Twelve Things Worth Knowing According to Jacques Delacroix, PhD, Plus a Very Few Brain Food Items.

Note: I wish you all a prosperous, healthy, and writerly year 2019. (No wishes for happiness, it will come from all the above.)

I have a French nephew who is super-smart. Not long after graduating from the best school in France, he moved to Morocco where he married a super-smart Moroccan woman. He is so smart that he asked me for my intellectual will before I depart for another planet. It’s below.

Here are my qualifications: I taught in universities for thirty years, including twenty-five years in a business school in Silicon Valley. My doctorate is in sociology. (Please, don’t judge me.) My fields of specialization are Organizational Theory and the Sociology of Economic Development. My degree is from a very good university although I am a French high school dropout. My vita is linked here (pdf). Its academic part is respectable from a scholarly standpoint, no more. There is much additional info in my book: I Used to Be French: an Immature Autobiography, available from me, and on Amazon Kindle, and in my electronic book of memoirs in French: “Les Pumas de grande-banlieue: histoires d’émigration”, also on Amazon Kindle.

1. When the facts don’t fit your perspective you should change …. ? (Complete sentence.)

2. One basic complex idea worth knowing that resists learning: natural selection.

Note: the effective mechanism involved is multi-generational differential reproduction. You don’t understand natural selection until you can put a meaning on all three words.

3. Another basic idea worth knowing, a counter-intuitive one, that also resists learning: the principle of Comparative Advantage: If you are not working at what you do the very best, you are impoverishing me. There is a ten-lesson quick course on my blog to explain this. Look for short essays with the word “protectionism” in the title. A longform version can also be found, here.

4. Taking from the poor is a stupid way to try to become rich when you can invent a new world – like Steve Jobs – and be immensely rewarded for it. Or open a decent restaurant and be well rewarded, or learn welding. There isn’t much you can take from the poor anyway because they are poor. Plus, the bastards often resist!

5. Culture is in the heads (plural). Everything else isn’t “culture.”

6. How a body of people act is not simply the addition of the thinking of its individual human members. (There is a sociology!)

7. Beware those pesky fractions. Quick test: Five years ago, my income was 40% of yours. Now, my income is only 20% of yours. Am I earning less than I did five years ago?

8. Correlation is not causation but there is no causation without some sort of correlation.

9. Statistical significance is significant even if you don’t quite know what it signifies. Find out. It’s not hard.

10. Use statistical estimation methods even if you don’t understand them well. It will improve your reasoning rigor by confronting you brutally with the wrongness of your guesses. And you can only become better at it with practice.

11. There is not text that’s not improved by extirpating from it half of all adjectives and adverbs.

12. Reading is still the most efficient way to improve your comprehension of the world.

It seems to me that if you understand these twelve points inside out, you are well above average in general culture; that’s even true on a global scale.

Below are some intellectual anchoring points of my life. They are subjectively chosen, of course. Don’t lend them too much credence.

My favorite singer-composers: Jacques Brel; the Argentinean Communist Atahualpa Yupanqui. (I can’t help it.)

My favorite instrumental musics: baroque music, the blues.

My favorite painters: Caravaggio (link); Delacroix (Eugene); Delacroix (Krishna).

I don’t have a favorite book because I read all the time without trying to rank books. These three books have made a lasting impression, changed my brain pathways forever, I suspect: Daniel Defoe, Robinson Crusoe; George R. Stewart, Earth Abides; Eric Hoffer, The True Believer: Thoughts on the Nature of Mass Movements.

The only two intelligent things I have said in my life:

“Once you know a woman well vertically, you know nothing about her horizontally.”

“There is not bad book.”

A response to a student

Each week I assign some reading or video. Recently I assigned a series of videos where Bryan Caplan discusses common biases, including the anti-foreign bias

One student questioned the benefits of expanded immigration, wondering if the costs to American workers might be too great. Below is my response:

My understanding of the evidence is that immigrants to the US are almost always complementary to US labor (e.g. Indian doctors that keep American designers healthy, or Salvadorian cooks who feed American engineers). The area where your suspicion is true (again, based on my limited understanding of the data) is with high school dropouts.

