Econlog.
"What if a poor person gets sick, doesn't have insurance, and can't get friends, family, or charity to pay for treatment?"
"What if an elderly person gets defrauded out of his entire retirement and the perpetrator vanishes into thin air?"
"What if a child is starving on the street, and no one voluntarily feeds him?"
"What if someone just can't find a job?"
If you're a libertarian, you face what-ifs like this all the time. The point, normally, is to make you say, "Tough luck" and look like a monster. What puzzles me, though, is why libertarians rarely ask analogous questions. Like:
"What if Congress passes an unjust law, the President signs it, and the Supreme Court upholds it?"
"What if the government conscripts you to fight in an unjust war, and you die a horrible death?"
"What if a poor person drinks and gambles away his welfare check?"
"What if the government denies you permission to legally work?"
"What if the President decides your ethnicity is a national security risk and puts you in a concentration camp, and the Supreme Court declares his action constitutional?"
"What if a person lives an extremely unhealthy lifestyle, so by the time they're retired, they're in constant pain no matter how generous their Medicare coverage is?"
"What happens if a President lies to start a war, and voters don't particularly care?"
Once you start the what-if game, it's hard to stop. Name any political system. I can generate endless hypotheticals to aggravate its supporters. The right lesson to draw: Every political perspective eventually has to say "Tough luck" when confronted with well-crafted what-ifs. There's nothing uniquely hard-hearted or cruel about libertarianism. Defenders of democracy, nationalism, liberalism, conservatism, the American Constitution, and social democracy all eventually sigh, "Life's not fair," or "Well, what do you want me to do about it?"
The obvious reply is that some of these hypotheticals are more realistic than others. But that puts the critics of libertarianism on extremely thin ice. None of my alternate what-ifs are fanciful. Several of them - lethal conscription, unhealthy lifestyles, denying foreigners the right to work, mendacious wars - have happened or continue to happen on a massive scale in the most democratic nations on earth. In contrast, we've never seen a rich, modern, libertarian society. For all we know, private charity in Libertopia would more than suffice to end absolute poverty. Stranger things have happened.
Why the double standard? The root, I suspect, is status quo bias. Most people tolerate the unpleasant ramifications of the status quo because they're used to them. You might get conscripted and die a horrible death? Oh well, that's life. Most people won't tolerate the unpleasant ramifications of libertarianism because they're used to a world where government says, "We'll never let that happen." But what's so great about that assurance, when it's bundled with a long list of other evils that governments blithely tolerate - or actively commit on a grand scale every day?
Mostrando entradas con la etiqueta Bryan Caplan. Mostrar todas las entradas
Mostrando entradas con la etiqueta Bryan Caplan. Mostrar todas las entradas
The Able Slave
Bryan Caplan.
Suppose there are ten people on a desert island. One, named Able Abel, is extremely able. With a hard day's work, Able can produce enough to feed all ten people on the island. Eight islanders are marginally able. With a hard day's work, each can produce enough to feed one person. The last person, Hapless Harry, is extremely unable. Harry can't produce any food at all.
Questions:
1. Do the bottom nine have a right to tax Abel's surplus to support Harry?
2. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to support Harry?
3. Do the bottom nine have a right to tax Abel's surplus to raise everyone's standard of living above subsistence?
4. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to raiseeveryone's standard of living above subsistence?
How would most people answer these questions? It's hard to say. It's easy to feel sorry for the bottom nine. But #1 and #3 arguably turn Abel into a slave. And #2 and #4 clearly turn Abel into a slave. I suspect that plenty of non-libertarians would share these libertarian moral intuitions. At minimum, many would be conflicted.
Yet bleeding-heart libertarian Jason Brennan doesn't seem conflicted. At all. He begins by quoting one of his earlier posts:
Suppose there are ten people on a desert island. One, named Able Abel, is extremely able. With a hard day's work, Able can produce enough to feed all ten people on the island. Eight islanders are marginally able. With a hard day's work, each can produce enough to feed one person. The last person, Hapless Harry, is extremely unable. Harry can't produce any food at all.
Questions:
1. Do the bottom nine have a right to tax Abel's surplus to support Harry?
2. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to support Harry?
3. Do the bottom nine have a right to tax Abel's surplus to raise everyone's standard of living above subsistence?
4. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to raiseeveryone's standard of living above subsistence?
How would most people answer these questions? It's hard to say. It's easy to feel sorry for the bottom nine. But #1 and #3 arguably turn Abel into a slave. And #2 and #4 clearly turn Abel into a slave. I suspect that plenty of non-libertarians would share these libertarian moral intuitions. At minimum, many would be conflicted.
Yet bleeding-heart libertarian Jason Brennan doesn't seem conflicted. At all. He begins by quoting one of his earlier posts:
Imagine that your empirical beliefs about economics have been disconfirmed. Imagine that a bunch of economists provide compelling evidence that life in a strictly libertarian polity would go badly. Imagine that they showed conclusively that if people everywhere were to live in a Nozickian minimal state or a Rothbardian anarcho-capitalist civil society, with everyone strictly observing property right rules, that 10% of people would starve (through no fault of their own), 80% would be near subsistence (through no fault of their own), and only 10% would prosper. However, imagine that they also show that in a liberal social democracy with significant redistribution or social insurance, most people would prosper, just as many people living in such welfare states are doing pretty well right now.In a followup, Brennan adds:
If you are a hard libertarian, you respond to this thought experiment by saying, "Well, that's too bad things turned out that way. But, still, everyone did the right thing by observing property rights, and they should continue to do so."...If you have at least some concern for social justice, you respond by saying, "If that happened, that would be strong grounds to change the economic regime. In that kind of society, it's unreasonable to ask people to observe the basic institutions and rules. They have a legitimate complaint that the rules works as if they were rigged against them. Perhaps we'd need to tweak property rights conventions. Perhaps we'd even need some sort of redistribution, if that's what it took."
This is a good example of what puzzles me most about bleeding-heart libertarians: At times, they sound less libertarian than the typical non-libertarian.* I'm not claiming that the "hard libertarian" intuition is certainly true. But in a thought experiment with ten people, the hard libertarian intuition is at least somewhatplausible. And once you start questioning the justice of the islanders' treatment of Able Abel, questions about the justice of the modern welfare state can't be far behind.
