« June 2015 | Main | August 2015 »

July 2015 posts

Summer Reading: The Autobiography of Walter Williams

By Jonathan B. Wight

The economist and columnist Walter Williams is a smart guy, but I often disagree with him on philosophical and policy issues.  Williams is famous for pushing the “greed is good” view of capitalism, and then incorrectly attributing it to Adam Smith. I previously blogged on this point here.

Nevertheless, his autobiography, Up From the Projects (2010) makes for fascinating reading.  He is a hardworking kid who comes of age in Philadelphia during the 1950s, still an era of segregation in the South but opportunities opening up for enterprising “Negroes” in Los Angeles where his father is living.

Williams is a mediocre student and works in numerous jobs to support his entertainments.  His mother, a saint, works part time as a “domestic servant” and is a harsh taskmaster to her two kids. Williams2

[Walter with his father-in-law and wife Connie in their first home in Chevy Chase, Md.]

Walter has a hard and demanding personality, which leads to his arrest for disorderly conduct as a cab driver.  Williams probably wasn’t guilty of the charge, but his behavior exacerbated a confrontation with a police officer.  He is also an inveterate wiseass and prankster, causing trouble in school and in the Army when he was drafted.  He fights segregation in the South by refusing to give up his seat on a Greyhound bus to a white woman, and in the Army by crashing a whites-only dance. 

He notes: “I would be provocative and aggravating, but not enough for them to bring serious charges against me”—at least at first. Williams acknowledges that his behavior was often “reckless.”  He is later court marshaled for failing to obey an order but acquitted. His acrimonious personality and his constant needling the Army about segregation is his constant companion.

Williams also admits that he did not take the feelings of others very seriously, and that his wife Connie played an important role in “civilizing” and “humanizing” him, by expanding his moral sentiments.  My own impression, having read some of his other work as well, is that Williams gets pleasure from causing consternation to others, and that is not a particularly worthy aspiration.  He admits to lying repeatedly to get out of troubles, including unpaid parking fines.  He is a scofflaw, and enjoys it.

During graduate school at UCLA he notes that he “probably became a libertarian through exposure to tough-minded professors who encouraged me to think with my brain instead of my heart.” He claims that, “I have never used my class for proselytizing students, as so many professors do. I think that’s academic dishonesty.” 

But in the next sentence he goes on to say, “Personally, I want students to share my conviction that personal liberty, along with free markets, is morally superior to other forms of human organization.” Saying “I want students to share my conviction” is essentially an admission that he has an ideological mission, which implies he is proselytizing because he has an end goal in mind for his students’ intellectual choices. Everyone has a bias, and mine as a teacher is to create opportunities for students to think critically, without (I hope) desiring that they share my ideological convictions.

There is a lot of interesting economic history here, such as how Thomas Sowell, a friend of Williams, came to become an expert on ethnic economic success in America. Williams stays true to his free market beliefs and refused to accept academic appointments that he thought were motivated by affirmative action. This is the most moving part of the book, when Williams at Temple University tries to get other faculty members to stop coddling black students and to hold them accountable for their academic failures.  He goes on to do the same thing when lecturing in Africa.

Up From the Projects provides an illuminating look into the life of a well-known and cantankerous economist, covering some interesting aspects of American and economic history. 

Review of Ethics in Economics

By Jonathan B. Wight

Jim Bacon, on Bacon’s Rebellion, reviews my new book and finds many positive things to say.  His one negative comment is that I don’t forcefully attack government enough. 

That’s an accurate assessment, and probably reflects my upbringing.  Both my parents worked for the federal government at various points.  My dad was in Naval Intelligence, then the State Department, and later worked in the private sector.  My mom worked in censorship during the war, and later in the State Department.

Unlike the Public Choice view in economics in which every government worker is simply a bureaucrat milking the system for their own private gain, my parents devoted 70 hours a week or more to their jobs and spent thousands of dollars of their own money to carry out official business overseas.  They did it because it was the right thing to do.

That is why I get irritated with those (not Jim) who press the issue of personal costs and benefits as the only way to think to about human choice.  For example, many economists and some philosophers argue that it is “irrational” to vote, since voting takes time away from work or leisure, and one’s vote has no impact on the outcome.  This ignores the ethical dimensions of living in community and having responsibilities to others in that community.

I am not a huge advocate for Kantian ethics, but at least here it is very clear: if you cannot universalize your action without it becoming illogical, that action is not ethical.  Hence, if in a democratic society everyone fails to vote, there could be no democracy and no legitimate government, so the idea of a democracy becomes unimaginable in these circumstances. 

