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Last Build Date: Thu, 23 Mar 2017 14:04:06 -0500

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Good Manners vs. Political Correctness, by Bryan Caplan

Thu, 23 Mar 2017 14:04:06 -0500

My first face-to-face encounter with political correctness came in 1989.  All undergrads in my dorm at UC Berkeley were strongly urged to attend the all-important DARE meeting.  Not DARE as in "Drug Abuse Resistance Education" but DARE as in "Diversity Awareness through Resources and Education."  I had disdain for this simple-minded leftist propaganda then, and the recent return of political correctness seems even worse.

These days, however, I'm also often appalled by the opponents of political correctness.  I'm appalled by their innumeracy.  In a vast world, daily "newsworthy" outrages show next to nothing about the severity of a problem.  I'm appalled by their self-pity.  Political correctness is annoying, but the world is packed with far more serious ills.  Most of all, though, I'm appalled by their antinomianism, better known as "trolling."  Loudly saying disgusting things you probably don't even believe in order to enrage "Social Justice Warriors" further impedes the search for truth - and makes your targets look decent by comparison. 

Against both political correctness and the trolling it inspires, I propose an old-fashioned remedy: good manners.  Everyone should feel comfortable speaking their minds - as long as they're polite.  In slogan form: It's not what you say; it's how you say it. 

Every child knows the basics of politeness.  Talk nicely.  Don't yell.  Don't call names.  Listen and respond to what people literally say.  Don't personally insult people.  Don't take generalizations personally.  If someone's meaning is unclear, don't put words his mouth; ask him to clarify.  And of course, don't escalate.  If someone's impolite, the polite response is to end the conversation, not respond in kind. 

Isn't this just "tone policing"?  Sure.  People can and should comport themselves like ladies and gentlemen.  You can fairly criticize Social Justice Warriors for one-sided tone policing - their failure to police their own tone.  And you can fairly criticize them for acting as if there's no polite way to reject their views.  But proper tone policing is what makes conversation productive and pleasant.  (And of course, the more pleasant conversation is, the more we're likely to constructively converse).

Aren't some positions inherently impolite?  Maybe, but they're so rare we needn't worry about them.  If someone says, "Your whole family should be murdered," they almost always say so impolitely.  To put it mildly.  But there are clear exceptions.  It's not impolite to simply be a utilitarian, and in the right kind of trolley problem, utilitarianism implies murderous answers.  While I'm not a Peter Singer fan, he seems polite to me. 

But isn't trolling fun?  For some people, it obviously is.  But trolling is still very bad.  If someone trolls you, you should just politely end the conversation and find someone worth talking to.


