Peter Berkowitz on Higher Education

He writes,

As a consequence of the decline of liberal education in the United States, most American Jews will also graduate college without a basic knowledge of the virtues that underlie free societies; the institutional arrangements through which constitutional government secures liberty and equality under law; and the assumptions, operations, and achievements of free markets.

This a symposium on the future of Jews, but his comments apply to the future of well-educated Americans in general. I am afraid to say that

a) I agree with Berkowitz about the way higher education now works, or does not work.

b) I think that unless new institutions emerge that solve this problem, one has to be very pessimistic about the future.

Other contributions to the symposium that I found interesting include that of Eliot Cohen (whose brilliant daughter I taught in high school) and Eric Cohen, who writes,

in the realm of politics, Jews seem pathologically silly…

In America, Jews should be focused on promoting school vouchers, the only hope for expanding the day-school movement and unleashing a new generation of Jewish educational entrepreneurship; on fighting to defend religious liberty, the only hope for ensuring that traditional Jewish beliefs and institutions are not marginalized by a hostile secularist culture; and on electing political conservatives, the only ones who still believe that Jewish nationalism is a noble cause and that American power is necessary to preserve decency and order in the troubled Middle East.

I am quite sure that the phrase starting with “American power” will turn off libertarians, including many Jewish libertarians.

Many Margins

Don Boudreaux writes,

Statists, in contrast, seem me to suppose both that the number of margins on which private people can adjust their actions is relatively small, and that these margins are mostly detectable by outside observers.

The contrast is with what Boudreaux calls marketists, who believe that private actors can adjust along many margins, including some that are not visible to outsiders.

the large number of such margins and the invisibility of their details to everyone who is not ‘on the spot’ combine with the subjectivity of each person’s preferences to make it practically impossible for government officials to assess how well or how poorly markets are working. Too much is unseen – indeed, too much is unseeable – to render imposed collective decisions likely to improve the general welfare.

I think that it may help to consider examples. Consider a doctor, a set of patients, and an outsider, such as an insurance company or the government. The outsider has to choose a method of compensating the doctor. If the compensation is for procedures, then the margin along which the doctor will adjust is likely to be to order excessive procedures. If the compensation is per patient, then the margin of adjustment is likely to be to order insufficient procedures, in order to have time to see more patients. If the compensation is for outcomes, then the margin of adjustment is likely to select for patients who the doctor expects to have good outcomes.

A standard trope among statist economists is that patients cannot know enough to second-guess their doctors, so that there is likely to be a “market failure” with doctors exploiting the patient’s lack of knowledge. But this ignores the margin of adjustment whereby the patient can affect and be affected by the doctor’s reputation. It ignores the margin of adjustment whereby a patient can get a second opinion. It ignores the margin of adjustment whereby a patient, while not acquiring the full range of knowledge as a doctor, can read intensively about the patient’s particular condition. etc.

Alan Kirman on Hayek

He says,

he had very clever ideas—but he was extremely bigoted, he was racist. There is a wonderful interview with him that you can find on You Tube, where he says (imitating Hayek’s accent) “I am not a racist! People accuse me of being a racist. Now it’s true that some of the Indian students at the London School of Economics behave in a very nasty way, typical of Indian people…” and he carries on like this. So that’s one reason he is horrid. A second thing is that if you don’t believe he is horrid, David, I will send you his book The Road to Serfdom, which said that if there is any planning going on in the economy, it will inevitably lead you to a fascist situation. When he produced that book it had a big success, particularly in the United States, and what is more, he authorized a comic book version of it, which is absolutely dreadful. One Nobel Prize winner, [Ronald] Coase, said “you are carrying on so much against central planning, you forget that a large part of our economy is actually governed by centrally planned institutions, i.e., big firms, and these big firms are doing exactly what you say they can’t do.

From a new web site called Evonomics, to which Jason Collins contributes. It seems like an eclectic grab-bag of not-necessarily-original content. Worth a visit. For example, in a different piece, Rory Sutherland writes,

The market mechanism is loosely efficient. But the idea that efficiency is the main virtue of free markets is wrong. Competition itself is highly inefficient. In my home town, I can buy food from about eight different places; I’m sure this system could be much more ‘efficient’ if Waitrose, M&S and Lidl were forcibly merged into one huge ‘Great Grocery Hall of The People No. 1306’. I am equally confident that after a few initial years of success, the shop would be terrible.

The missing metric here is semi-random variation. Truly free markets trade efficiency for a costly process of market-tested innovation heavily reliant on dumb luck. The reason this inefficient process is necessary is that, though we pretend otherwise, no one knows anything about anything: most of the achievements of consumer capitalism were never planned; they are explicable only in retrospect, if at all.

