Nightcap

  1. From Baghdad to Shanghai: rival Jewish dynasties Stefan Wagstyl, Financial Times
  2. Praise for Gary Becker’s work on the American family Kathleen Geier, Washington Monthly
  3. Crisis in the liberal city Ross Douthat, New York Times
  4. On nuclear propelled spaceships and Freeman Dyson Jeremy Bernstein, Inference

Nightcap

  1. What the West and its liberal world order is becoming Bruno Maçães, National Review
  2. Medieval geopolitics: the invention of the idea of sovereignty Andrew Latham, Medievalists
  3. The secret caste of nineteenth-century horse mystics Amelia Soth, JSTOR Daily
  4. Sanctimonious econ critics Robin Hanson, Overcoming Bias

If causality matters, should the media talk about mass shootings?

My answer to that question is “maybe not” or at the very least “not as much”. Given the sheer amount of fear that can be generated by a shooting, it is understandable to be shocked and the need to talk about it is equally understandable. However, I think this might be an unfortunate opportunity to consider the incentives at play.

I assume that criminals, even crazy ones, are relatively rational. They weigh the pros and cons of potential targets, they assess the most efficient tool or weapon to accomplish the objectives they set etc. That entails that, in their warped view of the world, there are benefits to committing atrocities. In some instances, the benefit is pure revenge as was the case in one of the famous shooting in my hometown of Montreal (i.e. a university professor decided to avenge himself of the slights caused by other professors). In other instances, the benefit is defined in part by the attention that the violent perpetrator attracts for himself. This was the case of another infamous shooting in Montreal where the killer showed up at an engineering school to kill 14 other students and staff. He committed suicide and also left a suicide statement that read like a garbled political manifesto. In other words, killers can be trying to “maximize” media hits.

This “rational approach” to mass shootings opens the door to a question about causality: is the incidence of mass shootings determining the number of media hits or is the number of media hits determining the incidence of mass shootings. In a recent article in the Journal of Public Economicsthe possibility of the latter causal link has been explored with regards to terrorism.  Using the New York Times‘ coverage of some 60,000 terrorist attacks in 201 countries over 43 years, Michael Jetter used the exogenous shock caused by natural disasters to study they reduced the reporting of terrorist attacks and how this, in turn, reduced attention to terrorism. That way, he could arrive at some idea (by the negative) of causality. He found that one New York Times article increased attacks by 1.4 in the following three weeks. Now, this applies to terrorism, but why would it not apply to mass shooters? After all, there are very similar in their objectives and methods – at the very least with regards to the shooters who seek attention.

If the causality runs in the direction suggested by Jetter, then the full-day coverage offered by CNN or NBC or FOX is making things worse by increasing the likelihood of an additional shooting. For some years now, I have been suggesting this possibility to journalist friends of mine and arguing that maybe the best way to talk about terrorism or mass shooters is to move them from the front page of a newspaper to a one-inch box on page 20 or to move the mention from the interview to the crawler at the bottom. In each discussion, my claim about causality is brushed aside with either incredulity at the logic and its empirical support or I get something like “yes, but we can’t really not talk about it”. And so, the thinking ends there. However, I am quite willing to state that its time for media outlets to deeply reflect upon their role and how to best accomplish the role they want. And that requires thinking about causality and accepting that “splashy” stories may be better left ignored.

Does business success make a good statesman?

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

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

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

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

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

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

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

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

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

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

A non-argument against immigration

I often encounter the argument that immigrants, especially Muslims, are so different from the populations of their host countries that they threaten the institutional foundations of these societies. As a result, the logic goes, we must restrict immigration.

I do not accept that argument as valid nor do I accept it as sufficient (in the case I am wrong) to make the case in favor of further restrictions on immigration.

