Author Archives: Arnold Kling

Andrew Sullivan on Klein and Caldwell

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Sullivan writes,

Caldwell’s book is far too nuanced and expansive to cover here. But he identifies key moments and key changes. The 1965 Immigration Act was the beginning of a huge experiment in human history. It was complemented by open bipartisan-elite toleration of mass undocumented immigration across the southern border. And civil rights became something other than ending racial discrimination by the state: It became a regime of ending discrimination by individuals in economic and social life; then it begot affirmative action, in which race played an explicit part in an individual’s chance of getting into college; and it culminated in the social-justice agenda, which would meaningfully do away with the American concept of individual rights and see it replaced by a concept of racial group rights. Caldwell sees the last 50 years as a battle between two rival constitutions: one dedicated to freedom, the other to equality of outcomes, or “equity.” And I think he is right to see the former as worth fighting for.

He is referring to Christopher Caldwell’s The Age of Entitlement. He compares and contrasts it with Ezra Klein’s Why We’re Polarized. Although both books might seem to be in my wheelhouse, I am not planning to read either one. Instead, I am inclined to rely on what others say about them.

Sullivan’s peroration:

I see in the long-delayed backlash to the social-justice movement an inkling of a new respect for individual and creative freedom and for the old idea of toleration rather than conformity. I see in the economic and educational success of women since the 1970s a possible cease-fire in the culture wars over sex. I see most homosexuals content to live out our lives without engaging in an eternal Kulturkampf against the cis and the straight. Race? Alas, I see no way forward but a revival of Christianity, of its view of human beings as “neither Jew nor Gentile, neither slave nor free, nor is there male and female, for you are all one in Christ Jesus.” This means such a transcendent view of human equality that it does not require equality of outcomes to see equal dignity and worth.

Yes, I’m hoping for a miracle. But at this point, what else have we got?

What strikes me is that for all of the talk about how race affects less-educated white voters, actual race relations seem most tense on college campuses. That is where change appears to require a miracle.

But suppose that black college students were to join the backlash against the social justice movement. Imagine a number of them saying, “We don’t need this patronizing condescension. It isn’t helping. We’re strong enough to do without it. From now on, treat us as individuals.”

I’m not predicting that black students will do that, nor am I saying that they should. But if black students were to join the backlash, that would strike a severe blow to the social justice movement.

How to reduce the racial gap in reading scores

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According to this study, the problem is worse in progressive cities.

Progressive cities, on average, have achievement gaps in math and reading that are 15 and 13 percentage points higher than in conservative cities, respectively

Pointer from Stephen Green, who sees it as an argument for cities to start to vote Republican.

The study compared test scores in the 12 most progressive cities (according to an independent measure) and the 12 most conservative cities. They report the results in tables. I saw a red flag in that they focused on the achievement gap, rather than black achievement scores per se.

From a Null Hypothesis, perspective, one way to reduce the racial gap is to start with dumber white students. Then when differences in schooling have no effect, you wind up with a smaller racial gap.

Using their tables, I got that for reading, the median score in the conservative cities for blacks was 24.5, and in the progressive cities it was 20.5. The median score in the conservative cities for whites was 61.5 and in progressive cities it was 69. Since much of the difference in the gap seems to come from lower test scores for whites, I am inclined to go with the Null Hypothesis interpretation.

Quasi-biological children

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In a podcast last April that I just listened to recently, James Metzl says,

I have absolute confidence that our species is moving in the direction of conceiving our children in laboratories and not through sex. I certainly believe that the scenarios that I describe are very real scenarios. Whether I’m off by a few years in one direction or another, even a decade, it’s important, but the real story is that after 3.8 billion years of evolving by one set of rules, which we call Darwinian evolution, random mutation, and natural selection, we are now beginning a future process of evolving by a very different set of rules.

About this process, he notes that it may soon be possible, using eggs created from stem cells, to conceive thousands of babies.

You grow these 10,000 now fertilized eggs for about five days, use a machine to extract a few cells from each one. You sequence them all, because the cost of genome sequencing has gone down from about a billion dollars in 2003 to about $800 now, to basic negligibility a decade from now. And now you have 10,000 choices.

His point is that this allows you to be highly selective about which egg or eggs to plant back into the womb.

My question is: what if you don’t need a womb? What if in vitro gestation becomes as viable as in vitro fertilization? And suppose a billionaire wants to bring thousands of his babies into the world?

Have a nice Valentine’s Day.

More Martin Gurri

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1. Kling and Gurri (self-recommending).

2. In a podcast with Jeff Schechtman, Martin Gurri said,

So there’s existential meaning that people try to extract from politics in a very utopian way. I am of course one who believes that you are not going to get that from politics. That’s not what politics is about. So part of the anger is fed by the fact that I’m asking for the government to give meaning to my life, and I mean how is that going to happen?

