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March 2015 posts

Discrimination—Good and Bad

By Jonathan B. Wight

Indiana has passed a “religious freedom” restoration act (RFRA) , the key provision of which states that:

“A governmental entity may substantially burden a person's exercise of religion only if the governmental entity demonstrates that application of the burden to the person: (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” (emphasis added)

The concern by gay-rights activists is that this law could be used to deny gays “public accommodation”—in other words, it could justify a humiliating denial of service. In theory, since the law is open-ended, it could also allow businesspeople to refrain from serving Jews or Muslims or Catholics if their religion so demanded.  Some of this is unlikely, since the issue of burden and compelling government interest may be interpreted by the courts to mean requiring reasonable accommodation in a public business such as a restaurant or a cab.

This has not stopped businesses like Apple and Angie’s List from attacking Indiana’s new law.  Yet many others states and the federal government apparently have similar laws on the books (see map).  Map of rfra

This is why Indiana’s Governor was totally mystified at the negative backlash this week: “"I just can't account for the hostility that's been directed at our state.”

Well, duh!  Has the governor been asleep for the past decade, during which the moral imagination of America has been aroused with sympathy for gays who want to have a normal family life?  Every person should have a right, in a place of public business, to be accorded a minimum degree of respect. There will be grey areas, however.

I am sympathetic to the argument, for example, that accommodation could in some cases impose a heavy burden on a person of faith with little compelling public interest.  Imagine that Anita Bryant, the anti-gay singer and activist, is offered a contract to sing at a gay wedding (the reason she is asked is simply to goad and humiliate her).  Forcing her to sing at such a wedding would

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Narcissism and Profitability

By Jonathan B. Wight

Greed is good, right?  A greedy person works harder and the invisible hand produces benefits for the rest of society, right?

Well, no… at least according business school researchers at the University of Maryland and the University of North Carolina. 

NarcissistIn “Narcissism Is a Bad Sign: CEO Signature Size, Investment, And Performance,” the authors find that excessively self-interested CEO’s deliver lower growth and lower ROI, despite the fact that, on average, they are paid more for this lower performance.

I was initially skeptical of this research, because it seemed to have a flawed methodology, measuring the size of CEO signatures as a proxy for narcissistic tendencies.  But after I downloaded and read the paper, the approach seems to have scientific validity, controlling for name size and other factors.

Self-aggrandizing CEO’s not only antagonize their own co-workers, they also misjudge their own abilities, make bad mistakes, and are less likely to learn from them.

A narcissist has a difficult time feeling empathy for others, and distorts facts to suit their own purposes. If you are wondering if someone you know has Narcissistic Personality Disorder (NPD), you might look at the “5 Early Warning Signs You’re With a Narcissist.”

Why do boards hire narcissists in the first place? One answer may be that we are all prone to being taken in by a huckster, someone so cocksure that our own hesitation is overcome by the egoist’s chutzpah. In short, we believe that self-confidence is an important attribute needed in the job, and we want to believe that the huckster’s self-confidence is well-placed.

Self-deception, in other words, is the root of the problem.  

[Thanks to Phyllis Korkki at the NYTimes for highlighting this story.]

The Wrong Kind of Muslim

By Jonathan B. Wight

Wrong.muslimQasim Rashid is a Pakistani-born American, and a follower of a sect of Islam known as the Ahmadiyya Muslim Community, of which he is a spokesperson. 

Rashid has written a moving account of what it is like to live in a state of religious persecution in Pakistan, where spiritual coercion is enforced with a death penalty for blasphemy. 

Pakistanis who oppose the intolerance, even if they are of dominant Sunni faith, are themselves subject to assassination and intimidation.

Ahmadi’s themselves practice non-violence, even as terrorists attack their mosques. Rashid works for religious tolerance, including for Christians, Jews, agnostics, atheists, and all other stripes.

Rashid’s account is vividly told in The Wrong Kind of Muslim: An Untold Story of Persecution and Perseverence (2013).

One interesting statistic: the overall literacy rate in Pakistan is less than 60%, and women’s literacy is far below that.  Yet literacy among the Ahmadiyya community in Pakistan is nearly 100%, including for women. So the illiterate and uneducated in Pakistan lead the persecution of the learned, as the puppets and tools of the politicians.  Bob Dylan, where are your lyrics?

I heartily recommend Rashid’s book. It makes three excellent points:  1) Islam is not a monolithic religion; 2) Pakistan’s problems with violence and instability are directly tied to its institutions of intolerance; and 3) education is needed for justice and ultimately peace. 

