I reviewed Sunstein’s book, Conformity.
It seems to me that Americans are becoming increasingly uncomfortable with viewpoints that diverge from their own. Sunstein’s book shows why such a trend is unhealthy. I wish that we knew more about how to reverse the trend.
Why do we demonize those with whom we disagree? The basic reason is that it helps to protect us from having to question or doubt our own beliefs. If we see others as decent human beings, then we have to consider how they arrived at a point of view that differs from our own, and even consider the possibility that they could be at least partly correct. But instead, if we regard them as driven by evil motives, then we feel no need to give their actual arguments any sort of fair hearing. Demonizing them saves us the hard work of listening and the emotional challenge of self-doubt.
It’s a short essay offering some of the psychological insights included in The Three Languages of Politics.
My review of George Will’s The Conservative Sensibility.
For Will, the apotheosis of the first phase of liberalism was the American Founding, with a capital F. Madison and the other Founders took at as given that human nature made us sufficiently equal to deserve identical treatment under the law, sufficiently different to benefit from liberty and autonomy, sufficiently bellicose to require a government that could resolve disputes peacefully, and sufficiently factional that preventing one coalition from dominating the rest required a system of checks and balances.
A UBI, moreover, would create more of a welfare culture than we have now. Imagine four young men meeting in college and figuring out that when they reach age 21, they can each get $10,000 a year from the federal government forever. There are a lot of places they could go in America and rent a three- or four-bedroom house for $1,500 a month ($18,000 a year), leaving $22,000 a year to spend on food, cable, and various amenities. Would they want to stay out of the labor force forever? Probably most of them would not, but the UBI could easily postpone their becoming responsible adults for five years or more.
I think that this is probably wrong. If it is wrong, it is demagogic.
Henderson writes as if our current welfare programs do not cover everyone. In fact, those four young men could be eligible for Medicaid, food stamps, housing vouchers, and so on. They could stay out of the labor force just about as easily as they could under a UBI.
I really think that my essay on the basic trade-offs of the UBI is the most objective, least demagogic piece you can read about the idea. That essay points out that a UBI has two parameters with which to try to manipulate three objectives. The parameters are the amount of the UBI and the tax rate on earned income. The objectives are offering a generous benefit, keeping the disincentive to work low, and keeping the budget cost low.
Henderson is correct in pointing out that giving every adult about $10,000 a year would strain the budget. In my essay, I propose giving an entire family of four $10,000, which is half of what they would receive under many current proposals. Most people would not want to live on the UBI that I would offer. To the extent that they were able to work, I believe that they would do so.
The problem with my proposal is that it does not provide for a family that is unable to work and/or has special needs, such as a child with an expensive medical condition. I suggest that those special needs be met by charities and local governments.
Who receives high status in society? Cultures can vary. We may assign high status to the brave warrior, to the gifted athlete, to the talented artist, to the holy priest, to the martyr, to the politician, to the craftsman, or to the intellectual. Because relative status is a zero-sum game, the more status points we assign to merchants, bankers, and entrepreneurs, the less status points are available for other categories.
There is much more. This essay was stimulated by one of the questions Erik Torenberg sent me to prepare for our podcast.
This post is inspired by a lot of recent reading, too much to reference here. Some of it pertains to Sohrab Ahmari David French. But most of it pertains to Scott Alexander’s recent posts inspired by Joseph Henrich’s work. (Note that I also praised the Henrich book myself.)
In the latter post, Scott writes,
We are the heirs to a five-hundred-year-old tradition of questioning traditions and demanding rational justifications for things. Armed with this tradition, western civilization has conquered the world and landed on the moon. If there were ever any tradition that has received cultural evolution’s stamp of approval, it would be this one.
Sometimes, there is a conflict between the approach that you arrive at using your reasoning of the moment and the existing tradition. For example, Bryan Caplan argues that a reasoning libertarian should oppose immigration restrictions.
Under such circumstances, which should prevail: your momentary reason or tradition?
Conservatives argue for paying considerable respect to tradition. Your individual, momentary reason is not sufficient to overwhelm generations of experience. Henrich’s anthropology supports that (although Henrich does not define himself as a conservative). Always going with momentary reason would mean depriving ourselves of cultural intelligence.
But obviously, if you always go with tradition, you never evolve in a better direction. So you want some experimentation.
The Whig history is that our current society reflects retention of successful experiments. The dour conservative point of view is that it has all been downhill since. . .the radical Social Justice turn of the last five years. . .or the 1960s. . .or Rousseau. . .or John Locke. Take your pick.
A few hundred years ago, a lot of cultural transmission depended on the elderly. Old people knew more than young people, so it was hard for young people to question tradition.