Robert Frost and liberalism, by Scott Sumner

Thu, 23 Mar 2017 14:02:59 -0500

Robert Frost once said: A liberal is a man too broadminded to take his own side in a quarrel. This seems very clever to me---I wonder what other people think. 1. He may not be using the term "liberal" to refer to left-wingers, but rather seems to be referring back to the original meaning of the term. In that case, I would consider myself to be a liberal. 2. Most of these sorts of pithy definitions are going to be unacceptable to one side of the political spectrum or the other. But I wonder if this is an exception. To me, Frost's definition seems like a compliment. I'd guess that non-liberals like Donald Trump might view it as an insult. Over at TheMoneyIllusion, I recently suggested that if I were a Supreme Court justice, I would not take the "libertarian" position on cases. I would not rule various laws "unconstitutional" just because I thought they were unwise examples of government interventionism. Indeed judges should never let their personal political views color their legal decisions. Some commenters thought I was being naive. Actually, I understand that very few people, indeed very few sitting judges, are able to completely put aside their personal biases. I was describing an ideal. In the very rare cases where someone does have the proper judicial temperament, political views don't matter. It's unfortunate that we must talk about liberal judges and conservative judges; we should be talking about good and bad judges. After all, we don't talk about liberal plumbers and conservative plumbers. Let me also use this definition to explain what I see as the difference between being liberal and being left wing. On a wide range of issues, including foreign policy, trade, entitlements and infrastructure spending, Trump's views might be characterized as being to the left of George W. Bush's views. But if we use Frost's definition of "liberal", then I'd claim that Bush was more liberal than Trump. Indeed Trump might be the least liberal major American politician in my lifetime. I've never seen another politician put so much emphasis on "our side" winning. President Bush was passionately devoted to the cause of treating AIDS in Africa. Trump's probably not opposed to the goal, but it certainly doesn't fit neatly into his real passion---making America great again. (Indeed Bush may have done more for Africa than any other President, including Obama.) Frost's comment seems to me to have two important implications: 1. The welfare of each and every person is just as important as your own welfare. Maybe not as important to you (in an emotional sense), but you should be aware that it is just as important in the general scheme of things. 2. Process is important. People (including judges) should not cheat on the process in order to achieve the result that they personally prefer. It seems to me that the first implication leads to utilitarianism, whereas the second implication leads to a specific version of utilitarianism called "rules utilitarianism". Society should use a rules-based approach to resolving issues (courts, elections, contracts, property rights, etc.) Voters should cast their ballot with an eye toward maximizing the welfare of society as a whole, not just the welfare of themselves and their families. It does no good to point out that this is all very utopian. Of course the real world always falls far short of perfection. The more interesting question is whether progress is possible. Is Denmark more liberal than Sicily? Is Denmark in 2017 more liberal than Denmark in 1317? I believe the answer to both questions is yes, which means that I believe human progress is possible. PS. In a fight between the faculty and the administration over abolishing tenure, I would have sided with the administration, even as a tenured faculty member. PPS. When I was growing up, I often helped my dad on construction, but I was pretty klutzy. My dad was a small businessman, another profession I was ill suited for. I can only recall one time when my dad said I'd be go[...]

Social Science, Statistics, and the Garden of the Forking Paths, by Amy Willis

Thu, 23 Mar 2017 09:44:44 -0500

(image) EconTalk host Russ Roberts has made no secret of his misgivings about high-level statistical analysis. So it's no surprise that his skepticism is brought to bear in his interview this week with Columbia University's Andrew Gelman. However, Roberts magnanimously starts the conversation by wondering aloud whether he's gone too far in his skepticism. Maybe there are indeed things we can learn, and that we could not learn otherwise, via data analysis.

Gelman, a statistician, suggests that reliance on statistical significance is answering the wrong question...There is an extended discussion on the extent to which "p-hacking" is a problem in statistical research, as well as a fascinating thread on the prevalence of "priming." (At the end of the conversation, Roberts refers to Brian Nosek's replication project as "God's work.")

The real point of the conversation to me, though, are the big questions raised. Roberts, about half-way through, genuinely asks, "So, now what?" Are we to discard all data analyses and resort once again to pure theory? Can statistical analyses ever avoid becoming ideological cudgels employed to beat down one's opponents? Should we reconsider the place of social science in policy altogether? What about what we consider to be social science? Is it enough to rely on your "gut" and be honest about it, as Roberts suggests?

These are just some of the questions I'm left thinking about after this week's conversation. I'm not really comforted by Gelman's contention that things would be better if only people had a better understanding of what statistical significance does (and does not) convey. I'm even less optimistic that more social scientists will go Gelman's route and endeavor to better integrate theory into their data modeling. But I always aspire to be proven wrong...