Moral Rectitude and Economic Policies

By Jonathan B. Wight

One state breaks up labor unions, cuts government spending, and  lowers taxes in an effort to attract more business investment and grow faster.  This state is led by a governor touting his moral rectitude.

A nearby state raises taxes and boosts the minimum wage.  Isn't that a job killer?

Okay readers—which state do you think is doing better seven years after the Great Recession?

The answer is the second state—at least comparing Wisconsin and nearby Minnesota.  Both states have about 5.5 million in population, and both states have legacies of mining, agriculture, and manufacturing industries. 

Scott Walker, the Republican governor of Wisconsin, has taken a slash-and-burn approach with labor unions and state government, championing himself as Reagan’s reincarnation. 

Yet his state lags economically behind Minnesota, where Governor Brandt Dayton (of the Democratic-Farmer-Labor Party) has erased the state’s budget deficit by asking well-off citizens to pay a higher tax rate.  And he's helped low income workers who have a job by raising their wages.  Unemployment rates have plummeted despite this. 

In “A Tale of Two States,” Randi Weingarten lays out the diametrically different policies.  Weingarten is certainly not unbiased,

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Merton and Smith on Happiness

By Jonathan B. Wight

Although I usually have a poor memory, I can well-remember the spring day in 1979 when I encountered at a yard sale a hardback copy of Thomas Merton’s Seeds of Contemplation (1949).  This book had a moving influence in my outlook on life.

MertonWhy would an economics graduate student be interested in this missive by an ascetic monk? One reason is that Merton had an astute eye for models: he discusses how new monks try on the “hats” of different philosophies, and observe themselves in the mirror to see what they look like.  This image seemed to apply to the graduate school models and ideologies of my day.  Self-reflection about this process of model selection allows one to have some detachment, and hopefully more objectivity.

Although I went on to read Merton’s wonderful biography, The Seven Storey Mountain (1948), and several other of his books, I did not know until a few weeks ago that he had published a sequel to Seeds of Contemplation, called No Man is an Island (1955). 

I am now in the throes of reading this wonderful book and thinking a lot about its connection to Adam Smith.  Why? Because both authors treat happiness in a similar way, as peace of mind.  It is elusive to find peace of mind in material possessions, but it emerges, according to Merton, in an attitude about love. But what kind of love and directed how? 

Both authors would note that self-interest is wrapped up in self-love, but Merton asks us to dig deeper.  In a similar way Smith nudges us toward the idea of “superior” prudence. Both authors treat human psychology as complex and full of contradictions.

Economists devote a lot of attention these days to happiness research, measuring and quantifying—but they seemingly devote little effort to understanding the highly nuanced metaphysics of this concept.  

As my colleague Mark White notes in The Illusion of Well-Being (2014), “using happiness as a tool for policymaking is misguided and unethical. Happiness is too vague a term to define, and too general a concept, to measure in a way that captures people's true feelings…. no measure of well-being can do justice to people's true interests, which are complex, multifaceted, and subjective.”

Bravo!  That does not mean the investigation of happiness and peace of mind is irrelevant, as both Merton and Smith offer insights into one's own exploration of meaning.

Bioeconomics and Ethics

By Jonathan B. Wight

Readers of this blog know that I am a fan of the evolutionary biologist David Sloan Wilson (e.g., see here).  He and economist John Gowdy have teamed up to write an interesting paper on the invisible hand and evolution. 

A special issue of the Journal of Bioeconomics 17 (1)(April 2015) contains a number of interesting articles.

In “Human Ultrasociality and the Invisible Hand” Invisible hand
Wilson and Gowdy identify the features that in an evolutionary sense would allow for the invisible hand to operate. 

In contrast to traditional views, the authors show that group level evolution can be a powerful force in “ultrasocial” environments, which they claim human development to entail:

“One of the most important developments in evolutionary thought since the 1960’s is the discovery that individual organisms are themselves highly integrated social groups that evolved by between-group selection…."

"Like any other major transition, the human transition required the suppression of dysfunctional forms of selection within groups, making benign forms of within-group selection and between-group selection the dominating evolutionary forces. In humans, the psychological dispositions, informal norms, and formal institutions associated with morality have precisely this effect. The moral sentiments, as Adam Smith (1759) called them, include an other-oriented dimension such as sympathy and empathy and a coercive dimension such as norms enforced by punishment and status based on good conduct (reputation) rather than coercive power. The two dimensions go together because without the second, the first would be vulnerable to exploitation…."

