Two Questions about Convergence

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1. If culture socially communicated thought patterns and behavioral tendencies are what determine economic performance, why do we not see more convergence?

2. Assuming that genetic engineering of humans becomes feasible, what traits will parents select for, and will this lead to convergence in the human race?

Tyler Cowen posed the first question to Joseph Henrich in his conversation with Tyler (you may need to Google for a link, and it may not be up yet). Tyler pointed out that even within the United States, we are seeing divergence in economic outcomes across geographic areas.

Later, at a private dinner, Tyler posed the second question.

It is possible to give similar answers to both questions. Two factors are involved.

a) parents want children to be like themselves, not simply copies of people that the parents admire.

b) we do not understand the processes well enough to reliably get the outcomes that we want. There is too much causal density.

Because of (a), we will never get complete convergence. Also, the fact that parents want children to be like themselves slows down the process of cultural convergence of thought patterns and behavioral tendencies across countries. Even if a family moves from a poor country to the United States, parents will want their children to retain a lot of the “old ways.” If it takes a few generations for people to assimilate thought patterns and behavioral tendencies when they are immersed in them, imagine how much longer it takes for people to assimilate distant thought patterns and behavioral tendencies when their immediate surroundings differ.

Because of (b), even if we knew that we wanted a particular outcome (a highly-growth economy, a high-IQ child), we do not know which changes to make to achieve that outcome. We do not know which genes to edit in order to produce high IQ. We do not know which social institutions will promote the thought patterns and behavioral tendencies of Iraqis in order to transform that country into a Jeffersonian democracy.

Null Hypothesis Watch

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1. Pro:
Timothy Taylor writes,

Why do the academic effects of early childhood education so often fade out? Is it lack of lack of follow-up in schools? The importance of peer effects as student who received pre-K assistance are blended in later grades with those who do not? Maybe the pre-K programs themselves vary in some way?

Read the whole post. Not all of the evidence is consistent with the null hypothesis, but it is very difficult to reject.

2. Con: David Leonhardt writes,

“The gains to children in Massachusetts charters are enormous. They are larger than any I have seen in my career,” [education researcher Susan] Dynarski wrote. “To me, it is immoral to deny children a better education because charters don’t meet some voters’ ideal of what a public school should be. Children don’t live in the long term. They need us to deliver now.”

Pointer from Tyler Cowen. For this research to be convincing to me, it would have to show that there is not much fadeout and also that the interventions are scalable.

Reassurance from The New Yorker

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William Finnegan [link fixed] tells readers

Understanding Venezuela’s failing state as just another failure of socialism, and of statism generally, is ahistorical. Venezuela before Chávez was often extravagantly statist. Corruption has been a major problem in every era. Even dire food shortages are not new. These things happened under capitalism, too, as did intense political repression. Today’s crisis is for most people the worst in memory, but it is not all about socialism. The predatory state, the extreme insecurity, the sheer weakness of the rule of law—these are problems more profound, at this stage, than a traditional left-right analysis can clarify, let alone begin to solve.

The actual reporting in the story makes clear how bad things have become. If he would only let the readers make up their own minds about what it says about socialism, it would be an excellent essay.

Trolling Libertarians

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Noah Smith does it again.

Instead of spinning theories that extol the virtue of unfettered markets — theories that by now, no one outside the profession actually believes — they should be diving into the gritty details of the regulatory state, or gathering evidence on how best to curb government’s excesses.

He cites Will Wilkinson .

The war against the welfare state hasn’t slowed growth in welfare-state spending so much as it has made our system unusually loathed and unusually shoddy. Mostly, it has fostered a divisive, racially-tinged “makers vs. takers” narrative while encouraging opposition to reform measures that might have made our safety net fairer, more efficient, and better at minimizing the economic anxieties that drive populist political sentiments fundamentally at odds with an open society of free markets, free trade, liberal migration, and peace.

My thoughts.

1. I do not believe that either Smith or Wilkinson is sincerely trying to appeal to libertarians. (Of course, with my last-minute decision to write in Paul Ryan on Tuesday, I am in no position to claim to speak for the libertarian movement.) They are not trying to pass an ideological Turing test. Instead, they employ slurs and charges against libertarians that are popular on the left, which suggests to me that the motive is not to offer constructive suggestions to libertarians. It is not Cato and Reason that are trying to inject racial overtones into American politics. And it is not that I believe in the absolute perfection of markets–what I believe is that markets are better than government at adapting to solve problems.