High school dropouts face competition from immigrants (who are often unable to apply their skills due to regulations or attempts to avoid being caught by immigration authorities) because relatively low-skilled immigrants face similar disadvantages in labor markets (i.e. they have a similar comparative advantage but their alternative options are even worse).

Trade: Is Obama Right This Time?

I was hoping to sit this one out. I mean the multiple discords about the new Pacific trade treaty proposed by President Obama. I feel I need to lend a hand because there are good reasons to be confused. Plus, I taught international business for twenty-five years. My voice just might be useful this time. Here is my brief but adequate road map to the problem. I am deliberately staying away from nouns and initials because they do more harm than good.

Pres. Obama has an early draft of an international trade agreement with a large number of Pacific countries. Such agreements eliminate or lower trade barriers. So, first, they make it easier for economic actors from one country to buy a and sell things to economic actors from another country. That’s because all trade barriers are hidden taxes on consumers. They all raise prices above where they should be. Get rid of them, have more real income.

Second, the lowering or the elimination of trade barriers ultimately result in something almost magical: Economic actors stop doing what they are doing badly and start focusing on what they do well. Most items become less expensive and of better quality. Everyone benefits from this. I mean everyone in the world.*

International trade agreements do cause some to lose their jobs. They create many more jobs than they cause to disappear, however. But the loss is certain: After all, as soon as central American bananas are allowed into Canada, Canadian banana growers must lose their jobs, by and large. Incidentally, there have not been Canadian banana growers, as far as I know but you see what I mean: Canadians ought to concentrate on producing lumber, or refrigerators, or iron ore, almost anything but bananas.

The current trade project presented by Obama contains a $500 million clause to retrain at public expense those Americans who might lose their job as a result of the new agreement. This is nothing new. Previous trade agreements contained similar arrangements.

President Obama wants what is known as “fast track authority.” That’s the privilege to have the Senate vote a simple “Yes” or “No” on the final draft of the agreement with those many other countries. This is pretty necessary because if each government of each signing country has to go home and gather amendments and often, amendments to amendments, in the end, no agreement sees the light of day. It’s a practical thing, not a sinister ploy.

On the one hand, practically all previous presidents who signed international trade agreements had fast track authority. On the other hand there is a sturdy reason to deny Mr Obama fast track authority: He is a proven, extremely bad negotiator. On the third hand, the negotiations of such agreements are almost completely done by technical personnel who know their business. And, how likely is Mr Obama actually to get involved?

As I write, elected Democrats are all against everything involved because the unions think that every international trade agreement makes them lose ground. I think their perception is correct. Republicans are torn between their understanding of the world (which is more or less like mine) and their wish to give the president a black eye.

This is a small digest of a complex and interesting issue. I deal with it at leisure and extensively in nine installments on this blog. Each had the words “protectionism” or “protectionist” in the title. Again, those are installments; you may want to look at them in order. No test!

* Paradoxically, one of the best, clearest scholarly explanations of this magic – called comparative advantage – is by Paul Krugman. It’s from the days when he was not yet crazy. Bret Stephens in the WSJ 6/16/15 jogged my memory on this strange fact. It’s worth looking up Krugman, for once.

The Chinese Get Richer, I Become Poorer. Right? Dreaded Percentages!

Elections season is on us again. On the talk shows, I hear more and more callers, and often hosts, grossly misusing percentages in the service of fallacious claims. Politicians won’t be far behind. Here we go again, I am thinking; I have been here before. Got to explain again.

This time, I am taking names. And there will be a quiz, and it will count toward the final grade.

Pay attention; slow down.

It’s 2000, I, JD, earn $60 as a machinist. My wife K earns $40 keeping accounts for others with the help of some sophisticate software. I am earning what percentage of our joint income?

