably less hawkish since he first tried to pick on me. He has not necessarily become more dovish mind you, but he has become much more cautious about promoting US militarism abroad.

Kling and Henderson on intervention and blowback

David Henderson, an economist at the Naval Postgraduate School’s GSBPP and also the Hoover Institution, alerted me to a remark made by another economist, Arnold Kling, about libertarian foreign policy. Both posts are worth reading, of course, but in the ‘comments’ thread of Henderson’s post, Dr Kling elicited a terse response from Dr Henderson for arguing the following:

David, the U.S. has intervened in Asia, Europe, Latin America, and the Middle East. We have not experienced terrorism except from the Middle East, and there the role of blowback is not clear–there are plenty of other causes, and Middle Eastern terrorists seem perfectly happy to operate in countries that have not invaded Iraq.

I think you have proved my point. Your preferred policy is non-intervention, and so blowback is your desired cause for terrorism. But you only look for evidence that confirms this. Go through the thought experiment of believing that terrorism is not caused by blowback, and then look for evidence from that perspective. That is what I ask for when someone has a “desired cause.”

You can read Dr Henderson’s response here, but I thought I’d go in a different direction with this. First, though, I’d like to thank Dr Kling for broaching this subject. Few libertarians do so (our own Drs Delacroix and van de Haar being two stubborn exceptions).

What I’d like to do is take Dr Kling’s second paragraph to heart and try to pin down some relevant facts I think are missing from his first paragraph, which I’ll break down, for the sake of dialogue, piece-by-piece.

the U.S. has intervened in Asia, Europe, Latin America, and the Middle East.

Kling left off Africa from his list of places the US government has intervened in. This is a huge omission because there has been plenty of terrorist attacks (successful or otherwise) aimed at US targets on the African continent, from Nigeria in the west to Kenya all the way in the east (a span, via each state’s respective most populous city, of 5,328 km; Los Angeles to New York City is about 4,500 km).

We have not experienced terrorism except from the Middle East, and there the role of blowback is not clear

Again, the US has been the target of terrorism in places other than the Middle East. Aside from Africa (the 1998 embassy bombings being perhaps the prominent examples, though there are more), the US has been the target of terrorism in Asia, Latin America, and Europe. I think much of Dr Kling’s confusion regarding blowback in due to his poor geographic knowledge. The Middle East (or Near East), for example, is also a part of Asia. Pakistan and Afghanistan, where many terrorist attacks against US targets have been undertaken, are not considered to be a part of the Middle East by specialists. Below is a partial list of terrorist attacks against US targets in the past:

  • In 1927, the US embassy (along with other foreign embassies) in Nanking, China came under sustained gunfire from both state and non-state actors, and at least one American died (“the Nanking Incident”);
  • In the 1920s and 1930s, many American institutions – public and private (or ostensibly private) – were bombed by left-anarchists upset over the unjust executions of two prominent Italian anarchists in Boston (“Sacco and Vanzetti”);
  • In 1964 the US embassy in Gabon was bombed twice in the same month;
  • In 1965 a car bomb exploded outside of the US embassy in Saigon, South Vietnam, and Leftist factions claimed responsibility;
  • In 1984 a car bomb exploded outside of the US embassy in Bogota, Colombia, but no faction came forward to claim responsibility (it is largely attributed to one of the drug cartels in operation there);
  • In 1985 a Left-wing terrorist organization attacked the Soviet, Chinese, and American embassies in Peru;
  • In the mid-1980s a Leftist terrorist organization attacked US embassies in Indonesia and Italy.

Again, this is just a partial list. In the spirit of Kling’s argument, what I suggest we do here is divide up terrorist bombings into two segments: 1) the period of 1945-1991 (the Cold War), and 2) everything else. I think this is a fair move because during the Cold War the line between state and non-state actors became especially blurred.

Even if we decide to ignore my suggestion of dividing terrorist attacks into two segments, one picture that becomes much clearer is that all of the attacks are political, and terrorism against US targets does not come solely from the Middle East (or even states with large Muslim populations). I hope these two issues are conclusions that we can all agree upon. If this does not nudge the evidence in favor of the intervention-causes-blowback thesis, I don’t know what does. I think Kling’s next line of reasoning will help us elaborate on this a bit more:

there are plenty of other causes [of terrorism], and Middle Eastern terrorists seem perfectly happy to operate in countries that have not invaded Iraq.

I think this statement actually breaks the back of the hawks’ argument. First, though, when did we move from a discussion about intervention causing terrorism to a discussion about invading and occupying Iraq causing terrorism? Is Kling guilty of the bait-and-switch fallacy here? I am forced to conclude that he is, although in fairness his point was raised in a ‘comments’ thread rather than in a post of its own.