Needless to say, bleeding-heart libertarians usually sound a lot more libertarian than the typical non-libertarian. Yet this just amplifies the puzzle. Unjust treatment of the able may not be the greatest moral issue of our time. (Then again...) But unjust treatment of the able is a serious moral issue. And it's a serious moral issue that mainstream moral and political philosophy utterly ignores. My question for bleeding-heart libertarians everywhere: Why don't your hearts bleed for the able slave?
* The most egregious example is Andrew Cohen's musings on parental licensing.
Highlights from "Does Technology Drive the Growth of Government?"
Bryan Caplan.
Thanks to the half dozen people who sent me copies of Cowen's "Does Technology Drive the Growth of Government?" The paper's even better than I remember. Highlights:
The puzzle, courtesy of the great Tullock:
Inadequacies of ratchet theories of government growth:
Tyler then promisingly begins by acknowledging the ultimate power of public opinion:
I value papers that make noticeable progress on important questions. If you share my preference, this could easily be Tyler's best paper ever. At least so far; I still hope to see many more like it. Read the whole thing.
Thanks to the half dozen people who sent me copies of Cowen's "Does Technology Drive the Growth of Government?" The paper's even better than I remember. Highlights:
The puzzle, courtesy of the great Tullock:
I start with what Gordon Tullock (1994) has called the paradox of government growth. Before the late nineteenth century, government was a very small percentage of gross domestic product in most Western countries, typically no more than five percent. In most cases this state of affairs had persisted for well over a century, often for many centuries. The twentieth century, however, saw the growth of governments, across the Western world, to forty or fifty percent of gross domestic product... I'd like to address the key question of why limited government and free markets have so fallen out of favor.Inadequacies of public choice theories of government growth:
Public choice analysis has generated many theories of why government grows and why that growth is inevitable. Special interest groups, voter ignorance, and the pressures of war all are cited in this context. Those theories, however, at best explain the twentieth century, rather than the historical pattern more generally. Until the late nineteenth century, governments were not growing very rapidly. The standard public choice accounts do not contain enough institutional differentiation to account for no government growth in one period and rapid government growth in another period.Inadequacies of ideological theories of government growth:
According to this claim, the philosophy of classical liberalism declined in the mid- to late nineteenth century. This may be attributed to the rise of socialist doctrine, internal contradictions in the classical liberal position, the rise of democracy, or perhaps the rise of a professional intellectual class. While the ideology hypothesis has merit, it is unlikely to provide a final answer to the Tullock paradox. To some extent ideology stems from broader social conditions. Ideologies changed, in part, because intellectuals perceived a benefit to promoting ideas of larger government, rather than promoting classical liberalism.I'd add, "Is it really true that in 1890, the typical voter staunchly supported free trade and free migration and staunchly opposed redistributive regulation and taxation?"
Inadequacies of ratchet theories of government growth:
The ratchet effect becomes much stronger in the twentieth century than before. Furthermore most forms of governmental growth probably would have occurred in the absence of war. The example of Sweden is instructive. Sweden avoided both World Wars, and had a relatively mild depression in the 1930s, but has one of the largest governments, relative to the size of its economy, in the developed world. The war hypothesis also does not explain all of the chronology of observed growth. Many Western countries were well on a path towards larger government before the First World War. And the 1970s were a significant period for government growth in many nations, despite the prosperity and relative calm of the 1960s.Inadequacies of franchise extension theories of government growth:
The hypothesis of franchise extension, however, again leaves much unexplained. First, non-democratic regimes, such as Franco's Spain, illustrate similar patterns of government growth as do the democracies. Second, much of the Western world was fully democratized by the 1920s. Most governmental growth comes well after that date, and some of it, such as Bismarck's Germany, comes well before that time. Third, and most fundamentally, white male property owners today do not favor extremely small government, though they do tend to be more economically conservative than female voters.The last sentence is so obvious yet so ignored.
Tyler then promisingly begins by acknowledging the ultimate power of public opinion:
No matter how incomplete it may be, there clearly must be something to the voter hypothesis. That is, there must be some demand for big government. If all or most voters, circa 2009, wanted their government to be five percent of gross domestic product, some candidate would run on that platform and win. Change might prove difficult to accomplish, but we would at least observe politicians staking out that position as a rhetorical high ground. In today's world we do not observe this. Voter preferences for intervention are therefore a necessary condition for sustained large government. Democratic government cannot grow large, and stay large, against the express wishes of a substantial majority of the population.Next he turns to the many technological changes that pumped up demand for big government. You can quarrel with the specifics, but his summation is excellent:
[N]o one of these technological advances serves as the cause of governmental growth. Taken as a group, however, these factors made very large government possible for the first time.He adds:
To see this, perform a very simple thought experiment. Assume that we had no cars, no trucks, no planes, no telephones, no TV or radio, and no rail network. Of course we would all be much poorer. But how large could government be? Government might take on more characteristics of a petty tyrant, but we would not expect to find the modern administrative state, commanding forty to fifty percent of gross domestic product in the developed nations, and reaching into the lives of every individual daily.
Think also about the timing of these innovations. The lag between technology and governmental growth is not a very long one. The technologies discussed above all had slightly different rates of arrival and dissemination, but came clustered in the same general period. With the exception of the railroads and the telegraph (both coming into widespread use in the mid-nineteenth century), none predated the late nineteenth century, exactly the time when governmental growth gets underway in most parts of the West. The widespread dissemination of these technologies often comes in the 1920s and 1930s, exactly when many Western governments grew most rapidly, leading sometimes to totalitarian extremes. The relatively short time lag suggests that strong pressures for government growth already were in place. Once significant governmental growth became technologically possible, that growth came quickly.At first glance, Tyler has an extremely functionalist model of government growth: People always had a latent demand for big government; then technology finally made it possible to satisfy them. But Tyler's model hardly implies that the public's latent demand for big government was wise or prudent. If improved transportation leads to a large increase in consumption of cyanide, it hardly implies that cyanide is part of every nutritious breakfast.
I value papers that make noticeable progress on important questions. If you share my preference, this could easily be Tyler's best paper ever. At least so far; I still hope to see many more like it. Read the whole thing.
The Age of Contestability
Bryan Caplan.
