Caplans of the Caribbean

I just returned from cruising the Caribbean on Anthem of the SeasMaybe you’ve heard of it? Fortunately, no coronavirus panic marred our vacation, and the concluding scare at the dock turned out to be a false alarm.  Though I’d seen a little of the Caribbean before, this trip was a heavy dose: after a stop at San Juan, Puerto Rico, we sailed on to St. Maarten, Antigua, St. Lucia, and St. Kitts.  My social science reflections:

1. I’ve been writing about Puerto Rico for years.  Its great open borders experiment doesn’t just put an upper bound on the dangers of “brain drain”; it also shows that liberalization makes migration serenely “snowball” rather than frighteningly “flood.” I was excited, then, to finally see Puerto Rico with my own eyes.  San Juan, at least, met my high expectations.  It’s a rich and beautiful city – and I didn’t merely visit the tourist areas.  The country is packed with Walmarts and other big-box retail.  Uber works well.  I saw near-zero remnants of Hurricane Maria, and – through my bilingual sons – had two fun chats with jovial Uber drivers.  Next time, I’d really like to drive the Ruta Panorámica.  No doubt I’d witness some serious poverty, but I doubt it’s more disturbing than driving around rural Mississippi or West Virginia.

When I invoke Puerto Rico, immigration skeptics often scoff.  Hurricane Maria aside, they deem Puerto Rico a disaster zone.  After all, if it were a U.S. state, Puerto Rico (with a per-capita GDP of just $32,000) would be even poorer than Mississippi, right?

I call this a willfully misanthropic comparison.  To grasp the effects of open borders on Puerto Rico, you have to ask, “How would Puerto Ricans be doing if they didn’t enjoy free migration to the U.S.?”  To answer that question, you’ve got to look not as Mississippi, but at other Caribbean islands.  Which I then proceeded to do.

2. Our next stop was St. Maarten (the Dutch side).  Official estimates of its per-capita GDP vary very widely.  While the CIA absurdly sets it at $66,800 (PPP), Wikipedia provides only a 2008 estimate of $15,400 (nominal).  Compared to Puerto Rico, in any case, the island looks quite poor.  A good chunk of this admittedly stems from low population; 42,000 people plus tourists aren’t enough to sustain more than a few restaurants or entertainment venues.  Even taking population into account, however, living standards look low.  Desperate peddling of tourist wares is a common job.  Roads are bumpy.  The shiniest business we saw was a KFC.  The biggest grocery store we found wasn’t bad, but about a third of the refrigerated shelves were empty.  There’s no Uber, but since there are plenty of taxis, I blame regulation.  After SNUBA diving (awesome), we taxied to the local tropical zoo, which sadly turned out to be shuttered since Maria.

What explains the gap between the official economic statistics and what we saw?  The simplest story is that a few super-rich expats drive up the average, but it’s hard to believe that’s close to the whole story.  The next explanation is that I’m such a spoiled American that almost everywhere on Earth looks impoverished to me.  Another is that the statistics are fake; but wouldn’t countries want to overstate their poverty to get extra foreign aid?  Last, CPI bias is plausibly astronomically unfavorable in small islands where there’s not much to spend your money on.  (As I told Tyler, there are odd parallels between small Swiss towns and these Caribbean islands; in both places, even the rich have little to buy).

While we’re on the subject of CPI bias, the Internet has clearly been a nearly unmeasured godsend for the whole region.  In 1990, islanders would have been cut off from 99% of humanity’s cultural bounty.  Today, the curious can sample and savor this bounty for modest connection fees.

3. Then we sailed on to Antigua (a subset of Antigua and Barbuda), with recent per capita GDP estimates of $17,500 nominal and $28,000 PPP.  It did indeed look a little richer than St. Maarten, though that too could be confounded with higher population.  The downtown was fun to see, but the roads were bumpy and even the main sidewalks poorly maintained.  While shuttling to snorkeling, we saw a huge sports stadium (10,000 seats!) largely funded by the government of mainland China.  (Other islands, in contrast, seemed oriented toward Taiwan).  There were fewer desperate peddlers, but almost no businesses even in the historic downtown.  As Richard Scarry famously inquired, “What do people do all day?”

4. Next, we saw St. Lucia.  Geographically, it was the most beautiful of the islands.  The Pitons are splendid, and we passed some scenic harbors and resorts.  Economically, though, St. Lucia looked the worst.  This fits with official statistics, which put its per-capita GDP at $10,000 nominal and $15,000 PPP.  Even though it has roughly twice the population of Antigua and Barbuda, the KFC was again the shiniest business we saw.  The main downtown church was closed, and the nearby park contained about a dozen apparently homeless men, though perhaps they were just relaxing and drinking alone.  Desperate peddling was intense.  The local police seemed to be one of the main employers.

5. Our last stop was on St. Kitts (a subset of St. Kitts and Nevis), whose per capital GDP of $19,000 nominal and $31,000 PPP make it the richest island we saw after Puerto Rico.  Since we spent six hours hiking Mount Liamuiga, the local volcano, we never walked the town.  Yet we did get to see a long stretch of one of the main coastal highways, and the country did indeed look marginally richer than Antigua.

