I Win My European Unemployment Bet

In 2009, the U.S. unemployment rate exceeded Europe’s for the first time in decades.  Apologists for European labor market regulation rejoiced, so I publicly bet that European unemployment would exceed U.S. unemployment over the next decade.  The original authors I targeted turned me down, even after I offered a 1 percentage-point spread.  But noted economist John Quiggin took the bait.  Our final terms:

The stake is $US100 and the agreed criterion is that, for Bryan to win, the average Eurostat harmonised unemployment rate for the EU-15 over the period 2009-18 inclusive should exceed that for the US by at least 1.5 percentage points.

Ten years later, the bet’s results are now in.  The average U.S. unemployment rate during this decade was 6.8%.  The EU-19 (the original EU-15 plus the Baltics and Slovakia) was 10.3%.  Since the EU-15 is no longer widely available, Quiggin would have been within his rights to hold out for slightly adjusted numbers, but via email he has nobly decided to concede.   Since the Baltics and Slovakia have low populations, they couldn’t sway the final figure much – and in any case, unemployment rates for the Baltics and Slovakia aren’t major outliers.  The upshot is that I won the European unemployment bet by an enormous margin of 2 full percentage-points (on top of the original 1.5 percentage-point edge).

What does this all mean?  To me, this bet is just a small extra piece of evidence in favor of the orthodox and blindingly obvious theory that Europe has higher unemployment than the U.S. because it has stricter labor market regulation.  Flexible labor markets respond more sharply to shocks, but yield lower unemployment rates overall.  As I originally explained:

During the dot-com bust, U.S. unemployment remained below Europe’s, but it clearly rose faster.  Isn’t this further evidence that the mainstream case against European labor market regulation is overstated?

On the contrary, this is precisely what the mainstream case predicts!  Europe makes it harder to get rid of workers, so it’s only natural that when a big shock hits, U.S. unemployment rises more.  However, precisely because it is easier for American wages to adjust and American employers to change their minds, our labor market is also relatively quick to recover.

Disclosure: From the outset, Quiggin argued that the U.S. unemployment rates were artificially suppressed by high incarceration.  This has always seemed crazy to me, as I explained back in the day:

From a labor market perspective, though, Quiggin’s incarceration adjustment would only make sense if you thought that most or all of the people in jail would be unemployed if they were released.  That doesn’t make sense to me – while the people currently in American prisons might not be model workers, most of them could easily be gainfully employed on the outside.

Notice: Even if you think that the people in jail have no desire to work, you’d expect this to show up in labor force participation, not unemployment.  After all, to keep counting as unemployed, you have to keep trying – and failing – to find a job.

That said, I heartily commend Quiggin for actually making our bet.  He towers above all of the apologists for European labor market regulation who refuse to put their money where their mouths are.

Stepping back: Isn’t it possible that European-style labor regulation still helps workers, because the extra wages outweigh the lost hours of employment?  To be fair, this optimistic story is consistent with standard estimates of labor demand elasticity.  However, the optimistic story overlooks a pessimistic truth: Most of the harm of unemployment is psychological, not material.  Holding income constant, the employed are much happier than the unemployed.  Hence, no sensible person would want to see U.S. workers’ wages rise by 10% if the unemployment rate rose 3.5% as a result.  And psychology aside, remember that the welfare state forces active workers to support the idle.  So when regulation forces wages up, even the lucky workers who keep their jobs ultimately forfeit much of what they gain.

What did I learn from this bet?  Back in 2009, I was unaware that Germany had seriously liberalized its labor markets a few years earlier.  Since then, German unemployment has fallen from a peak of over 11% in 2005 to 3.3%.  The Great Recession barely happened in Germany; unemployment inched up from 7.1% in late 2008 to 7.9% in mid-2009, then continued its free fall.  There’s no reason all of the other high-unemployment countries in Europe can’t swallow their pride and follow Germany’s path to progress.  Well, unless “We’re too busy debating populism versus socialism” counts as a reason.

By my count, this betting victory brings my record to 19 wins, 0 losses.  Yes, perhaps I’ll see my first defeat later this month.  But even if I do, I’m not afraid to repeat that I have publicly demonstrated that my judgment is good.  And in my demonstrably good judgment, radical deregulation of Europe’s labor markets is long overdue.  I’m happy to make the Quiggin bet all over again with anyone who’s interested, but what’s the point?  My homeschooled sons understood all of this when they were 12.  Forget ideology.  Let’s all join hands, admit that labor market regulation is a scourge, and tear down these paper walls.