When economists want to measure the competitiveness of an industry, they usually start by counting the number of competing firms. If they see a lot of firms, they infer a lot of competition. Few firms? Little competition. One firm? No competition at all.
Three decades ago, a model came along to challenge this mindset: thecontestable market model. In the contestable market model, a single firm often behaves exactly like a perfectly competitive firm. Why? Because of potentialcompetition. Sure, your firm may be the sole supplier of a good right now. But if you raise your price above the competitive level, all sorts of competitors might suddenly spring up. To prevent this from happening, you need to keep your prices so low than no potential competitor bothers to become an actual competitor.
The contestable markets model enjoyed immediate attention. But as you'd expect, believers in the traditional structure-conduct-performance model were not impressed. It doesn't google, but I still remember Leonard Weiss's summary dismissal. It went something like this: "The contestable markets model is empirically irrelevant and should play no role in policy."
There hasn't been much new research on the contestability model in recent years. But I recently realized that the empirical and policy relevance of this much-maligned model is now very hard to deny.
Consider: The internet has given us a long list of near-monopolies: Amazon, Apple, and Netflix are only the beginning. Funny thing: consumers love these "monopolies."* Despite their market dominance, these firms deliver amazing products at low prices. And almost no one is "waiting for the other shoe to drop." If someone claimed that Amazon, Apple, or Netflix were planning to gouge us as soon as they devour their last competitors, we'd laugh.
The contestable markets model has a simple explanation. Sure, Amazon, Apple, and Netflix look a lot like monopolies. But the people who run these firms can feel their potential competitors breathing down their necks. If these "monopolies" start taking their customers for granted, they'll quickly cease to be monopolies. Indeed, they may quickly cease to exist at all.
In fact, the results we see are better than the simple contestability model predicts. Amazon, Apple, and Netflix don't just keep offering customers the same attractive terms. They're constantly trying to improve the terms they offer. Why? Because they realize that in the Age of Contestability, market leaders will fall behind unless they keep running full speed ahead.
* Yes, I know that Netflix recently burned up a lot of good will with some bad decisions. But consumers still love the product.
When economists want to measure the competitiveness of an industry, they usually start by counting the number of competing firms. If they see a lot of firms, they infer a lot of competition. Few firms? Little competition. One firm? No competition at all.
Three decades ago, a model came along to challenge this mindset: thecontestable market model. In the contestable market model, a single firm often behaves exactly like a perfectly competitive firm. Why? Because of potentialcompetition. Sure, your firm may be the sole supplier of a good right now. But if you raise your price above the competitive level, all sorts of competitors might suddenly spring up. To prevent this from happening, you need to keep your prices so low than no potential competitor bothers to become an actual competitor.
The contestable markets model enjoyed immediate attention. But as you'd expect, believers in the traditional structure-conduct-performance model were not impressed. It doesn't google, but I still remember Leonard Weiss's summary dismissal. It went something like this: "The contestable markets model is empirically irrelevant and should play no role in policy."
There hasn't been much new research on the contestability model in recent years. But I recently realized that the empirical and policy relevance of this much-maligned model is now very hard to deny.
Consider: The internet has given us a long list of near-monopolies: Amazon, Apple, and Netflix are only the beginning. Funny thing: consumers love these "monopolies."* Despite their market dominance, these firms deliver amazing products at low prices. And almost no one is "waiting for the other shoe to drop." If someone claimed that Amazon, Apple, or Netflix were planning to gouge us as soon as they devour their last competitors, we'd laugh.
The contestable markets model has a simple explanation. Sure, Amazon, Apple, and Netflix look a lot like monopolies. But the people who run these firms can feel their potential competitors breathing down their necks. If these "monopolies" start taking their customers for granted, they'll quickly cease to be monopolies. Indeed, they may quickly cease to exist at all.
In fact, the results we see are better than the simple contestability model predicts. Amazon, Apple, and Netflix don't just keep offering customers the same attractive terms. They're constantly trying to improve the terms they offer. Why? Because they realize that in the Age of Contestability, market leaders will fall behind unless they keep running full speed ahead.
* Yes, I know that Netflix recently burned up a lot of good will with some bad decisions. But consumers still love the product.
Cato Journal Immigration Symposium Round-Up
Bryan Caplan.
I've now read the full Cato Journal immigration issue cover-to-cover. Leaving aside my lead article, here are my brief reactions:
1. Gordon Hanson, "Immigration and Economic Growth." Pretty good, especially on the interaction between high-skilled native labor and low-skilled immigrant labor:
6. Edward Alden. "Immigration and Border Control." Alden wants people to acknowledge the trade-off between the ease of legal immigration and the cost of border enforcement. Perhaps he's just being strategic, but Alden shows little concern for the well-being of immigrants or the immorality of treating people like criminals for doing an honest day's work:
9. Daniel Griswold. "Immigration and the Welfare State." The best in the bunch. Griswold provides a careful survey of the literature on the fiscal effects of immigration, and never forgets that immigrants count, too. I'll blog the highlights in a separate post.
10. Raul Hinojosa-Ojeda. "The Economic Benefits of Comprehensive Immigration Reform." Provides a computable general equilibrium model of the effects of different immigration reform scenarios. Unfortunately, this approach just isn't transparent enough to change a skeptic's mind. And I can't understand how the same model could imply that:
(a) Comprehensive immigration reform (amnesty, more or less) "results in higher wages--and higher worker productivity--for all workers in industries where large numbers of immigrants are employed."
AND
(b) Under mass deportation, "Wages do rise for less-skilled native-born workers under this scenario, but they fall for higher-skilled natives and the U.S. economy loses a large numbers of jobs."
Perhaps I'm missing something, but how can amnesty and mass deportation both boost wages for less-skilled natives?
