Social media and content regulation

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John Samples writes,

American law and culture strongly circumscribe government power to regulate speech on the internet and elsewhere. Regulations of social media companies might either indirectly restrict individual speech or directly limit a right to curate an internet platform. The First Amendment offers strong protections against such restrictions. Congress has offered additional protections to tech companies by freeing them from most intermediary liability for speech that appears on their platforms. The U.S. Supreme Court has decided that private companies in general are not bound by the First Amendment.

However, some activists support new efforts by the government to regulate social media. Although some platforms are large and dominant, their market power can disintegrate, and alternatives are available for speakers excluded from a platform. The history of broadcast regulation shows that government regulation tends to support rather than mitigate monopolies.

I think that this gets it mostly right.

My worry is that American culture no longer supports free speech. We can make exceptions for speech that causes direct harm, such as shouting “Fire!” in a crowded theater where there is no fire. But hurting someone’s feelings should not count as direct harm. Racist remarks or Holocaust denial may be uncouth, but in a culture of free speech they should be permitted.

Zoning and liberty

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John Cochrane writes,

I received a few comments from fellow libertarians last time I wrote about these issues. Shouldn’t communities have the right to pass whatever restrictions they want? If they want to preserve a $5 million per house replica of 1950s suburbia, and wall out the unwashed masses, hypocrisy aside, why should the state stop them? I counter, this is not libertarianism, the defense of private rights, this is untrammeled majoritarianism, by which your neighbors via the city strip you of your right to sell your house to the highest bidder, do what you want with it, and strip the ambitious kid from Fresno who wants to move here of his right to be supplied by a competitive marketplace.

But there are externalities in neighborhoods. If my neighbor’s house gets sold to someone who puts up a ten-story apartment building, my porch will no longer get any sun. I may have to put up a fence to keep my lawn from being trampled. The increased traffic on our street could mean that every time I want to pull out of my driveway I have to wait ten minutes for someone to let me in. The noise level may be much higher.

In theory, you can handle all of these issues with well-specified property rights and Coasian bargaining. In reality, this is a difficult problem.

I am not saying that government solves the problem well. I am not saying that existing zoning practices make sense. But a simple rule that says that you are allowed to sell your property to the highest bidder, with no restrictions, probably does not make sense either.

Hiring miscalculations

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Peter Capelli writes,

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.

Three opinions about monetary policy

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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.

Road to Sociology watch

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Dylan Matthews writes that tomorrow belongs to Raj Chetty.

Chetty has made his name as an empirical economist, working with a small army of colleagues and research assistants to try to get real-world findings with relevance to major political questions. And he’s focused on the roots and consequences of economic and racial inequality. He used huge amounts of IRS tax data to map inequality of opportunity in the US down to the neighborhood, and to show that black boys in particular enjoy less upward mobility than white boys.

Ec 1152 is an introduction to that kind of economics.

Pointer from Tyler Cowen.

I have been saying for quite a while that economics is on the road to sociology. I first made that case two years ago.

Economists will need to see economic decisions as embedded in cultural circumstances. In order to understand economic phenomena, we will have to pay attention to the role of beliefs and social norms.

. . .There is a very real possibility that over the next 20 years academic economics will congeal into a discipline, like sociology today, which is definitively shaped by an ideologically driven point of view.

I have mixed feelings about seeing the new approach to economic education. The pluses, which were alluded to in my essay, include:

1. Recognition of the importance of cultural factors.

2. Getting away from thinking in terms of optimization problems.

3. In empirical work, recognizing the problems created by what Edward Leamer called specification searches.

The minuses include:

1. Traditional economics emphasizes that outcomes do not come from intentions. The supply-and-demand model is not one in which one individual or group controls the outcome. Students are thought to think in systemic terms, rather than personal terms. That is useful (a) because it provides valuable insights into the economy and (b) because it is good for people to practice thinking in abstract, systemic terms rather than only in concrete terms. I think that not giving students the systemic perspective is a loss.

2. The research can be, and often is, oriented toward filling in the oppressor-oppressed framework. That is the ideological trap that concerned me in my essay. We also need to be able to step outside of the oppressor-oppressed framework and examine it critically, and I fear that this examination will not take place.

3. The newer research methods are not without their own weaknesses. They are subject to replication failures and narrow applicability. Data can be of questionable validity. Interpretations of results can be misleading.

I think that economic education can arrive at something better than neoclassical economics. But the road to sociology may not be the way to get there.

Race and education

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This is the topic of a wide-ranging discussion between Michele Kerr and Glenn Loury. They get into the highly-charged subject of racial disparities in school suspensions, and the Obama Administration’s presumption that such disparities reflected racism, which pressured schools to reduce suspensions. Here is a recent article blaming the Obama edicts for an increase in attacks on teachers.