Today, old people don’t know how to use smart phones as well as young people do. So why should young people think old people aren’t equally antiquated on issues of race relations, gender, or free speech?
I wish that old people and traditions had somewhat higher status than they do with young progressives, and I wish that momentary reason had somewhat lower status.
UPDATE: After I wrote this post but before it was scheduled to appear, Scott Alexander elaborated further. I will have another post on this tomorrow soon.
Range, by David Epstein. You can listen to a Russ Roberts podcast with him here. The book argues for the virtues of cultivating talents in multiple areas.
I find the main argument convincing. One of my rules for financial life is
When you have little left to learn on your job, it is time to move on.
2. But I don’t buy everything in the book. He has a chapter on problems that stumped specialized experts but were solved by outsiders. OK, but what makes those stories fun is that more often the reverse is true. Specialized experts solve problems that would stump outsiders. Don’t get carried way with this outsider problem-solving stuff.
3. He points to research suggesting that teachers improve when they change schools. Of course, any research that claims to measure teacher effectiveness and show significant differences is suspect. The Null Hypothesis does not concede defeat so easily.
4. But I can readily imagine that changing organizations would improve anyone’s performance. Your supervisors and colleagues provide you with cultural learning. When you go to a new organization, you get exposure to another set of cultural practices, and you can pick the best from both. Unless you are rigidly attached to the first organization’s approach, or the second organization doesn’t let you port over any good ideas from your first organization, you should get better.
5. Look at the guests that Tyler Cowen interviews for his conversations with Tyler. They are almost always generalists. A top-tier economist (or top-tier anything) with little or no experience or interests outside of his or her specialty would be really dull to interview.
6. One can argue that you need multiple cultural influences to be an interesting person and, in the modern world, to be an effective person. The small-town resident who has never traveled more than 50 miles, the professor who has never functioned outside of academia, the professional who has never had an adult friend or colleague who lacked a college degree–all of these people are stunted in their cultural growth.
Eric Helland and Alex Tabarrok sort out the various proposed explanations. For example, concerning (lower) education, they write,
no metric of school quality shows any improvement that would appear to justify a cost increase of more than five times. Improvements in quality do not appear to explain increases in cost.
. . . Contrary to the usual story, the number of teachers per 100 students has increased since 1950. . . The number of other staff per 100 students also has increased, but at least since 1980 the increase has, if anything, been at a slower rate than the increase in teachers per student.
The rising cost of labor inputs is the best explanation for the rising cost of education
They focus on the Baumol Effect, about which I wrote
for everything that gets cheaper, something else has to get relatively more expensive. If efficiency shoots up in one sector, then in relative terms it has to decline elsewhere.
The recruiting and hiring function has been eviscerated. Many U.S. companies—about 40%, according to research by Korn Ferry—have outsourced much if not all of the hiring process to “recruitment process outsourcers,” which in turn often use subcontractors, typically in India and the Philippines. The subcontractors scour LinkedIn and social media to find potential candidates. They sometimes contact them directly to see whether they can be persuaded to apply for a position and negotiate the salary they’re willing to accept. . .
The big problem with all these new practices is that we don’t know whether they actually produce satisfactory hires. Only about a third of U.S. companies report that they monitor whether their hiring practices lead to good employees; few of them do so carefully, and only a minority even track cost per hire and time to hire.
Pointer from Timothy Taylor.
The article suggests that modern firms are leaving $20 bills on the sidewalk, in that there are better hiring practices that could easily be adopted. Perhaps.
But I want to emphasize that this reinforces a key point that I make in The Great Miscalculator: In business, it is very difficult to measure the performance of employees.
The measurement challenge is bound to create discrepancies between pay and marginal product. And it is bound to make the hiring process quite error-prone.
1. Tyler Cowen cites a paper by three economists which argues that the lower bound for the interest rate does not matter. Cowen comments, “this evidence is the (current) final word, and I hope it will be heeded as such.”
2. Mark Thoma links to an article by Blanchard and Summers saying that the most important new development in macroeconomics is the significance of the lower bound for the interest rate.
3. My own view is that the lower bound is not significant, but that is because the impact of monetary policy is over-rated even above the lower bound. As an aside, I disapprove when macroeconomists talk of “the” interest rate, as if there were only one. Or, equivalently, when they use the term “interest rates” to imply that if you know one, you know them all.
My view is that the central bank is just another bank. It can no more hit an inflation target than Citibank can. If the government wants to really print money sufficiently to get people to notice, it has to use something like Modern Ponzi Theory.
I know that mine is an outlier view. Everyone else pays great heed to the Fed. If I am correct, then some day what everyone else claims to “know” about the importance of the central bank will eventually be understood to belong in the same category as astrology or 18th-century medical theory.