11. Joshua Hall, Benjamin VanMetre, and Richard Vedder. "U.S. Immigration Policy in the 21st Century: A Market-Based Approach." A lot of good material, but it ends on a disappointingly agnostic and amoral note:
I've now read the full Cato Journal immigration issue cover-to-cover. Leaving aside my lead article, here are my brief reactions:
1. Gordon Hanson, "Immigration and Economic Growth." Pretty good, especially on the interaction between high-skilled native labor and low-skilled immigrant labor:
One contribution of low-skilled immigrants is to make it possible for high-skilled workers to spend more time on the job and less time doing non-work related chores... The majority of highly educated women are married to highly educated men (Isen and Stevenson 2010: 13). For both to work outside the home often requires hiring outside labor to care for children, clean the home, launder clothes, and tend to the yard. In a study of immigration's impact on U.S. cities, Cortes (2008) finds that metropolitan areas that have had larger influxes of low-skilled immigrants have lower prices for dry cleaning, child care, housing cleaning, yard care, and other labor-intensive services. Lower prices for these services translate into more hours spent at work for high-skilled workers, particularly among women with a professional degree or PhD (Cortes and Tessada 2009). Low-skilled immigration thus indirectly contributes to productivity growth by raising the effective supply of high-skilled labor.2. Giovanni Peri, "Immigration, Labor Markets, and Productivity." If all labor is identical, the effect of immigration on domestic wages is clearly negative, at least in the short-run. But in reality, immigrant labor and native labor are very different - and it matters. Peri provides an excellent survey of the evidence. One highlight:
In Peri and Sparber (2009) we show that, due to the limited knowledge of the language, immigrants have a comparative advantage in manual type of jobs. Hence they specialize in those, and in firms and sectors that hire immigrants, this produces higher demand for jobs of coordination and interaction typically staffed by natives, whose language skills are superior. This dynamic specialization in tasks according to skills pushes natives to upgrade their jobs (as communication-intensive occupations pay better than manual intensive ones) and protects their wages from competition with immigrants.3. Joel Kotkin and Erika Ozuna, "America's Demographic Future." A good intro to the demographic effects of immigration. Immigration is keeping America young and working:
Mexican and other immigrants are one key reason why America boasts a fertility rate 50 percent higher than Russia, Germany, or Japan, and well above that of China, Italy, Singapore, Korea, and virtually all of eastern Europe (The Economist 2002; United Nations 2005; Longman 2004: 60). Consequently, it is widely believed America's workforce will continue to grow even as that of Japan, Europe, Korea, and eventually even China will start to shrink.4. Stuart Anderson, "America's Incoherent Immigration System." A solid moderate reformist piece:
Between 2000 and 2050, for example, the U.S. workforce is projected to grow by over 40 percent, while that of China shrinks by 10 percent, the EU by 25 percent and, most remarkably, Japan's by over 40 percent (U.S. Census Bureau International Database).
[M]uch can be accomplished by simply raising the quotas for temporary visas for both low- and high-skilled workers and increasing the number of green cards available for family and employer-sponsored immigrants.5. Pia Orrenius and Madeline Zavodny. "The Economic Consequences of Amnesty for Unauthorized Immigrants." Pretty good, but most readers will get more out of the broader articles on the labor market and fiscal effects of immigration.
6. Edward Alden. "Immigration and Border Control." Alden wants people to acknowledge the trade-off between the ease of legal immigration and the cost of border enforcement. Perhaps he's just being strategic, but Alden shows little concern for the well-being of immigrants or the immorality of treating people like criminals for doing an honest day's work:
There are certainly many--indeed the majority of the American public at the moment--who would argue against higher levels of immigration. That is perfectly reasonable. But the debate should be an honest one. Larger legal quotas, especially for less-skilled workers, would reduce the need for enforcement; smaller quotas would increase it. Instead, the discussion is a disingenuous one in which many in Congress insist that the border must first be "secured" before any serious consideration of immigration reform can be permitted.7. Jim Harper. "Internal Enforcement, E-Verify, and the Road to a National ID." A frightening picture of rapid technological progress in the war on illegal immigration. But like Alden, Harper shows little concern for the rights of immigrants. And he frustratingly equivocates between the "values of the people" as expressed in private behavior, and the "values of the people" as expressed in the voting booth:
[T]he goal of many of E-Verify's proponents is to bring the rule of law to the immigration environment. Fealty to law is important for the maintenance of a just and stable society, and immigration law is widely disrespected and often broken. But good law is not a hammer waved over the heads of subservient people. Good law gives expression to the values of the people.8. Margaret Stock. "Is Birthright Citizenship Good for America?" Stock's answer, of course, is yes. But her piece is not persuasive. People oppose birthright citizenship because they oppose immigration. If you don't change their minds about immigration, you won't change their minds about birthright citizenship, either.
Immigration law is disrespected and broken not because it is poorly enforced, but because it is inconsistent with the will of the people. In the main, the majority of the American people express their will quietly but insistently in their decisions to hire good, hard workers, and to enjoy the product of these workers' labor, indifferent to where the worker was born.
9. Daniel Griswold. "Immigration and the Welfare State." The best in the bunch. Griswold provides a careful survey of the literature on the fiscal effects of immigration, and never forgets that immigrants count, too. I'll blog the highlights in a separate post.
10. Raul Hinojosa-Ojeda. "The Economic Benefits of Comprehensive Immigration Reform." Provides a computable general equilibrium model of the effects of different immigration reform scenarios. Unfortunately, this approach just isn't transparent enough to change a skeptic's mind. And I can't understand how the same model could imply that:
(a) Comprehensive immigration reform (amnesty, more or less) "results in higher wages--and higher worker productivity--for all workers in industries where large numbers of immigrants are employed."
AND
(b) Under mass deportation, "Wages do rise for less-skilled native-born workers under this scenario, but they fall for higher-skilled natives and the U.S. economy loses a large numbers of jobs."
Perhaps I'm missing something, but how can amnesty and mass deportation both boost wages for less-skilled natives?
11. Joshua Hall, Benjamin VanMetre, and Richard Vedder. "U.S. Immigration Policy in the 21st Century: A Market-Based Approach." A lot of good material, but it ends on a disappointingly agnostic and amoral note:
As has been shown in this article, for every pro-immigration argument there is an opposing anti-immigration argument and thus it is unlikely that there will be an immigration policy that everyone will agree on. It is possible, however, to devise an immigration policy that would appeal both to those supporting more immigrants and to those who complain about the character of immigration after 1965.Namely:
[C]reating an international market for visas. To start, each business day of the year 5,000 visas for entry to the United States would be sold in a NASDAQ-style marketplace by the federal government and each immigrant would need a visa to enter the country. There would also be a limited number of visas, maybe 100,000 annually, provided free by the federal government to refugees fleeing political, religious, or other persecution as isMy question for the authors: You find it "unlikely that there will be an immigration policy that everyone will agree on." Fair enough. But what makes you think that your proposal will have broader appeal than any other proposal on the table? Indeed, how many non-economists would even consider your approach?
done under current law.
