Nightcap

  1. What should we do? The right thing! Jason Brennan, 200-Proof Liberals
  2. The crusaders were not incompetent zealots after all Ian Garrick-Mason, Spectator
  3. The end of the secular republic in India and Turkey Yasmeen Serhan, Atlantic
  4. American sublime Michael Lewis, New Criterion

Nightcap

  1. Virus deaths in Democratic and Republican states James Rogers, Law & Liberty
  2. How fractured is the British left? Leontios Xenophilos, American Affairs
  3. An argument against moral blameworthiness Bill Rein, NOL
  4. Pity the poor stepmother Susan Hill, Spectator

Paid Sick Leave and Schelling Focal Points

Paid sick leave is something I want more people to have. Of course it’s a good thing. Sick leave is valuable, but it’s not free so we have to ask it it’s worth it.

Right around the 11:30 mark is a tragic and hilarious line: “Dildos are not essential items. Books for kids, yes, but dildos? … No!” Good for John Oliver noting that deciding what is essential isn’t straight forward–apparently frivolous things might keep people inside and so serve the public health.

This is a classic Austrian point: prices (are supposed to) communicate information about how urgently people want a product. We run into trouble trying to prevent prices from reflecting the underlying economic crappiness of a crisis. Price gouging should be allowed for toilet paper and especially for grocery/Amazon workers. And the price of grocery workers should be passed on to consumers.

What we’ve got now requires each of us to not only ask “am I willing to pay this price?” but also engage in a moral calculus that is hard. I have to ask (as a person striving to be moral) if it’s really worth ordering X, Y, and Z from Amazon. But as a person who has to strive to be moral, it’s entirely too easy to fall for bad rationalizations.

So how do we help these essential-yet-replaceable* workers? Paid sick leave sure sounds good. And given the externalities involved in a pandemic, there’s a strong argument for mandating it.

But it’s worth remembering (particularly as a long run policy) that if we push on one part of a compensation bundle, something’s going to give. If we require employers to provide a company car (or simply encourage company cars through preferential tax laws), we shouldn’t be surprised to see monetary compensation fall. The same logic applies to paid sick leave.

But I’m my own devil’s advocate, so let me make a counter argument. I rarely use my sick days. I think I’ve taken 2 or 3 in the last 6 years. (I’m absolutely reevaluating that position now!) There’s this idea floating around in the back of my head that tells me to just tough it out and keep working. This isn’t because I carefully weighed pros and cons, it’s just received “wisdom” picked up by osmosis from the broader culture.

American culture values work over value. There’s no shortage of bullshit work because we’re in a work-too-hard equilibrium. This is not to say that hard work doesn’t have benefits. I’m happy when ambitious entrepreneurs work “too” hard to provide greater value. But there are a lot of cases where we create work for its own sake (especially in the higher ed racket, but apparently we’re not alone).

Essentially, we’re all playing a coordination game where we choose between “[appear to] work to make things better” and “stay home instead of passing your illness to other people.” Given American work culture, the Schelling focal point is <work, work>.

On the compensation end of things employers have to decide between offering more sick leave or some other compensation (like money). In this end, there is some benefit to zigging where other employers zag. If I’m running the only business to offer paid paternity leave, I get my pick of the best family-oriented workers while my competitors have to outbid each other to get the best of the other workers. But any mid-level HR manager is more likely to play the risk-averse strategy of following “best practices.”

So we’re in an equilibrium that underrates sick leave. We want to be in an equilibrium where it’s just good business sense to offer sick leave during a global pandemic. But coming from our current equilibrium, offering sick leave is a costly decision to privately provide a public good; it’s unlikely to happen unless the culture already promotes it.

I think we can get that equilibrium. I think we’re already moving towards it (ask yourself: would the board of the East India Company be more likely to offer sick leave than Amazon?). But we’re not there yet.

Paid sick leave should be good business sense right now**. But it depends on a culture where such behavior is widespread. I’m not convinced we could flip a switch and get that culture over night. Given that, I’m at least somewhat okay with contradicting my libertarian priors and calling for emergency mandates for paid sick leave. 2020 America isn’t likely to coordinate on the “right” short-term solution and coercion is probably the most efficient*** way to deal with this common pool problem. But outside of a public health emergency we shouldn’t allow top down mandates about the mix of compensation offered in markets (certainly not with the sort of people we elect to be on top).


(A couple rhetorical points: First, John Oliver isn’t speaking the language of those on the right. They won’t even be convinced that the issues he’s talking about are important. I think that’s a shame. Second, this is a tough time to try to argue against paid sick leave. In 2020 America, mandatory paid sick leave is probably required because we’re at the wrong Schelling point. Again, I don’t think conservatives or right-libertarians will find Oliver’s motivations convincing, but I believe that they could be persuaded. But that’s another blog post.)

(Two important counterpoints to the above: first, price increases hurt the poor. The way to solve that is to give charity money to the poor, not to try to make markets communicate information about relative scarcity and act as charity–that’s half-assing twice and it’s bound to be more inefficient than the charity would be costly. Second many people categorized as “essential” aren’t in a position to demand higher wages*. I don’t have an easy solution to this issue. Let’s talk about it in the comments.)

*Which is to say, workers who are in the same position as water in the diamond-water paradox.
**Not to say it would be cheap or easy.
***There you go. Now my friends on the left can accuse me of being a bloodless economist for opposing paid sick leave in general, and my friends on the right can accuse me of being a bloodless economist for supporting

Life

Screenshot 2020-03-26 at 12.15.15

No matter how old, frail or vulnerable it may be, a life isn’t something to take or risk at another’s discretion. Nor does it undermine culpability when someone dies as a result of negligence. The common law ‘eggshell skull’ rule reflects this moral principle.

During the Coronavirus pandemic, some erstwhile defenders of the famous Non-Aggression Principle (NAP) appear to have forgotten that natural rights are conceived to protect life as well as liberty and property. They seem to think that the liberties we ordinarily enjoy have priority over the right to life of others. The environment has changed and, for the time being, many activities that we previously knew to be safe for others are not. They are not part of our set of liberties until a reformed set of rules, norms and habits establishes a sufficiently hygienic public environment. To say that bans on public gatherings violate natural rights a priori is as untenable as G.A. Cohen’s claim that a prohibition on walking onto a train without a valid ticket is a violation of one’s freedom.