Tyler Cowen is a Semi-Persuasive Futurist, by David Henderson

Wed, 22 Mar 2017 18:31:27 -0500

My review of Tyler Cowen's latest book, The Complacent Class, is now out in the pages of Regulation. It's titled "Tyler Cowen: Semi-Persuasive Futurist." This excerpt gives a flavor of what I liked and disliked: Cowen nails the causes and effects of high housing costs. He points out that restrictions on building have driven housing prices sky high in many major cities, especially in coastal California and the Northeast. Somewhat disappointingly, although Cowen's claims are generally well-cited, he doesn't mention the path-breaking work by Harvard economist Edward Glaeser and Wharton economist Joseph Gyourko, which shows the high prices are indeed due to a scarcity of building permits rather than a scarcity of land. (See "Zoning's Steep Price," Regulation, Fall 2002.) However, Cowen goes beyond that fact to make another important point: those high housing costs have discouraged movement by workers to those cities and have kept them in lower-productivity jobs elsewhere. The overall negative effect on productivity and output is huge. He cites a 2015 National Bureau of Economic Research paper by University of Chicago economist Chang-Tai Hsieh and University of California, Berkeley economist Enrico Moretti, who find that lowering regulatory constraints in those cities to the level of regulation in the median-regulated city in the United States "would expand [these high-cost cities'] work force and increase U.S. GDP by 9.5%." On traffic, Cowen writes, "Traffic gets worse each year and plane travel is if anything slower than before." True. But why does traffic get worse each year? One's knee-jerk response would be to say that it's because more people are driving. But more people are going to Starbuck's each year, too. Has the wait at Starbuck's increased? Not that I can see. What accounts for slow traffic on roads but not "slow traffic" at Starbucks? Starbucks is private and for-profit, and it has the right incentive to expand and manage traffic, whereas roads are generally provided by government and government has little incentive to manage traffic well. That's why so few roads are toll roads with congestion pricing. One little-known fact is that state governments were starting to move in the direction of toll roads in the 1940s and early 1950s. But President Eisenhower put a stop to it with his interstate highway system, 90 percent of which was funded by gasoline taxes. It's hard to compete with highly subsidized roads. Disappointingly, in light of the problems caused by lack of tolls, Cowen cites that highway system as a big success. Less successful are other modes of transportation; he laments the fact that the number of bus routes has decreased, that "America has done little to build up its train network," and that American cities "haven't built many new subway systems in the last thirty-five years." That last lament was shocking because subways, except in high-density cities such as New York, are notoriously costly and inefficient. I was surprised by how lukewarm he was on gains from outsourcing. Here's that segment: Economists, caring as they do about overall economic well-being, tend to applaud free trade even when firms reduce labor costs by outsourcing. But Cowen is amazingly lukewarm on the gains from outsourcing. Cost-cutting developments, he writes, "build America's productive future less than coming up with neat and new ways of doing things, such as harnessing electricity, developing antibiotics, or inventing automobiles." But whether that's true depends on the degree of cost cutting. And what if American firms developed antibiotics by outsourcing to lower-cost outfits in, say, India? He sees outsourcing as "a way of keeping the status quo in place--for some, that is--at lower cost to owners of capital and privileged workers who have kept their incumbent status." Actually, that's not true. By definition, outsourcing improves on the status quo. And he and I seem to disagree a lot about which requires more resources for government[...]

Is Immigration a Basic Human Right? Full Video, by Bryan Caplan

Wed, 22 Mar 2017 14:20:37 -0500

Here's my debate with Christopher Wellman.  Since the audience was admonished to vote on the literal resolution prior to voting, I'm now slightly less confident in my "metaphorical voting" theory of my Intelligence Squared debate outcome.  Either way, enjoy.

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Interest on reserves and stock prices in 2008, by Scott Sumner

