If the Only Way You Can Get Your Great Idea Implemented…

Economics textbooks are full of clever-and-appealing policy proposals.  Proposals like: “Let’s redistribute money to the desperately poor” and “Let’s tax goods with negative externalities.”  They’re so clever and so appealing that it’s hard to understand how any smart, well-meaning person could demur.  When critics appeal to “public choice problems,” it’s tempting to tell the critics that they’re the problem.  The political system isn’t that dysfunctional, is it?  In any case, reflexively whining, “The political system will muck up your clever, appealing policy proposal,” hardly makes that system work better.  The naysayers should become part of the solution: Endorse the clever-and-appealing policy proposals – and strive to bring them to life.

When you look at the real world, though, you see something strange: Almost no one actually pushes for the textbooks’ clever-and-appealing policy proposals.  Instead, the people inspired by the textbooks routinely attach themselves to trendy-but-awful policy proposals.  If you point out the discrepancy, they’re often too annoyed to respond.  When they do, reformers shrug and say: “The clever-and-appealing policy never has – and probably never will – have much political support.  So we have to do this instead.”

Examples?  You start off by advocating high-impact redistribution to help poor children and the severely disabled… and end defending the ludicrously expensive and wasteful Social Security program.  “Unfortunately, the only politically viable way to help the poor is to help everyone.”  Or you start off advocating Pigovian taxes to clean the air, and end up defending phone books of picayune environmental regulations.  “Unfortunately, this is the way pollution policy actual works.”

Don’t believe me?  Here’s a brand-new example courtesy of Paul Krugman:

But if a nation in flames isn’t enough to produce a consensus for action — if it isn’t even enough to produce some moderation in the anti-environmentalist position — what will? The Australia experience suggests that climate denial will persist come hell or high water — that is, through devastating heat waves and catastrophic storm surges alike…

[…]

But if climate denial and opposition to action are immovable even in the face of obvious catastrophe, what hope is there for avoiding the apocalypse? Let’s be honest with ourselves: Things are looking pretty grim. However, giving up is not an option. What’s the path forward?

The answer, pretty clearly, is that scientific persuasion is running into sharply diminishing returns. Very few of the people still denying the reality of climate change or at least opposing doing anything about it will be moved by further accumulation of evidence, or even by a proliferation of new disasters. Any action that does take place will have to do so in the face of intractable right-wing opposition.

This means, in turn, that climate action will have to offer immediate benefits to large numbers of voters, because policies that seem to require widespread sacrifice — such as policies that rely mainly on carbon taxes — would be viable only with the kind of political consensus we clearly aren’t going to get.

What might an effective political strategy look like? … [O]ne way to get past the political impasse on climate might be via “an emphasis on huge infrastructural projects that created jobs” — in other words, a Green New Deal. Such a strategy could give birth to a “large climate-industrial complex,” which would actually be a good thing in terms of political sustainability.

Notice the pattern.

Step 1: Economics textbooks offer a clever-and-appealing policy proposal: Let’s tax carbon emissions to curtail the serious negative externalities of fossil fuels.  It’s cheap, it’s effective, it provides great static and dynamic incentives.  Public choice problems?  Don’t listen to those naysayers.

Step 2: Argh, Pigovian taxes are going nowhere.

Step 3: Let’s have a trendy-but-awful populist infrastructure program to get the masses on board.

So what?  For starters, any smart activist who reaches Step 3 tacitly concedes that public choice problems are dire.  You offer the public a clever-and-appealing remedy for a serious social ill, and democracy yawns.  To get action, you have to forget about cost or cost-effectiveness – and just try to drug the public with demagoguery.

Note: I’m not attacking Krugman for having little faith in democracy.  His underlying lack of faith in democracy is fully justified.  I only wish that Krugman would loudly embrace the public choice framework that intellectually justifies his lack of faith.  (Or better yet, Krugman could loudly embraced my psychologically-enriched public choice expansion pack).

