What Now for Conservative Cosmopolitans?

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The LA Times hosts a symposium. Max Boot writes,

I want Trump to succeed as a conservative president for the good of the country. But I remain skeptical about whether this is possible for someone as unmoored and erratic as he is.

In the meantime, I can no longer support a party that doesn’t know what it stands for — and that in fact may stand for positions that I find repugnant. After a lifetime of being a Republican, I have re-registered as an independent.

I am not registered as an independent, because in Montgomery County, Maryland that would mean being disenfranchised. I am registered as a Democrat, so I can vote in the primaries, where votes have a (distant) chance of mattering.

Jonah Goldberg writes,

The Republican Party, which in many ways is at the historic height of its power, really isn’t having a crisis — but the conservative movement is. The differences between a white-nationalist, protectionist populism and the traditional conservative reverence for classical liberalism and limited government are too great to paper over indefinitely.

Suppose that you are cosmopolitan conservative. What are your choices?

a) Suddenly discover the virtues of mercantilism and strict immigration controls, sort of like a liberal economist who suddenly discovers the virtues of raising the minimum wage.

b) Try not to worry about what might become of the Republican brand, and meanwhile enjoy whatever conservative legislation gets signed and whatever sensible deregulation takes place.

c) (Continue to) distance yourself from Mr. Trump, and hope for a more cosmopolitan conservatism to make a comeback.

For me, (a) is too dishonest. Meanwhile, (c) sounds much less plausible after a Trump victory than a Trump defeat. You wind up in the same wilderness as libertarians. That leaves (b) as the only realistic alternative. Although if the cosmopolitans over-play their hand, the anti-cosmopolitans may feel like victims of a bait-and-switch.

Pete Boettke on Expertise

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He writes,

The problem with experts isn’t that individuals can have superior judgement to others, or that one can earn authority through judicious study and successful action. The problem is an institutional one, and institutional problems demand institutional solutions. In the case of the Levy/Peart and Koppl stories, the problem results from monopoly expertise that produce systemic incentives and social epistemology which is distortionary from the perspective of correct policy response.

Read the whole post. Pointer from Don Boudreaux.

The Minnesota Plan for Big Banks

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Neel Kashkari explains,

Today, banks can enjoy their explicit or implicit status as being TBTF potentially indefinitely. In contrast, the Minneapolis Plan puts a hard deadline on Treasury: Certify banks as no longer TBTF within five years, or else that bank will see dramatic increases in capital requirements. We believe the threat of these massive increases in capital will provide strong incentives for the largest banks to restructure themselves so that they are no longer systemically important.

Pointer from Mark Thoma. TBTF is, of course, too big to fail.

I endorse this approach. However, instead of the threat consisting of dramatic increases in capital requirements, I think that the threat ought to be to have the Treasury break up the banks. In effect, the government would be saying, “Either you break yourselves up, or we do the break-up for you.” I am confident that every large bank would come up with a divestment plan.

Keep in mind that the top financial institutions all grew through mergers and acquisitions. It is not as if any of them just naturally grew larger because of some unique ability to serve customers. As a result of these agglomerations, the largest institutions are too complex to be managed effectively. My guess is that breaking them into “smaller” units (I put smaller in quotes, because even after divestment these institutions would still be gigantic on a world historical scale) would not result in a large loss in total market value. It might very well result in an increase.

I should emphasize that smaller institutions are not necessarily less risky financially. But when they do fail, there are many feasible alternatives to bailouts. When a financial giant is about to fall, no Treasury Secretary can sleep at night unless there is a bailout.

Trust and Banks

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Erika Vause writes,

No institution more clearly relies on trust than the bank. That is precisely what makes banks a lightning rod for suspicion. From the time modern banking emerged, it has been the subject of intense misgivings. Many of these suspicions are with us still.

This issue gets much more attention in Specialization and Trade than it does in standard economic textbooks, but reading Vause’s essay makes me think that there is even more involved. The role of materialism is one example. That is people, including most economists, want to see value reduced to tangible properties of things, such as capital and labor input. A prerequisite for understanding finance is a willingness to acknowledge the large intangible components of value, including the components that consist of trust and financial intermediation.