First of all, the “social distance” between immigrants and the hosts society is very subjective. The caricature below offers a glimpse into how “unsuited” were Catholic immigrants to the US in the eyes of 19th century American natives. Back then, Catholics were the papist hordes invading America and threatening the very foundations of US civilization. Somehow, that threat did not materialize (if it ever existed).  This means that many misconceptions will tend to circulate which are very far from the truth. One good example of these misconceptions is illustrated by William Easterly and Sanford Ikeda on the odds of a terrorist being a muslim and the odds of a muslim being a terrorist. Similar tales (especially given the propensity of Italian immigrants to be radical anarchists) were told about Catholics back then. So let’s just minimize the value of this argument regarding going to hell in a hand basket.

nast1

But let us ignore the point made above – just for the sake of argument. Is this a sufficient argument against more immigration? Not really. If the claim is that they hinder “our” institutions, then let them come but don’t let them participate in our institutions. For example, the right to vote could be restricted to individuals who are born in the host country or who have been in the country for more than X-number of years. In fact, restrictions on citizenship are frequent. In Switzerland, there are such restrictions related to “blood” or “length of stay”. I am not a fan of this compromise measure (elsewhere I have advocated the Gary Becker self-selection mechanism through pricing immigration as a compromise position).*

The point is that if you make the argument that immigrants are different than their host societies, you have not made the case against immigration, you have made the case for restrictions against civic participation.

* Another “solution” on this front is to impose user fees on the use of public services. For example, in my native country of Canada, provincial governments could modify the public healthcare insurance card to indicate that the person is an immigrant and must pay a X $ user fee for visiting the hospital. Same thing would apply for vehicle licencing or other policies. Now, I am not a fan of such measures as I believe that restrictions on citizenship (but offering legal status as residents) and curtailements of the welfare state are sufficient to deal with 99% of the “problem”. 

Neoliberalism: When French philosophy thinks about American economics

From an economic perspective, the vision of man becomes very, very poor. Man is a being who responds to stimuli from the environment, and we can modify his behavior with a choice of stimuli. And what government is, what power is, is the use of different kinds of stimuli. The economic theory gives a set of tools, a “good manner” to use stimuli to obtain the right comportment. In this respect, the result of the theory, perhaps, is to produce a vision of man that is very impoverished.

This is French philosopher François Ewald taking a moment away from his task of explaining Foucault’s thoughts on Gary Becker’s work to elaborate his own thoughts on the discipline of economics. Read the whole thing (pdf). It’s a short paper on Michel Foucault’s thoughts about American liberalism (or neoliberalism) and particularly Gary Becker’s work.

Around the Web

  1. A Riddle Wrapped in a Mystery Inside of an Enigma
  2. Gary Becker on François Ewold on Michel Foucault on Gary Becker (pdf)
  3. Check Your Obedient Privilege
  4. Political scientist Jason Sorens on the difference between states and governments
  5. Rational expectations don’t require smart people
  6. The State as a Metanarrative (when post-modernism meets libertarianism; h/t Mark Brady)
  7. Twisting Libertarianism (a great debunking of the most recent prominent straw man attack on libertarianism)
  8. A Liberty Society versus a Status Society

Open Access Gary Becker papers, and a couple of thoughtful links on him

Nobel Prize-winning economist Gary Becker died Saturday. For those of you who don’t know about his work, go here. For the rest of you, economist Tyler Cowen has compiled a great list of articles by Becker that you can read:

    1. Irrational Behavior and Economic Theory.”  Can the theorems of economics survive the assumption of irrational behavior? (hint: yes)
    2. Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology.”  The title says it all, from 1976.
    3. A Note on Restaurant Pricing and Other Examples of Social Influence on Price.”  Why don’t successful restaurants just raise the prices for Saturday night seatings?
    4. The Quantity and Quality of Life and the Evolution of World Inequality” (with Philipson and Soares).  The causes and importance of converging lifespans.
    5. Competition and Democracy.“  From 1958, but most people still ignore this basic point about why government very often does not improve on market outcomes.
    6. The Challenge of Immigration: A Radical Solution.”  Auction off the right to enter this country.

Cowen also linked to sociologist Kieran Healy’s fascinating take on Michel Foucault’s thoughts about Gary Becker’s work over at Crooked Timber (and here is a pdf of Becker on Foucault on Becker).

And economist Mario Rizzo shares some short thoughts about Becker’s work in relation to the Austrian School of Economics (Becker is associated with the Chicago School of Economics). Rizzo’s account of the early 1960s debate on rationality between Becker and Kirzner is worth a look.