Once you pay proper respect to public choice theory, however, you cannot simply continue on your merry way.  You have to ponder its central normative lesson: Don’t advocate government action merely because a clever-and-appealing policy proposal passes a cost-benefit test.  Instead, look at the trendy-but-awful policies that will actually be adopted – and see if they pass a cost-benefit test.  If they don’t, you should advocate laissez-faire despite all those shiny ideas in the textbook.

Krugman could naturally reply, “I’ve done the math.  Global warming is so terrible that trendy-but-awful policies are our least-bad bet.”  To the best of my knowledge, though, this contradicts mainstream estimates of the costs of warming.  That aside, why back a Green New Deal instead of deregulation of nuclear power or geoengineering?  If recalcitrant public opinion thwarts your clever-and-appealing remedy, maybe you started out on the wrong path in the first place.

Unfair?  Well, this is hardly the first time that Krugman has rationalized destructive populism when he really should have reconsidered.  Krugman knows that immigration is the world’s fastest way to escape absolute poverty.  He knows that standard complaints about immigration are, at best, exaggerated.  But he’s still an immigration skeptic, because:

The New Deal made America a vastly better place, yet it probably wouldn’t have been possible without the immigration restrictions that went into effect after World War I. For one thing, absent those restrictions, there would have been many claims, justified or not, about people flocking to America to take advantage of welfare programs.

Notice the pattern.

Step 1: You start with the textbook case for a welfare state to alleviate domestic poverty.  Public choice problems?  Bah.

Step 2: Next, you decide that you can’t get that welfare state without horrible collateral damage.

Step 3: So you casually embrace the status quo, without seriously engaging obvious questions, like: “Given political constraints, perhaps its actually better not to have the New Deal?” or even “How close can we get to the New Deal without limiting immigration?”

The moral: If the only way you can get your great idea implemented is to mutilate it and/or package it with a pile of expensive junk, you really should wonder, “Is it still worth it?”

Well, is it?

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Playing Chess with the Market

I just talked to an entrepreneur friend of mine and he had a great phrase for what building a company is like.

Playing chess with the market.

I love this because building a business isn’t so much about right and wrong, luck or skill. The outcome is determined by a series of moves made in response to another player whose mind you can never read. There are causal chains, but they’re all theoretical. They assume certain actions by the other player that may or may not happen. In fact, it’s like a never ending series of chess matches against a rotating cast of random opponents, where moves that worked the first five times stop working the next, and patterns you learned change.

This framing reveals how hard it is and makes the challenge exciting. It also depersonalizes it a bit. Of course you won’t get every move right or win every game. But you try to learn each time. Treating it like a game is a huge cognitive relief.

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Don’t Scare Kids with Political Fears

I remember the panic I felt about tornado warnings as a child. It didn’t matter whether my family was in danger; I wasn’t informed enough to know whether we were. I didn’t understand that worry isn’t helpful, and I wasn’t able to change things. There was nothing meaningful I could do.

In the past couple of weeks, I’ve heard of local children scared that World War III had begun. They’ve overheard adults talking about it and were worried. I did my best to explain things and calm the fears of one kid; hopeful that she’d calm her friends.

It would be great if adults would stop acting like scared children; overreacting about politics, science, and other things they don’t understand as well as they imagine they do.

This pattern repeats both locally and on a global scale.

In recent months an angry Swedish teen gained attention because she believes the planet is being destroyed by carbon dioxide. She’s scared … and she blames you.

All because she has been shown one side of a debate by people who don’t want dissent. Their political agenda — their power and position — depends on the narrative going a particular way. She is being used as their political pawn.

I’m not even claiming she’s necessarily wrong. Regardless of what you’ve been told, no one knows. Climate predictions about the long-term are not much better than a guess. But the way she has been frightened and used is wrong without question. Do you really want to ruin a young person’s life based on speculation?

Political events may even be worse. To pretend you know for certain that one politician having another politician killed is going to cause a world war — and scaring children with this kind of talk — is irresponsible. Or worse.

If you want to worry, go ahead. But to scare kids with this kind of thing isn’t right.