The clue for anarcho-capitalist state-sceptics that this is a genuine shift in social priorities is that even organized criminal gangs are willing to enforce social distancing. You do not have to believe that the state itself is legitimate to see that the need for social distancing is sufficiently morally compelling that it can be enforced absent free agreement, just as one does not need free agreement to exercise a right to self-defense.

Not every restriction is going to be justified, although erring on the restrictive side makes sense while uncertainty about the spread of infection persists. Ultimately, restrictions have to balance genuine costs with plausible benefits. But rejecting restrictions on a priori grounds does not cohere with libertarian principles. Right now, our absolute liberties extend to the right to be alone. Everything else must be negotiated under uncertainty. Someone else’s life, even two-weeks or so in the future, is a valid side-constraint on liberty. People can rightfully be made to stay at home if they are fortunate enough to have one. When people have to travel out of necessity, they can be temporarily exempted, compensated or offered an alternative reasonable means of satisfying their immediate needs.

Nightcap

  1. My mother’s last words Lee Rourke, New Statesman
  2. The conscience of a human being Michael Huemer, Cato Unbound
  3. In praise of Barcelona’s crosswalks Irfan Khawaja, Policy of Truth
  4. Islam and the French Revolution Ian Coller, Age of Revolutions

The Least Empathic Lot

On standard tests of empathy, libertarians score very low. Yet, the world’s “well-known libertarian bias” coupled with many people’s unwarranted pessimism makes us seem like starry-eyed optimists (“how could you possibly believe things will just work themselves out?!”).

Under the Moral Foundations framework developed and popularized by Jonathan Haidt, he and his colleagues analyzed thousands of responses through their YourMorals.org tool. Mostly focused on what distinguishes liberals from conservatives, there are enough self-reported libertarians answering that the questionnaire to draw meaningful conclusions. The results, as presented in TED-talks, podcast interviews and Haidt’s book The Righteous Mind: Why Good People Are Divided by Politics and Religion contains a whole lot of interesting stuff.

First, some Moral Foundations basics: self-reported liberals attach almost all their moral value to two major categories – “fairness” and “care/harm.” Some examples include striving for equal (“fair”) outcomes and concern for those in need. No surprises there.

Conservatives, on the other hand, draw fairly evenly on all five of Haidt’s different moralities, markedly placing weight on the other three foundations as well – Authority (respect tradition and your superiors), Loyalty (stand with your group, family or nation) and Sanctity (revulsion towards disgusting things); liberals largely shun these three, which explains why the major political ideologies in America usually talk past one another.

Interestingly enough, In The Righteous Mind, Haidt discusses experiments where liberals and conservatives were asked to answer the questionnaire as the other would have. Conservatives and moderate liberals could represent the case of the other fairly well, whereas those self-identifying as “very liberal” were the least accurate. Indeed, the

biggest errors in the whole study came when liberals answered the Care and Fairness questions while pretending to be conservatives.

Within the Moral Foundations framework, this makes perfect sense. Conservatives have, in a sense, a wider array of moral senses to draw from – pretending to be liberal merely means downplaying some senses and exaggerating others. For progressives who usually lack any conception of the other values, it’s hard to just invent them:

if your moral matrix encompasses nothing more than Care and Fairness, then to imagine a political opponent is to reverse one’s own position for those foundations – that Conservatives act primarily on other frequencies, on other foundations, wouldn’t even occur to them.

Libertarians, always the odd one out, look like conservatives on the traits most favoured by liberals (Fairness and Care/Harm); and are indistinguishable from liberals on the traits most characteristic of conservatives (Authority, Loyalty, and Sanctity). Not occupying some fuzzy middle-ground between them, but an entirely different beast.

Empathy, being captured by the ‘Care’ foundation, lines up well with political persuasion, argues Yale psychologist Paul Bloom in his Against Empathy: The Case for Rational Compassion. Liberals care the most; conservatives some; and libertarians almost none at all. Liberals are the most empathic; conservatives are somewhat empathic; and libertarians the least empathic of all. No wonder libertarians seem odd or positively callous from the point of view of mainstream American politics.

Compared to others, libertarians are more educated and less religious – even so than liberals. Libertarians have “a relatively cerebral as opposed to emotional cognitive style,” concluded Haidt and co-authors in another study; they are the “most cerebral, most rational, and least emotional,” allowing them more than any others to “have the capacity to reason their way to their ideology.”

Where libertarians really do place their moral worth is on “liberty” (a sixth foundation that Haidt and his colleagues added in later studies).  Shocking, I know. Libertarians are, in terms of moral philosophy, the most unidimensional and uncomplicated creatures you can imagine – a well-taught parrot might pass a libertarian Turing test if you teach it enough phrases like “property rights” or “don’t hurt people and don’t take their stuff.”

The low-empathy result accounts for another striking observation to anyone who’s ever attended an even vaguely libertarian event: there are very few women around. As libertarians also tend to be ruthlessly logical and untroubled by differential outcomes along lines of gender or ethnicity – specifically in small, self-selected samples like conferences – they are usually not very bothered by the composition of their group (other than to lament the potential mating opportunities). The head rules, not the heart – or in this case, not even the phallus.

One of the most well-established (and under-appreciated) facts in the scientific community is the male-female divide along Simon Baron-Cohen’s Empathizing-Systemizing scale. The observation here is that males more often have an innate desire to understand entire systems rather than individual components – or the actions or fates of those components: “the variables in a system and how those variables govern the behaviour of that system,” as Haidt put it in a lecture at Cato. Examples include subway maps, strategy games, spreadsheets, or chess (for instance, there has never been a female world champion). Women, stereotypically, are much more inclined to discover, understand, mirror and even validate others’ feelings. Men are more interested in things while women are more concerned with people, I argued in my 2018 Notes post ‘The Factual Basis of Political Opinion’, paraphrasing Jordan Peterson.

The same reason that make men disproportionately interested in engineering – much more so than women – also make men more inclined towards libertarianism. A systemizing brain is more predisposed to libertarian ideology than is the empathizing brain – not to mention the ungoverned structure of free markets, and the bottom-up decentralized solutions offered to widespread societal ills.