Update: Here is Gary Becker’s 1992 Nobel Prize lecture (pdf)

Around the Web

  1. Recent Mexican reforms and the impact on the United States. From Gary Becker.
  2. Is the Pope’s Capitalism Catholic? Read this for the concise history lesson on Argentina rather than for the Pope’s opinion about public policy.
  3. Sandy Ikeda asks: Who is really threatened by innovation? Rick’s recent musing on political entrepreneurs can also shed some light on Ikeda’s question.
  4. The Liberty Constitution, Or, What About Slavery? Some libertarian legal theory for dat ass.
  5. Diplomacy.” A transcript of Rand Paul’s recent speech on US foreign policy.
  6. Why the world needs more globalization, not less.

Has Nobel Laureate Gary Becker been reading NOL?

I would think so, especially after reading this:

The movement toward free trade agreements and globalization during the past 60 years has enormously reduced the economic advantages of having a larger domestic market to sell goods ands services. Small countries can sell their goods to other countries, both large and small, almost as easily as large countries can sell in their own domestic markets. For example, during the past 30 years the small country of Chile has had the fastest growing economy of Latin America, larger than Brazil and Mexico, the two largest nations of this region. This would not have been possible without the access of Chilean companies to markets in other countries, both in South America and elsewhere. As a result, Chile now exports around 40% of its GDP, compared to a ratio of exports to GDP in the United States of about 13%.

[…]

Small countries can do well with small domestic markets by taking advantage of a globalized economy by selling large fractions of its production to consumers and companies in other countries. That is why smaller countries usually export a considerably larger fraction of its production, and import a much bigger share of its consumption, than do larger countries. Size of country was much more important in the past when many countries had high tariffs, and transportation costs were much more important.

Political interest groups tend to be less able in smaller countries in distorting political decision in their favor. This is partly because smaller countries are more homogeneous, so it is harder for one group to exploit another group since the groups are similar. In addition, since smaller nations have less monopoly power in world markets, it is less efficent for them to subsidize domestic companies in order to give these companies an advantage over imports. The greater profits to domestic companies from these subsidies come at the expense of much larger declines in consumer well being.

The growth in the competitiveness of small countries on the global market is in good part responsible at a deeper level for the remarkable growth in the number of countries since 1950 from a little over 100 to almost 200 countries now. And the number of independent countries is still growing.

OMG! He has been reading us! How could he not be? Check out our thoughts on secession, decentralization, and devolution and tell me I’m wrong. Do it!

Heck, if we’re writing about the same stuff as a Nobel Laureate, and you’re reading us, what does that tell you about you? About us?

I’m curious. I also know Dr Becker doesn’t really read us. However, does the fact that we write about the same concepts and events as a Nobel Laureate have more to do with intelligence or ideological bias? Do prominent Left-wing scholars write about secession and globalization in the same way that we do?

From what I can tell, the answer to my second question is ‘no’ (the answer to my first is further below). Generally speaking, libertarians view more countries, more decentralization and more economic integration as a great thing, and we’ve got the data (increases in income, and longevity of life, and literacy rates, and…) to back it up. We’re the optimists.

Leftists and conservatives argue that all the good libertarian things happening in the world are bad, and they have some data to back it up (like Gross National Happiness). Leftists and conservatives are the pessimists.

Is this disagreement over globalization really a matter of intelligence? Of ideology? I think it’s probably a mixture of both, and also that intelligence levels affect ideological bias. You don’t hear many stupid people advocating for a more globalized world, much less for decentralized power structures and economic integration. It’s also hard to find smart people that will shun internationalism at the cultural or political level. The fact that many smart people, especially on the Left, shun economic internationalism is not so much troubling as it is amusing.

Watching intelligent people attempt to squirm out of answering questions about economic internationalism (“globalization”) can be quite the treat.

I think facts are squarely on the libertarian’s side, and that the main obstacle to attaining a more globalized, a more economically integrated, and a more politically decentralized world is rhetoric (and sheer numbers, of course). The benefits of globalization are usually seen by intelligent people very quickly (though not always thanks to clever rhetoric), but there are simply not that many intelligent people in the world (if there were, wouldn’t intelligence be rendered useless or morph into something else?).

