The Basis of Moral Outrage

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Zachary K. Rothschild and Lucas A. Keefer write,

we test the counter-intuitive possibility that moral outrage at third-party transgressions is sometimes a means of reducing guilt over one’s own moral failings and restoring a moral identity.

Pointer from Elizabeth Nolan Brown, who nicely summarizes the studies. Brown writes,

Ultimately, the results of Rothschild and Keefer’s five studies were “consistent with recent research showing that outgroup-directed moral outrage can be elicited in response to perceived threats to the in-group’s moral status,”

In other words, you lash out at Trump in part because of your own status anxiety.

My thoughts:

1. Be cautious. Remember the low replication rate of these sorts of studies.

2. Counter-intuitive? Not so much. I think that many people suspect that expressing moral outrage is a cheap way of trying to raise one’s status.

3. When I was younger, psychological reductionism (e.g., Freud) was quite popular. There was widespread suspicion that the “true believer,” in Eric Hoffer’s terminology, was wrestling with personal demons. Back in those days, if you were to suggest that, say, a politician who spoke up for family values was probably plagued by guilt about his own sexuality, everyone in the room would have nodded their heads.

The Making of a Quagmire

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Concerning the new official Republican House health care proposal, Michael Cannon writes,

The leadership bill therefore creates the potential, if not the certainty, of a series of crises that Congress will need address, and that will crowd out other GOP priorities, in late 2017 before the 2018 plan year begins, and again leading up to the 2018 elections. If Congress gets health reform wrong on its first try, health reform could consume most of President Trump’s first term. Pressure from Democrats, the media, and constituents could prevent Republicans from moving on to tax reform, infrastructure spending, or even Supreme Court nominees.

Avik Roy is more favorably disposed to the proposal, but with significant misgivings. I tend to agree with his “cons” and disagree with his “pros.”

The WaPo story on the proposal says

four key Republican senators, all from states that opted to expand Medicaid under the ACA, said they would oppose any new plan that would leave millions of Americans uninsured.

It would take a lot of nerve to say: Our plan is to hold households responsible for obtaining health insurance. Some households will “lose” coverage that was heavily subsidized by the government. But if you cannot stand up and say that, then you cannot change the direction of health care policy away from socialism.

As I wrote recently, the Overton Window has moved, so that responsibility for health insurance is strictly with the Federal government, not with the household. Along similar lines, Philip Klein writes,

Barring radical changes, Republicans will not be passing a bill that ushers in a new era of market-based healthcare. In reality, the GOP will either be passing legislation that rests on the same philosophical premise as Obamacare, or will pass nothing at all, and thus keep Obamacare itself in place.

After digesting these and other analyses, I am inclined to think that Obamacare will not be repealed and replaced during the Trump Administration. Instead, it will be repealed and replaced by the Democrats the next time they are in power. And the replacement will not look very market-friendly.

Asymmetric Intolerance

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In the United States, the average number of automobile accidents per year is 5.25 million (source). The average number of fatalities per year is 30,000 to 35,000. (source).

How many accidents are we willing to tolerate involving self-driving cars before we stop trying to restrict their usage? Pretty much zero, right?

Let’s call this “asymmetric intolerance.” We accept a phenomenon that is highly flawed (human-driven cars) while we refuse to tolerate a phenomenon if it has any flaws at all (self-driven cars).

If asymmetric intolerance had been a policy principle 125 years ago, might we not still be transporting ourselves in horse and buggy?

Some further thoughts:

1. Maybe this is in line with the issue of resistance to change that is a theme of Tyler Cowen’s latest book.

2. Is an obsession with terrorism an example of asymmetric intolerance?

3. I have a relative in California who buys “organic toaster pastries” (non-GMO, of course). In other words, Pop-Tarts that have been blessed as all natural. Isn’t that an example of asymmetric intolerance?

4. Where else do we observe dramatic examples of asymmetric intolerance? Or is this the only example that comes to mind?

Japan and the Consensual Hallucination Hypothesis

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Kevin Drum writes,

Japan’s deflation has persisted even in the face of massive BOJ efforts that, according to conventional economics, should have restored normal levels of inflation.

Pointer from Mark Thoma. BOJ = Bank of Japan, their central bank.

We have all been taught that money and inflation are tightly linked. Those of you have read Specialization and Trade know that one of my heresies is to deny that this is true under normal circumstances (large government deficits that can only be financed by printing money are the exception; to get hyperinflation, you need the fiscal driver of money creation). I say that money and “the overall price level” are a consensual hallucination. They are embedded in cultural norms and expectations.