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Liberty is Not An “Ideology”

I saw a headline recently, which read in part, “Ideologies clash…”

It turns out one side simply wants to exercise liberty (open a brewery), while the opponents want to violate the first side’s liberty for “reasons”. The reasons include religion, fear of negative consequences of letting people control their own lives, and prohibitionism.

One side is an ideology, the other isn’t.

Liberty isn’t an ideology. It is the acceptance of the reality of self-ownership. From this acceptance flows certain principles. It doesn’t matter to the existence of liberty whether people accept it or not– it just is, to be respected or violated.

Yes, there will be consequences for exercising liberty. Everything has consequences. But slavery’s consequences are worse than liberty’s. And you’re the bad guy when you choose slavery over liberty, no matter what “reasons” you come up with.

This is why governing others is never a valid form of interpersonal interaction. It allows people to violate the liberty of others too easily, and without the risk which should come along with such anti-social behavior.

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Why I’m Optimistic About Venezuela

If there were mass protests against the government of Saudi Arabia, and the U.S. decided to recognize the opposition as the legitimate government of Saudi, I would expect disaster.  Why?  Because…

1. Supporters of the Saudi monarchy remain powerful and confident enough to aggressively fight back, plunging the country into hellish civil war.

2. If the monarchy loses, it’s most likely replacement will be a revolutionary Islamist dictatorship.

3. Even if the new Saudi government sticks to democracy, the median Saudi voter probably favors even worse policies than the Saudi monarchy now imposes.  In particular, government enforcement of Islamic fundamentalism would tighten, and economic policies would move even further toward socialism and populism.

And now you know why I am optimistic about the constitutional crisis in Venezuela.

1. Supporters of Maduro are too weak and demoralized to aggressively fight back, so I put the risk of hellish civil war below 10%.  (Indeed, since there’s a high base rate for civil wars in situations this dire, it’s quite possible that the risk of civil war has actually fallen due to the crisis).

2. If the Maduro regime loses, its most likely replacement will be a moderate pro-Western democracy.

3. If the new Venezuelan government sticks to democracy, the median Venezuelan almost certainly favors better policies than Maduro now imposes.  In particular, government enforcement of socialist ideology will crumble, and economic policies will move sharply away from socialism and populism.

If you’re too young to remember the collapse of Communism, this is a tiny taste of the sweetness of 1988-1991.  When’s the last time you had reasonable hope of dramatic peaceful pro-freedom change in the world?

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Dear Women: You ARE Your Body, And That Isn’t A Bad Thing; It’s Your Power

The mind/body duality is as fundamental to universal nature as masculine/feminine duality. If you don’t believe in masculine/feminine energy polarities or that there are “masculine” traits and characteristics as well as “feminine” ones, then maybe just stop reading because this article probably isn’t for you. If you do have a deep or even general understanding of this, then continue on…

When it comes to qualities and strengths of the mind and body, it seems fair enough to conclude that the mind is used for more masculine energies (reason, logic, intellect, etc) and the body holds more feminine energy (intuition, flow, sensing, where emotions are stored and felt).

In my opinion, one simple way to break down and describe what so many people call “the patriarchy” is to say it’s a society that fundamentally operates in a way that values the mind (intellect/doing) over the body (intuition/feeling). 

We see this played out everywhere, one of the most obvious and pervasive is the ideology of science and the use of charts, graphs, and measurements to “prove” if something is true or untrue. Science is typically seen as “fixed” and “settled.” There is no room for personal accounts, stories, things that are felt but not seen, etc.

This isn’t to say science is wrong or bad at all. I am simply suggesting that it might not be the ONLY means to discovery. Our dismissal of things like magic, energetics, intuition, and all things meta is a sign of masculine dominance, as these things were quite common and well understood in past times. Some radical feminists point out that the process and politics of modern science is a projection and influence of the western man’s values. Here is an excerpt I like from an article by Dr. Kelly Brogan:

Ever heard the phrase, “…the science is settled?” If so, it didn’t come from the mouth of a true scientist. Scientific dogmas create taboos – things you’re not allowed to ask about or talk about, let alone study and research. But science is not a destination…it is a process of discovery. Moreover, it is a means of studying and honoring the wonder around us and within us. When science is bound and arrested by dogmatic beliefs, it becomes an eviscerated religion that can be co-opted for political gain and control.