Back to Kirman, I found this interesting:

in France when I arrived here it used to take about a day and a half to make my tax return. Now it takes around about 20 minutes, because some sensible guy realized that you could simplify this whole thing and you could put a lot of stuff already into the form which they have received. They have a lot of information from your employer and so forth. They’ve simplified it to a point where it takes me about 20 minutes a year to do my tax return.

Advantage France, apparently.

Overall, you will find the interview annoying. Lots of use of “neoliberalism” and “laissez-faire” as boo-words. Just once, I would like to see someone on the left walk through the Federal Register’s list of regulations and justify the claim that we are living in a laissez-faire economy. And I would like more people to have Sutherland’s understanding of the virtues of markets rather than the neoclassical understanding.

Lifted from the comments

Handle, who is a popular commenter here, wrote a long essay on this post.

I’ll start with my outline/interpretation of Handle’s comment, and then reproduce the comment.

1. Political movements need to coordinate. This requires simplifying messaging. (This may explain why my three-axes model seems to work. While there may be all sorts of subtle nuances to individuals’ thinking, it is easiest for progressives to signal to one another by invoking the oppressor-oppressed axis, or for conservatives to signal using the civilization-barbarism axis, or for libertarians to signal using the freedom-coercion axis.)

2. In a complex world, this sort of simplification can have adverse consequences if one group becomes dominant and tries to cram every issue into its simple framework. We are better off in a society where no one ideological framework takes over.

3. However, the progressive movement seems dominant today. The more that the progressive agenda becomes implemented, the more damage it will cause. Paradoxically, this will lead progressives to become more adamant and less tolerant of dissent.

If you combine Sanders and Warren, what you get is socialism combined with demonization and intimidation of anyone who does not support left-wing views. This is the country that the Democratic left wants to live in?

I take this as a rhetorical question to try and make mainstream elite democrats, who would not be comfortable admitting that they side with Socialist bullies, a little ashamed of not speaking up against them and of belonging to a party increasingly characterized by those types of characters and behaviors.

However, I think the accurate and unfortunate answer is ‘yes’ for a good portion of Democrats, and the reasonable, enlightened and moderate folks for whom the answer is ‘no’, still have no desire or ability to resist it.

Which raises the question as to why that should be, which I think is the most important question about social-psychological dynamics of our era, especially since it could give us some insight into how the near future will unfold.

Please allow me to speculate a little on it. Continue reading

Dani Rodrik on Trade Across Borders

He writes,

A libertarian might view much of the regulatory apparatus of the nation-state as superfluous at best and detrimental at worst. For me, the apparatus is what makes capitalism feasible and sustainable at the national level – and problematic at the global level.

Pointer from Tyler Cowen. Read Rodrik’s whole post.

Suppose that A trades voluntarily with B. Then C comes along and says that this trade harms D, so it should be prevented.

The libertarian position is that we know that A and B are better off, or they would not have done the trade in the first place. We doubt that C is such a wise, benevolent individual that we can trust his judgment that the harm to D is larger than the benefit to A and B.

Now it is true that the benefits of specialization and trade require trust, and it is possible that trust in general is higher when people believe that their government is wise and benevolent. However, I would bet that where you find people trusting their government to interfere with cross-border trade you find less overall trust and worse economic outcomes. It will take some demonstration on Rodrik’s part to convince me otherwise. It is one thing to conjure up “models” in which trade restrictions improve outcomes. I want to see examples of broad improvements in well-being arising from real-world trade restrictions.

Not surprisingly, Don Boudreaux has views on this.

Three Axes of Refugees

The crisis du jour is once again aligning people along the three-axis model. The freedom-coercion axis says that borders should be open. The oppressor-oppressed axis says that people fleeing Syria are oppressed, and anyone who would keep them out is evil. The civilization-barbarism axis says that European countries that take in large numbers of refugees are committing cultural suicide. Just one of many examples in this genre:

Few intend or desire to adapt to European society. They may want to ride Europe’s gravy train, but by and large they feel contempt for its values. Many scorn Christians and Jews. They reject freedom of speech and religion. Most openly subjugate women and think that homosexuals should perish. Yet to hear Europe’s political class talk, accepting these newcomers and many more like them constitutes a moral test for liberal and Christian principles.

The author goes on to cite Gibbon on how Rome succumbed to barbarians.

My guess is that:

1. Most of those who support allowing more migration from the Middle East live in affluent neighborhoods.

2. Wherever the migrants from the Middle East end up, it will not be in affluent neighborhoods.

Libertarians should not be so quick to align with progressives on this issue. Be as suspicious about government involvement in “solving” the crisis as you are about government’s role in enforcing borders.

Imagine the decisions about taking in Middle Easterners being made by individuals, rather than by government. That is, imagine that it were up to individual households to take them in.

Or imagine that refugee resettlement had to be funded entirely through private donations. What if the political leaders doing their moral posturing on behalf of refugees had no access to taxpayer money. Instead, suppose that they had to contribute their own money or money that they raised through private charity.

