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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Trump versus Iran: Power Doesn’t Just Corrupt, it Deludes

On January 8, US president Donald Trump addressed the American public concerning a casualty-free Iranian missile attack on US bases in Iraq, where just last week Iranian general Qasem Soleimani was killed in a US drone strike.

If the speech was remarkable in any way, it was for the comparative restraint Trump displayed: Rather than pledging another round of tit-for-tat, he announced new sanctions on Iran, vowed that “as long as I’m president of the United States, Iran will never be allowed to have a nuclear weapon,” called on NATO to “become much more involved in the Middle East process,” and rambled aimlessly about the “Iran nuclear deal” that his administration abrogated in 2018.

What was unremarkable — and unfortunate — in the speech was the obvious assumption underlying it: That the United States enjoys, and SHOULD enjoy, absolute power in international relations.

Trump is hardly unique in publicly stating, or in operating on, that assumption. The claim of such absolute power has been the tacit US doctrine of foreign relations since at least as far back as the end of World War Two.

America emerged from that war as the world’s sole nuclear power and, unlike other combatant countries, with its wealth virtually unscathed and its industrial capacity increased rather than demolished. Its rulers saw themselves as able, and entitled, to dictate terms to almost everyone, on almost everything.

“Power tends to corrupt,” wrote Lord Acton, “and absolute power corrupts absolutely.”

Acton was referring to individuals (“great men are almost always bad men”), but his observation is just as true of institutions. And above and beyond corruption, absolute power creates delusion.

The post-war “consensus” on American power around the world began to fray almost immediately.

The Soviet Union acquired “the bomb” and settled in for half a century of dominating eastern Europe.

The US found itself fought to a draw in Korea and defeated in Vietnam when it tried to throw its newfound weight around.

Even after the collapse of the Soviet bloc, the US learned that Michael Ledeen’s re-formulation of the doctrine — “every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business” — tends toward big price tags and negative returns.

Yet the delusion persists. It substitutes hubris for humility, sacrificing the blood and treasure of Americans and foreigners alike on the altar of a false god and in pursuit of an imaginary paradise.

The foreign policy recommended by Thomas Jefferson in his first inaugural address —  “peace, commerce, and honest friendship with all nations, entangling alliances with none” — was, and remains, the common-sense alternative to the nonsensical assumption of absolute American power.

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Every One of Your Actions Sets a Precedent

I wonder whether scientists like Albert Einstein and Robert Oppenheimer had any inkling in their youth that their work in physics would one day be used to produce nuclear weapons.

Yet by cooperating with the government that produced these weapons, these men (even Einstein, more indirectly) created the forces that could destroy all life on earth. And they made it easier for more scientists to come to cooperate in the refinement of nuclear weapons and other terrible tools.

Most of us may not live (as they did) to see the long-range results of our actions turn into something quite as bad as atomic weapons. But I’m convinced of the idea that every action we take sets a precedent for how other humans behave. And every action we take brings us closer to or takes us further from our worst nightmares.

If we do a bad job in our work, other people will tend to a bad job in theirs. It doesn’t take long until our world is full of shoddy work.

If we lie, other people will find it easier to lie (and harder to tell the truth). It won’t be long before no one’s word can be trusted in our world.

If we cooperate with tyranny, other people will find it easier to cooperate with tyranny. We shouldn’t be surprised if tyranny takes over.

These changes are slow, but they spread pretty inexorably among people who aren’t awake to the significance of their actions.

The macro problems of 50 or 100 years from now – the breakdown of families, climate change, erosion of individual freedom, what have you – will spring out of behavioral precedents we set now. So in case we needed another reminder to “do unto others” as we would have them do unto us, this is it.

Originally published at JamesWalpole.com.

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The Roots of Inertia

Why don’t low-skilled workers try harder to better their condition?  While this might seem a neoliberal question, it weighs on Barbara Ehrenreich’s mind:

I was baffled, initially, by what seemed like a certain lack of get-up-and-go on the part of my fellow workers. Why didn’t they just leave for a better-paying job, as I did when I moved from the Hearthside to Jerry’s?

She starts with some textbook economic answers.  There’s transaction costs:

Part of the answer is that actual humans experience a little more “friction” than marbles do, and the poorer they are, the more constrained their mobility usually is. Low-wage people who don’t have cars are often dependent on a relative who is willing to drop them off and pick them up again each day, sometimes on a route that includes the babysitter’s house or the child care center… I have mentioned, too, the general reluctance to exchange the devil you know for one that you don’t know, even when the latter is tempting you with a better wage-benefit package. At each new job, you have to start all over, clueless and friendless.