Griswold on Immigration and the Welfare State
Bryan Caplan.
Dan Griswold's "Immigration and the Welfare State" was my favorite in the Cato Journal immigration symposium. Highlights:
False stereotypes notwithstanding, immigrants have an awesome work ethic:
Dan Griswold's "Immigration and the Welfare State" was my favorite in the Cato Journal immigration symposium. Highlights:
False stereotypes notwithstanding, immigrants have an awesome work ethic:
The typical foreign-born adult resident of the United States today is more likely to participate in the work force than the typical native-born American. According to the U.S. Department of Labor (2011), the labor-force participation rate of the foreign-born in 2010 was 67.9 percent, compared to the native-born rate of 64.1 percent. The gap was especially high among men. The labor-force participation rate of foreign-born men in 2010 was 80.1 percent, a full 10 percentage points higher than the rate among native-born men.Immigrants display reverse welfare magnetism:
Labor-force participation rates were highest of all among unauthorized male immigrants in the United States. According to estimates by Jeffrey Passell (2006) of the Pew Hispanic Center, 94 percent of illegal immigrant men were in the labor force in the mid-2000s.
The 10 states with the largest percentage increase in foreign-born population between 2000 and 2009 spent far less on public assistance per capita in 2009 compared to the 10 states with the slowest-growing foreign-born populations--$35 vs. $166 (see Table 1). In the 10 states with the lowest per capita spending on public assistance, the immigrant population grew 31 percent between 2000 and 2009; in the 10 states with the highest per capita spending on public assistance, the foreign-born population grew 13 percent (U.S.What about illegals?
Census 2011, NASBO 2010: 33).
Undocumented immigrants are even more likely to self-select states with below-average social spending. Between 2000 and 2009, the number of unauthorized immigrants in the low-spending states grew by a net 855,000, or 35 percent. In the high-spending states, the population grew by 385,000, or 11 percent (U.S. Census 2011; NASBO 2010: 33; Passel and Cohn 2011). One possible reason why unauthorized immigrants are even less drawn to high-welfare-spending states is that, unlike immigrants who have been naturalized, they are not eligible for any of the standard welfare programs.The paper goes on to cover the net multigenerational fiscal effects of immigration, with extra sections on educational spending, health spending, and Social Security. Though the net fiscal effect seems positive, there's a clear federal-state conflict:
The 1997 National Research Council study determined that the typical immigrant and descendants represent an $80,000 fiscal gain to the government in terms of net present value. But that gain divides into a positive $105,000 fiscal impact for the federal government and a negative $25,000 impact on the state and local level (NRC 1997: 337).While the net fiscal effects of illegal immigration in Texas were modestly negative, the net economic effect for Texas was strongly positive:
[U]nauthorized immigrants in fiscal year 2005 paid a total of $2.09 billion in taxes at the state and local level, while consuming $2.60 billion in services (Strayhorn 2006: 20). Education was the main expenditure on the state level, and health care on the local level. Thus the net fiscal cost for state and local taxpayers in Texas from illegal immigration that year was $504 million.Griswold's not apologizing for the welfare state. But libertarians who see the welfare state as an argument for restricting immigration are straining out a gnat and swallowing a camel.
The fiscal cost, however, was more than offset by the boost to the size of the Texas economy, another finding consistent with other state studies. The Texas comptroller used a general equilibrium model known as the Regional Economic Model Inc... The model found that the resulting drop in the state's labor force would cause wages of remaining workers to rise slightly--by less than 1 percent. But the higher wages caused by a tightening labor market would make producers in the state less competitive, resulting in a modest decline in the value of the state's exports. The state's economy would shrink by 2.1 percent or $17.7 billion (Strayhorn 2006: 17)
Economic growth & Egalitarianism and Inequality
Por Don Boudreaux.
One of the first things I do each morning is to check EconLog for any new insights from Arnold, Bryan, or David that might have arrived overnight. This morning’s discoveries – both from Bryan Caplan – are simply too good not to share.
The first is Bryan’s take on Will Wilkinson’s take on Ken Rogoff’s take on economic growth. Here’s Bryan:
“Economic growth seems like an extremely good thing. But growth could have undesirable side effects so severe that growth is actually bad.” This position is totally reasonable – and totally uninteresting. Could? Could?! If something seems extremely good, you need a let more than “coulds” to counter it. Indeed, you need strong evidence that side effects of the seemingly-extremely good-thing are on balance extremely bad.
I tell my students that time is too short to worry about what’s merely possible. Nearly everything that is possible will never occur. The range of the possible is enormously larger than is the range of the plausible; the range of the plausible is larger than is the range of the probable; and the range of the probable is bigger than what (if we’re speaking of the past) has actually occurred or (if we’re speaking of the future) what will actually occur.
Part of what separates good thinkers (including those who are formal scholars) from poor thinkers is their wisdom in sensing what is relevant enough for analysis. I know of no recipe for instilling such wisdom. And I realize that if you lack such wisdom you necessarily lack the ability to understand that you lack such wisdom. We all think we have it; we all understand that not everyone does have it.
(BTW, I do not mean here to suggest that Ken Rogoff lacks such wisdom. I emphatically believe that he does not lack it. While I agree with Bryan and Will that Rogoff hits a sour note in discussing the tradeoffs involved in economic growth, what struck me in Bryan’s post is his general point that “could” is uninteresting – uninteresting, I add, except to thinkers whose cleverness overwhelms their wisdom.)