Tue, 21 Mar 2017 15:23:11 -0500

I did a recent post criticizing Bernanke's defense of paying interest on reserves. This policy was introduced in October 2008, and even the Fed viewed the policy as contractionary in intent. Indeed Susan Woodward and Robert Hall called the Fed's explanation a "confession of the contractionary effect of the reserve interest policy". The term 'confession' is rather telling, as it implicitly pushes back against the widespread view that the Fed was doing all it could in 2008 to stimulate the economy. Today I'd like to discuss the market view of IOR. Back in 2010, Louis Woodhill suggested that the Fed announcement of interest on reserves, as well as two subsequent increases in IOR, had a very negative effect on the stock market: A valid way to gauge whether events are "good" or "bad" for the economy is to look at the stock market's reaction to them. The day that Lehman Brothers collapsed, the S&P 500 went down 4.71%. Three days later (i.e., at the fourth market close after the event), the S&P 500 was down by a total of 3.61% from its pre-Lehman close. At the time of the Fed's IOR announcement, the S&P 500 was down by a total of 12.18% from its pre-Lehman close, 15 trading days earlier. However, the day that the Fed announced IOR, the S&P 500 fell by 3.85%, and it was down by a total of 17.22% three days later. On October 22, 2008, the Fed announced that it would increase the interest rate that it paid on reserves. The S&P 500 fell by 6.10% that day, and it was down by a total of 11.11% three days later. On November 5, 2008, the Fed announced another increase in the IOR interest rate. The S&P 500 fell by 5.27% that day, and it was down by a total of 8.60% three days later. I have some serious doubts about Woodhill's way of doing event studies, particularly the four-day windows for each shock. But before getting into interpretation, let's do some math: 1. If we take the three negative IOR shocks cited by Woodhill, and look at the four-day windows that he describes, the declines in the S&P500 are 17.22%, 11.11%, and 8.60%. That adds up to 36.93% decline. But there is a compounding factor that (I think) reduces the total declines to about 32.75% (someone tell me if my math is wrong.) The intuition is that two consecutive 10% drops at up to 19%, not 20%. 2. Of course 2008 was a catastrophic years for the stock market, as this is when the Great Recession got going. The total decline in the S&P500 from December 31, 2007 to December 31, 2008 was 38.5%. 3. Thus the overwhelming majority of the stock market decline of 2008 took place in twelve trading days, immediately following three contractionary IOR announcements, and only a small part of the decline occurred during the other roughly 240 trading days. What can we make of all this? Let me start by criticizing Woodhill, then defend him, and then give you my own view. Let's start with the four-day windows. In an event study, a one-day window would be more appropriate. Why should the market reaction have taken four days? That time frame seems cherry-picked. Yes, even the single day drops were pretty large, much larger than a normal single day movement in the S&P500. But this was a very tumultuous period for the economy and the stock market, and large daily moves were pretty common in late 2008. So this is not statistically significant. If I were to defend Woodhill I'd point to the fact that interest on reserves was a new and unfamiliar policy. It was not well understood by the markets. Indeed it wasn't even well understood by the Fed (which is why adjustments had to be made in October 22 and November 5, to make the policy more effective.) The Fed certainly wasn't loudly publicizing the fact that it was contractionary, you had to read the fine print. Perhaps the markets noticed the effects of IOR were contractionary. Thus over a period of several days they noticed monetary conditions tightening as banks were less anxious[...]

Pacifism in Hell's Angels, by Bryan Caplan

Tue, 21 Mar 2017 13:30:22 -0500

(image) Until recently, I only knew Howard Hughes' World War I saga Hell's Angels (1930) second-hand, from Martin Scorsese's Hughes biopic, The AviatorI was amazed when I finally watched Hughes' classic.  The special effects are stunning even by modern standards.  And the Pre-Code script is too good to be true. 

On the surface, the audience is supposed to detest the selfish, unscrupulous Monte Rutledge, the "bad brother" of protagonist Roy Rutledge.  But as in Milton's Paradise Lost, the author plainly has great sympathy for the devil.  The best scene must have shocked World War I veterans around the world.  When Monte feigns illness to avoid combat, a fellow pilot angrily declares, "He's yellow and we all know it."  Then Monte pulls off the mask:
That's a lie! I'm not yellow. I can see things as they are, that's all. I'm sick of this rotten business.

You fools. Why do you let them kill you like this? What are you fighting for? Patriotism. Duty. Are you mad?

Can't you see they're just words? Words coined by politicians and profiteers to trick you into fighting for them. What's a word compared with life... the only life you've got.

I'll give 'em a word. Murder! That's what this dirty rotten politician's war is. Murder! You know it as well as I do. Yellow, am I? You're the ones that are yellow. I've got guts to say what I think. You're afraid to say it. So afraid to be called yellow, you'd rather be killed first.
Critics routinely dismiss pacifists as "cowards."  But as I've said before:
Given the unpopularity of pacifism - and the extreme unlikelihood that your pacifism tips the scales against war - this is plainly false.  A real coward would enthusiastically parrot whatever the people around him want to hear.