60/60+40 = 60%

It’s 2010, I, JD, now earn $90 as a machinist, My wife K’s business has taken flight. She uses more sophisticated software. She has more customers than she can handle. She earns $120.

My share of our new joint income is now:

90/90+120 = 42%

The percentage of our joint income that I produce has declined. It has declined a lot; it has declined by almost 1/3.

Has the value of my production declined? Slow down!

The answer is clearly “no.” The value of my production has increased by half (from 60 to 90). That’s not bad at all. At any rate, it ‘s obviously an increase.

Think it through. Do the arithmetic yourself. There is no trick. It’s the simple math you did not learn in third grade because you hated the teacher.

In the simple example above, my income represents the value of American manufacturing. My wife’s income represents the value of the mysterious and illogical category “services.”

The percentage of the value of manufacturing relative to the total GDP of this country has been going down steadily because the value of US services has gone up even faster.

The absolute value of American manufacturing has only gone up and up, and going up. America has not become “de-industrialized,” contrary to a common but false perception.

The misperception has two main sources:

  1. Many media commentators and perhaps even more politicians don’t understand simple percentages. See above.
  2. The number of manufacturing jobs has declined even as the value of that which they manufacture has gone up.

Here is a solution to the drying up of manufacturing jobs: Take away machine tools from one metal worker in three; give him a hammer instead. You want even more manufacturing jobs, lots of them? Remove the software from textile weaving plants. Program their machines by hand as they did in 1910.

You don’t like the idea? Time for a serious discussion.

Now let’s go back up a little.

The quite good rise in the value of manufactures and the even greater rise in the value of whatever services produce, these two things are related. Better and better, more and more efficient manufacturing provides the resources for more services. We can afford more waiters, more surgeons, more teachers, more acupuncturists, more therapists, more life coaches, more “color advisers” (I live in Santa Cruz, California) because, collectively, we produce more hard necessities much more cheaply than our close ancestors did. Hard necessities include cars, soap, oatmeal, shovels, bricks and nails. Why, nails used to be forged by hand! I own some hand-forged nails from making repairs on my 1906 house.

When you hear, for example, that manufacturing now contributes only 30% of US GDP, it does not mean that there is less manufacturing being done in this country. To figure out the reality, you have to get out of percentages completely. Period!

If my income used to be $60 and it’s now $50 then, yes, it has declined. If it’s now $65, my income has risen. Period! That’s true irrespective of percentage contribution to anything.

Tech note: Don’t get tripped by the separate issue of the changing value of money. There are inflation/deflation calculators on the Internet that do a good enough job of dealing with this issue. I recommend that you consider one train of thought at a time.

Nearly everyone is overestimating himself. That’s the problem.

Speaking of GDP (Gross Domestic Product), a National Public Radio chickie announced breathlessly a couple of weeks ago that China would soon pass the US in GDP. I could hear fearful emotion in her voice, as if some bastard had threatened to cut up her credit card.

Here is the truth: We may soon see the day when 1,400 million Chinese produce as much together as…..314 million Americans.

Personally, I can’t wait for the Chinese to do better, to make their percentage of global joint production much higher.

Question: When the Chinese GDP reaches 60% of world joint GDP, will I be poorer?

From the Comments: Populism, Big Banks and the Tyranny of Ambiguity

Andrew takes time to elaborate upon his support for Senator Elizabeth Warren, a Native American law professor from Harvard who often pines for the “little guy” in public forums. I loathe populism/fascism precisely because it is short on specifics and very, very long on generalities and emotional appeal. This ambiguity is precisely why fascist/populist movements lead societies down the road to cultural, economic and political stagnation. Andrew begins his defense of populism/fascism with this:

For example, I still have more trust in Warren than in almost anyone else in Congress to hold banks accountable to the rule of law.

Banks have been following the rule of law. This is the problem libertarians have been trying to point out for hundreds of years. See Dr Gibson on bank regulations and Dr Gibson again, along with Dr Foldvaryon alternatives. This is why you see so few bankers in jail. Libertarians point to institutional barriers that are put in place by legislators at the behest of a myriad of lobbying groups. Populists/fascists decry the results of the legislation and seek a faction to blame.