"Other primate species are intelligent, but their intelligence is predicated upon distrust, which prevents teamwork. Human intelligence is predicated upon trust, which makes myriad forms of teamwork possible…."

"Human ultrasociality provides a new theoretical foundation for managing human affairs…."

The authors discuss the interaction of evolution with culture, and argue that while polygamy was a dominant social practice in antiquity (when women sought survival by marrying the richest guy in town, even if he had other wives), monogamy has won the cultural evolutionary wars: all rich modern societies are monogamous because it allows for more males to reproduce.  This argument may seem moot in the current demographic environment, in which reproduction is getting further and further delayed, and fewer and fewer people are choosing marriage commitments.

Nevertheless, the article provides a tantalizing look into the way that economics is being influenced by biology, but not in the way traditionally thought.  The tradition view of “survival of the fittest” individual is giving way to “survival of the fittest” group, in which socialization and ethical norms play powerful roles in giving rise to a successful economy and society. 

Economics After the Crisis

Irene van Staveren

Irene bookA year after the fall of Lehman Brothers, The Economist's headline proclaimed the end of modern economics. What has happened since? Well... almost nothing.

Mainstream and near-mainstream economic textbooks still sell like before. And INET has supported some initiatives that eliminate the rough sides of neoclassical thought and neoliberal policy advice. Very laudable initiatives, with, for example, Wendy Carlin's work on developing a new undergraduate curriculum CORE. But students of economics are not satisfied with these minor changes, so many years after the start of the financial crisis. Their Rethink Economics petition demands more fundamental changes to textbooks.

As a supporter of every single petition, pamphlet, op-ed, and plea for pluralism in economics before and after the crisis, I decided three years ago that I should practice what I preach. The result is Economics after the Crisis, a pluralist introductory textbook published by Routledge in January 2015. It offers a tool to understand the basics of economics from four theoretical perspectives either for use in the classroom or for self-study alongside a standard course book. The theories are presented in every chapter, micro and macro. And from interdisciplinary and close to real-world experiences to mathematically in an idealized world of perfect markets and agents following the single ethical guide of utility maximization. The book presents social economics, institutional economics, post Keynesian economics, and neoclassical economics and thereby shows that almost no economic concept or tool is theory-neutral. If only this message gets across, the book will have accomplished already more than I could hope for.

The window of opportunity to reform economic teaching is almost shut. Banks pass stress tests in Europe and the US while still being too big to fail. Nobel Prizes are awarded to economists who show no effort at all in rethinking economics. And economic policies ignore the danger of continuously increasing private and public debt, while shifting the consequences of such myopia on disadvantaged groups and whole populations.

If it is not now, we may have to wait for the next crisis to change economic thinking and teaching. I truly hope that the combined efforts of critical economists, activist students, and courageous teachers will help to make the change. We cannot afford to standby any longer.

Adam Smith--Critic of Capitalism?

By Jonathan B. Wight

The Yale Center for the Study of Representative Institutions Smithfaceswill host a conference on this topic on April 10. 

The three sessions will focus on

    a) inequality;

    b) the commercial self; and

    c) sentimental ethics and the commercial imagination.

These are all great topics for debate.

The full program of speakers can be found here.

[Thanks to Chris Martin and the International Adam Smith Society for the link.]

Is Anything Wrong with Economics?

By Jonathan B. Wight

The New York Review of Books Foundation, the Dan David Prize, and the Fritt Ord Foundation seem to think there is something wrong.  They are hosting a conference in New York on March 14-15, in which (likely) heterodox speakers will bring forth issues of concern. 

The central topic to be discussed is: What’s Wrong With the Economy—and With Economics?

Below are two panels of interest:

Saturday, March 14, 2015

 III. 3:30–5:00 pm: Who and Where Are the Economists?

Chair: Philip  Howard, Founder and Chair of Common Good
Professor David Colander, Middlebury College, Vermont
Professor Gerald Epstein, University of Massachusetts, Amherst
Professor Philip Mirowski, University of Notre Dame

Sunday, March 15, 2015

IV. 10:00–11:30 am: The Problem of Value: Economics as a Moral Science

Chair: Ambassador Itamar Rabinovich, Dan David Foundation
Professsor Greta Brochmann, University of Oslo
Professor Richard Sennett, New York University
Professor Jeremy Waldron, New York University