Thus, we really shouldn’t be surprised about the lack of women in the libertarian ranks: libertarians are the least empathic bunch, which means that women, being more inclined towards empathy, are probably more appalled by an ideology that so ruthlessly favours predominantly male traits.

As I’ve learned from reading Bloom’s book, empathy – while occasionally laudable and desirable among friends and loved ones – usually drives us towards very poor decisions. It blinds us and biases us to preferring those we already like over those far away or those we cannot see. The “spotlight effect” that empathy provides makes us hone in on the individual event, overlooking the bigger picture or long-term effects. Bloom’s general argument lays out the case for why empathy involves in-group bias and clouds our moral judgements. It makes our actions “innumerate and myopic” and “insensitive to statistical data.” Empathy, writes Bloom:

does poorly in a world where there are many people in need and where the effects of one’s actions are diffuse, often delayed, and difficult to compute, a world in which an act that helps one person in the here and now can lead to greater suffering in the future.

In experiments, truly empathizing with individuals make us, for instance, more likely to move a patient higher on a donation list – even when knowing that some other (objectively-speaking) more-deserving recipient is thereby being moved down. Empathy implores us to save a visible harm, but ignore an even larger (and later) but statistically-disbursed harm.

Perhaps libertarians are the “the least empathic people on earth.” But after reading Bloom’s Against Empathy, I’m not so sure that’s a bad thing. Perhaps – shocker! – what the world needs is a little bit more libertarian values.

2019: Year in Review

It’s been a heck of a year. Thanks for plugging along with Notes On Liberty. Like the world around me, NOL keeps getting better and better. Traffic in 2019 came from all over the place, but the usual suspects didn’t disappoint: the United States, United Kingdom, Canada, India, and Australia (in that order) supplied the most readers, again.

As far as most popular posts, I’ll list the top 10 below, but such a list doesn’t do justice to NOL and the Notewriters’ contribution to the Great Conversation, nor will the list reflect the fact that some of NOL‘s classic pieces from years ago were also popular again.

Nick’s “One weird old tax could slash wealth inequality (NIMBYs, don’t click!)” was in the top ten for most of this year, and his posts on John Rawls, The Joker film, Dominic Cummings, and the UK’s pornographer & puritan coalition are all worth reading again (and again). The Financial Times, RealClearPolicy, 3 Quarks Daily, and RealClearWorld all featured Nick’s stuff throughout 2019.

Joakim had a banner year at NOL, and four of his posts made the top 10. He got love from the left, right, and everything in between this year. “Elite Anxiety: Paul Collier’s ‘Future of Capitalism’” (#9), “In Defense of Not Having a Clue” (#8), and “You’re Not Worth My Time” (#7) all caused havoc on the internet and in coffee shops around the world. Joakim’s piece on Mr Darcy from Pride and Prejudice (#2) broke – no shattered – NOL‘s records. Aside from shattering NOL‘s records, Joakim also had excellent stuff on financial history, Richard Davies, and Nassim Taleb. He is also beginning to bud as a cultural commentator, too, as you can probably tell from his sporadic notes on opinions. Joakim wants a more rational, more internationalist, and more skeptical world to live in. He’s doing everything he can to make that happen. And don’t forget this one: “Economists, Economic History, and Theory.”

Tridivesh had an excellent third year at NOL. His most popular piece was “Italy and the Belt and Road Initiative,” and most of his other notes have been featured on RealClearWorld‘s front page. Tridivesh has also been working with me behind the scenes to unveil a new feature at NOL in 2020, and I couldn’t be more humbled about working with him.

Bill had a slower year here at NOL, as he’s been working in the real world, but he still managed to put out some bangers. “Epistemological anarchism to anarchism” kicked off a Feyerabendian buzz at NOL, and he put together well-argued pieces on psychedelics, abortion, and the alt-right. His short 2017 note on left-libertarianism has quietly become a NOL classic.

Mary had a phenomenal year at NOL, which was capped off with some love from RealClearPolicy for her “Contempt for Capitalism” piece. She kicked off the year with a sharp piece on semiotics in national dialogue, before then producing a four-part essay on bourgeois culture. Mary also savaged privileged hypocrisy and took a cultural tour through the early 20th century. Oh, and she did all this while doing doctoral work at Oxford. I can’t wait to see what she comes up with in 2020.

Aris’ debut year at NOL was phenomenal. Reread “Rawls, Antigone and the tragic irony of norms” and you’ll know what I’m talking about. I am looking forward to Dr Trantidis’ first full year at NOL in 2020.

Rick continues to be my favorite blogger. His pieces on pollution taxes (here and here) stirred up the libertarian faithful, and he is at his Niskanenian best on bullshit jobs and property rights. His notes on Paul Feyerabend, which I hope he’ll continue throughout 2020, were the centerpiece of NOL‘s spontaneity this year.

Vincent only had two posts at NOL in 2019, but boy were they good: “Interwar US inequality data are deeply flawed” and “Not all GDP measurement errors are greater than zero!” Dr Geloso focused most of his time on publishing academic work.

Alexander instituted the “Sunday Poetry” series at NOL this year and I couldn’t be happier about it. I look forward to reading NOL every day, but especially on Sundays now thanks to his new series. Alex also put out the popular essay “Libertarianism and Neoliberalism – A difference that matters?” (#10), which I suspect will one day grow to be a classic. That wasn’t all. Alex was the author of a number of my personal faves at NOL this year, including pieces about the Austro-Hungarian Empire, constructivism in international relations (part 1 and part 2), and some of the more difficult challenges facing diplomacy today.

Edwin ground out a number of posts in 2019 and, true to character, they challenged orthodoxy and widely-held (by libertarians) opinions. He said “no” to military intervention in Venezuela, though not for the reasons you may think, and that free immigration cannot be classified as a right under classical liberalism. He also poured cold water on Hong Kong’s protests and recommended some good reads on various topics (namely, Robert Nozick and The Troubles). Edwin has several essays on liberalism at NOL that are now bona fide classics.