My bottom line: the Public Choice idea, taken to extreme, is that government agents always shirk, are lazy, and contrive to fix the system for their own benefit.  That actually is a pretty good model when thinking about the House of Representatives!  But it does not work well when considering ordinary civil servants, people in the military, firemen and women, and so on, who strive to serve honorably and faithfully, with notions of duty and virtue at the forefront, or at least alongside considerations of costs and benefits.  Pluralism rules.

So Jim is right about “government failure” being a real and important issue. But so too is the exaggerated claim that some make that government and their agents are always bad.

The Ethical Effects of Trees

By Jonathan B. Wight

The curative powers of nature have been recognized for millennia in the ancient traditions of folk medicine, as exemplified by the widespread use of aspirin as a preventative prescriptive in heart disease.

Turkey OakBut what about the long standing reverence for nature itself that seems to transcend cultural barriers?  That, too, is now being taken seriously by medical scientists.  As reported in the New Yorker (“How Trees Calm Us”), gall bladder patients with windows overlooking trees recovered noticeably sooner than those without such a vista.  This has led to confirmation in other studies.  Here is an extended excerpt:

“That is the riddle that underlies a new study in the journal Scientific Reports by a team of researchers in the United States, Canada, and Australia, led by the University of Chicago psychology professor Marc Berman. The study compares two large data sets from the city of Toronto, both gathered on a block-by-block level; the first measures the distribution of green space, as determined from satellite imagery and a comprehensive list of all five hundred and thirty thousand trees planted on public land, and the second measures health, as assessed by a detailed survey of ninety-four thousand respondents. After controlling for income, education, and age, Berman and his colleagues showed that an additional ten trees on a given block corresponded to a one-per-cent increase in how healthy nearby residents felt. “To get an equivalent increase with money,

Continue reading "The Ethical Effects of Trees" »

Milking Students and Taxpayers

By Jonathan B. Wight

Government financing of higher education (through student loans and grants) leads to an increase in demand for higher education.  As demand shifts right, we move up the supply curve of higher ed.  What does that do to the price of education?

If the elasticity of supply is high, that means that it is relatively easy to add to capacity, and output expands with little rise in price, assuming a competitive marketplace.

But there are two things wrong with this: first, labor inputs in the higher ed world are limited, which is another way of saying the quality varies greatly. The research quality of people hired by Stanford is markedly different from the research quality of people hired by a local community college. 

Second, if research quality determines reputation in the academic world, and if reputation affects demand, then we no longer live in a world of perfect competition because the products being sold are not homogenous—identical.

Rather, we now live in a world of limited supply of high quality educational offerings. This supply curve is relatively inelastic, because it takes a long time and a lot of money to create reputation. And since the existing high quality schools may disproportionately set the standards for accreditation, they can lead others down the path of emphasizing research over simply teaching.

The result is that as demand increases, tuition prices surge (see chart).  Inelastic supply
This is not rocket science, and was recently supported by research from the New York Fed, as reported by Jim Bacon on Bacon’s Rebellion. The conclusion Bacon draws is that:

“Little of the money has gone to hire more professors, increase faculty pay or otherwise improve the quality of education. Most of it has paid for bloated administrations. Meanwhile, outstanding student-loan debt has skyrocketed to more than a trillion dollars, creating a new class of indentured servants.”

“This is the hardest evidence yet that one of America’s most ideologically liberal institutional complexes, higher education, is also one of the most exploitative. Colleges and universities talk a good game about social justice, but in the end, they put their institutional prerogatives first.  In the end, higher education has become a powerful engine of social injustice.”

I can corroborate this from my years in Brazil, where higher education was not only subsidized, it was free.  All you had to do was get in. But only rich kids had access to excellent high schools.  As a consequence, society provided a free ride for rich kids to add to their human capital in college, paid for by the taxes on the poor.  And virtually all of these kids were white, adding to Brazil's racial injustice.

Two chapters in my book, Ethics in Economics, deal with economic injustice and economic opportunity.

[Chart source: http://www.federalreserve.gov/pubs/feds/2011/201103/index.html]

Dan Hausman on the limits of economics (in The New York Times)

Mark D. White

HausmanIn today's installment of The Stone in The New York Times, Gary Gutting interviewed philosopher of economics Daniel Hausman about the role of economics in public policy and the media. Hausman usefully points out the limitations of economics in predicting the outcome of real-life crises (such as the current Greek crisis):

Speaking of the predictive power can be misleading. Scientists (and I include economists) are not fortunetellers. Their theories only allow them to predict what will happen if initial conditions are satisfied. Elementary physics enables us to predict how long it will take an object to fall to the ground, provided that gravity is the only force acting on the object. Predicting how long it will take a leaf falling from a tree to reach the ground or where it will land is a much harder problem.