I guess what I’m trying to say is that working towards a more libertarian world (thousands of political units with one world market) should be easy, so why isn’t it? I think the answer is ‘factions’. Farm subsidies in the West, for example, are unnecessary and can actually lead to hunger in poorer parts of the world. Getting rid of such subsidies would be a great benefit to mankind, but these subsidies persist. Why? Because of the political power of farm lobbies. If a politician representing a farm district in the West votes to eliminate subsidies, he’s gone in the next election. So unless the representatives of Western farmers somehow band together in defiance of their own interests and vote to eliminate farm subsidies, poor people will go hungry and Western citizens will pay too much for food.

Here is the real conundrum, though. If some factions gain political leverage over other factions, it does not necessarily follow that arbitrarily ending the hard-won privileges of the rent-capturing factions is the best option to take. In fact, it is often the worst option to take because of the dangers associated with arbitrary rule.

Think about it this way: Suppose a bunch of farmers in a democratic state band together and form a lobby for the purpose of protecting their interests. They gain influence (“capturing the rent”) and eventually become a nuisance to their countrymen but not a problem. Unfortunately, they are more than a nuisance to people in poor countries, but these poor people are unable to form a lobby that counters the lobbying efforts of the farmers.

The farm lobby in the rich country has followed all the rules. It has achieved its status as rent-capturer fairly, democratically and legally. What gives the government the right to suddenly change the rules on the farm lobby? Absolutely nothing. Furthermore, if the democratic government starts to ban lobbies it deems to be nuisances, it relinquishes its democratic moniker (and, more importantly, introduces arbitrary rule). Do you see the problem of ‘factions’?

Unfortunately, factions are built in to the policy-making process itself. One of the strengths of democracies is that they tend to give factions more of a voice than autocracies. In the United States, for example, Madison sought to combat the problem of factions by restricting the scope of the state to certain duties, and his system has done an excellent job (all things considered).

So I’ve got two questions I hope to be able to think about in the near term: 1) how can we make the Madisonian system better here in the United States, and 2) how can we “export” (for lack of a better term) Madisonian democracy abroad in a non-coercive manner?

Cronismo…você sabe o que é isto?

Não??? Então você não deve estar morando no Brasil. Ok, você mora, mas não sabe do que se trata. Um livro que divulgou este conceito no Brasil é o do Lazzarini. Mas você pode aprender também sobre isto neste video. Este blogueiro (junto com o Leo Monasterio) já falava de rent-seeking no Brasil desde o final do século passado. A galera, contudo, custou a nos acompanhar na literatura. Ao longo destes primeiros 13 anos do século, vimos vários autores e artigos sobre o tema. Claro, tudo começou com o Jorge Vianna Monteiro (embora muita gente não pareça saber fazer pesquisa científica direito e, portanto, não faça a revisão da literatura corretamente).

O termo rent-seeking nunca saiu muito das conversas de economistas e alguns poucos cientistas políticos esclarecidos. Claro, havia também a competição dos marxistas, sempre receosos de perderem sua platéia para teorias concorrentes. Mas, aos poucos, as coisas mudaram. Aí alguém, acho que foi o Gary Becker, popularizou o termo capitalismo de compadres (ou de compadrio). Paralelamente, a mudança de gerações nas redações de jornais e a tecnologia ajudaram a popularizar as idéias de Tullock, Olson, Buchanan e outros. Mesmo assim, convenhamos, “capitalismo de compadres” não é um termo muito retórico, no sentido da McCloskey.

Aí, agora, veio este novo termo, o tal “cronismo”. No fundo, no fundo, fala-se do mesmo fenômeno. Mas parece que este termo está se popularizando com certa facilidade. Ajuda, claro, a corrupção desenfreada que assistimos no Brasil desde a primeira administração da Silva (agora também conhecido como “Lula”, “Lula da Rose”, “o Barba”, dentre outros divertidos apelidos). O desencanto dos eleitores não deixa de ter um impacto positivo: o aumento do ceticismo e do grau de exigência quanto às suas demandas políticas. Claro que isto não necessariamente melhora a qualidade do setor público ou diminui a corrupção, mas o realismo trazido pelo ceticismo é sempre saudável.