Cheaper than Seasteading

Ofer Petersburg reports,

The price: 450,000 euros. The goal: To build an Israeli colony on it. Officially, the island is known as Petäjäsaari, but already upon disembarking from the plane in the town of Kuopio, after a half hour flight from Helsinki, Finnish media report on “The Israeli Island,”

Four young Israeli entrepreneurs bought it. They seem to want to create an eco-friendly (i.e., primitive) quiet residential village. No, not really a substitute for seasteading.

Jonathan Haidt on Progressive Campus Culture

Summarizing a paper by two sociologists, he writes,

The key idea is that the new moral culture of victimhood fosters “moral dependence” and an atrophying of the ability to handle small interpersonal matters on one’s own. At the same time that it weakens individuals, it creates a society of constant and intense moral conflict as people compete for status as victims or as defenders of victims.

The paper is by Bradley Campbell and Jason Manning.

To me, this just sounds like what I call the oppressor-oppressed axis in the three-axes model.* With college campuses dominated by progressives, you would expect them to see things in terms of oppressors and oppressed. But I am not sure that the rest of American culture is going to go this way.

*Well, I’ll be darned. They cite The Three Languages of Politics. They say, though, that non-progressives are starting to use oppressor-oppressed terminology. That may be true (as when one complains that academic life is prejudiced against conservatives), but ultimately I think you have to stick to a different axis to remain a conservative or libertarian.

The authors claim that what preceded our current culture was a culture of individual dignity. Haidt quotes the authors,

Members of a dignity culture, on the other hand, would see no shame in appealing to third parties, but they would not approve of such appeals for minor and merely verbal offenses. Instead they would likely counsel either confronting the offender directly to discuss the issue, or better yet, ignoring the remarks altogether.

Ron Bailey offers a succinct description of the earlier transition from an honor culture to a dignity culture.

In honor cultures, people (men) maintained their honor by responding to insults, slights, violations of rights by self-help violence. Generally honor cultures exist where the rule of law is weak. In honor cultures, people protected themselves, their families, and property through having a reputation for swift violence. During the 19th century, most Western societies began the moral transition toward dignity cultures in which all citizens were legally endowed with equal rights. In such societies, persons, property, and rights are defended by recourse to third parties, usually courts, police, and so forth, that, if necessary, wield violence on their behalf. Dignity cultures practice tolerance and are much more peaceful than honor cultures.

The “honor culture” reminds me a bit of The Rule of the Clan and Mark Weiner’s view that it is the alternative to a strong state.

I would give the paper the Cowenian caveat: “speculative”

Chris Edwards on Government Failure

He writes,

Consider Medicare. Under Parts A and B, the government pays doctors and hospitals a set fee for
each service provided. That encourages them to deliver unnecessary services because they make more money the more services they bill. As an example, investigations have found that doctors are ordering many unneeded drug tests for seniors.

I think that someone with an opposing viewpoint would say that even though government initiatives are not executed flawlessly and that adverse side effects do occur, the intentions of the programs are good and the positive outcomes are sufficient to outweigh the problems. As Edwards puts it,

It is true, however, that just because a federal policy creates unintended collateral damage does not automatically mean that the overall policy is a failure. Some federal interventions do generate higher benefits than costs. The important thing is that policymakers look beyond the intended effects of their programs and consider how people and businesses may respond in negative ways over the longer term.

As I see it, those of us who are concerned about government failure have to get over the following hurdles with those who disagree.

1. Lead them to think beyond the intention heuristic. “Support for education” sounds good, but that does not automatically justify every government program intended to improve education.

2. Scrutinize the actual design and execution of government programs, rather than assume that both are flawless.

3. Track the cost of government programs. This includes the direct cost paid by taxes, but it also includes the indirect cost of market distortions, including (as Edwards points out) the deadweight loss from taxation.

4. Take into account the organizational dynamics of government programs. That is, agencies and programs tend to persist well beyond the point where they have served a useful purpose.

5. Take into account the public choice aspect of government programs.

Even so, I still do not think that we will get very far. I think that the supporters of Obamacare are aware to some extent of the way that each of these issues has affected the program (perhaps not so much with issue 3). And yet they are very enthusiastic about Obamacare, and they insist that it is working.

A Philosophy of Markets

from Jason Brennan:

Peter Jaworski and I have a book on commodification, Markets without Limits, coming out next month. Our thesis is that any service or good that you may give away for free, you may sell for money.

Pointer from Bryan Caplan.

If it’s worth doing, it’s worth doing for a profit. That sounds like what I said about Planned Parenthood controversy. If harvesting body parts from aborted babies is ok, then they should be allowed to profit from it. But if it’s not ok, then doing it for free would not make it better.