Federico produced a number of longform essays this year, including “Institutions, Machines, and Complex Orders” and “Three Lessons on Institutions and Incentives” (the latter went on to be featured in the Financial Times and led to at least one formal talk on the subject in Buenos Aires). He also contributed to NOL‘s longstanding position as a bulwark against libertarian dogma with “There is no such thing as a sunk cost fallacy.”

Jacques had a number of hits this year, including “Poverty Under Democratic Socialism” and “Mass shootings in perspective.” His notes on the problems with higher education, aka the university system, also garnered plenty of eyeballs.

Michelangelo, Lode, Zak, and Shree were all working on their PhDs this year, so we didn’t hear from them much, if at all. Hopefully, 2020 will give them a bit more freedom to expand their thoughts. Lucas was not able to contribute anything this year either, but I am confident that 2020 will be the year he reenters the public fray.

Mark spent the year promoting his new book (co-authored by Noel Johnson) Persecution & Toleration. Out of this work arose one of the more popular posts at NOL earlier in the year: “The Institutional Foundations of Antisemitism.” Hopefully Mark will have a little less on his plate in 2020, so he can hang out at NOL more often.

Derrill’s “Romance Econometrics” generated buzz in the left-wing econ blogosphere, and his “Watson my mind today” series began to take flight in 2019. Dr Watson is a true teacher, and I am hoping 2020 is the year he can start dedicating more time to the NOL project, first with his “Watson my mind today” series and second with more insights into thinking like an economist.

Kevin’s “Hyperinflation and trust in ancient Rome” (#6) took the internet by storm, and his 2017 posts on paradoxical geniuses and the deleted slavery clause in the US constitution both received renewed and much deserved interest. But it was his “The Myth of the Nazi War Machine” (#1) that catapulted NOL into its best year yet. I have no idea what Kevin will write about in 2020, but I do know that it’ll be great stuff.

Bruno, one of NOL’s most consistent bloggers and one of its two representatives from Brazil, did not disappoint. His “Liberalism in International Relations” did exceptionally well, as did his post on the differences between conservatives, liberals, and libertarians. Bruno also pitched in on Brazilian politics and Christianity as a global and political phenomenon. His postmodernism posts from years past continue to do well.

Andrei, after several years of gentle prodding, finally got on the board at NOL and his thoughts on Foucault and his libertarian temptation late in life (#5) did much better than predicted. I am hoping to get him more involved in 2020. You can do your part by engaging him in the ‘comments’ threads.

Chhay Lin kept us all abreast of the situation in Hong Kong this year. Ash honed in on housing economics, Barry chimed in on EU elections, and Adrián teased us all in January with his “Selective Moral Argumentation.” Hopefully these four can find a way to fire on all cylinders at NOL in 2020, because they have a lot of cool stuff on their minds (including, but not limited to, bitcoin, language, elections in dictatorships, literature, and YIMBYism).

Ethan crushed it this year, with most of his posts ending up on the front page of RealClearPolicy. More importantly, though, was his commitment to the Tocquevillian idea that lawyers are responsible for education in democratic societies. For that, I am grateful, and I hope he can continue the pace he set during the first half of the year. His most popular piece, by the way, was “Spaghetti Monsters and Free Exercise.” Read it again!

I had a good year here, too. My pieces on federation (#3) and American literature (#4) did waaaaaay better than expected, and my nightcaps continue to pick up readers and push the conversation. I launched the “Be Our Guest” feature here at NOL, too, and it has been a mild success.

Thank you, readers, for a great 2019 and I hope you stick around for what’s in store during 2020. It might be good, it might be bad, and it might be ugly, but isn’t that what spontaneous thoughts on a humble creed are all about? Keep leaving comments, too. The conversation can’t move (forward or backward) without your voice.

Nightcap

  1. Less visible systems of murder Robin Hanson, Overcoming Bias
  2. No. Belle Warring, Crooked Timber
  3. Finally, air is for sale Oliver Wainwright, Guardian
  4. Martian civilization Nick Nielsen, Centauri Dreams

Institutions, Machines, and Complex Orders (Part 2): Moral and Politics

It is a characteristic feature of Modernity to separate between private morality and public ethics. The first concerns the ethics of principles by virtue of which each individual governs his own sphere of autonomy. Each individual, while not interfering in the interests of third parties, is a legislator, judge, and part of their own moral issues. The law regulates conflicts of interest between individuals, giving legal protection to a certain range of interests and systematically denying it to others (Friedrich Hayek, Law, Legislation and Liberty, Volume I, “Norms and Order”, 1973). For example, in almost all modern legal systems the interest to move and, fundamentally, to leave a territory is protected through the freedom of locomotion. In the meantime, a producer may feel prejudiced by the mere existence of competition and nevertheless he may be denied the right to protection of his monopoly (since a “right” is a legally protected interest). In both cases, questions of principle and questions of social utility are combined.

In most modern systems, the interest to circulate freely is solved more by addressing questions of principles than of social utility – the right to freedom of locomotion is enshrined without addressing arguments about the utility of denying legal protection with respect to another interest. While the problems of protectionism and competition are considered mainly in terms of their social utility, the arguments about whether a certain individual or group of individuals have, as a matter of principle, the right to monopolize an economic activity by the mere fact of belonging to a certain ethnic group, estate, or guild today sounds ridiculous, but not in the past.

The widespread distinction practiced by Max Weber between ethics of conviction and ethics of responsibility continues in force. Individuals, in their private lives, have the right to make decisions following the ethics of conviction, although their principles may be debatable, obsolete, incongruous, and arbitrary. In any case, the consequences will have to weigh on the agents of the decision themselves. On the other hand, the consequences of the decisions of politicians extend to the whole society. The ethics of responsibility becomes relevant here, which, although it may come into conflict with the ethical principles most widely spread among members of society – that is, the current morality – it must address issues related to social utility. This is to say that a substitution of the current morality for welfare economics would be operated.

However, the Weberian notion of ethics responsibility brings with it all the problems of instrumental reason: the means-that is, the resources to be sacrificed-must be proportional to the ends-in this case, the social utility-but remains open to definition what are the values ​​that will define social utility. This is how the question of principles is reintroduced, the discussions about what is right and what is wrong, i.e. morality, in the political sphere. Correlatively, the critiques around the notion of subjective or instrumental reason once formulated by Max Weber are also applicable to the aforementioned welfare economy, so that they retain special validity.

