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May 2011 posts

Culture Matters: The Real Obstacles to Latin American Development

Jonathan B. Wight

The argument that economic development is captive to culture is well-known, made famous by Max Weber in The Protestant Ethic and the Spirit of Capitalism (1904) and in modern times by Lawrence E. Harrison in Underdevelopment Is a State of Mind: The Latin American Case (1985) and also by Lawrence E. Harrison and Samuel P. Huntington in Culture Matters: How Values Shape Human Progress (2001).

These arguments have been debated and often ridiculed by other economists, who argue that people merely respond to incentives, and that institutions create incentives.  Can people choose some of their cultural institutions?  Native language, for example, is instinctively absorbed at such an early age that there is nothing conscious or chosen about it. 

Oscar Arias, the two-time former President of Costa Rica and winner of the Nobel Peace Prize in 1987, now enters the fray in the Jan/Feb issue of Foreign Affairs 90 (1)(2011) with an article, “Culture Matters: The Real Obstacles to Latin American Development.”

The fault, dear citizens, is ourselves according to Arias.  Using the first person, he addresses the key issues that he feels hold back Latin development: (a) a conservative mindset that protects the status quo of power and wealth; (b) a fundamental lack of trust in others; and (c) a fragile commitment to democracy.

For those who may not know, Arias’ Costa Rica has achieved an admirable record of democracy for reasons that may have more to do with culture than enlightenment musings (see Harrison’s first book above).  Arias argues:

No development project can prosper in a place where suspicion reigns, the success of others is viewed with misgiving, and creativity and drive are met with wariness. (p. 4)

Latins are primarily wary of their own governments that represent entrenched interests.  People flagrantly abuse the laws, with no repercussions.  Arias cites The World Values Survey, which finds that only 16 percent of those people surveyed in Latin America say that “most people can be trusted” – and this number is just three percent in Brazil.  The impact on entrepreneurship is predictable but tragic.  Consequently, Arias notes:

Latin Americans doubt the true intentions of all those who cross their paths, from politicians to friends.

For economic development to succeed, Latin Americans must be able to trust their states to act reasonably and predictably. They must be able to anticipate the legal consequences of their actions. And they must be able to trust that others, too, will act in accordance with the rules of the game. (p. 5)

Memorial Day

Jonathan B. Wight

When examining the philosophy of selfish individualism as a system for organizing society, I always think of Memorial Day.

It is hard to argue that "I made it my way" and "Greed is good" when walking through Arlington Cemetery.

Many lucky people have it made in America, but not only from their own hard work and individual virtues. Many of the institutions we take for granted, and which allow us the freedom to pursue our dreams, came at the expense of the lives of others who served.

Humility and gratitude are the emotions of today.

Care ethics and Confucian philosophy

Mark D. White

In the latest issue of Philosophical Compass (6/6, June 2011), Ann A. Pang-White (University of Scranton) discusses "Caring in Confucian Philosophy":

This article examines the intersections of Confucian philosophy and feminist ethics of care. It explains the origins and contribution of care ethics to modern ethical discourse and the controversy that surrounds this ethical theory. The article discusses the emergence of comparative research on the compatibility (or incompatibility) of Confucian ren and feminist care. It first explores the question whether it is philosophically feasible to disassociate Confucian ren from its historical context by deploying it for contemporary feminist debates, especially considering that, strictly speaking, no direct counterpart in the original Confucian texts is an exact match to the words ‘care’ or ‘caring’. Following this exploration, the article investigates what ren is and whether Confucian ren is feminist care, what the ‘No Exit’ Objection and the ‘Domesticity’ Objection are, and how ren or caring in Confucian philosophy can answer these objections. The article concludes with an affirmation of the social transformative power of ren and its feminist potential.

Book review: Inequality, Development, and Growth (Routledge, 2011)

Irene van Staveren

Idg Review of Inequality, Development, and Growth, edited by Günseli Berik, Yana van der Meulen Rogers, and Stephanie Seguino. London: Routledge, 2011, 361 pp. ISBN13: 978-0-415-59944-3 (hbk), ISBN13: 978-0-415-60994-4 (pbk).

This volume is a flagship for feminist macroeconomics and was first published as a special issue of the journal Feminist Economics in 2009. Its major contribution to the study of inequality and growth is that it follows a two-sided approach to the relationship between these two phenomena. The book examines not only the effect of macroeconomic policies and economic growth on inequalities but also as the effects of inequality on growth. The volume presents a wide diversity of theories, methods, country studies and levels of integration by an equally wide diversity of authors, male and female, and from the developed as well as the developing world.