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The second gem today from Bryan is his post entitled “How Egalitarianism Increases Inequality.” This post highlights the fact that good economists understand that money is not all that matters – or, put differently, highlights the point that David Friedman makes that “everything can be measured in [DB: or, traded-off against] anything.” This insight from Bryan is spot-on – and it suggests yet another agreeable consequence of norms and rhetoric that applaud bourgeois virtues and, hence, give dignity to the bourgeoisie:
Imagine people become more egalitarian, to the point where they heap scorn on the rich and successful. What is the effect on inequality? By the previous logic, the effect is directly counter-productive. The more you scorn rich people, the more people you scare away from high-income professions. The more you scare away, the lower their supply. And the lower their supply, the higher their income!Lesson: If you really want a materially more equal society, stop beating up on the 1%. Do a complete 180. Smile upon them. Admire them. Praise them. Sing songs about how much good they do for the world. The direct result will be to raise their status. But the indirect result will be to pique the envy of status-conscious people, increasing the competition among the top 1%, and thereby moderating income inequality.
Patria, Parenti, Amici
By Bryan Caplan.
I'm a staunch opponent of nationalism. But I'm also a family man. Isn't there a direct contradiction between the two? If I refuse to show favoritism to my fellow Americans, how can I in good conscience buy Christmas presents for my children? You might argue that whether you favor your countrymen or your kin, you're neglecting far more deserving strangers.
There is one obvious difference between nationalism and familial favoritism. Familial favoritism is a deep and ineradicable part of the human psyche, thanks to many millions of years of evolution. Nationalism - and expansive tribal identities more generally - pretends to be equally fundamental, but it's largely cheap talk. People happily give tons of free stuff to their children. But you need coercion to make people surrender more than a pittance to their "fellow citizens." To ask people to stop favoring their own children goes utterly against human nature. To ask people to stop favoring their countrymen is a modest, eminently do-able request.
There is however a less obvious, but far more important difference between nationalism and familial favoritism: Despite its mighty evolutionary basis, almost everyone recognizes moral strictures against familial favoritism. Almost everyone knows that "It would help my son" is not a good reason to commit murder, break someone's arm, or steal. Indeed, almost everyone knows that "It would help my son" is not a good reason for even petty offenses - like judging a Tae Kwon Do tournament unfairly because your son's a contestant.
Nationalism, in contrast, is widely seen as an acceptable excuse for horrific crimes against outgroups. Do you plan to murder hundreds of thousands of innocent foreign civilians? Just say, "It will save American [German/Japanese/Russian/whatever] lives" - and other members of your tribe will nod their heads. Do you want to deprive millions of foreigners of the basic human rights to sell their labor to willing buyers, rent apartments from willing landlords, and buy groceries from willing merchants? Just say, "It's necessary to protect American jobs" in a self-righteous tone, then bask in the admiration of your fellow citizens.
The surprising lesson: familial favoritism isn't just inevitable; it's basically benign. People know that this fundamental emotion is no excuse for ignoring the rights of strangers. Nationalism, in contrast, is at once phony and dangerous. Phony, because nationalists' behavior belies their gradiose claims of loyalty and devotion to their countrymen. Dangerous, because when people remember their nation, they forget their basic moral obligations to leave strangers alone.
I'm a staunch opponent of nationalism. But I'm also a family man. Isn't there a direct contradiction between the two? If I refuse to show favoritism to my fellow Americans, how can I in good conscience buy Christmas presents for my children? You might argue that whether you favor your countrymen or your kin, you're neglecting far more deserving strangers.
There is one obvious difference between nationalism and familial favoritism. Familial favoritism is a deep and ineradicable part of the human psyche, thanks to many millions of years of evolution. Nationalism - and expansive tribal identities more generally - pretends to be equally fundamental, but it's largely cheap talk. People happily give tons of free stuff to their children. But you need coercion to make people surrender more than a pittance to their "fellow citizens." To ask people to stop favoring their own children goes utterly against human nature. To ask people to stop favoring their countrymen is a modest, eminently do-able request.
There is however a less obvious, but far more important difference between nationalism and familial favoritism: Despite its mighty evolutionary basis, almost everyone recognizes moral strictures against familial favoritism. Almost everyone knows that "It would help my son" is not a good reason to commit murder, break someone's arm, or steal. Indeed, almost everyone knows that "It would help my son" is not a good reason for even petty offenses - like judging a Tae Kwon Do tournament unfairly because your son's a contestant.
Nationalism, in contrast, is widely seen as an acceptable excuse for horrific crimes against outgroups. Do you plan to murder hundreds of thousands of innocent foreign civilians? Just say, "It will save American [German/Japanese/Russian/whatever] lives" - and other members of your tribe will nod their heads. Do you want to deprive millions of foreigners of the basic human rights to sell their labor to willing buyers, rent apartments from willing landlords, and buy groceries from willing merchants? Just say, "It's necessary to protect American jobs" in a self-righteous tone, then bask in the admiration of your fellow citizens.
The surprising lesson: familial favoritism isn't just inevitable; it's basically benign. People know that this fundamental emotion is no excuse for ignoring the rights of strangers. Nationalism, in contrast, is at once phony and dangerous. Phony, because nationalists' behavior belies their gradiose claims of loyalty and devotion to their countrymen. Dangerous, because when people remember their nation, they forget their basic moral obligations to leave strangers alone.
Reflections on Rod Long's "Libertarian Three-Step Program". Bryan Caplan
Wolf Blitzer: You're a physician, Ron Paul, so you're a doctor. You know something about this subject. Let me ask you this hypothetical question.
A healthy 30-year-old young man has a good job, makes a good living, but decides: "You know what? I'm not going to spend $200 or $300 a month for health insurance because I'm healthy, I don't need it." But something terrible happens, all of a sudden he needs it. Who's going to pay if he goes into a coma, for example? Who pays for that?
Ron Paul has a three-part answer: (1) The young man should have been more responsible, and strangers shouldn't be forced to bail him out; (2) private charity will help; and (3) regulation makes health insurance needlessly expensive.
Furthermore, there are many problems that laissez-faire won't much improve. Take alcoholism. Yea, you could claim that bad government policies drive people to drink. But that's far from clear. And don't liquor taxes make people drink less? The hard fact is that free people make lots of bad choices. Libertarians should accept this fact - not pretend that government policies are the "root cause" of bad choices.
Happiness. Bryan Caplan
Via Francisco Capella.
Extractos:
At the other end of the political spectrum, consider immigration. The most pessimistic researchers find that decades of immigration have depressed native wages by about 5%, total. The effect of immigration on Third World migrants' wages, by contrast, is massive: One recent paper finds that allowing a Haitian to take a low-skill job in the U.S. increases his earnings 10 times. If you care about happiness, the implication is clear: Government should get out of the way.