Rupert Sheldrake is a brilliant renegade scientist and theorist with this to say on the matter:

“We are, many of us, waking up from a several century long slumber induced by Scientism – the dogmatic belief in the dominant narrative of science as religion. As we wake up to nuance, to new science that defies the old, and to a complexity that often leads us to an awareness of all that we don’t know, those Scientism believers will become more and more uncomfortable. These people may be your family, your doctors, or even your formerly trusted media reporters. They may foam at the mouth and threaten violence at the suggestion that Scientism’s sacred cows (pharmaceuticals, bioengineered foods, industrial chemicals) are not what we have been lead to believe. Stay strong and reconnect to the elegance of a world of natural design, harmony, and regeneration.”

Another way we witness the unconscious cultural belief of mind > body is through this idea that women’s bodies are  “objects” and we should stop appreciating and wanting their beautiful, sexy bodies and instead pursue them for their mind/intellect/creativity. Again, not that the latter qualities are not important, but why isn’t the body seen as equally significant, desirable and powerful?

Ironically, it’s typically other women who I see most demanding to be noticed and recognized for the qualities they possess in their mind, while mocking and ridiculing anything body-centric, essential to female biology (which is a damn powerhouse), is focused on appreciating the female form, or uses intuition as a compass for living.

One might call this the real “internalized misogyny.” The deeply unchecked belief that the mind is more valuable than the body.

In a world where we are so divorced from our bodies and mostly live in the mind, the mind is seen as superior, and all of our ideas and advocating for reform are still rooted in these masculine values of systems, intellect, tests, logic, data, etc…

To me, the new feminism would be a return to embodiment. Yet, as it stands today, it seems we still generally believe the mind is the more sophisticated and trusted between the two, while we depreciate the body as the weaker one. Something susceptible that is to be feared and not trusted. Just a powerless “object” that acts as a distraction to men, couldn’t possibly know when and how to give birth, and offers no healing in and of itself.

I believe if women owned the power of their body, heart, and sex, and made embodiment their practice, that is to say, focused on radically changing “in here” rather than trying to change how everyone responded to us “out there,” then we would see shifts in our world beyond what we could ever imagine.

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Rainwater’s Motivated Reasoning

Lee Rainwater was one of the most prominent liberal sociologists of the Great Society era.  He spent 23 years at Harvard; here‘s the Harvard Gazette‘s memorial to his work.  To be honest, though, I never heard of him until last week.  Yet after I stumbled upon his 1966 Daedalus article, “The Crucible of Identity: The Negro Lower-Class Family,” I was surprised that any academic would so candidly admit to motivated reasoning.  When I discovered that he was an intellectual leader of his generation, I was stunned.

Here’s what stunned me; Rainwater’s in blockquotes, I’m not.  He starts off promisingly enough:

The first responsibility of the social scientist can be phrased in much the same way: “Tell it like it is.” His second responsibility is to try to understand why “it” is that way, and to explore the implications of what and why for more constructive solutions to human problems.

Then he runs right off the rails:

Social research on the situation of the Negro American has been informed by four main goals: (1) to describe the disadvantaged position of Negroes, (2) to disprove the racist ideology which sustains the caste system, (3) to demonstrate that responsibility for the disadvantages Negroes suffer lies squarely upon the white caste which derives economic, prestige, and psychic benefits from the operation of the system, and (4) to suggest that in reality whites would be better rather than worse off if the whole jerry-built caste structure were to be dismantled.

If you wanted to “tell it like it is,” of course, your goal would not be to “disprove” any ideology, but to fairly evaluate it.  Similarly, your goal would not be to “demonstrate” that responsibility lies squarely upon anyone, but to accurately apportion responsibility.  In any case, it’s hard to understand how both (3) and (4) could be true.  If whites would be better-off if the system were dismantled, how can the “white caste… derive economic, prestige, and psychic benefits from the operation of the system”?  I suppose you could treat “the white caste” as the subset of whites who profit, but then the claim is almost tautologous.  Or you could be really defensive and say, “He means ‘gross benefits,’ not ‘net benefits.’”

Are Rainwater’s words really so damning to his own intellectual tradition?  Well, imagine I wrote:

Social research on the situation of the American immigrant has been informed by four main goals: (1) to describe the disadvantaged position of immigrants, (2) to disprove the nativist ideology which sustains the caste system, (3) to demonstrate that responsibility for the disadvantages immigrants suffer lies squarely upon the native caste which derives economic, prestige, and psychic benefits from the operation of the system, and (4) to suggest that in reality natives would be better rather than worse off if the whole jerry-built caste structure were to be dismantled.