If you wanted to be thought of as an open-minded, fairly intelligent individual, which framework would you present to those who you wished to impress: the institutional one that libertarians identify as the culprit for the 2008 financial crisis or the ambiguous one that the populists wield?

And populism=fascism=nationalism is a daft oversimplification. I’ll grant that there’s often overlap between the three, but it’s far from total or inevitable overlap. Populists target their own countries’ elites all the time.

Sometimes oversimplification is a good thing, especially if it helps to clarify something (see, for example, Dr Delacroix’s work on free trade and the Law of Comparative Advantage). One of the hallmarks of fascism is its anti-elitism. Fascists tend to target elites in their own countries because they are a) easy and highly visible targets, b) usually employed in professions that require a great amount of technical know-how or traditional education and c) very open to foreign cultures and as such are often perceived as being connected to elites of foreign societies.

The anti-elitism of fascists/populists is something that libertarians don’t think about enough. Anti-elitism is by its very nature anti-individualistic, anti-education and anti-cooperative. You can tell it is all of these “antis” not because of the historical results that populism/fascism has bred, but because of its ambiguous arguments. Ambiguity, of course, is a populist’s greatest weapon. There is never any substance to be found in the arguments of the populist. No details. No clarity. Only easily identifiable problems (at best) or ad hominem attacks (at worst). Senator Warren is telling in this regard. She is known for her very public attacks on banks and the rich, but when pressed for details she never elaborates. And why should she? To do so would expose her public attacks to argument. It would create a spectacle out of the sacred. For example, Andrew writes:

Still, I’d rather have people like Warren establish a fuzzy and imperfect starting point for reform than let courtiers to the wealthy and affluent dictate policy because there’s no remotely viable counterpoint to their stances […] These doctrinaire free-market orthodoxies are where the libertarian movement loses me. There are just too many untrustworthy characters attached to that ship for me to jump on board.

Ambiguity is a better alternative than plainly stated and publicly published goals simply because there are “untrustworthy characters” associated with the latter? Why not seek plainly stated and publicly published alternatives rather than “fuzzy and imperfect starting points for reform”?

Andrew quotes a man in the street that happens to be made entirely of straw:

“Social Security has gone into the red, but instead of increasing the contribution ceiling and thoughtfully trimming benefits, let’s privatize the whole thing and encourage people to invest in my company’s private retirement accounts.”

Does the libertarian really argue that phasing out a government program implemented in the 1930s is good because it would force people to invest in his company’s private retirement accounts? I’ve never heard of such an example, but I may just be reading all the wrong stuff. Andrew could prove me wrong with a lead or two. There is more:

This ilk of concern trolls (think Megan McArdle: somewhat different emphasis, same general worldview) is one that I find thoroughly disgusting and untrustworthy and that I want absolutely no part in engaging in civil debate. Their positions are just too corrupt and outlandish to dignify with direct responses; I consider it better to marginalize them and instead engage adversaries who aren’t pushing the Overton Window to extremes that I consider bizarre and self-serving. They’re often operating from premises that a supermajority of Americans would find absurd or unconscionable, so I see no point to inviting shills and nutters into a debate […].

Megan McArdle is so “disgusting and untrustworthy” that her arguments are not even worth discussing? Her name is worth bringing up, of course, but her arguments are not? Ambiguity is the weapon of the majority’s tyranny, and our readers deserve better. They are not idiots (our readership is still too small!), and I think they deserve an explanation for why McArdle is not worthy of their time (aside from being a shill for the rich, of course).

I think populism/fascism is often attractive to dissatisfied and otherwise intelligent individuals largely because its ambiguous nature seems to provide people with answers to tough questions that they cannot (or will not) answer themselves. Elizabeth Warren’s own tough questions, on the Senate Banking Committee, revolve around pestering banks for supposedly (supposedly) laundering money to drug lords and terrorists:

“What does it take, how many billions of dollars do you have to launder from drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution?” Warren asked at a Banking Committee hearing on money laundering.