Continue reading "Book review: Inequality, Development, and Growth (Routledge, 2011)" »

Symposium on eminent domain (and Kelo) in Albany Government Law Review

Mark D. White

The latest issue of the Albany Government Law Review (4/1, 2011) features a symposium on "Eminent Domain: Public Use, Just Compensation, & 'The Social Compact,'" with a particular focus on Kelo and its effects of New York:

Introduction: The Judicial Reaction to Kelo, by Ilya Somin

"Fairness and Equity," or Judicial Bait-and-Switch? It's Time to Reform the Law of "Just" Compensation, by Gideon Kanner

The Trouble With Eminent Domain In New York, by Norman Siegel, Steven Hyman, and Philip van Buren

Urban Revitalization and Eminent Domain: Misinterpreting Jane Jacobs, by Steven J. Eagle

Moving the Cat Into the Hat: The Pursuit of Fairness in Condemnation, or, Whatever Happened to Creating a "Partnership of Planning?", by Michael Rikon

Evaluating Economic Development Takings: Legal Validity Versus Economic Viability, by David Schultz

From Slum Clearance to Economic Development: A Retrospective of Redevelopment Policies in New York State, by Amy Lavine

The Rise of Robert Moses and the Fall of New York Constitutional Protections Against Eminent Domain, by Christopher Dunn 

Stacking the Deck: New York's Unique Approach to Eminent Domain, by Robert McNamara

The EDPL Revised, by M. Robert Goldstein

(Crossposted at The Literary Table.)

AEA Acts to Shore-up Ethics

Jonathan B. Wight

 John Siegfried, the Secretary-Treasurer of the AEA, sent an email today with several important announcements.

 First, AEA journals will no longer conduct “double-blind” reviews of articles, primarily because everyone already knows what everyone else is working on.  Double-blind was impossible to achieve.  But there’s also an important ethical rationale:  “Double-blind refereeing also … makes it harder for referees to identify an author’s potential conflicts of interest arising, for example, from consulting.” 

 This is indirectly a reference to the criticisms in the movie Inside Job and in George DeMartino’s book, The Economists Oath.

 Second, in direct reply to these criticisms, the AEA has established an Ad Hoc Committee on Ethical Standards for Economists.   The Committee is chaired by Robert Solow, with other members Derek Bok, David Card, William Nordhaus, and Nancy Stokey.   If you’d like to share input:

The Committee welcomes pertinent comments and suggestions from AEA members. Send them to [email protected] by June 30, 2011.

Making Good Choices in Situations of Radical Uncertainty

Mark D. White

Barry Schwartz (author of The Paradox of Choice: Why More Is Less), Yakov Ben-Haim, and Cliff Dasco have a paper in the latest issue of Journal for the Theory of Social Behaviour (41/2, June 2011) titled "What Makes a Good Decision? Robust Satisficing as a Normative Standard of Rational Decision Making," in which they recommend robust satisficing as a normative standard for decision-making when facing radical uncertainty (in the sense in which Frank Knight used the term):

In all the research on how heuristics and biases can lead people into bad decisions, the normative standard for comparison has rarely been called into question. However, in this paper, we will argue that many decisions we face cannot be handled by the formal systems that are taken for granted as normatively appropriate. Specifically, the world is a radically uncertain place. This uncertainty makes calculations of expected utility virtually meaningless, even for people who know how to do the calculations. We will illustrate some of the limitations of formal systems designed to maximize utility, and suggest an approach to decision making that handles radical uncertainty—information gaps—more adequately. The arguments below will be normative in intent. They will suggest that “robust satisficing,” not utility maximizing, is often the best decision strategy, not because of the psychological, information processing limitations of human beings (see Simon, 1955, 1956, 1957), but because of the epistemic, information limitations offered by the world in which decisions must be made. (p. 210)

What is robust satisficing?

There is a quite reasonable alternative to utility maximization. It is maximizing the robustness to uncertainty of a satisfactory outcome, or robust satisficing. Robust satisficing is particularly apt when probabilities are not known, or are known imprecisely. The maximizer of utility seeks the answer to a single question: which option provides the highest subjective expected utility. The robust satisficer answers two questions: first, what will be a “good enough” or satisfactory outcome; and second, of the options that will produce a good enough outcome, which one will do so under the widest range of possible future states of the world.

Interview with Daniel Hausman (and more) in Erasmus Journal for Philosophy and Economics

Mark D. White

In the latest issue of Erasmus Journal for Philosophy and Economics (4/1, Spring 2011), there is an interview with Daniel Hausman, in which he discusses his views on methodology (with a particular focus on Mill) and his upcoming book on preferences (of which his recent paper "Mistakes about Preferences in the Social Sciences" is apparently a preview). He also describes the path he took to studying the philosophy of economics and his early background--very interesting. (I also strongly recommend another recent paper of Dan's, "Hedonism and Welfare Economics," in which he critiques the use happiness as a measure of well-being.)