Thoughts on the Republican Health Insurance Reform, by David Henderson

Mon, 20 Mar 2017 21:51:49 -0500

I've held back on commenting in a big-picture sense on the Republicans' plan for repealing and replacing Obamacare. I've found comments by Megan McArdle, Peter Suderman, co-blogger Scott Sumner, and Steven Landsburg, among others, useful. They've tended to focus on many of the negative aspects of the plan. I asked my health analyst friend Merrill Matthews of the Texas-based Institute for Policy Innovation what he thinks, and he sent me links to four of his pieces on the plan. They are here, here, here, and here. I notice from his bio that he has a 6th degree black belt in Tae Kwon Do, so I will be careful in my criticisms, if any. Seriously, though, I tend to agree with Merrill. As I wrote over 20 years ago, the combination of guaranteed issue and community rating, a key feature of Obamacare, leads to the destruction of insurance markets. No one would advocate forcing insurance companies to issue house insurance policies to people whose houses are burning, at premiums equal to those paid by others whose houses aren't burning. And the twin requirements would cause more and more people to refrain from buying insurance until their houses are on fire. Insurance companies, knowing this, would charge astronomically high premiums. As Merrill Matthews points out, the Republicans had a good plan for getting rid of guaranteed issue, but caved: But in the past week or two, Republicans apparently abandoned actuarial principles--just as Obamacare did. Under their new plan, if a person wants to buy coverage in the individual market during an open enrollment period, insurers have a 12-month "look back." If the person has been uninsured more than 63 days in that period, the insurer will charge the applicant 30 percent more than the standard premium for the next 12 months. Apparently, that 30 percent increase will happen even if the applicant is perfectly healthy. One thing I would like to see more discussion of in the commentary is how/whether we could adopt some of the best elements of Singapore's plan. No, it would not pass a libertarian test, but it would pass an incentive test. Co-blogger Bryan Caplan has written here, here, and here about what is so good about Singapore's system. When I covered Bryan's pieces in my fall economics class, two of my students were from Singapore. They emphasized that virtually everyone, rich or poor, has skin in the game, that is, pays something for any given health care service. (14 COMMENTS)[...]

Is Immigration a Basic Human Right? My Opening Statement, by Bryan Caplan

Mon, 20 Mar 2017 02:40:52 -0500

Here's my opening statement from Thursday's debate.  Enjoy. There are many complaints about governments, but the harshest is, "This government grossly violates human rights."  The background assumption is that human beings have rights that everyone - including governments - is morally obliged to respect.  When looking at the grossest violators - Nazi Germany, the Soviet Union, Maoist China - almost no one denies the validity of the idea of human rights.  But then you have to wonder: Do the governments we know, accept, and even love have clean hands?  Or do they violate human rights, too? To answer, we normally apply a simple test: If an individual treated other people the same way the government does, would he clearly be a horrible criminal?  If an individual deliberately kills innocent people, he's a murderer; if an individual imprisons innocent people, he's a kidnapper.  A government that does the same violates basic human rights - and it can't justify its actions by calling innocent people "criminals."  If someone is peacefully living his life, he's innocent - whatever the government says. What does this have to do with immigration?  Lots.  Since we're in San Diego, we've seen illegal immigrants.  What are the vast majority of them doing?  Working for willing employers.  Renting apartments from willing landlords.  Buying stuff from willing merchants.  Sending money home to their families.  Maybe even sitting next to you in class.  They sure look innocent - even admirable.  But the U.S. government can and does forcibly arrest and exile them to the Third World.  Why can't they all just come legally?  Because exile is the default; they're all exiled unless the U.S. government makes a rare exception.  This is far less bad than killing or imprisoning them, but it sure looks like a severe human rights violation.  If the U.S. government forbade you to live and work here, wouldn't that be a severe violation of your human rights? You could reasonably object that human rights are not absolute.  While there's a strong moral presumption against killing, imprisoning, or exiling innocent people, it's okay to do so if the overall consequences of respecting human rights are clearly awful.  The main problem with this objection is that when social scientists measure the overall consequences of immigration, they're not clearly awful.  In fact, the overall consequences look totally awesome.  Most notably, standard economic estimates say that letting all the world's talent flow to wherever it's most productive would roughly DOUBLE global prosperity.  That's an extra $75 TRILLION of extra wealth per year.  How is this possible?  Because even the world's lowest-skill workers produce far more in the First World than they do at home.  Even if all other fears about immigration were bulletproof - which they aren't - they're dwarfed by this gargantuan economic gain.  This isn't trickle-down economics; it's Niagara Falls economics. To effectively defend immigration restrictions, then, saying "Human rights are not absolute" is insufficient.  You need to flatly deny that immigration is a human right - to say that while the illegal immigrants you meet on the street may look innocent, they're actually guilty as hell.  The most popular argument analogizes illegal immigrants to trespassers.  No one has any right to be here without government permission; it's our country, so we set the rules.  The obvious problem with this position is that it justifies a vast range of blatant human rights abuses.  If it's our country and we set the rules, why can't we exile citizens, too?  Why can't we imprison people for saying the wrong thing, practicing [...]