I’m not saying to keep them ignorant. You can discuss the facts without sharing scary doomsday conclusions.

It’s different to educate a kid on the dangers of getting into a stranger’s car. They have control over this. None of us can save or destroy the planet, and politicians are going to do what politicians do. In fact, you can’t be certain which path results in destruction and which one comes out better in the long run. You can guess. You can apply your beliefs. But you can’t know.

To scare children over things no one can know for certain is child abuse.

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On Business

Just as companies accept their employees labor in exchange for money, they also accept their customers money in exchange for goods and services cooperatively produced by their employees. Companies do not and may not take their customers money. We must never forget these salient facts. Companies accept, they do not take. Conversely, governments do precisely the opposite: they take our money in the form of taxation, and they take our labor in the form of conscription. (They also take our property in whole or in part in many other ways.) It breaks my heart that my fellow human beings can be so bamboozled into believing that the institutions who plunder and pilfer them must be used (and has their best interests in mind) to save them from the institutions who do not. It’s tragic, and that’s today’s two cents.

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On Wages

It’s a common cry across social and popular media to deride one business or another for the way they model their wage structure. Most of my current income is earned by delivering food for companies like DoorDash and GrubHub. I do pretty well, but I’ve also spent a year and half learning how to do pretty well in my particular market. When these companies offer deliveries for amounts and distances below my professional standard, I simply reject them. What I don’t do is write articles decrying “predatory pay models” or other such signaling buzz words. It’s nonsense, and this is why: businesses do not and may not take our labor. Rather, they accept our labor in exchange for their money. We do the job at the wage agreed upon up-front, we get paid (at least) that amount. If we don’t agree, we don’t do it. If someone else does, good for them. If they can’t find anyone to agree, they increase the offer until they do, or cancel it. So long as it’s accepted willingly, everyone benefits. Third party opinions about it are totally irrelevant. If these companies are no longer profitable for you in your market, find a new company. Nobody’s forcing you to work for them. And that’s today’s two cents.

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Not a Fan of Artificial Divisions

I’m not a fan of the trend on social media to create artificial divisions to pit people against each other. A recent example is the condescending remark “OK boomer.”

This phrase is commonly used against anyone assumed to be a “baby boomer,” or who simply isn’t as “progressive” and “enlightened” as those weaned on “social justice” might prefer.

If someone points out problems with socialism, with basing legislation on sexual identity issues, with climate change prescriptions to be imposed on society through the “New Green Deal,” or with other topics that have been politicized, they are likely to be dismissed with this comment.

As if they are cute for being too old and backward to be taken seriously.

Why encourage this type of division? There are endless ways to categorize and divide people: generations, races, sexes, Democrat and Republican. Those who crave more control will back whichever side begs for more legislation. They will encourage them to fight and ridicule anyone who opposes handing government more control.

It’s why government loved “Baby Boomers” as long as they were useful — begging for more government programs and spending — but was happy to throw them under the bus when a new generation began to beg for “social justice” legislation the older generation saw as going too far.

“Social justice” was too good an excuse for more government control; it couldn’t be ignored.

Climate change seems to be an equally popular excuse.

Government supremacists seek to divide and conquer with whatever divisions can be imagined, created, magnified, or exaggerated.

The truth is, it’s not “Republican versus Democrat,” Baby Boomer against Generation Z, “black” against “white,” male versus female versus whatever else you imagine exists. It has always come down to those who want people to be herded, numbered, controlled, governed, and enslaved against those who recognize the equal and identical rights of all humanity and the liberty that comes from this truth.

It has always been the rulers against the people.

Increased government power depends on hiding truth from you. It depends on giving you imaginary enemies to keep you too flustered to realize who your real enemy is.

Instead of dividing, I try to support anyone I think is right, even if I am hard on them when they are wrong. I don’t fault people for who they are; only for what they do when what they do violates the liberty of others.

I’d much rather explain my reasons in either case than to dismiss people with an intentionally condescending catchphrase.

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