The consensual hallucination hypothesis (which was held by the late Fischer Black) is consistent with the Japanese experience.

My Review of Tyler Cowen’s Complacent Class

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I conclude,

there is an important category of people who are dissatisfied with the status quo and at the same time are averse to risk and to change. It is an interesting pathology, but I think it is misleading to term it complacency.

A few more thoughts.

1. There is a lot to the book. You should read it. Even though it is getting a lot of coverage, don’t just assume that you can pick up its contents by osmosis. But prepare to disagree with him at times.

2. I wrote the review in a hurry. I can imagine re-reading the book and writing a different review.

3. I am still not happy with Tyler’s use of the term “complacency.” I can think of three senses of the word that are floating around in the book.

a. Complacency is “a general sense of satisfaction with the status quo.”

b. Complacency is a desire to avoid risk and resist change.

c. Complacency is a belief that the current social order is stable, that we will not suffer from a sharp increase in violence or a major breakdown of norms and institutions that maintain order.

Tyler explicitly writes (a), but I don’t think he really means it. The first three-quarters of the book are about (b), amassing evidence that modern Americans suffer from (b) much more than our forefathers. The last quarter of the book is about (c) and why Tyler believes it is wrong. He wants to claim that a big reason that (c) is wrong is that (b) has become so prevalent. Think of a Minsky model of social change: stability leads to instability.

The Case for Libertarian Despair

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John J. Dilulio, Jr. writes,

State and local governments and their governors associations, mayors associations, state legislatures, corrections commissioners, and more; big and small business lobbies; and, yes, nonprofit sector lawyer-lobbyists—all three federal proxies exert nonstop pressure in favor of federal policies that pay them to administer federal business, with as few strings attached as possible, and with lots of paperwork but little real accountability for performance and results.

Pointer from Tyler Cowen. DiLulio coins the phrase “proxy-administered state” to describe how government works today. It is hard to say which is more despair-inducing in the essay–the facts or the analysis.

I have said before that there are three forms of political economy:

1. Market economy: the private sector sets goals and owns the means of production

2. Socialist: the government sets goals and owns the means of production. Think of the public school system.

3. Corporatist (or Cronyist): the government sets goals and the private sector owns the means of production. Think of Freddie Mac and Fannie Mae back when they were owned by shareholders, or think of Obamacare. These are examples of the proxy-administered state.

Speaking of Obamacare, it seems increasingly clear that it has moved the Overton Window on health care policy. You are not allowed to substitute individual responsibility for Obamacare. Instead, you must come up with a “better” system. The ground rules for any new health care system now state that responsibility for your ability to obtain health insurance ultimately rests with the Federal government.

Labor’s “share” in a Garett Jones World

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Timothy Taylor looks at an article on the secular decline in labor’s share of income, and he concludes

These explanations all have some plausibility, but it isn’t clear to me that, taken together, they adequately explain the fall of more than four percentage points in labor share in the decade or so from the early 2000s (roughly 61%) to the years right after the Great Recession (just above 56%). The labor share does show some sign of rebounding in the last couple of year, and it will be interesting to see whether that turns out to be true bounce-back or a damp squib.

“Labor’s share” is one of those macro-Marxist concepts that I distrust. It ignores the heterogeneity of labor. Some workers have few skills. Others have highly marketable skills. It ignores heterogeneity of capital. But perhaps even more important, it ignores the fact that most of us are Garett Jones workers, who do not produce output but instead produce organizational capital.

As an example of a firm with a high labor “share,” consider a 1990s dotcom, which has lots of dreams but little revenue. For many of the dotcom darlings, labor’s share was way over 100 percent, and hence they went bust. Those that survived are now living off the organizational capital that they developed back in the day, which could make for a low labor share today.

In some (many?) firms, the labor share is arbitrary. For example, my guess is that as of now the “labor share” at Google is low, because the organizational capital that it built up during its first decade of existence is very valuable relative to the necessary labor input to keep it running. But Google has a lot of leeway. The more it invests today in organizational capital (research into driverless cars and such), the higher will be its (current) labor’s share. The more it just sticks to its existing business and trims workers in the research areas, the lower will be its labor’s share.

A Provocative Op-Ed

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In the WaPo.