The problems that we want economists to help us solve are more like predicting how leaves will fall on a windy day than predicting how objects will fall in a vacuum. Economic phenomena are affected by a very large number of causal factors of many different kinds. The Greek economic crisis is extraordinarily complex, and it has as many political causes as economic ones. Standard economic theory provides useful tools, but it focuses on a very limited range of causal factors — mainly the choices of millions of consumers, investors and firms — which it simplifies and assumes to be governed entirely by self-interested pursuit of goods or financial gain. When one recognizes all the other factors that affect economic outcomes, from government policies to the whims of nature, it is easy to see that economists cannot predict the economic future with any precision.

When Gutting asks what help economists can provide in debates over public policy, Hausman's answer places economics much closer to philosophy than physics: "They tell us which are the right questions to ask... Knowing what to ask is enlightening even when it is hard to find the answers." In other words, economics provides focus to help policymakers choose the means that will best further their ends, wherein both means and ends are ethically loaded concepts as well as economic ones.

(Hausman also highlights the biases of economists as well as the journalists that write about them, and deftly resists Gutting's attempts at the end to goad him into going political or condemn some economic theories as having "no scientific support.")

Hausman ends by saying:

There are cognitive limits to what can be learned about such a complicated system as a modern market economy, and there are practical and political limits to our ability to make use of what can be learned. Within these limits, economics can be of use. I fear this is faint praise.

I don't think that's faint praise at all; rather, it reflects appropriate humility toward a realm of study that is often called upon to decide issues that are outside its purview. And it leaves tremendous room for economics to contribute to—but not determine—the choices of policymakers

As Hausman recognizes, economics can be of invaluable use to policymakers in terms of analyzing aspects of a problem that relate to prices, output, and simple measures of well-being, and it can often predict many significant outcomes of alternative policies to inform policymakers. But economics cannot dictate policy choices that are, by their nature, inherently moral or political choices as long as it refuses to acknowledge and either embrace or question its moral and political foundations.

The Big One

By Jonathan B. Wight

We all remember the National Geographic article of October 2004 predicting a devastating hurricane hitting New Orleans.  I read this piece and was shocked, like everyone else, when its prediction came true ten months later with Hurricane Katrina. 

The ethics of inaction to real threats like this likely stems from some behavioral economic issues, such as humans assuming that risks apply to others.  People also have very short time horizons.  Preparing for disaster means incurring costs now, with only the probability of yielding a public benefit at someone unknown future date. Politicians may want more visible bequeaths to their communities than simply lowering the potential threat level.

This assumes, of course, that politicians actually care about public preparedness—a notion put to the test with Michael Brown’s selection to head FEMA.  Brown was appointed as a political hack, having limited prior relevant experience but close personal connections.  It was a crony government job.

That brings me to the “next big one.”  We are accustomed to thinking that if a huge, devastating earthquake will hit, it will happen in California along the San Andreas Fault. This menace is well-known and the public fairly well prepared.

A much bigger potential catastrophe lurks in the Pacific Northwest, where the Juan de Fuca tectonic plate is jamming itself under the larger North American plate.  It is off our radar screens of worry for two reasons:  one, it is 30 miles offshore; and two, its last major earthquake was in 1700, before written records of the area.  (There are other kinds of evidence for this quake, including tree extinctions and tsunami reports in Japan.)

Cascadia copy

A predicted Cascadia quake was written up in Cascadia's Fault: The Earthquake and Tsunami That Could Devastate North America (2011).  A more recent analysis is in the current New Yorker magazine. Either account will scare your socks off.  Because this fault line has been building tension for over 300 years, a major plate realignment would result in a massive earthquake.  A 9.0 quake in the Pacific Northwest would be followed by a massive tsunami that would kill tens of thousands along coastal areas and devastate cities such as Seattle and Portland. 

Of course, authors like to exaggerate threats to sell books and magazines, and it is tempting to discount the worries.  If the threats were real, wouldn’t serious scientists and government agencies be hard at work to prepare, and thus mitigate the impacts? 

According to these authors, everyone is asleep at the wheel.  The politics and economics of inaction are a strong inertia to overcome.  Is it ethical for Chicken Little to claim the ocean is going to rise up and drown us, based only on historical evidence that it has happened in the past, repeatedly, over the last 10,000 years?  