[Editor’s note: Here is Part 1 of the essay. You can find the full essay here.]

Nightcap

  1. The Second Earl of Liverpool SJD Green, Law & Liberty
  2. Multilateralism is cooperative, not imperial Ankit Panda, Diplomat
  3. Should we worry about deplatforming? Arnold Kling, askblog
  4. Eating someone Lori Marino, Aeon

The nonexistent moral decay of the west

Humankind’s struggle with moral is of course nothing new, it rather inherent to our nature to revolt against the meaningless world and the manmade system of reason. Furthermore, moral values vary over a specific period of time swinging from rather high moral standards to very low ones. Regarding morality as an abstract compass guiding our thought, goals and behaviour, Economist, in general, are not known for dealing in depth with the metaphysical reason behind our behaviour yet they explore and explain human actions through our surrounding incentives, which also structure and direct our action. Economist such as Daron Acemoglu & James Robinson or William J. Baumol have explored these changes in human behaviour through changing incentive structures thoroughgoingly.

However, folks mourning the moral decline of today’s west often fail to provide concrete evidence for their argument. They either cherry-pick events or legislatures to infer a macro trend inductively or they lose themselves in difficult language trying to somehow save their argument by making it incomprehensible. I cannot help feeling that mourning the moral decay of the west has somehow become a shibboleth for eloquently expressing the “Things used to be way better back then” narrative. However, I admit that there were probably a couple of sociological papers who have covered this issue very well which I am unaware of. Contrary, the public debate was dominated by a few grumpy intellectuals holding the above-named attitude. I was recently provided with a very concrete set of indicators to measure moral decline while digging through Samuel P. Huntington’s infamous classic “The clash of civilization” from 1996. He states that there are five main criteria which indicate the ongoing decline of moral values in the West. [1]

After being provided with a concrete framework to quantify the moral decline of the west, I was keen to see how the moral decline of the west has developed in the 20 years since the book has first been published in 1996. Although I also take issue with some of these indicators to measure moral decline, I avoid any normative judgement in the first part and just look at their development over time. Furthermore, since Samuelson himself mostly takes data from the USA representing the West, I might as well do so too for the sake of simplicity. So, let’s see what happened to moral values in the West in the last years by checking each of Huntington’s indicator one by one.

1. Increasing antisocial behaviour such as acts of crime, drug use and general violence

Apart from the global long-term trend of declining homicides, we can also observe a recent downward trend in the reported violent crime rate since 1990 in the USA. Scholars agree that the crime rate is in an extreme decline. Expanding the realm towards Europe, you will see similar results (see here).

1Source: Statista

Despite these trends, the public (as well as some intellectuals as well I assume) vastly still holds a distorted perception of the crime rate. The sharp decline in actual crimes strongly contradicts the fact that a majority of the people still uphold the myth of increasing crime rates.

2

Source: Pew Research Center

Regarding drug use in the USA, it is important to mention that the absolute amount of illicit drugs consumed has slightly gone up since 1990. This development is mostly driven by an increasing  consumption of marijuana: Use of most drugs other than marijuana has stabilized over the past decade or has declined., states the National Institute on drug abuse in 2015.

Contrary, the number of deadly injections are increasing. However, the share of the population with drug use disorders has remained on the same level of 5.3% over the last 20 years.

2. Decay of the family resulting in increasing divorce rates, teenage motherhood and single parents

It is hard to measure the “Decay of the family” itself. Luckily, Huntington further concretizes his claim by naming some of the measurable effects. There is nothing much to do to refute these statement except for looking at the following graphs.

a) Firstly, the divorce rate is sharply declining.

3

Source: Statista

b) Second, teenage pregnancy rates are also dropping since 1990.

4Source: National Vita Statistics Report

c) Third, the number of Americans living in single parenthood is not increasing drastically since 1990.

5Source: Statista

I often take issue when (especially conservative) scholars mourn the declining importance of family. Even if there are certain indicators which would back up Huntington’s claims, he does not name them himself. While it is indeed true that “family” as an institution is undergoing changes, there is no evidence (at least named by Huntington) to back up the claim of a decline of its importance.

3. Declining “social capital” and voluntarism leading to less trust.

It is indeed true, that the adult volunteering rate declined from early 2000 to 2016 from 27.4% to 24.9%. Interestingly, it recently bounced back to a new high in 2018, hitting the 30% target. Really the only point where one must agree to Huntington’s claim is the decrease of interpersonal trust as well as trust in public institutions. This trend is indeed very worrisome considering that trust is a major factor for flourishing societies.

4. The decline in work ethic

The research here is a little bit tricky and points in both directions. Although there has been wide academic coverage of the millennial work ethic scholars could not find a consensus on this issue. Its is especially difficult to extract the generational influence from other key determinants of work ethic, such as position or age. Academics warn to mistake the ever-ongoing conflict between young vs. old with the Boomer vs. Millenial conflict. I haven’t settled my opinion on this one. These Articles from Harvard Business Review and Psychology Today provide a good overview of both sides of the medal.

5. Less general interest in Education

This indicator is particularly interesting for me because as a member of the 90’ generation, I have experienced quite the opposite in Germany. But let’s have a look at the data.

Despite ranking only in the middle in a global country comparison, the US students still made a huge leap in terms of maths and reading proficiency, which only slowed down in 2015:

6

Source: Pew Research Center

Furthermore, the overall educational level of the USA continues to rise, resulting in the fact that  “the percentage of the American population age 25 and older that completed high school or higher levels of education reached 90% [for the first time ] in 2017.” Contrary, there are still major differences when one looks at features like race or parent household (See here), but the overall trajectory of the educational level is sloping upwards.

What do these criteria measure?