Last spring, when I heard Donald Trump say that Caitlyn Jenner could use whatever bathroom she wanted at Trump Tower, I breathed a sigh of relief. There weren’t many things Trump and I agreed on, but this was one. Surely, I hoped, if he became president, he would extend the same courtesy to my 7-year-old daughter, Henry.

…The first time we knew that Henry was different, she was 2. When she found her cousin’s Barbie doll, she lit up like a Christmas tree. “The hair, Mama,” she cooed. “Look at her looong hair!” Henry continued to show us, in every way she could, that she wanted to live as a girl. This was new territory. What do you say when your 3-year-old boy asks to be Rapunzel for Halloween? In our house, you say yes.

If you go to a family beach, you will see girls aged 8-10 practicing cartwheels, handstands, backbends, and the like. Well, I loved to do that when I was 9. If trans-gender had been such a hip thing among my parents back then, that would have been my label. I don’t think it turned out to be the correct one.

The op-ed says,

Bathrooms are a big deal for Henry, a point of clear anxiety and worry.

Bathrooms were a huge worry for me at age 7, also. I was traumatized by having to sit on a toilet in a school bathroom in a stall that had no front door. But I’m over it. My guess is that many non-trans children at that age have trouble handling nudity and proximity to others when performing bodily functions.

The author describes the support she receives from local authorities. President Trump did not take away any of that support. He just decided that the Federal government does not belong in the bathroom.

Using your 7-year-old child as a political mascot does not win my admiration.

Provocative Sentences

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From Tucker Carlson, profiled by McKay Coppins.

“Look, it’s really simple,” Carlson says. “The SAT 50 years ago pulled a lot of smart people out of every little town in America and funneled them into a small number of elite institutions, where they married each other, had kids, and moved to an even smaller number of elite neighborhoods. We created the most effective meritocracy ever.”

“But the problem with the meritocracy,” he continues, is that it “leeches all the empathy out of your society … The second you think that all your good fortune is a product of your virtue, you become highly judgmental, lacking empathy, totally without self-awareness, arrogant, stupid—I mean all the stuff that our ruling class is.”

Of course, assortive mating is only one of the four forces. But he is talking about it as a political force, not as an economic force.

My concern is that we are losing the ability to discuss ideas with people who disagree. Instead, we keep getting better and better at closing the minds of people on our side.

Positivism, Progressivism, and Economics

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Steven Hayward writes,

for Progressive politics, the positivist distinction between facts and values, which corresponds to the distinction between administrative questions and political questions. . .preserves for the rulers alone freedom of choice and action. The “scientific” elites of the administrative state

I am taking this quote quite out of context. Please read the entire essay.

Back when I took Introduction to Philosophy, the professor taught positivism as an approach to epistemology, which deals with the question of how we know what is true. The positivist answer is that there is logical knowledge and empirical truths. Logical truths are embedded in the definitions of terms. Empirical knowledge comes from observation. Statements that are neither logical nor empirical are dogma.

The term dogma is meant to apply to statements such as “Jesus is the son of God,” or “Sodomy is wrong.”

Nowadays, it seems that what positivism means to Hayward (and others, including McCloskey) is the doctrine that we can and should separate fact from opinion, knowledge from preference, the news page from the editorial page. It links to progressivism in that the progressive imagines an ideal political system as one in which the voting public expresses preferences and then the experts with the knowledge design and execute policies to satisfy those preferences. It links to orthodox American economics, because those economists have always thought of themselves as having the knowledge needed in order to play the expert role.

Note that the progressive model cannot handle a situation in which the public expresses a preference not to be governed by experts. Such a preference does not compute.

There are some heterodox economists on the left and the right who deny that the facts/values distinction can be maintained. I think they have a point.

Let’s take as an example the effect of the minimum wage on employment. In principle, the question of how the minimum wage affects employment falls on the “facts” side of the facts/values divide. In practice, I think it is fair to say that the easiest way to predict where an economist will come out on the question of how the minimum wage affects employment is to find out where the economist stands on some other issue that divides left and right. So an economist who supports a higher military budget is likely to predict a larger adverse effect of an increase in the minimum wage on employment than economist who supports a smaller military budget. That is because the military spending issue and minimum wage policy “affiliate” with one another, even though they have essentially nothing to do with each other.

Still, I do not have a problem with the facts/values distinction in principle. I do not mind if economists try to keep facts and values separate, however much this tends to fail in practice. What I object to the most is the claim that economists have expertise that enables them to operate the administrative state as it exists today.