And also this:

the internet can be seen as bringing the public and the elites into kind of an unbearable proximity, and the reaction of the public has been anger, and the reaction of the elites has been to fly as high up into the top of the pyramid to escape.

Pointer from Tyler Cowen.

Wages and the cycle

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John Cochrane writes,

John Grigsby has a very nice paper I saw last week pointing out that wages rose in the Great Recession. Why? Well all the low-wage people got fired, so the average wages of those remaining got hired [sic–he must mean “higher”]. Right now, we are seeing some of the opposite. People who have been out of the labor force for years are returning. Even ex-cons are getting jobs. Employers are skipping the drugs tests. Hire a lot of people at less than average wages, and average wages go down. It is possible for every individual to get a raise but the average decline.

The paper to which he refers has the following abstract:

What determines the joint dynamics of aggregate employment and wages over the medium run? This classic question in macroeconomics has received renewed attention since the Great Recession, when real wages did not fall despite a crash in employment. This paper proposes a microfoundation for the medium-run dynamics of aggregate labor markets which relies on worker heterogeneity. I develop a model in which workers differ in their skills for various occupations, sectors employ occupations with different weights in production, and skills are imperfectly transferable. When shocks are concentrated in particular industries, the extent to which workers can reallocate across the economy determines aggregate labor market dynamics. I apply the model to study the recessions of 2008-09 and 1990-91. I estimate the distribution of worker skills using two-period panel data prior to each of these recessions and find that skills became less transferable between the 1980s and 2000s. Shocking the estimated model with industry-level TFP series replicates the increase in aggregate wages in 2008-09, and decline in 1990-91. The model implies that if either the composition of industry shocks or the distribution of skills in the economy had been the same in the 2008-09 recession as in the 1990-91 recession, real wages would have fallen, while employment would have declined less. The declining industries during the 2008-09 all employed a similar mix of skills, which induced many low-skill workers to leave the labor force and limited downward wage pressure on the rest of the economy. Finally, the model inspires a novel reduced form method to correct aggregate wages for selection in the human capital of workers, which accounts for cyclical job downgrading by focusing on the wage movements of occupation-stayers. This correction recovers pro-cyclical wages, suggesting the changing composition of the workforce was crucial for aggregate wage dynamics during the Great Recession.

In textbook macro, there is no worker heterogeneity. There is just one type of worker in the GDP factory, and when demand falls, “the” wage is too high for the factory to keep all of its workers. We get an increase in unemployment until “the” real wage falls, in the textbook case due to prices rising faster than wages, thanks to monetary policy.

As you know, I don’t buy this story. I think of the economy as highly specialized, and I tell the PSST story. Some patterns of specialization an trade become unsustainable, and that results in higher unemployment until new patterns can be established. The quoted abstract struck me as closer to a PSST story than to a textbook macro story.

As an aside, I perhaps could link to John more often. I certainly agree with him often. But in choosing material to which to link, I lean in the direction of looking for facts or analytical points that are new to me or that I want to ponder further. I don’t want to automatically link to stuff just because I agree with it. And I try to stay away from the “Somebody said something wrong on the Internet” genre, meaning finding something you disagree with and acting on the urge to attack it.

The output gap as an outmoded AD story

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The output gap is a concept in simplistic Keynesian economics. It was most widely used fifty years ago. It never worked very well as a policy tool. Moreover, it has become much less relevant as the economy has moved away from concentration in automobile and steel production toward a highly diverse set of industries, with high technology as well as health care and other services particularly important.

The idea of an output gap is easy to explain. Suppose that the economy consists of a single factory. For some reason, demand for output falls. The factory will lay off workers and operate at less than full capacity. The difference between full-capacity production and actual production is the output gap.

When the concept of the output gap is applied to our nation’s data, the implicit assumption is that the economy is like a single factory, producing GDP. The capacity of the GDP factory is estimated using a trend line connecting years in which the unemployment rate is near its minimum. When GDP is below this trend line, that is said to signify an output gap.

But the economy is most certainly not a single factory. This makes the output gap an increasingly problematic calculation. Perhaps the measured output gap was a decent approximation in the 1950s, when most job losses consisted of temporary layoffs at large manufacturing firms that had accumulated too much in inventory. Once the excess inventory had been sold off, workers could be recalled to their same jobs and the output gap could be closed. In that sense, the economy operated somewhat like a single GDP factory.

In today’s economy, most job losses are permanent, due to reconfiguration of industries. Unemployed workers cannot simply be recalled to their old jobs. Instead, entrepreneurs must create new jobs, and then matches must be found between these new jobs and unemployed workers.

Each month in the United States, approximately four million jobs are destroyed and about the same number are created. When slightly more jobs are destroyed than created, the measured output gap goes up. When slightly more jobs are created than destroyed, the measured output gap goes down.