As you can see, there is little to no evidence to empirically back up the claim of western moral decay. Furthermore, while many case studies have shown that lack of interpersonal trust, lack of education or a declining work ethic can pose a great threat to society, I refuse to see a connection (a no known to me study disproves me here) between (recreational) drugs consumption, alternative family models, increasing hedonism and moral decline. Thus I believe that many advocates of the moral decay theory regard it as an opportunity to despise developments they personally do not like. I do not imply that everyone arguing for the moral decline of the west is unaware of the global macro-trends which heavily improved our life, but I highly doubt their assumption, that we are currently in a short-to-medium term “moral recession”. Even when one upholds the very conservative statements such as drug consumption adding to moral decline, is hard to argue that we are currently witnessing a moral decay of the west. Contrary, It may be true that Huntington has observed something different in the period before publishing “The clash of civilization” in 1996. Of course, I myself witness the ongoing battle against norms on the increasing hostility towards the intellectual enemy in the west, but one should always keep in mind the bigger picture. Our world is getting better – in the long- and in the short-run; There is no such thing as a moral decline of the West.


[1] Huntington, Samuel P. (2011): Kampf der Kulturen. Die Neugestaltung der Weltpolitik im 21. Jahrhundert. Vollst. Taschenbuchausg., 8. Aufl. München: Goldmann (Goldmann, 15190). P. 500

Nightcap

  1. Is the Turk a White Man? Murat Ergin, Aeon
  2. The centenary of the Amritsar Massacre William Dalrymple, Spectator
  3. The struggle continues Rafe Champion, Quadrant
  4. Why moral progress is not inevitable Ilya Somin, Volokh Conspiracy

Three Lessons on Institutions and Incentives (Part 6): Breaking the mold

Daron Acemoglu & James Robinson acknowledge that the weakest point of their theory consists of recommendations to “break the mold.” How to change the historical matrix that leaves the nations stagnant in extractive political and economic institutions, or that move them back from having inclusive economic institutions with extractive political institutions to being trapped in exclusively extractive institutions with the risk of falling into a failed state. This brings us to Douglass C. North and his theory of institutional change.

Although he published works before and after Institutions, Institutional Change and Economic Performance, this book can be taken as the archetypal expression of neo-institutionalism. In the United States, institutionalism, whose main speaker was the Swedish immigrant Thorstein Veblen, was the local expression of what in Europe was known as “historicism”: a romantic current, inspired by Hegelian idealism, which denied the universal validity of institutional rules and claimed the particularism of the historical experience of each nation. American historicism was called institutionalism, because it concentrated the sciences of the spirit in the empirical study of the institutions given in the United States.

On the contrary, North’s school is called “neo-institutionalist” because it does exactly the opposite: it studies the phenomenon of institutions from a behavioral point of view and, therefore, universal. As already noted here, for North institutions are limiting the choice of the rational agent in his context of political, economic and social interaction. These limitations are abstract; that is, they are not physical, like the law of gravity, nor do they depend on a specific and specific order of authority. Examples of these abstract limitations can be found in social customs and uses, in moral rules, in legal norms insofar as they are enunciated in general and abstract terms.

Attentive to such diversity, Douglass C. North groups institutions in formal and informal. Within the formal institutions we find, unquestionably, the positive law, in which its rules of formation and transformation of the statements that articulate them can be identified very clearly. In a modern democracy, laws are sanctioned by the legislative body of the State. Meanwhile, the rules of formation and transformation of statements concerning morality are more diffuse – previously, Carlos Alchourrón and Eugenio Buligyn, in Normative Systems, had used this distinction to support the application of deontic logic to law, since deontic statements of law are much more easily identifiable than those of morality.

On the other hand, North distinguishes two types of institutional change: the disruptive and the incremental. An example of disruptive institutional change can be a revolution, but it can also be a legislative reform. The sanction of a new Civil Code, entirely new, can mean a disruptive change, while partial reforms, which incorporate judicial interpretative criteria or praetorian creations, can be examples of incremental changes.

Institutional changes do not necessarily have to come from their source of creation or validity. Scientific discoveries, advances in transport and telecommunications, information technologies, are some of the innovations that can make certain institutions obsolete or generate a new role or interpretation for it, depending on the open texture of the language.

Therefore, following the tradition of Bernard Mandeville and Adam Ferguson, neo-institutionalism admits that there are unintended consequences in the field of institutional change. Not only the incremental change of institutions, be they formal or informal, depends largely on changes in the cultural and physical environment in which institutions are deployed. Also the disruptive and deliberate change of a formal institution can generate unforeseen consequences, since it is articulated on a background of more abstract informal institutions.

Both Acemoglu & Robinson and North acknowledge that there is no universal law of history that determines institutional change -i.e., they deny historicism, as Karl R. Popper had defined it at the time-; what we have, on the other hand, is an “evolutionary drift,” a blind transformation of institutions. In this transformation, political will and environmental conditions interact. The latter not only limit the range of options for the exercise of “institutional engineering,” but also introduce an element of uncertainty in the outcome of such institutional policies, the aforementioned unintended consequences.

Much more complex is to identify which components are included in that black box that is called “environment” (environment). In principle, there could reappear the creatures that both William Easterly and Acemoglu & Robinson had banished from their explanations: the geography, culture and education of the ruling elites; more sophisticated elements such as the one referred to in the previous paragraph could also be incorporated: technological change. However, the discoveries of science would have no impact if the institutional framework pursued “creative destruction”, seeking to protect already installed activities from competition, or a lifestyle threatened by technological innovation.

We arrive here at a seemingly paradoxical situation: the institutions’ environment is the institutions. Using the Douglass North classifications system, one could try as a solution to this paradox the assertion that formal institutions operate on the background of informal institutions, which escape political will, and that disruptive institutional changes occur in a context of other institutions that are transformed in an incremental way. From this solution to reintroduce culture as a factor of ultimate explanation of institutional change, only one step remains.

At the other extreme, following the typologies used by Acemoglu & Robinson, the institutions can be political or economic and these in turn can be extractive or inclusive, jointly or alternatively. Inclusive economic institutions within a framework of extractive political institutions can result in a limitation of creative destruction and, consequently, produce a regression to extractive economic institutions. In the institutional dynamics of Acemoglu & Robinson, history can both progress and regress: from economic institutions and extractive policies it can be involuted even to situations of failed state and civil war. To reach the end of history, with inclusive institutions, seems to depend on the conjugation of a series of favorable variables, among which is the political will; while to fall back into chaos and civil war it is enough to let go. Without looking for it, the conceptual background of Why Nations Fail rehabilitates the thesis of Carl Schmitt insofar as it presupposes that in the background of human interaction there is no cooperation but conflict.