2. I am not going to be bullied into supporting policies that I believe are bad just because they are popular. If you want to talk me out of my position against a policy, tell me what is good about the policy.

3. The welfare state, like any Ponzi scheme, can be quite popular as long as it is still functioning. However, some time in the next decade, I think it is probable that one of the major welfare states is going to be unable to borrow enough to meet all of its current obligations (this sounds like a prediction on which one can construct a bet), and so it will be faced with a need for either sharp government austerity, hard default on its debt, or soft default (high inflation). The U.S. will not be the first country to suffer from this, because our reputation as a safe haven is so good that the world always will lend to us. But Italy does not enjoy that status. Nor does Japan. Neither does Greece, but they are small enough to be bailed out. Once one country that is “too big to bail” has to resort to extreme budget austerity or money-printing, this will call attention to the precariousness of the others, including the U.S.

What Will be the Significance of Mr. Trump?

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I recommend reading these three pieces in their entirety.

1. Tyler Cowen wrote,

I think his natural instinct will be to look for some quick symbolic victories to satisfy supporters, and then pursue mass popularity with a lot of government benefits, debt and free-lunch thinking. I don’t think the Trump presidency will be recognizable as traditionally conservative or right-wing.

2. Yuval Levin wrote

this election is at the very best a mixed blessing. It is less a show of strength of any sort than a cry of resistance and outrage. It is a cry that our politics clearly needed to hear and will now be forced to take seriously. But by itself it has not charted a way forward.

3. David French wrote,

I had no idea that the Democratic party was so thoroughly alienating it’s own voters. Hillary is will likely end up with almost 10 million fewer votes than Obama in 2008. She’ll end up with almost six million fewer votes than Obama in 2012. Those voters didn’t move to the GOP. People just stayed home. Given our growing population and the enormous media interest in this campaign, those numbers are simply astounding. The Democrats alienated roughly 14 percent of their 2008 voting base.

The Republicans tend to do better in off-year elections, because Democratic turnout is lower. I am tempted to say that Mrs. Clinton managed to turn this into an off-year election.

[UPDATE: David French takes back his earlier analysis, because it was based on incomplete vote totals.]

Let me speak to the significance of Mr. Trump from the perspective of the person, the party, and ideology.

As a person, his victory is astounding. Like any Republican, he had the liberal media against him. But they were less restrained and balanced than they have been in the past. On top of that, he had some mainstream conservative media (including Yuval Levin and his colleagues at National Review) against him. You can argue that Mr. Trump’s unpopularity with the establishment actually helped to firm his support, but even so you have to give him credit for pulling off such political jujitsu.

As for the party, I expect the schism within the Republican Party to heal quickly. I am reminded of Winston Churchill’s reaction to the Nazi invasion of the Soviet Union.

No one has been a more consistent opponent of Communism than I have for the last twenty-five years. I will unsay no words that I’ve spoken about it. But all this fades away before the spectacle which is now unfolding.

I do not expect that the Republican establishment will unsay any words that they have spoken about Mr. Trump. But I expect all that will fade away once he is engaged in political combat with Democrats in Washington.

I also think that those progressives who are predicting that the election will have dire consequences for women, gays, and people of color are making a tactical error. They are setting a very low bar for Mr. Trump and the Republicans. When four years from now we still have civil rights laws in place, mostly-legal abortion, and widely-legal gay marriage, these putative victim communities will be wondering what all the fuss was about.

Going forward, the Republicans desperately need to catch on with one or more of the demographic groups that currently is in the bag for the Democrats. Read David French’s piece again. My takeaway is that if the Republicans stand still, then all the Democrats have to do to win the Presidency is find a candidate who does not turn off the weakly-attached voters.

On immigration, I agree with Tyler that Mr. Trump’s border control efforts may prove mostly symbolic. I do not think he needs to make much progress on the wall. He could simply ask ICE to make a regular public display of rudely and forcefully deporting people. I am cynical enough to guess that if every night on television there are scenes of suffering and humiliated deportees, this will satisfy the anti-immigrant crowd without having to build the wall. (For those of you new to this blog, I am against causing suffering and humiliation among deportees. I am not even in favor of deportation in the first place–if it were up to me, the most we would do to deter anyone wanting to take up residence here is charge some sort of one-time fee.)

Assuming Mr. Trump succeeds in creating the impression that our border controls are tight, some of his supporters might countenance giving long-time undocumented residents a path to citizenship. What is unacceptable to those who make an issue of illegal immigration is giving a path to citizenship without much tighter controls.

As for ideology, Mr. Trump is not a man of strong principles. He will not treat his victory as a conservative mandate, nor should he.