And information costs:

There is another way that low-income workers differ from “economic man.” For the laws of economics to work, the “players” need to be well informed about their options…

But there are no Palm Pilots, cable channels, or Web sites to advise the low-wage job seeker. She has only the help-wanted signs and the want ads to go on, and most of these coyly refrain from mentioning numbers. So information about who earns what and where has to travel by word of mouth, and for inexplicable cultural reasons, this is a very slow and unreliable route…

Soon, however, she appeals to industrial psychology.  Employers win workers hearts and minds – what Ehrenreich calls, “the co-optative power of management, illustrated by such euphemisms as associate and team member.”  And don’t forget learned helplessness:

Drug testing is another routine indignity. Civil libertarians see it as a violation of our Fourth Amendment freedom from “unreasonable search”; most jobholders and applicants find it simply embarrassing…

There are other, more direct ways of keeping low-wage employees in their place. Rules against “gossip,” or even “talking,” make it hard to air your grievances to peers or-should you be so daring-to enlist other workers in a group effort to bring about change, through a union organizing drive, for example. Those who do step out of line often face little unexplained punishments, such as having their schedules or their work assignments unilaterally changed. Or you may be fired…

The big picture, though, is that the capitalist system breaks workers’ spirits:

So if low-wage workers do not always behave in an economically rational way, that is, as free agents within a capitalist democracy, it is because they dwell in a place that is neither free nor in any way democratic. When you enter the low-wage workplace-and many of the medium-wage workplaces as well- you check your civil liberties at the door, leave America and all it supposedly stands for behind, and learn to zip your lips for the duration of the shift. The consequences of this routine surrender go beyond the issues of wages and poverty. We can hardly pride ourselves on being the world’s preeminent democracy, after all, if large numbers of citizens spend half their waking hours in what amounts, in plain terms, to a dictatorship.

The obvious response to all of these stories, however, is: “Why don’t the same factors prevent high-skill workers from trying to better their condition?”  Let’s consider each in turn.

Transaction costs.  While high-skilled workers have fewer problems with transportation and child-care, they also have much more specific skills.  This seriously impedes job search.  To find a new job, most nuclear engineers – and many professors – would have to not just sell their homes, but move to a new city.  The high-skilled are also more likely to be in two-earner families, which makes relocation doubly disruptive.

Information costs.  Firms often publicly advertise low-skilled wages.  This is much less true for high-skilled jobs.

Hearts and minds.  High-skilled workers seem much more likely to identify with their employer – and to define themselves in terms of their work.

Learned helplessness.  Again, the indignities required for starting a high-skilled job probably exceed those for low-skilled employment, especially if you’re a government contractor.  Once hired, however, the petty indignities high-skill workers endure are admittedly lower.  (Here’s why).

The capitalist system. Almost no employer cares for kvetching, but high-skill workers probably feel freer to speak up on the job.  Off the job, however, they are probably more worried about offending bosses, co-workers, or clients.  Who cares what a waiter posts on Facebook?  In any case, why should lack of voice reduce enthusiasm for exit?

So why then don’t low-skill workers try harder to better their condition?  All of Ehrenreich’s answers prove too much.  The better story is simply that there is a distribution of desire to better your condition.  In short, human beings have heterogeneous ambition. Some burn to rise; others take life as it comes; most lie somewhere in the middle.  And though mere desire hardly ensures success, ambition usually works in the long-run.  The more you want to better your condition, the better your condition eventually tends to become.

Like Ehrenreich’s story, my story explains why low-skill workers seem “stuck.”  Unlike her, however, I can also explains why high-skill workers seem mobile.  In short, what my “heterogeneous ambition” story lacks in Social Desirability Bias, it makes up for by explaining mobility and inertia, rather than inertia alone.

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The Great Successor: Inside North Korea

I highly recommend Anna Fifield’s The Great Successor.  It’s full of information about not only the life of Kim Jong Un, but what’s happened inside North Korea since his ascent to the Red Throne.  Most readers will be shocked by her description of the North Korean hell-state, but that’s all old hat to me.  Here’s what surprised me in Fifield’s book:

1. Kim Jong Un didn’t just attend a fancy English-language school in Switzerland.  After his expat guardians – his maternal aunt and her husband – defected, Kim was actually switched over to a German-language Swiss public school.  Weird.

2. Kim’s top interest as a boy was basketball.  His eagerness to befriend American basketball stars really is the fulfillment of a childish dream.

3. “Kim Jong Il spoke in public only once, and then only a single phrase, during his entire seventeen years in power.  ‘Glory to the heroic soldiers of the Korean People’s Army!’ he said during a military parade in 1992.”  Kim Jong Un started giving lengthy public speeches almost immediately.

4. Kim Jong Un has deliberately fostered a revolution of rising expectations:

North Koreans “will never have to tighten their belts again,” the Great Successor declared when he delivered his first public speech, marking the occasion of his grandfather’s one hundredth birthday.  Kim Jong Un told the bedraggled populace that they would be able to “enjoy the wealth and prosperity of socialism as much as they like.”