My hiking guide described himself as “fascinated by economics,” and we had a good amount of time to chat.  He suffered from severe pessimistic bias; I tried in vain to calm his fears that U.S. agro-business faced imminent crisis.  When he playfully accused me of having naive faith in mankind, I told him, “No, I just believe in business.”  He mentioned his Netflix subscription, but I didn’t have time to rhetorically build on that foundation.

My guide knew a handful of islanders who worked in the UK, but viewed his countrymen as deeply provincial.  Cruise ships dock all the time in St. Kitts, but when I asked him if he knew anyone who worked on such a ship, he insisted, “It’s not something they would ever think about as a possibility.”  This surprised me, because workers of Caribbean origin were fairly common on my ship, especially relative to their countries’ populations.

6. Are the latter four islands the ideal comparison group for Puerto Rico?  Not really.  Antigua, St. Lucia, and St. Kitts are all former British colonies, and St. Maarten’s is so anglophone that it might as well be.  A better approach is to compare Puerto Rico with other former Spanish colonies; the Dominican Republic is the most obvious counterpart.  Since the latter’s per-capita GDP is only $9000, Puerto Rico’s open borders experiment look even better.

7. I’ve repeatedly heard people claim that open borders would turn the U.S. into Haiti.  On this journey, I was struck by the fact that almost nowhere in the Caribbean is remotely as awful as Haiti.  St. Maarten, Antigua, St. Lucia, and St. Kitts all have roughly the same demographics has Haiti – all are 90%+ black.   They all have roughly the same history of hellish slave plantations.  Furthermore, according to the least-bad estimates, their national average IQs are all extremely low.  St. Lucia comes in second-to-last on Earth, with an average national IQ of 62 (versus Haiti’s 67).  Despite these parallels, St. Lucia roughly matches average global per-capita income, and St. Maarten, Antigua, and and St. Kitts are comfortably above this average.

8. With the able assistance of Nathaniel Bechhofer, I’ve pointed out that “Deep Roots” theories of national development are highly sensitive to population-weighting.  If you count China and India as two data points, the empirics say that national ancestry matters a lot.  When you weigh countries by their populations, however, national ancestry barely matters at all, because the two most-populous countries on Earth have done poorly in modern times despite their illustrious histories.  Critics have pushed back; each country should count as a separate “experiment,” so we should base our worldviews on the unweighted results.

Yet in that case, each and every tiny upper-middle-income Caribbean country should statistically count as much as China and India.  I just checked Putterman and Weil‘s data, and found that none of my last four islands is actually in their sample.  (Haiti and Jamaica are, but even the Bahamas fell through the cracks).  If we re-did Deep Roots estimates with ten more Caribbean data points, I predict that their results would markedly attenuate.  So would Garett’s main findings in Hive Mind.

Personally, I continue to think that population-weighting is the way to go in cross-country regressions.  If you disagree, though, you’d really better add the island nations of the Caribbean to your sample and watch what happens.

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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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Unshakable Faith in The State

A couple of nights ago, an odd confluence of things made me consider my statist family members.

I’m currently watching The Man in the High Castle after I accidentally subscribed to Amazon Prime for a month, and then I ran across this piece of fiction in The Voluntaryist, and that combination started some wheels a-turning.

Had Germany won WWII, would my parents have grown up to be loyal Nazis? Believing the Bible told them that God had put that government over them and it was their duty to obey and be good citizens?

It really seems as though nothing can shake their faith in the U.S. feral government and its escalating police state. They may oppose certain policies or even most politicians, but they never question the institution of political government itself. They refuse to consider that the U.S. government might not be ethically superior to all others or that perhaps political government isn’t necessary at all. And, of course, they are enthusiastic supporters of the State’s reproductive organs. They are good Americans in all the ways the U.S. government wants.

So, had they grown up immersed in a slightly different political environment, would they manage to question its legitimacy when they can’t seem to do that with this one now? Would any “patriotic American” be able to do that?

I wonder…

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The Miracle of the Market

At this time of year especially, the wide variety of individual human preferences and interests becomes abundantly clear. My children’s Christmas lists display this diversity: Molly (13) wants a doughnut pan to feed her baking passion, Jack (11) wants anything tech-related, Abby (9) wants drawing supplies, and Sam (6) wants Lego pieces and stuffed animals. How do the elves satisfy these assorted preferences? It’s the miracle of the market.

FEE’s founder, Leonard Read, wrote about this miracle in his classic 1958 essay, “I, Pencil.” Writing cleverly from the pencil’s perspective, Read explains that even something as seemingly simple as a pencil is an extraordinary human creation involving countless decentralized, spontaneous actions prompted and facilitated by a free, global marketplace. The 18th-century philosopher, Adam Smith, described this unplanned process of social cooperation as the “Invisible Hand,” leading to collective human progress and abundance when each individual pursues his or her own interests. Read writes:

I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me—no, that’s too much to ask of anyone—if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach. And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because—well, because I am seemingly so simple.