In recent years, the main challenge with job creation has been the mismatch between the skills and reliability desired by employers and the characteristics of people who are unemployed or not in the labor force. This is a much more nuanced problem than the concept of the output gap would suggest.

I recommend Nicholas Eberstadt’s recent article “Education and Men without Work”. He points out that the problem for low-skilled men in our economy is not one of demand. Instead, data on job openings show that we are

a country awash in low-skill jobs at a time when millions of men with high-school diplomas or less are out of the workforce. . .positions go unfilled because of a lack of interest by non-workers, or because of unreliable applicants who do not show up for work regularly and on time, or because applicants cannot stay sober or pass drug-screening tests.

Eberstadt would argue that the most important problem in our economy is not a generic output gap that can be treated by the Federal Reserve. Instead, it is a breakdown in families and social norms more generally as well as an education system that has not adapted to current realities.

Human migration and evolution

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One point that Charles Murray makes effectively in Human Diversity is that human migration necessarily creates different genetic patterns.

If we start with a tribe of 200 people, and 100 of them break off and move to a new location, those 100 cannot possibly take with them a representative sample of the gene pool of the whole tribe. There are many possible genetic combinations, but by arithmetic the new tribe can only take 100 combinations with them.

Here are some thoughts I have about that;

1. An assumption that Murray makes, which I believe is accurate, is that there is not much re-mixing. The old tribe and the new tribe cross-breed very little, if at all. In prehistoric days, the physical separation made cross-breeding unlikely. Also mutual tribal suspicion.

2. My guess is that some human colonies survived, and some didn’t. The ones that survived preserved their genetic tendencies and cultural traits.

3. Surviving colonies tend to stay put. If the colony really thrives and its population increases, then it will send out more migrant colonies.

4. My guess is that when long-distance communication and transportation was primitive, failing colonies tended to just fail. As technology improved, failing colonies would be more inclined to migrate, because they have better knowledge of where life might be better.

5. Of all of the colonies that humans ever created, only a relatively few were successful. When your genome is used to speculate about your ancestry, it is linking you back to one or more of the successful colonies.

6. If only a small proportion of colonies were successful, then of all of the viable combinations of genes, only a few will be present. Evolution will not have selected with extreme rigor. Yes, some of the colonies failed because of weak genes. But others failed because of bad luck or bad culture. And not very many combinations of genes were tried.

7. I think that this picture reinforces my skepticism about polygenic scores ever being able to explain much of the observed variation in heritable traits. We will observe some combinations of genes with great frequency, making additional sampling from those populations redundant from a statistical perspective. My intuition continues to be that we are now or soon will be at the point of greatly diminishing returns to increased sample size.

8. It is not just prehistoric migration that follows the colony model. Consider David Hackett-Fisher’s Albion’s Seed. Consider the Bosnian community in St. Louis, the Hmong community in Minneapolis-St. Paul, etc.

9. The more that a migrating colony marries endogamously and brings strong cultural beliefs when it migrates to a larger society, the longer it can persist without without dissolving into that society. Consider Orthodox Jews.

10. What will emerge from the migration process is populations with differences in both genetic makeup and cultural practices. Most of these differences are random, as opposed to selective. This will make it difficult to pin down the extent to which differences in outcomes across populations have genetic causes.

Speculative thoughts on evolution

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In a podcast, Eric Weinstein and Tom Bilyeu discuss a number of things, including evolution. I want to focus on that topic, which comes up sporadically, especially at minutes 11-15, 1:19, 1:24-1:31. A related issue is learning disability, which comes at minute 25, minute 57, minute 1:03, minute 1:17, and elsewhere.

My understanding of genetics and natural selection differs from Eric’s. Keep in mind that I never took a biology course, and most of any scientific discussion of alleles and so on goes right past me. So you should trust him more than you trust me.

I want to claim that evolution is like a statistician with insufficient data to determine whether a particular gene should be passed along or not. My slogan might be “Evolution selects for traits, and genes only code for proteins*” *or do other biochemical stuff.

Think of evolution as statistician. Call this EAS. EAS does not necessarily know which traits to keep. Take left-handedness, for example. Do we need to tell a just-so story in which left-handedness has survival value at a population level? Or can the genes for left-handedness have survived because they don’t have much impact on survival either way? Or is left-handedness an emergent property of gestation, not determined entirely by genetics? Maybe left-handedness is just a random variant that does not affect survival at either an individual or a group level.

EAS can figure out when single-gene mutations that are bad, and it can work on selecting those out. But a lot of traits are not single-gene based, and traits themselves are multidimensional. Suppose that we think in terms of an input-output matrix or a production function in which genes are inputs and traits are outputs. My sense is that the relationship between the inputs and the outputs is so complex that not only can we not figure out that relationship, but evolution cannot figure it out, either. So maybe there are some “bad” genetic combinations that get selected out, but there are plenty of genetic combinations that are far from optimal that do not get selected out.