I actually was interested in Kerr’s description of T’s, K’s, and S’s. That is, a teacher can be most focused on Teaching, on the Kids, or on the Subject. As I interpret this, a T is focused on “moving the needle” with real signs of progress for the students. K’s focus on kids and making them comfortable (think of a kindergarten teacher). An S would focus on the subject matter (think of a college professor).

I was trying to relate to this to my own experience teaching high school. I had a bit of each type of behavior.

K behaviors: On the first day, I started out with an icebreaker. Also, I told students that my goals were long term. I would value an email from a student five years later.

T behaviors: I always hoped that the AP scores would be good.

S behaviors: I had very strong views of what I wanted to get across in my statistics and economics classes.

I am not sure whether this is K or T, but I also adopted the philosophy of my favorite college professor, Bernie Saffran, which was never to let the material get in the way. If a student came in with an interesting question, even if it was totally off topic or even off subject, if I thought that I could provide an interesting take on the topic, I would go with it.

Overall, I think I was more S than K and more K than T.

On the Social Justice movement

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BJ Campbell writes,

Where Social Justice fails as a religion, is in its efficacy. Every religion that’s survived the historical gauntlet of religious Darwinism has done so by promulgating key features which make a society stable. This stability usually includes an order or hierarchy, but not always, as in the case of Buddhism or Wicca. The Golden Rule is a must have, for the in-group. It’s not necessary for the out-group (Burn the Heretic! Kill the Mutant! Purge the Unclean!) but Golden Rule principles within the in-group are not negotiable if a religion is to survive. Golden Rule indoctrination guides people towards good behavior among their peers without the need for a burdensome behavior enforcement apparatus. Social Justice fails on this, because of what we might call the Totem Pole of Oppression.

What he goes on to suggest is that regardless of whether or not you believe in the Social Justice religion, you can be labeled as belonging to the oppressor class. Thus, the religion will alienate some of its believers, and that is not stable.

I don’t find that prediction compelling. Plenty of straight white males want to be perceived as Social Justice adherents, and they can do so.

Elsewhere, Uri Harris writes that there are reasonable adherents of Social Justice

who wouldn’t dream of demanding that Jordan Peterson’s books be banned or of declaring math a social construct. However, they devote a lot of their attention to pointing out racial or gender disparities, arguing that social norms confer privileges on white people, or suggesting that giving a platform to speakers lends credibility to their views in the eyes of impressionable viewers. One can agree or disagree with any of these views, but there’s nothing necessarily authoritarian, bigoted, or anti-intellectual about them. They’re factual claims, even if they are sometimes presented in emotionally or morally charged language.

His claim is that Social Justice is not inherently authoritarian.

Suppose one makes a factual claim that disparities in race and gender outcomes are mostly due to differences in the distribution of abilities and preferences. The authoritarian will treat such a claim as blasphemy. The reasonable person will respond with empirical counter-claims. If Social Justice were predominantly reasonable, then the IDW would not exist.

A theory of the glass ceiling

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My latest essay.

the corporate CEO, operating with a limited information set that arrives indirectly, must use more abstract thinking. We may think of the CEO as trying to navigate in a confusing forest using only little scraps of a map. The CEO operates with a theory of the business and fits those little map scraps into the theory.

. . .What Baron-Cohen calls systemising may correspond to a propensity for abstract thinking in business. In that case, that could explain the predominance of males as CEOs.

Read the whole essay before commenting.

A green bad deal

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Timothy Taylor finds a paper by Michael Greenstone and Ishan Nath on the cost of renewable energy mandates for utilities.

this study finds that the cost of reducing carbon emissions through an RPS policy is more than $130 per ton of carbon abated and as much as $460 per ton of carbon abated—significantly higher than conventional estimates of the social and economic costs of carbon emissions. For example, the central estimate of the Social Cost of Carbon (SCC) tallied by the Obama Administration is approximately $50 per ton in today’s dollars.

It is plausible to me that when all of the general-equilibrium repercussions are in, the increase in cost leads to an overall increase in carbon emissions. For example, suppose that due to higher electricity costs in your home state in the U.S., you end up moving your plant to a place where the electricity comes from coal.

Null hypothesis watch

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Sarah Cohodes and co-authors write,

We study a policy reform that allowed effective charter schools in Boston, Massachusetts to replicate their school models at new locations. Estimates based on randomized admission lotteries show that replication charter schools generate large achievement gains on par with those produced by their parent campuses. The average effectiveness of Boston’s charter middle school sector increased after the reform despite a doubling of charter market share. An exploration of mechanisms shows that Boston charter schools reduce the returns to teacher experience and compress the distribution of teacher effectiveness, suggesting the highly standardized practices in place at charter schools may facilitate replicability.

One of the main pillars of the null hypothesis is that education interventions that succeed as experiments often fail to replicate. If this study is valid (if it replicates, so to speak) then it helps knock down one of those pillars. Since it favors charter schools, I am actually rooting against the null hypothesis in this case. But we’ll see.