Simple? Yet, not a single person on the face of this earth knows how to make me.

There is no central planner, no mastermind, as Read says, capable of making a simple pencil. Instead, there are the loggers who harvest the cedar from the Pacific Northwest and the innumerable actions that go into the loggers’ work, including the manufacture of their saws and machinery, the growing of hemp for their ropes, and even the cups of coffee they drink. All of these spontaneous actions contribute to the production of a simple pencil—and that’s only for its wood. Read then describes the graphite from Sri Lanka, the wax from Mexico, the miners of zinc and copper to create the small metal piece that attaches the eraser, which is made with rapeseed oil from the Dutch East Indies.

Read concludes:

There isn’t a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how. From the standpoint of know-how the only difference between the miner of graphite in Ceylon and the logger in Oregon is in the type of know-how…Their motivation is other than me. Perhaps it is something like this: Each of these millions sees that he can thus exchange his tiny know-how for the goods and services he needs or wants. I may or may not be among these items.

More profound than the dispersed and unplanned creation of the simple pencil is, as Read explains, the fact that it is accomplished without coercion through the uniquely human act of peaceful, voluntary exchange. Read writes:

For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand— that is, in the absence of governmental or any other coercive master-minding—then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.

There are many miracles that get celebrated at this time of year, but one we shouldn’t forget is the miracle of the market and the power of free, voluntary exchange to unleash human creativity and inventiveness. Let’s take to heart Read’s words:

Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth.

Happy Holidays!

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You Are Responsible for Your Own Disillusionment

We aren’t so much disillusioned by the failures of others as by our own failures.

We aren’t just disillusioned with our ideals because of the corrupt systems at our companies or in our countries. Plenty of people keep their idealism while fighting corrupt systems. We are disillusioned because we go along with the systems.

We aren’t just disillusioned with courage and adventure because the lifestyles around us are comfortable and craven. We are disillusioned because we recognize the mediocrity of our lifestyles but do nothing to change them.

And we aren’t just disillusioned with faithfulness in friendships and relationships because our friends are unreliable. We are disillusioned because we know we aren’t willing to give the work, time, and resources of true comrades.

If you want to believe that people are better, become a better person.

If you want to believe that the world is good, do something to make it so.

If you wait on the world to confirm or deny your highest hopes for the world, you’ll be shocked by how disillusioned you become – but it won’t be the world’s fault.

Originally published at JamesWalpole.com.

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Impeachment: Trump Has Already Confessed to “High Crimes”

Every time a witness testifies behind closed doors in the US House of Representatives’ methodical march toward the impeachment of President Donald Trump, Trump supporters scream “no quid pro quo” while Trump opponents breathlessly inform us that the “smoking gun” has turned up and that impeachment is now “inevitable.”

What’s with all this “smoking gun” stuff? The decision to impeach is political, but in terms of evidence, it’s already a lock. President Trump publicly confessed to multiple “high crimes” before House Speaker Nancy Pelosi (D-CA) even announced the impeachment inquiry, then threw in a corroborating White House document.

Readers, meet Article VI of the US Constitution:

“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land …”

And now let us consult a lesser-known document, the US government’s  Treaty With Ukraine on Mutual Legal Assistance in Criminal Matters:

“Each Contracting State shall have a Central Authority to make and receive requests pursuant to this treaty. For the United States of America, the Central Authority shall be the  Attorney General or a person designated by the Attorney General. For Ukraine, the Central Authority shall be the Ministry of Justice and the Office of the Prosecutor General. … A request for assistance shall be in writing except that the Central Authority of the Requested State may accept a request in another form in urgent situations.”

Donald Trump is not the Attorney General of the United States, nor has the Attorney General publicly produced a document designating him the US government’s requesting authority under the treaty. Volodymyr Zelensky is the president of Ukraine, not a principal of its Ministry of Justice or Office of the Prosecutor General. A request by phone is not in writing, nor are matters years in the past and already subject to substantial investigation “urgent.”

Donald Trump made a request he had no authority to make, to a person he had no authority to make it of, in a form he had no authority to make it in. That’s at least three violations of the “Supreme Law of the Land.”

So, what’s a “high crime?” It may sound like a synonym for “serious crime” — espionage, treason, assassination, that kind of thing — but it’s actually a “term of art”  more concerned with the person committing the act than the act itself.

As Alexander Hamilton put it in Federalist #65, “high crimes”  for purposes of impeachment are “offences which proceed from the misconduct of public men, or, in other words, from the abuse or violation of some public trust.”

Donald Trump’s public trust, per the Constitution, includes “tak[ing] care that the laws be faithfully executed.” Instead, he violated “the supreme Law of the Land,” then publicly confessed to doing so, then corroborated his confession with evidence.

The “smoking gun” has been there the whole time. The rest is just details and politics.

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