For his part, William Easterly in The Elusive Quest for Growth does not ask these questions, but simply works under a hypothesis that already has it answered: whenever there is human interaction, there will be a framework of incentives and such a framework of incentives will have certain universal characteristics. Douglass C. North’s central concern in Institutions, Institutional Change, and Economic Performance, as well as that of Acemoglu & Robinson in Why Nations Fail, was to establish patterns of events and conditions that made some nations be prosperous while others could not emerge from stagnation. That is, they are works that must necessarily be about the differences between one country and another and, therefore, emphasize the different conditions. Notwithstanding that both North and Acemoglu & Robinson expressly shun culturalist explanations, but instead postulate abstract models and typologies of institutions and institutional change to be applied universally, when the moment of exemplification arrives, they must necessarily resort to the differences between countries and regions. While it is true that both books resort to the description of the problems of the southern United States when illustrating how certain institutions generate results similar to those of third world countries, the culturalist explanation is always available.

In contrast, William Easterly in his The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics focuses almost exclusively on countries with low economic performance and only tangentially refers to cases of high performance. Therefore, in his work, the empirical analytical tools used to dissect it are well separated. To do this, Easterly will not only use a utility-maximizing rational agent model, but will also enunciate abstract models of universally valid human interaction.

In the first part of the work, Easterly describes the failed panaceas of growth: direct aid, investment, education, population control, loans to make adjustments and subsequent debt forgiveness. Affirms that such policies invariably failed because they did not take into account the basic principle of the economy that indicates that people respond to incentives (people respond to incentives, a statement that is repeated as a mantra throughout the book). While acknowledging that in some cases of extreme poverty and bad luck it is necessary for governments to take direct action to help people escape from poverty traps, the author proposes as the main means for people to take a path of prosperity: work to establish the right incentives. It clarifies, however, that this should not be a new panacea but a principle to be implemented little by little, displacing the layers of vested interests impregnated with the wrong incentives and allowing the entrance of the right incentives.

These incentives, right or wrong, do not depend on the culture, nor on the education of the elites, nor on geography. On the contrary, they consist of abstract models of human interaction, which can materialize at any time or latitude. Since the main interest of The Elusive Quest for Growth is, precisely, growth, such models concern this matter, but nothing prevents future research from identifying other abstract patterns of behavior that allow us to infer incentives to address other issues, such as crime, equity, violence, etc.

Some incentive structures that Easterly describes in relation to the problem of growth are the following: conditions for increasing returns – instead of decreasing ones – that come from technological innovation, which in turn depend on phenomena identified as “leakage of technological knowledge” (leaks of technological knowledge), “combination of skills” (matches of skills) and traps (traps) of poverty -although there are also wealth traps.

Technological knowledge has the capacity to filter into a population because it is mainly abstract. It can be exemplified in an accounting system, the practice of carrying inventories, literacy, techniques and procedures for the production, distribution and sale of products, etc. If the technological knowledge consisted exclusively of physical machinery, then yes it would be to a point where yields would become decreasing. On the contrary, understanding technological knowledge as consisting of “abstract machines”, it acquires the characteristics of a public good: it is not consumed with its use nor can it be exclusive. This is how technological knowledge can be extended in a society, multiplying the productivity of its members without entering into diminishing returns.

Also, following the ideas of the recent Nobel Prize in Economics Paul Romer, Easterly highlights that technological change can generate increasing returns thanks to the work of an endogenous agent of the economy, the entrepreneur. Being the labor force a fixed factor of production with respect to machinery, it is expected that, at a certain point, capital will generate diminishing returns, thus conditioning the growth rate of an economy (the main concern of The Elusive Quest for Growth). For its part, the entrepreneur is not only that agent of the economy who discovers new business, he also discovers new uses for existing capital goods. Easterly does not mention it, but this is also the main conclusion reached by Ludwig Lachmann in his work Capital and Its Structure. This work of the entrepreneurs, to find a new utility for a set of capital goods that had come to generate diminishing returns, making them continue to generate increasing returns is what frees the rate of growth of the economy from the limits of technological change and, in turn, makes it depend on the endogenous factor of the economy: the incentives for entrepreneurs to develop their activity -which some call creative destruction.

[Editor’s note: Here is Part 5 and here is the entire, Longform Essay.]

The Nonsensical Meaning of Sustainability

Along with ‘Inequality’ and ‘Democratic socialism’, ‘Sustainability‘ is one of the words that captures the essence of my generation. A sustainable project, event or business is met with “wow”s and “oooh!”s, an indicator of its owner’s moral righteousness and altogether praiseworthy character.

But its meaning is far from clear from all but its most fervent supporters. Dealing with the extraction of resources, the use of ecological reserves or harvesting of crops, a process is allegedly ‘sustainable’ if the naturally occurring regeneration exceeds the current levels of extraction. Simply put, don’t use more than what is (annually?) renewed. Moreover, a process branded as sustainable usually involve a mix of some other virtue signalling activities of our time: carbon emission neutrality or offsetting; at least a superficial concern for one’s environmental impact; energy produced in ‘renewable’ ways (read: nothing but solar, wind or hydro); or the use of recycled materials.

If this sounds unobjectionable and self-evident to you, this piece is for you. Despite the fancy branding, the SDGs, the fervor of self-proclaimed do-gooders, is the ‘sustainability’ of an activity really what we care about?

There are at least two major confusions with the assessment of activities as sustainable or its despised opposite: unsustainable. First, and most frequently occurring, is the belief that we aim to pursue our current endeavor in the same way for all eternity. If you think about it, the indignant objection of unsustainability is often quite meaningless, worthy of nothing but a ‘so what?’ response; everything we do at any given moment is in a sense “unsustainable”:

  • if I keep typing on my computer I will eventually starve;
  • if I keep lifting weights or endlessly running on that treadmill, I will collapse;
  • if I keep eating this chocolate cake of mine, I will be sick.