Finally, even if Mr. Powdthavee is right about the unhappy effects of income comparison, you shouldn't conclude that redistribution is the solution. Yes, you could fight inequality of income. But you could just as easily fight comparison of income. Instead of praising those who "raise awareness" about inequality, perhaps we should shame them, like the office gossip, for spreading envy and discontent. In the end, happiness research and history teach the same lesson: If you live in the First World, you should be very grateful for what you have. So cheer up!
Read full story.
Hard-Wired Envy. Bryan Caplan
If people envy people richer than themselves, I say we should fight envy, not inequality. A number of people have objected that "Envy is 'hard-wired.'" They're right - but it doesn't matter.
Why not? Most, if not all, of our emotions are hard-wired. We're hard-wired to resent it when strangers take our stuff without our consent. We're hard-wired to yell at people who make us angry. And judging from how sexist kids are - even faced with constant adult objections - I'd add that humans are probably hard-wired to be sexist, too.
The catch, in every case, is that "hard-wired" does not mean fixed. All humans may feel these emotions to some extent. But there's plenty of room to maneuver. You can become less envious than you are. Make an effort to monitor your thoughts and behavior. Count your blessings. Give credit where credit is due. Focus on improving yourself instead of comparing yourself to other people. Spend more time with less envious people. Will you achieve the nirvana of zero envy? Probably not. But you will become less envious and more enviable at the same time.
Communisim. Bryan Caplan
Stalin’s apologists argue that Germany forced militarization on him. In truth, Stalin not only began World War II as Hitler’s active ally against Poland, but also saw the war as a golden opportunity for communist expansion: “[T]he Soviet government made clear in its Comintern circular of September 1939 that stimulation of the ‘second imperialist war’ was in the interests of the Soviet Union and of world revolution, while maintaining the peace was not.”
Foolish as he looked after Hitler’s double-cross in 1941, Stalin’s assessment was correct. After World War II, the USSR installed communist regimes throughout Eastern Europe. More significantly, Japan’s defeat created a power vacuum in Asia, allowing Mao Zedong to establish a Leninist dictatorship in mainland China. The European puppets closely followed the Soviet model, but their greater prewar level of development made the transition less deadly. Mao, in contrast, pursued even more radical economic policies than Stalin, culminating in the Great Leap Forward (1958–1960). Thirty million Chinese starved to death in a rerun of Soviet collectivization.
Lecturas interesantes 25 de febrero de 2011 (y II)
China's Secret Weakness by Paul Johnson.
Agnostics for Pacifism by Bryan Caplan.
Bryan CaplanAre they right to claim credit? I don't know - and neither do they. The hard truth is that predicting the effects of war is extremely difficult. If one man's suicide can topple multiple Middle Eastern governments, Ghassan might be right about Iraq. In foreign policy, sometimes you sit back and problems solve themselves. Sometimes you act and create a massive domino effect. And sometimes the dominoes fall the wrong way.
William Kristol argues that “American principles” require Uncle Sam to intervene more vigorously – with force, if necessary – in the revolutions now sweeping through the Middle East (“Obama’s moment in the Middle East – and at home,” Feb. 23).
The Ultimate Resource: You by McGlothlin Andrew.
If you’ve spent any time in class with Dr. Gillette, you most likely have heard of the concept of knowledge-value. This idea, from Taichi Sakaiya’s book The Knowledge Value Revolution: or a History of the Future, reminded me very much of a discussion I had heard about Julian Simon’s idea of the ultimate resource, human ingenuity. The similarity between these ideas seemed striking, and I think this twist on the familiar concept of knowledge-value gives us an interesting way to understand its fundamental importance.
As a Share of Income, Americans Have the Most Affordable Food in World & It's Never Been Better by Mark J. Perry.
Economic Growth Happens When Labor Becomes More (Not Less) Productive by Don Boudreaux.
Why Do We Take These People Seriously?; Exhibit #34,577 by Don Boudreaux.
Joaquín Soler Serrano [España, 1919-2010] por EQDLM.
This is nonsense. So long as America retains its freedom and thus its unique powers of innovation, it will continue to lead. Besides, China's elite is too scared to follow in the path of freedom because to do so would risk unity, threatening disintegration and a return to the terrible days of warlords and civil war, as in the 1920s.
Moreover, China has secret weaknesses. Its most serious: gambling and drug addiction. China's new prosperity is already producing a rapid expansion of the country's international gambling class, not to mention an appreciable increase in the number of drug addicts.
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Agnostics for Pacifism by Bryan Caplan.
Bryan CaplanAre they right to claim credit? I don't know - and neither do they. The hard truth is that predicting the effects of war is extremely difficult. If one man's suicide can topple multiple Middle Eastern governments, Ghassan might be right about Iraq. In foreign policy, sometimes you sit back and problems solve themselves. Sometimes you act and create a massive domino effect. And sometimes the dominoes fall the wrong way.
By itself, I freely admit, extreme uncertainty is a double-edged sword. The consequences of war might be worse than you thought; they might be even better. But as I've argued in my common-sense case for pacifism, pacifists just need to add the weak moral premise that "before you kill innocent people, you should be reasonably sure that your action will have very good consequences." This plausible premise, combined with the uncertainty of foreign affairs, creates an almost insurmountable presumption against war.
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Civil Societies Cannot be Built – They Must Emerge by Don Boudreaux.
William Kristol argues that “American principles” require Uncle Sam to intervene more vigorously – with force, if necessary – in the revolutions now sweeping through the Middle East (“Obama’s moment in the Middle East – and at home,” Feb. 23).
I disagree. While we should cheer for liberalization to grow and spread throughout the Middle East, American principles counsel our government not to interfere. One of these principles, after all, is that government (even our own) is an inherently dangerous agent best kept on as short a leash as possible. Another of these principles is that top-down social engineering is bound to have undesirable unintended consequences – a fact that is no less true when the social engineers are headquartered in the Pentagon and the State department as when they are headquartered in the Department of Health and Human Services and the Department of Education. The same government that Mr. Kristol so often, and rightly, criticizes for making a mess of matters here at home is unlikely to become a shining example of efficiency, rectitude, and Solomaic wisdom in foreign lands.