Mortgage Loan Limits, Housing Demand, and Supply

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Tobias Peter writes,

In the mortgage business, the drumbeat for the government to support more leverage is a constant, occurring in both a buyer’s and a seller’s markets. But it is the latter that has potential for dangerous buildup of risk. The latest fad is raising the conforming loan limit, which, since 2006 has been set at $417,000 in most areas, but allows for a higher limit in certain high-cost counties.

Of course, one reason that there are high-cost counties is because there are higher loan limits. Remember that the general pattern of government policy is to stimulate demand and restrict supply. Where this combination of policies is most blatant, in cities like New York and San Francisco, you see prices soar. More mortgage credit, which is supposed to make housing “affordable,” has the opposite effect.

For high-cost counties, one idea might be for the Federal government to try to encourage cities to break the logjam by offering a subsidy for every new housing unit that is fully approved in terms of permits within the next six months. I am not saying that I have that concept fully worked out, and of course it is not a first-best libertarian idea.

In any case Keeping the loan limits fixed, and getting rid of the alternative for “high-cost counties,” would be steps in the right direction.

Peter Turchin on Surplus Elites

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Bloomberg view decided that this was a good time to recycle this column, first published in 2013.

Past waves of political instability, such as the civil wars of the late Roman Republic, the French Wars of Religion and the American Civil War, had many interlinking causes and circumstances unique to their age. But a common thread in the eras we studied was elite overproduction. The other two important elements were stagnating and declining living standards of the general population and increasing indebtedness of the state.

He argues that the surplus of law school graduates indicates elite overproduction. The other elements seem to be here as well. On the stagnation issue, Tyler Cowen cites research into cohorts that sounds more convincing than the usual analysis of means and medians.

Recall that I wrote about Turchin a couple of months ago.

Disperse the Federal Government

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I have a random suggestion for the new Administration: disperse the Federal government. The idea is to move agencies that do not really need to be in Washington to depressed areas of the country. This would improve the labor market in those areas.

We could move HUD to Detroit. We could move the Department of Energy to West Virginia. We could move the Department of Education to rural Mississippi.

I know that some of you do not think we need these agencies at all. But dispersing them might accomplish some of what you want. Many of the employees would be unwilling to relocate.

Jason Collins on Joseph Henrich

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Self-recommending. One excerpt:

Contrast cultural evolution with genetic natural selection. In the latter, high fidelity information is transmitted from parent to offspring in particulate form. Cultural transmission (whatever the cultural unit is) is lower-fidelity and can be in multiple directions. For genetic natural selection, selection is at the level of the gene, but the future of a gene and its vessels are typically tightly coupled within a generation. Not so with culture. As a result we shouldn’t expect to see the types of results we see in population/quantitative genetics in the cultural sphere. But can cultural evolution get even close?

Suppose that we define culture as socially communicated thought patterns and behavioral tendencies. Then cultural evolution would be the process by which the “fittest” thought patterns and behavioral tendencies survive. One can imagine that such a process could be extremely messy. There are non-linear interactions among thought patterns and behavioral tendencies. We would expect the evolutionary process to make a lot of mistakes, and indeed a little reflection would tell you that we have seen a lot of mistakes.

Jonathan Haidt on the State of Politics

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Self-recommending. Pointer from Tyler Cowen. An excerpt:

I’m a fan of the political scientist Karen Stenner, who divides the groups on the right into three: The laissez-faire conservatives or libertarians who believe in maximum freedom, including economic freedom and small governance; the Burkean conservatives, who fear chaos, disruption, and disorder — these are many of the conservative intellectuals who have largely opposed Trump.

And then there are the authoritarians, who are people who are not necessarily racist but have a strong sense of moral order, and when they perceive that things are coming apart and that there’s a decrease in moral order, they become racist — hostile to alien groups including blacks, gay people, Mexicans, etc. This is the core audience that Trump has spoken to.

That’s not to say that most people who voted for him are authoritarians, but I think this is the core group that provides the passion that got him through the primaries.

But perhaps the key idea is this:

We haven’t talked about social media, but I really believe it’s one of our biggest problems. So long as we are all immersed in a constant stream of unbelievable outrages perpetrated by the other side, I don’t see how we can ever trust each other and work together again.