Is a falling population contractionary?, by Scott Sumner

Sun, 19 Mar 2017 18:47:02 -0500

One often comes across articles that suggest Japan faces "headwinds" of a falling population. This is supposed to contribute to falling aggregate demand and deflation. That may be true, but if so it's almost certainly not for the reason that many people assume. One of the best examples of a falling population occurred in Europe between 1345 and 1400, when the population may have fallen in half (I'm not sure how accurate the data is.) There is some evidence that the effect of the Black Death was actually inflationary, especially for wages: But the Black Death had other economic effects. Although the rise in real wages after the plague was not as dramatic as many assume, it was persistent, as this graph from Gregory Clark (who looks at England) illustrates: This is exactly what I would have expected. A plague does not reduce "M" in the famous equation of exchange. It might reduce velocity, but over a period of many decades I doubt it would have much impact on the speed at which medieval people spent money. If MV doesn't decline, then that means there is no impact on aggregate demand. Since the Black Death would clearly reduce real output (Y) we can infer that it probably raised prices. Many people get confused on this point, because they wrongly visualize "aggregate demand" in terms of "lots of people going shopping". That is, they think of AD as a real concept, when it is in fact a nominal concept. The most explosive growth in aggregate demand in recent decades occurred in Zimbabwe during 2008, yet there weren't all that many Zimbabweans at the shopping malls---it was mostly inflation. Japan is in the midst of an episode of falling population that may eventually rival the Black Death (fortunately with much longer life expectancy). Here is the Wall Street Journal discussing the Japanese labor market: TOKYO--A labor shortage is helping Japan's temporary and part-time workers win greater pay increases than its full-timers, a reversal that adds to signs of gains by lower-wage workers globally. . . . In January, part-time hourly wages rose 2.6% from the previous year, compared with a 0.4% increase for full-time workers' base wages. On b-style, a listing site for part-time jobs, the average position was offering ¥1,087 an hour in February, up by more than 7% in two months. "There is a labor crunch overall due to the falling birthrate. If you don't raise hourly wages, you can't secure people," said Keitaro Kawakami, head of b-style's research unit. I'm not sure what to make of that, as those wage increases are not all that impressive. But the basic point is correct. Other things equal, a falling population would lead to rising wages. Why then does Japan usually have such weak wage increases? Because other things are not equal---Japan has an extremely tight monetary policy, leading to slow NGDP growth. Another mistake is to assume that a falling population leads to weak AD because there is less "need" for goods. In fact, needs are limitless. Here's a FT article discussing Japan's housing market: You could pity the Japanese house. Its average lifespan is only 26 years. Or, you could revel in a culture of exuberant renewal that has made the Japanese house the crucible of contemporary architectural experimentation. It is no accident that Japan has the highest number of architects per capita in the world -- about five times as many as the UK and more than seven times as many as the US. Their country needs them. In 2015, Japan built almost a million new housing units. That's almost as many as the 1.108 million homes built in America that year. If I had not read that FT article, I might have guessed that the US built 10 times as many homes as in Japan. After all, our population is still growing at a decent clip while theirs is falling rapidly. So on a per capita [...]