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The Ultimate Resource: You by McGlothlin Andrew.
If you’ve spent any time in class with Dr. Gillette, you most likely have heard of the concept of knowledge-value. This idea, from Taichi Sakaiya’s book The Knowledge Value Revolution: or a History of the Future, reminded me very much of a discussion I had heard about Julian Simon’s idea of the ultimate resource, human ingenuity. The similarity between these ideas seemed striking, and I think this twist on the familiar concept of knowledge-value gives us an interesting way to understand its fundamental importance.
First, I would like to start by defining Knowledge-Value for anyone who is not familiar with the concept. On pages 235-236 of his book, Sakaiya says that “knowledge-value means both ‘the price of wisdom’ and ‘the value created by wisdom.’ A more strict definition might be, ‘the worth or price a society gives to that which the society acknowledges to be creative wisdom.’ …The truly large-scale production of knowledge-value will take the form of concrete goods and services in which it is embedded, or to which it can be added, and its distribution will be either synonymous with or conducted in concert with those goods and services,” (1991). From this definition and description, we can start to see that knowledge-value is something which has its formative roots in creativity and ingenuity and then becomes embedded in products and services giving them value for which society is willing to pay a price. As we will see in the next paragraphs, this sort of concept has been described very similarly in Economics as the Ultimate Resource.
My initial contact with the concept of the ultimate resource was in a podcast from EconTalk, in which the host, Russ Roberts, was discussing the economics of buying local with Don Boudreaux, Chairman of the Department of Economics at George Mason University. In this, Boudreaux gives his explanation of the concepts originally put forth by Julian Simon in his book The Ultimate Resource. Boudreaux discusses the idea that people consider resources to be materials that are “out there.” However, using an impromptu example, he imagines that Native Americans hundreds of years ago would have found oil bubbling up in a stream to detract from the quality of the drinking water and therefore to have been a problem rather than a resource. He says that it is the application of human creativity that changes oil into something useful (Boudreaux, 2007). Figuring out how to use potential resources productively and economically to make human life better is the act which creates value, not the potential resources themselves. This explanation interprets the thesis of The Ultimate Resource in a way that I think makes it very easy to see the connection between the ultimate resource and knowledge-value. However, looking into Julian Simon’s central argument can help us see what other ideas can be inferred from these concepts.
The thesis of the Ultimate Resource II (a revision of the original, rather than a sequel) can be summed up like this: Shortages of resources will occur due to population and income growth, and this will cause prices to go up. As prices go up, the incentive to find other alternatives to the resource or to find new ways to use less of the resource will motivate people to find ingenuitive ways to fill the shortage. Simon argues that the end result is that we find ourselves better off than if the shortage had never happened, with lower prices due to lower demand and more efficient use (Simon, 1996). The conclusions to be drawn from this are that progress is made through the efforts of intelligent and creative people, and to limit the number of such people involved in that progress is to limit the supply of ingenuity, and therefore to limit progress itself. The true resource that adds value is the trained workforce that is the source of creativity.
To tie this in with our Leadership seminar, adding knowledge-value to everything we touch is something that we talk about doing, and it seems worthwhile, even if we were to assume it was only supplemental to the other valuable parts of an operation. What Julian Simon and Don Boudreaux show us is that adding knowledge-value isn’t one of the resources we can use to make our lives better, it is the ONLY resource we have to make our lives better. Understanding this in a leadership position is extremely important. A leader must recognize and appreciate the people that they are leading (along with themselves) as the ultimate and only true resource which they have, and instill in those people the same value for their own ingenuity and that of their peers. In order to thrive, an organization must have a strong group of creative people designing systems to fulfill needs in ways that are valuable to society. The more sources of ingenuity an organization has, the more knowledge-value it will be able to generate. That’s why every member of a team needs to be able contribute their own creativity freely. A leader who limits the creative input of the people they are leading is limiting the knowledge-value that will then be embedded in their final product or service. This will lower the value, and therefore the price, that society will attribute to it, and will limit the success of the organization.
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As a Share of Income, Americans Have the Most Affordable Food in World & It's Never Been Better by Mark J. Perry.
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Economic Growth Happens When Labor Becomes More (Not Less) Productive by Don Boudreaux.
I enjoyed Timothy Noah’s review of my colleague Tyler Cowen’s book The Great Stagnation (“Don’t Worry, Be unhappy,” Feb. 21). But Mr. Noah oversimplifies Cowen’s thesis by suggesting that Cowen measures an innovation’s merit by how much employment it creates.
It’s true that Cowen notes that (as Mr. Noah reports with dismay) “the iPod has created fewer than 14,000 jobs in the U.S.” But immediately after noting this fact, Cowen rightly observes that “we should applaud the iPod for creating so much value with so little human labor” [original emphasis].
Mr. Noah is wrong to suppose that the value of innovations is found in the number of workers they employ. Consider agriculture: the many innovations in that arena over the years – such as mechanized harvesters, chemical fertilizers, and bio-engineering to increase crop yields – have dramatically reduced the number of people employed in agriculture. Would we be remotely as wealthy as we are today if it still took nine of us to feed every ten of us?
Economic growth is overwhelmingly the proximate result of innovations that allow fewer workers to produce more output – thereby releasing that most precious of all resources, human labor, for use in producing goods and services that earlier were too costly to produce.
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Why Do We Take These People Seriously?; Exhibit #34,577 by Don Boudreaux.
Yes, the Social Security “trust fund” is indeed filled with ample quantities of interest-bearing U.S. treasuries. But the same organization (Uncle Sam) that is the creditor on these treasuries is also the debtor on them. Ask: when Uncle Sam cashes in these treasuries to get funds to pay promised Social Security benefits, who pays Uncle Sam the principal and interest on these treasuries? Answer: Uncle Sam – who must, of course, raise taxes on flesh-and-blood people to get the dollars that he pays to himself so that he can then pay out promised Social Security benefits.
I.O.U.s written to one’s self are not assets. They are, instead, pathetic reminders of one’s gross financial irresponsibility.
Bernie Madoff is in jail – rightly so – for duping people with the same sort of financial flim-flammery that the White House budget director today peddles in your pages.
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Joaquín Soler Serrano [España, 1919-2010] por EQDLM.
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