5. Kim’s execution of his uncle Jang Song Thaek was part of a much larger purge.  “Dozens, perhaps even hundreds, of Jang’s associates disappeared around the same time.  Some of them were not just purged from the system but more likely executed.  Those outside North Korea at the time fled.”  Note: This probably means that the runners’ families were sent to slave labor camps or executed.

6. Just as Stalin stole Trotsky’s economic plan after purging him, Kim went on to implement Jang’s vision of watered-down Deng-style economic reforms.  The Communist elite now openly enjoys a much higher standard of living.  Some of this gain is trickling down to the commoners.

7. Kim Jong Un is eager to win over the millennial elite with capitalist luxuries and entertainment.  “It was fun to be a rich kid in Kim Jong Un’s North Korea.  The richest kid of all was making sure of it.”

8. Kim rushed to get a credible nuclear deterrent, then declared himself satisfied.  And his behavior seems consistent with his intentions.

Just a week before his summit meeting with South Korea’s President Moon, Kim Jong Un delivered a speech to a Workers’ Party meeting in Pyongyang in which he declared the “byungjin” or “simultaneous advance” policy to be over.  He no longer needed to pursue nuclear weapons – he had achieved them.  He declared an immediate end to nuclear tests and intercontinental ballistic missiles launches…

From now on, Kim Jong Un said, he would be focusing on a “new strategic line.”  He would be concentrating on the economy.  And for that, he would need an “international environment favorable for the socialist economic construction…

In 2013, he had boldly elevated the economy to level pegging with the nuclear program after decades of “military first” policy.  Five years later, almost to the day, he was unequivocally making economic development his top priority.

Before reading this book, I was already 85% confident that Kim Jong Un would rule North Korea for life.  Now I’d go up to 90%.  Despite his youth, he’s a skilled tyrant.  However, I’m not quite as pessimistic about the fate of the North Korean people.  Kim has dramatically relaxed the regime’s war on consumerism, and it is very hard to confine this rising abundance to the inner circle.  People who think Kim will give up his nuclear arsenal are dreaming (or lying); while he lives, the best nuclear outcome we can hope for is “Don’t ask, don’t tell.”  Kim may die young due to poor health; he might even be assassinated, though I doubt it.  When he dies, North Korea – and the world – will get to throw the dice one more time.  Until his death, however, Kim will stay the course.

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Trump and Netanyahu: “Mutual Defense” or Just Mutual Political Back-Scratching?

On September 14, US president Donald Trump tweeted (of course) the suggestion of a US-Israel “Mutual Defense Treaty,” citing a call with Israeli prime minister Benjamin Netanyahu.

Hopefully there’s less going on here than meets the eye: The tweet may just be another mutual publicity back-scratch of the type Trump and Netanyahu frequently exchange when they find themselves in political pickles. And Netanyahu is likely in the biggest such pickle of his career.

After failing to put together a ruling coalition in the wake of April’s general election, Netanyahu called another election for September 17.

Netanyahu also faces imminent indictment on three corruption charges, with a court hearing on the charges scheduled for early October. In June, his wife Sara took a plea deal and paid a fine for misusing state funds.

Netanyahu’s personal future may well depend on him having a political future. He’s pulling out all stops to change the April results, from approving new Israeli squats (“settlements”) in, and even promising to annex parts of, the occupied West Bank, to conducting military attacks in Syria and Iraq and along the Lebanese border.

Talk of a “Mutual Defense Treaty” with the US may well drive some badly needed votes his way, especially to the extent that such a treaty might be thought available only to Netanyahu and his Likud Party but not to Benny Gantz’s Blue and White alliance (the platform of which, by the way, bars indicted politicians from serving in the Knesset, Israel’s legislature).

So maybe Trump’s tweet is just politics. But if it’s for real, it’s a bad idea for the US, a bad idea for Israel, and a bad idea for world peace.

The US doesn’t need Israel’s assistance to defend itself. It already spends far more than any other state in the world on its military,  that amount is many multiples of any amount reasonably related to actual defense, and it faces no existential military threats other than attack with nuclear-armed intercontinental ballistic missiles, which Israel couldn’t plausibly reduce.

Israel hasn’t faced a military threat to its existence since 1973, and given the web of US-influenced and US-financed relations it’s created with Egypt, Jordan, and Saudi Arabia, isn’t likely to face any such threat not of its own making for the foreseeable future .

As for peace in general, Trump proposes a “Mutual Defense” pact with a rogue nuclear garrison ethno-state in a tinderbox region. What could possibly go wrong?

A “Mutual Defense Treaty” with the US would only encourage further bad behavior and saber-rattling on the part of the Israelis toward e.g. Iran and Syria. That’s the kind of behavior bound to eventually CREATE a real military threat, resulting in the Israelis demanding US support pursuant to the treaty, on a claim of “Mom, he hit me back FIRST.”

It’s time for the US to start furling its post-World War Two “security umbrella” instead of inviting suspect new partners to join it beneath that umbrella. America’s future, if it is to have one, requires a non-interventionist foreign policy.

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