On health care policy, pundits are talking as if a Senate filibuster is inevitable if the Republicans try to repeal Obamacare. I would bet against this. For one thing, I don’t think Democratic pollsters are going to be advising their clients to fall on their swords to keep Obamacare. For another thing, I would not put it past Mr. Trump to work with Democrats on a new law. You may have forgotten that before Mr. Obama, whose idea of talking with the other side was to say “I won,” we had Presidents who were able to negotiate bipartisan bills. Do not be shocked if Mr. Trump does this. That would, however, result in health care policy that is at best a mixed bag for those of us with a preference for market-oriented solutions.

Still, I am more optimistic than Tyler that conservatives will win some victories during the Trump Administration. After all, we do have a Republican Congress that is licking its chops. In particular:

1. I would bet that the courts get packed with a lot fewer strongly progressive judges than they would have been under Mrs. Clinton.

2. I would bet that the EPA, the Department of Education, and the Department of Labor pursue a much less expansive regulatory agenda.

3. I would bet that some of the regulatory red tape that impedes infrastructure projects will go away.

My Thoughts on Inequality

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I have an essay, mostly inspired by Cosmides and Tooby at a Cato panel a while back. I begin by saying that

my goal is to make each side’s arguments intelligible to the other. I want Ayn Rand’s partisans to understand Karl Marx’s partisans, and vice-versa.

I conclude [link fixed],

I think that it is beyond debate that capitalism is imperfect. However, the more interesting question concerns how to try to improve it. There, a lot hinges on how one interprets the frequent failures of socialism as well as the failures of less-drastic forms of government intervention. To opponents of capitalism, these failures suggest a need to try harder to implement reform correctly. To proponents of capitalism, these failures suggest a need for reformers to back off. In that regard, I admit to being on the side of the proponents.

Read the whole essay before commenting.

On the Topic of the Day

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Joel Kotkin writes,

America is a nation of many economies, but those that produce real, tangible things — food, fiber, energy and manufactured goods — went overwhelmingly for Trump.

On Facebook, I wrote,

I feel sorry for the supporters of both candidates. I think of Mr. Trump’s supporters as people who over the years have grown our food, worked to supply us with fuel, sent their sons to fight in our wars, and yet are in regions that are declining due to forces beyond their control. Mr. Trump got their hopes up, and I doubt that he can deliver.

I think of Mrs. Clinton’s supporters as well intentioned people who are now stunned and worried. Losing an election does not make you wrong or make you a bad person. I hope that it turns out that this election still leaves us free, prosperous, and safe.

Somehow, this seems apropos:

Too Much Innovation?

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A commenter pointedly asks,

What’s an example of a culture and a period for which there was too much innovation?

Some possibilities.

1. None. It has never happened.

2. Europe from 1880-1940. That is, if we can blame the two world wars and the Communist revolution on instability caused by innovation. That is debatable.

3. The U.S., 1990-present. That is, if we can blame the decline in respect for government and leaders on innovations in communications technology (see Martin Gurri’s The Revolt of the Public) and if we view this decline as more of a bug than a feature.

Changed My Mind

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Walking to the polling place, I changed my mind and decided to write in Paul Ryan. That is what I felt like doing today. I wasn’t feeling that way before.

I think what influenced me was a column predicting that the Republican Party after the election is likely to split between the populists who support Trump and the non-populists who support Ryan. My mood affiliation today was with non-populists.

By the way, there was no line at all at the polls. That is because our precinct when nuts for early voting–lines were out the wazoo the first few days of that.

Weakest-Link Theory

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In a review of Garett Jones’ Hive Mind, Jason Collins writes,

Jones’s argument builds on that of Michael Kremer’s classic paper, The O-Ring Theory of Economic Development. Kremer’s insight was that if production in an economy consists of many discrete tasks and failure in any one of those tasks can ruin the final output (such as an O-ring failure on a space shuttle), small differences in skills can drive large differences in output between firms.

Let us meditate on this for a while. Toss out all of your intuition based on marginal productivity theory, and instead think of a business as undertaking a set of processes, with the overall profit constrained by its weakest process. It fails if it is great at engineering but lousy at marketing, or vice-versa. A firm that has great engineering and great marketing can be done in by poor internal controls. And so on.

First, this theory helps explain why there are firms. An engineer working by himself automatically has a lousy marketing department.

Second, it may explain why we see higher pay at highly profitable firms. These are firms that know how to identify and retain high-performing workers. That includes giving their high-performing workers appropriate compensation.