Suppose that I have a combination of genes that is far from ideal for survival. But a lot of those genes overlap with genes that are ideal for survival, so evolution cannot be sure what to keep and what to discard. Furthermore, even though my combination of genes is “bad,” it is not so bad that I am unable to survive and reproduce. So “bad” combinations of genes can persist, and you cannot say that merely because a gene has persisted it must have some survival value. Same with traits.

So I am arguing against Eric’s inclination to see everyone as having good traits, and the rest of us should work to see the gifts that others have. I think instead that some people who just seem stupid or lazy are in fact stupid or lazy, due to a combination of the genes they inherited and the random adverse events that occurred during gestation. (One of my main takeaways from Kevin Mitchell’s Innate is that lots of bad things can happen during gestation.) EAS is not going to get rid of their traits or their genes. They are entitled to human dignity, but we should not set them up for failure by claiming that they really can perform great feats with the right encouragement.

Culture also affects selection. The person you want to mate with in an agricultural society may differ from the person you wanted to mate with in a hunter-gatherer tribe, so one can imagine culture changing the gene pool over time. In the last 20 minutes or so of the podcast, Eric argues that developments such as birth control and economic forces have affected sexual preferences. If so, then obviously this is a rapid cultural change, not a biological evolutionary one.

As an aside, I think that Eric and I share the trait of being disagreeable, and that it happened to work for us. He felt a strong need to prove himself to the educators who doubted him, and that was a powerful motivator for him. Similarly, when I was forty, I was tired of people saying that I was a visionary who could not implement anything, and that motivated me when I started my business. I decided that in order to succeed I needed to network, and I did more of that than I have ever done before or since. That helped make me lucky.

But being disagreeable and wanting to prove yourself to people who doubt you is hardly a guarantee of success. If it were, then the struggling students that Eric wants to champion might do better if their teachers are doubtful rather than supportive.

Eric’s view reminds me of that of Ralph Waldo Emerson’s Law of Compensation.

Every excess causes a defect; every defect an excess. Every sweet hath its sour; every evil its good. Every faculty which is a receiver of pleasure has an equal penalty put on its abuse. It is to answer for its moderation with its life. For every grain of wit there is a grain of folly. For every thing you have missed, you have gained something else

I do not think that the genetic/gestation lottery is as fair as that. Some defects are just defects. And some excesses are just advantages.

Dalton Conley on polygenic scores

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At the AEI, Dalton Conley commented on Charles Murray’s new book. At minute 30, Conley starts to discuss polygenic scores. At around minute 35, he points out that the polygenic score for height, which seems to do much better than polygenic scores for other traits, still does a terrible job. The score, which has been based primarily on data from Europeans, under-predicts heights of Africans by 6 inches.

As you know, I am a skeptic on polygenic scores. The exercise reminds me too much of macroeconomic modeling. Economic history did not design the types of experiments that we need in order to gauge the effect of fiscal and monetary policy. What we want are lots of time periods in which every little changed other than fiscal and monetary policy. But we don’t have that. And as you increase the sample size by, say, going back in time and adding older decades to your data set, you add all sorts of new potential causal variables. Go back 70 years and fluctuations are centered in steel and automobiles. Go back 150 years and they are centered in the farm sector.

Similarly, evolution did not design the types of experiment that we need in order to gauge the effect of genes on traits. That is, it didn’t take random samples of people from different geographic locations and different cultures and assign them the same genetic variation,, so that a statistician could neatly separate the effect of genes from that of location or culture.

If I understand Conley correctly, he suggests looking at genetic variation within families. I am not sure what advantage that has that is not outweighed by the disadvantage that you reduce the likely range of genetic combinations that you can observe.

Why liberty requires state capacity

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Nick Gillespie writes,

Again and again—and in countries all over the world—declines in trust of government correlate strongly with calls for more government regulation in more parts of our lives. “Individuals in low-trust countries want more government intervention even though they know the government is corrupt,” explain the authors of a 2010 Quarterly Journal of Economics paper. That’s certainly the case in the United States, where the size, scope, and spending of government has vastly increased over exactly the same period in which trust and confidence in the government has cratered. In 2018, I talked with one of the paper’s authors, Andrei Shleifer, a Harvard economist who grew up in the Soviet Union before coming to America. Why do citizens ask a government they don’t believe in to bring order? “They want regulation,” he said. “They want a dictator who will bring back order.” [links omitted]

It seems as though “liberty with ineffectual government” is not an equilibrium.

A trend I have been noticing among libertarian organizations is that they are starting to express worries about populism, polarization, and the sorry state of political discourse.