Would any judicious reader trust my work on immigration after this declaration?  No.  Why not?  Because I’m talking like a trial lawyer who wants to win a case.  The whole point of research, in contrast, is to stay open to the possibility that you’re wrong.  Sure, you’ve got suspicions.  But you’re supposed to not only verify your suspicions, but energetically look for counter-evidence!  Furthermore, you’re supposed to not just follow these standards yourself, but monitor your intellectual teammates.  The fact that your intellectual subculture wants X to be true urges self-scrutiny, not self-congratulation.

Speaking of that, how’s this for self-congratulation?

The successful accomplishment of these intellectual goals has been a towering achievement, in which the social scientists of the 1920’s, ’30’s, and ’40’s can take great pride; that white society has proved so recalcitrant to utilizing this intellectual accomplishment is one of the great tragedies of our time, and provides the stimulus for further social research on “the white problem.”

What’s most striking about Rainwater’s article, however, is that he provides a wealth of empirical evidence against his own point (3).  Indeed, most of the article is standard “culture of poverty” sociology, documenting high levels of irresponsible and criminal behavior among the underclass.  How then does Rainwater reconcile his theory with the facts?  Again, by the power of motivated reasoning.

Yet the implicit paradigm of much of the research on Negro Americans has been an overly simplistic one concentrating on two terms of an argument:

White cupidity———–> Negro suffering.

As an intellectual shorthand, and even more as a civil rights slogan, this simple model is both justified and essential. But, as a guide to greater understanding of the Negro situation as human adaptation to human situations, the paradigm is totally inadequate because it fails to specify fully enough the process by which Negroes adapt to their situations as they do, and the limitations one kind of adaptation places on possibilities for subsequent adaptations. A reassessment of previous social research, combined with examination of current social research on Negro ghetto communities, suggests a more complex, but hopefully more vertical, model:

White cupidity creates

Structural Conditions Highly Inimical to Basic Social Adaptation (low-income availability, poor education, poor services, stigmatization)

to which Negroes adapt by

Social and Personal Responses which serve to sustain the individual in his punishing world but also generate aggressiveness toward the self and others

which results in

Suffering directly inflicted by Negroes on themselves and on others.

In short, whites, by their greater power, create situations in which Negroes do the dirty work of caste victimization for them. [original punctuation]

Notice: As an ethnographer of black poverty, Rainwater offers little or no data on “white cupidity.”  Furthermore, a straightforward reading of his own evidence is that irresponsible and criminal behavior is, as usual, maladaptive.  All he directly documents is the final clause – the intra-racial “dirty work of caste victimization.”  Only motivated reasoning allows Rainwater to casually interpret these facts as proof of that the “white caste” is to blame for anything.

You could naturally protest that Rainwater is right for the wrong reasons.  Maybe so, but this protest misses the meta point.  Namely: If a brilliant, eminent, and mainstream scholar of the 1960s could be right for such wrong reasons, the brilliant, eminent, and mainstream scholars of today could easily be mired in their own brand of motivated reasoning.  Indeed, so could you.  Or me.  There’s no easy remedy, but the first step is being hyper-aware that we have a problem.

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Portray a Sense of Confidence

People often feel agitated and uncomfortable in the presence of religious/spiritual people. This is because holding any strong moral ideology infers judgement on behavior and that judgement implicitly means judgement of other people’s behavior. This makes people uncomfortable partially in the same way that overly dramatic people make people uncomfortable … their emotional disposition dictates the underlying tone and culture of the interaction.

While this isn’t how it emotionally works with religious people, the higher moral/ethical/personal standards make it so it strongly affects the behavioral culture within the climates they are involved and people don’t wish to be subject to judgement within an ideology they haven’t subscribed to. Additionally, most people feel various subtle feelings of guilt, confusion and a lack of purpose … the presence of someone who seem to have resolved these issues make them feel incompetent and diminished.

While many religious people intentionally elicit these feelings in others as a means of setting the culture, and attaining power/control/dominance, most probably don’t. Most people have these standards and don’t desire to use it as a weapon to hurt or control (at least in Western society). Sure, they might think your behavior isn’t a good idea, but they have no desire to control you or treat you as an inferior.

If you set a culture of tolerance and portray a sense of purpose, confidence, and a coherent value system, you can often feel very comfortable around religious people. You won’t feel subject to their ideology, and the religious person won’t believe it is appropriate to use their values and beliefs in any way to distort the situation. They will often respect the difference and no one will feel feelings of inferiority/superiority.

I believe our discomforts around people who aren’t malicious often reflect our own perceptions of inadequacy and/or insecurity.

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