It’s not just social media. The mainstream media also deal in a “constant stream of unbelievable outrages.” The double standards are glaring. Elizabeth Warren attacks Wall Street, and she is called a brave progressive. Donald Trump attacks Wall Street, and he is called anti-semitic. If the Pope were to say that capitalism needs to be softened by religious beliefs, then the media would report that he “gets it.” Steve Bannon says pretty much the same thing, and supposedly he is a white nationalist.

Related: Scott Alexander writes,

There is no evidence that Donald Trump is more racist than any past Republican candidate (or any other 70 year old white guy, for that matter). All this stuff about how he’s “the candidate of the KKK” and “the vanguard of a new white supremacist movement” is made up. It’s a catastrophic distraction from the dozens of other undeniable problems with Trump that could have convinced voters to abandon him. That it came to dominate the election cycle should be considered a horrifying indictment of our political discourse, in the same way that it would be a horrifying indictment of our political discourse if the entire Republican campaign had been based around the theory that Hillary Clinton was a secret Satanist. Yes, calling Romney a racist was crying wolf. But you are still crying wolf.

Tyler Cowen thinks that Alexander is naive. I think not. The fact that real rape happens does not make false accusations of rape helpful. And the fact that real oppression happens does not make false accusations about it helpful.

If minorities come under attack under President Trump, then I will rally to their defense. But the wave of post-election rallies strikes me as more counterproductive and divisive than healing or inclusive. If what you want is a peaceful, inclusive society, then you should model peaceful, inclusive rhetoric and avoid contrived outrage.

The Best Writing on the Presidential Transition

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is by David Halberstam, in The Best and the Brightest. Of course, it is about the Kennedy transition of 1960-1961. As the book opens, President Kennedy is meeting with Robert Lovett to discuss candidates for important offices, such as Secretary of State and Secretary of Defense.

Note that the first sentence of the book is “A cold day in December.” By today’s standards, Kennedy must have spent the month of November in “disarray.”

Halberstam explains that two party icons who might have offered independent thinking, Adlai Stevenson and Chester Bowles, were passed over for Secretary of State. One important reason is that during the nomination contest, Stevenson and Bowles had failed to live up to Kennedy’s standards of loyalty. Those standards evidently were met by Kennedy’s choice for Attorney General–his brother.

Kennedy selected for his key foreign policy team Dean Rusk, Robert McNamara, and McGeorge Bundy, all of whom were wedded to orthodox views. They also had no independent political base to detract from their loyalty to Kennedy. Their legacy is the Vietnam War.

On the Trump transition, I ran across this WaPo piece by Eliot Cohen.

The president-elect is surrounding himself with mediocrities whose chief qualification seems to be unquestioning loyalty…By all accounts, his ignorance, and that of his entourage, about the executive branch is fathomless.

Recall that before the election I wrote

On the Republican side the best and the brightest are NeverTrumpers, and I don’t see Mr. Trump reaching across those burned bridges.

Cohen is certainly not repairing those bridges (he is close to declaring them beyond repair). If his strong words are based on a single interaction he had with someone on the Trump team, then shame on him. On the other hand, if Cohen has accumulated a plural of anecdotes, then he is delivering a fair warning.

[UPDATE: Yuval Levin writes,

I respect Cohen, certainly share his concerns about Trump, and can understand his worries here. But I think his piece is unfair in some important respects, and ultimately unpersuasive

I should add that I also find the piece a bit strange, in this respect: my guess is that Cohen could reach a lot of his friends among conservative foreign policy wonks with a more private medium, such as email. What was the purpose in going public in the Post? As Levin puts it,

if Trump’s team concludes that every frank private conversation they have with anyone outside their circle will end up in the newspapers, they will be even less likely to reach beyond that circle in recruiting talent, and the country will pay for it.

Thanks to a commenter for pointing to Levin’s post, which I had somehow missed.
]

I do not know Eliot Cohen. However, it happens that his daughter was in my class when I taught AP statistics in 2001-2002. That was my first full year of high school teaching, and I was not yet competent at explaining concepts. After several months, I realized that what the students were getting from me was just a general indication of what they were supposed to know. Most of the students who were actually learning the subject were getting their instruction from Eliot Cohen’s daughter.