His bait-and-switch aside, Kling’s point about “plenty of other causes” of terrorism is one worth thinking through a bit more. There are four lines of thought that I’d like to explore here: 1) Now would be a good time to draw up a distinction between intervention and occupation. Up until now, we have been discussing foreign policy colloquially and ostensibly in terms of intervention, but the difference between the two concepts I just highlighted is huge and needs a bit of clarification. Some of the fuzziness surrounding the two concepts has to do with Kling’s charge of normative libertarian foreign policy. Dr Henderson, for example, cites the scholarly work of Robert Pape and Ivan Eland (as well as the observations of Paul Wolfowitz) to bolster his claim that intervention leads to blowback, but those guys are referring to the explicit occupation of territory, not intervention. This does not mean Dr Henderson or libertarians more broadly are wrong, of course, but only that dialogue on this topic suffers from a lack of detail. The Cold War-era bombings I listed above can be attributed to intervention. The terrorist attacks pre- and post-Cold War can be attributed to intervention as well, but also to occupation. Does this make sense?

2) While Kling is lazy in his assertion about “Middle Eastern terrorists” being “perfectly happy” with attacking states that did not invade Iraq, he has a really good point, albeit one made unintentionally: terrorism is an international phenomenon, and not something that can be attributed to a specific region (or religion). If we take a step back and look at terrorism more broadly (i.e. not just in a US context, which I think highlights well the consequences of intervention and occupation), what do we see? I don’t know about you, but I see terrorism in Russia, China, India, Pakistan, the US, Europe, all of Africa, Latin America, and, just for good measure, the rest of Asia, too. This leads me to train of thought Number 3: terrorism is political, as even death cults like Aum Shinrikyo in Japan or lone wolves like the Unabomber or the white nationalist shooter in Charleston are overtly political. I know I’ve harped on this already, but Dr Kling’s point helps make this much easier to understand.

Much of the terrorism, if not all of it (I hope readers will provide counter-examples), not directed at the US and its allies (which do intervene and do occupy) is done in the name of separatist movements within a state. While states claim sovereignty over their territories, and use IGOs such as the United Nations to bolster these claims, the separatist movements believe themselves to be occupied by a foreign power. Pape makes this crystal clear in his work on the (nominally Buddhist but militantly Left-wing) Tamil Tigers of Sri Lanka.

If terrorism is political, but it is not aimed at foreign intervention or occupation/separatism, what would terrorists hope to accomplish by murdering people? Given the calculated political nature of terrorism highlighted above, I fail to see how terrorism could be carried out randomly, except in works of fiction like Batman comics or old James Bond movies. The fictional nature of random acts of terrorism leads me in to my fourth and last train of thought, namely that I think Kling is introducing a red herring when he states that “there are plenty of other causes” of terrorism. This is simply not true. Since Dr Kling didn’t provide any examples, and since I don’t want to attempt to read his mind, I can only hope he reads this post and provides me with some examples that I can proceed to debunk.

While I think Dr Kling raises an excellent topic that needs to be discussed way more often, he, like Dr Delacroix, simply does not have his facts straight when it comes to foreign affairs. Ideology and dialogue are important components of the free and open society, but without a good grasp of the relevant facts of a matter those tools for improving our livelihoods become worthless, at best.

New Issue of Econ Journal Watch: Economists on the Welfare State and the Regulatory State: Why Don’t Any Argue in Favor of One and Against the Other?

For those of you who don’t know Fred is an Editor for the Journal and Warren is its math reader, so this occasion is very much a family affair. Here is the low-down:

Economists on the Welfare State and the Regulatory State: Why Don’t Any Argue in Favor of One and Against the Other?

The symposium Prologue suggests that among economists in the United States, on matters of the welfare state and the regulatory state, virtually none favors one while opposing the other. Such pattern is a common and intuitive impression, and is supported by scatterplots of survey data. But what explains the pattern? Why don’t some economists favor one and oppose the other?

Contributors address those questions:

Dean Baker: Do Welfare State Liberals Also Love Regulation?

Andreas Bergh: Yes, There Are Hayekian Welfare States (At Least in Theory)

Marjorie Griffin Cohen: The Strange Career of Regulation in the Welfare State

Robert Higgs: Two Ideological Ships Passing in the Night

Arnold Kling: Differences in Opinion Among Economists About Government and Market Efficiency

Anthony Randazzo and Jonathan Haidt: The Moral Narratives of Economists

Scott Sumner: Moral Differences in Economics: Why Is the Left-Right Divide Widening?

Cass Sunstein: Unhelpful Abstractions and the Standard View

There is a lot more here. You can find Econ Journal Watch‘s home page here, on our ‘Recommendations’ page.