Also in the journal you'll find an exchange on critical realism between Simon Deichsel, Uskali Mäki, and Tony Lawson; Irene van Staveren's review of Economic Pluralism, edited by Robert Garnett (a contributor to Accepting the Invisible Hand), Erik Olsen, and (guest blogger) Martha Starr; and a review of Debra Satz’s Why Some Things Should Not Be for Sale: The Moral Limits of Markets by Joseph Heath (a contributor to The Thief of Time).

Same-Sex Marriage Should Be Defended on Moral Terms, Not Economic Ones

Mark D. White

Sociologist Jaye Cee Whitehead (Pacific University) has a wonderful piece in The New York Times today titled "The Wrong Reasons for Same-Sex Marriage," arguing that the recent arguments espousing the economic benefits of same-sex marriage for cash-strapped states and municipalities miss the point:

Those making these economic arguments probably have the best of intentions. After all, why can’t gays and lesbians have full equality, while also saving the state money and bolstering local economies? Aren’t civil rights narratives consistent with the economic case for same-sex marriage? Shouldn’t supporters use all possible arguments in the hopes that at least one will finally stick?

And yet supporting marriage on economic grounds dehumanizes same-sex couples by conflating civil rights with economic perks. Americans should be offended when the value of gays and lesbians is reduced to their buying power as consumers or their human and creative capital as workers.

Why can’t same-sex couples have access to the same rights and protections as their straight neighbors simply because they are citizens? How would we respond if the right to interracial marriage were based on the prospects that these relationships made good business sense or added to the state budget? While economic arguments were certainly advanced during the struggle for African-American civil rights — in the late 1950s, Atlanta’s business-oriented mayor, William B. Hartsfield, promoted his city as being “too busy to hate” — those rationales are not what we think about when we remember that struggle’s highest ideals.

I made a similar point in my paper "Same-Sex Marriage: The Irrelevance of the Economic Approach to Law," aimed more at academic economic arguments than popular ones, but with the same general thesis: that the argument for same-sex marriage is properly a moral one, based on dignity and equality, not an essentially contingent cost-benefit calculation (particularly one based on current economic conditions).

Ron Paul and Property Rights

Jonathan B. Wight

Ron Paul announced his candidacy recently.  One of his claims to fame is that he publically admits he would not have voted for the Civil Rights Act because it represents excessive government intrusion in private affairs.  In his view it is a violation of private property rights to force a business to serve Black customers if they choose not to do so.

First, one has to admire a politician who speaks his mind, and second, who doesn’t pander to voters.  Paul has also said he would not endorse helping flood victims with federal funds because of the moral hazard this creates.  It is admirable when someone stands up against the forces of relentless expansion of positive “rights” of government. 

But his Civil Rights argument needs fleshing out—and ultimately—rejection. 

Brad DeLong, for example, argues that no understanding of property rights can exist outside of law and government.  DeLong notes:

When you own a lunch counter and make it whites-only if Black people sit down at the lunch counter you call the police--functionaries of the state--and they then take the Black people away and charge them with trespass...  Private fee-simple property is, after all, an institution established and enforced by the government. You can hardly get the government out of what is, fundamentally, the government's core business.

Property rights do not bestow limitless abilities on owners, and property rights come with responsibilities.  For example, zoning laws not only proscribe what owners can do they also call for acts that owners must do (e.g., must clear the public sidewalk of snow within 24 hours of a major snowstorm, must cut the grass, and so on).  The Civil Rights Act is essentially a zoning overlay that says public businesses must treat customers as inalienably similar with regard to race.  Adam Smith, when arguing in favor of responsible financial regulations, opined that:

Such regulations may, no doubt, be considered as in some respects a violation of natural liberty. But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments (Wealth of Nations, Glasgow edition, p. 324).

To what extent does the denial of service based on race “endanger the security of the whole society”?  It seems difficult to create a society of loyal and patriotic citizens when basic market functions are withheld from a minority group on the basis of arbitrary racial profiling.  Alternative markets in larger towns can be created (as indeed, Richmond, Virginia had a thriving Black commercial district in the early 20th century).  But that argument fails to address the broader issue of whether imposing a moral responsibility on public businesses is both legal and desirable. 

Whether on the basis of a Smithian argument or a Kantian human rights argument, Ron Paul’s stand seems weak in this day and age because he fails to consider the broader context in which property rights are created and preserved.