So? Everyone who has ever engaged in those activities understand that there are ends to them, that we’re only doing them for a particular purpose for a certain period of time, and that extrapolating snapshots of reality is quite silly; I do not intend to continue this activity until the brink of whatever physical boundary there might – or might not – be. Until I approach some “safe” distance to that brink, I’ll happily indulge in my chocolate cake, lift my weights or type away at my keyboard. In economic speak we are trading off one resource for another, until saturation or the fulfillment of some other aim becomes more important (prime example is Environmental Kuznets Curves).

The other confusion is to believe that economic systems cannot change and that humans cannot adapt. It is emphatically irrelevant that there is a physically limited amount of oil in the ground, since price systems and their incentives effectively ration oil use according to urgently-induced needs and encourage substitutes when those are needed. More importantly, the price system for raw materials incorporate and incentivize technological improvements that 1) through discovering new deposits literally expands “the” amount of resources,  2) shape cost-effective processes to hard-to-access deposits we couldn’t profitably exploit before, 3) improve the bang for our buck, i.e. how much output we can squeeze out of a given quantity of material. Thus, there might ultimately be a physical limit, but not an economic limit.

Let me give an iconic example: chopping down trees quicker than the forest grows. Such an activity seem pretty ‘unsustainable’ since the declining size of the forest implies that one day there will no longer be a forest. So what? There might be urgent present reasons for doing that (say, for instance, no other source of heat/fuel for cooking or no other source of income) that are very likely to change in a fairly short time frame (ie, before complete deforestation has occurred); the current prices of pulp or firewood may be meaningfully higher than their anticipated future prices (‘selling’ off some capital assets would therefore be fairly prudent); there might be future technological innovations that a) (re-)grows forests quicker, b) offers a better substitute to the current use of wood, c) allows us to cheaply make use of more from what we chop down.

Almost any practice taken as a snap-shot in time is literally ‘unsustainable’. Naively believing that they will mindlessly continue linearly into the future is quite silly; hailing processes that don’t as righteous and ‘sustainable’ is similarly silly. Human societies and their economic process are dynamic systems capable of (read: constantly) change.

By saying that something is unsustainable, my generation wants to convey the idea that these activities are immoral and that they shouldn’t continue. It’s a naive and erroneously nonsensical conviction.

No Country for Creative Destruction

Imagine a country whose inhabitants reject every unpleasant byproduct of innovation and competition.

This country would be Frédéric Bastiat’s worst nightmare: in order to avoid the slightest maladies expected to emerge from creative destruction, all their advantages would remain unseen forever.

Nevertheless, that impossibility to acknowledge the unintended favourable consequences of competition is not conditioned by any type of censure, but by a sort of self-imposed moral blindness: the metaphysical belief that “being” is good and “becoming” is bad. A whole people inspired by W. B. Yeats, they want to be gathered into the artifice of eternity.

In this imaginary country, which would deserve a place in “The Universal History of Infamy” by J.L. Borges, people cultivate a curious strain of meritocracy, an Orwellian one: they praise stagnation for its stability and derogate growth because of the stubborn and incorruptible conviction that life in society is a zero-sum game.

Since growth is an unintended consequence of creative destruction, they reason additionally, then there must be no moral merit to be recognised in such dumb luck. On the other hand, stagnation is the unequivocal signal of the good deeds to the unlucky, who otherwise could suffer the obvious lost coming from every innovation.

In this fantastic country, Friedrich Nietzsche and his successors are well read: everybody knows that, in the Eternal Return, the whole chance is played at each throw of the dice. So, they conclude, “if John Rawls asked us to choose between growth or stagnation, we would shout at him: Stagnation!!!”

But the majority of the inhabitants of “Stagnantland” are not the only to blame for their devotion to quietness. The few and exceptional proponents of creative destruction who live in Stagnantland are mostly keen on the second term of the concept. That is why some love to say, from time to time, “we all are stagnationist” – the few contrarians are just Kalki’s devotees.

These imaginary people love to spend their vacations abroad, particularly in a legendary island named “Revolution”. Paradoxically, in Revolution Island the Revolutionary government found a way to avoid any kind of counter-revolutionary innovation. It is not necessary to mention that Revolution Island is, by far, Stagnantlanders’ favourite holiday destination.

They show their photos from their last vacation in Revolution Island and proudly stress: “Look: they left the buildings as they were back in 1950!!! Awesome!!!” If you dare to point out that the picture resembles a city in war, that the 1950 buildings lack of any maintenance or refurbishment, they will not get irritated. They will simply smile at you and reply smugly: “but they are happy!”

Actually, for Stagnantlanders, as for many others, ignorance is bliss, but their governments do not need to resort to such rudimentary devices as censure and spying to prevent people from being informed about the innovations and discoveries occurring in other countries, as Revolutionary Island rulers sadly do. Stagnantlanders simply reject any innovation as an article of faith!

Notwithstanding, they allow to themselves some guilty pleasures: they love to use smartphones brought by ant-smuggling and to watch contemporary foreign films which, despite being realistic, show a dystopian future to them.

As everything is deteriorated, progress is always a going back to an ancient and glorious time. In Stagnantland, things are not created, but restored. As with Parmenides, they do not believe in movement, but if there has to be an arrow of time, you had better point it to the past.

Moreover, Stagnantland is an imaginary country because it does not only lack of duration, but of territory as well. As the matter of fact, no man inhabits Stagnantland, but it is indeed stagnation that inhabits the hearts of Stagnantlanders. That is how, from dusk to dawn, any territory could be fully conquered by the said sympathy for the stagnation.

Nevertheless, if we scrutinise the question with due diligence, we will discover that the stagnation is not an ineluctable future, but our common past. Human beings appeared very much earlier than civilisation. So, all those generations must have been doing something before agriculture, commerce, and institutions.

Before the concept of creative destruction had been formulated by Joseph Schumpeter, it was needed a former conception about how people are conditioned by institutions: Bernard Mandeville pointed out how private vices might turn into public benefits, if politicians arranged the correct set of incentives. The main issue, thus, should be the process of discovery of such institutions.

That is why the said aversion to competition and innovation is hardly a problem of a misguided sense of justice, but mostly a matter of what we could coin as “bounded imagination”: the difficultly of reason to deal with complex phenomena. Don’t you think so, Horatio?