Notice how the populist/fascist simply takes the laws in place for granted (so long as they serve her desires)? The libertarian would ask not if the banks were doing something illegally, but why there are laws in place that prohibit individuals and organizations from making monetary transactions in the first place.

Senator Warren’s assumptions highlight well the difference between the ideologies of populism/fascism and libertarianism: One ideology thinks bludgeoning unpopular factions is perfectly acceptable. The other would defend an unpopular faction as if it were its own; indeed, as if its own freedom were tied up to the freedom of the faction under attack.

France Does not Export Wines, nor Mexico Guacamole, nor Does the US Import Cars, etc. “National Competitiveness” for the Intelligent Ignorant

It’s national election season again. As always happens in this season, in every developed country, the old battle horse of national competitiveness gets a new coat of shiny paint and is led out by its sparkle-strewn tether to support politicians misconceptions and mis-talks. There is a very widespread misconception that nourishes unreasonable thoughts and false notions on the economy.

Sorry but at this time, in this season, I feel a compulsion to resort to teaching, so, pay attention. There might be a quiz.

The misconception: Countries, (or “nation-states”) such as the US, Canada, Mexico, Belgium, or France don’t compete with each other like soccer teams, for example, compete against each other. In soccer, when one team wins a point, the other team loses a point. When the economy of one country picks up speed however, it is not (NOT) the case that the economy of another country (or of several countries) must slow down. The reverse is true. When the Mexican economy grows, some Mexicans are better able to buy American corn, or American video games, making some Americans richer than would be the case if the Mexican economy stagnated.

The confusion has three sources. The first source is simply ignoring that the producers of one country are also potential customers for the producers of all other countries. Those who compete with American workers, are often also buyers of American-made products. If they are not at the moment, the richer they become, the more likely they are to become buyers. One of the international functions of those who compete with American producers is thus to enrich American producers, perhaps different ones. The relationship may be more indirect. Foreign worker A competes with American worker B and he uses the money he gets from beating B to buy from American worker C. If I am C, my interests are not well lined up with those of my fellow American B. That’s a fact, no matter what politicians say in the language of football. However, if I am American worker C, in the long run, I am better off if fellow American worker B becomes richer than if he does not. For one thing, he will be able to support better equipments, such as schools, from which I will profit. Continue reading

Chocolate for Thought

There is a pervasive feeling among thinking people that this country is not just facing a severe economic crisis but that we are losing something exceptional. That something is American exceptionalism precisely. Lech Walesa, the blue-collar hero of Polish freedom from communism put it well in a recent piece in the Wall Street Journal. There is only one of America and if it ceases being itself, the world is left in the dark, goes the thinking. It’s not reasonable to count on the debt-ridden government pension-sucking Europeans to hold up the flashlight. The fact is that several European countries are disappearing because they don’t make enough babies to replenish themselves. That’s the ultimate form of pessimism. (And no, this is not a racist statement, I am completely pleased with the fact that brown-skinned Mexicans and their children are keeping the American population growing. They make good immigrants. See my article on Mexican immigration, with Nikiforov, in the Summer 2009 issue of the Independent Review.)

Unfortunately, there is an innate humility among Americans which makes it difficult for them to think aloud about American exceptionalism. If there were not, twenty years of cultural relativism in the schools would make the very thought difficult to formulate: “Everybody is equal. We are not any better than those who suck their grandmothers’ brain – but only after they die, or than those who practice horrendous sexual mutilation on little girls, or than those who still practice slavery. Only American slavery was atrocious. Slavery in exotic locales is kind of nice, actually, if you look at it in its proper cultural context.”

One way to overcome this shyness and diffuse sense of equality in order better to grasp what we are losing is to consider Swiss exceptionalism about which no one gives a damn, not even the SwissIt turns out that in the main respects, there is not one America, there are several. Switzerland is one. Continue reading