Honor Code for Science

By Jonathan B. Wight

The University of Minnesota Medical School is embroiled in an ethics scandal and the administration is allegedly playing cover-up.

That is the normal course of things, hoping that unpleasant issues will blow over. I recently read a lovely novel by Richard Adams, Plague Dogs, about two mutts who escape from a medical research facility in the lake district of England and are now ravaging the nearby country folk. Naturally the administration stonewalls in the hopes that a scapegoat can be found.

In the case of Minnesota one has deep surprise, since squeaky-clean Midwesterners with roots in Sweden and Norway are not supposed to exhibit moral failure.  Ah, but perhaps the school hires researchers from the degenerate East and West coasts?

The problem with scientific Institutional Review Boards is that they only evaluate what a researcher self-reports they plan to do, not what a researcher actually does.  There’s the rub.  Science must rely on the virtue of a researcher to mean what they say and to stick with their promise.  That takes integrity in addition to incentives.

Carl Elliott, a faculty member at Minnesotta argues that:

“An honor code is a fragile thing. All the parts have to be in place: pride in the integrity of an institution, vigilant self-policing, a collective sense of shame when the code is violated and a willingness to punish those who break it. At the University of Minnesota, we have very few of those things. And so without sustained, relentless pressure from the outside, I am afraid we are doomed to more of the same.”

Debt Relief in Perspective

By Jonathan B. Wight

When is it okay to forgive a nation’s debt?

This is the question of the day with Greece.

Now the New York Times digs up this photo of Germany’s delegation to London in 1953, inking an agreement that cut Germany’s debt obligations in half! 

Germany debt relief

Is it rank hypocrisy for Germany to drive Greece into depression when Germans received debt write-offs during their crisis, and this boon led to an economic take-off?  Or, that Germany never compensated Greece for the damage it caused during WWII?

Debt forgiveness, or at least partial forgiveness, seems the sensible approach when both sides are in error.  The banker and the borrower are in this together. Partial debt forgiveness does not mean anyone endorses Greek’s corrupt economic and political system, but it could forestall worse fascist political futures and the unraveling of the European experiment.

Of course there is a moral hazard, of creating an incentive for future bad behavior. But if there is pain on both sides, as required by partial debt forgiveness, this may forestall bankers from making reckless international loans in the future. 

Greece is now running a primary budget surplus, wages have been falling, and unemployment exceeds 25%.  There is more to be done, given the fact that Greece at the moment has no currency to devalue. But debt renegotiation and some debt forgiveness seems just and right n the grand scheme of things.

Monuments and Flags – Hate or Heritage?

By Jonathan B. Wight

The rushing debate about the Confederate flag and related monuments to the Civil War are particularly meaningful in my neck of the woods—Richmond, VA—the capital of the Confederacy and the largest slave-trading city outside of New Orleans.

IMG_1413 There is lots of vitriol, exemplified by the recent defacing of numerous statues around town.  The photo shows a workman removing graffiti this Sunday morning from the Confederate Soldiers and Sailors Monument on Libby Hill Park, a few blocks from my home.

But there is also lots of overdue discussion and dialogue taking place. The move to eradicate Confederate symbols from our daily life is gratifying and uplifting if it reduces the systematic opportunities for the spreading of hate and division.  The battle flag is the most obvious target and is rightfully being removed as a public symbol around the country.

Monuments are a more difficult issue.  The famous statue of Robert E. Lee mounted on his horse Traveler that adorns Monument Avenue in Richmond represents a special case for three reasons.  Lee statueFirst, Lee’s conduct after the surrender at Appomattox shows that he genuinely reaffirmed his pledge of allegiance to the United States and later sought to strengthen the union rather than undercut it. 

Second, Lee promoted racial harmony through personal acts, such as the apocryphal story of his kneeling alongside a black parishioner to receive communion at St. Paul’s Church.  This is not to suggest he believed in racial equality, but he did believe in basic dignity.

Third, and most important, Lee went on after the war to lead Washington College as a modern educator, transforming a sleepy and outdated curriculum and paving the way for Washington and Lee as a premier liberal arts institution.  We continue to celebrate Lee’s life because it affords us an example of someone who struggled, lost, and redeemed himself through humility, learning, and growth.

In short, Lee represents the heroic life not because he lacked faults, but because he strove to overcome them and provide a positive legacy for society.  (For more on this topic, read an excellent essay by Ken Ruscio from Inside Higher Ed.)

The same cannot be said for those who continued to foment rebellion in the Lost Cause. A recent Richmond Times Dispatch editorial nailed it: remove those statues, such as the one of Jefferson Davis on Monument Avenue, that uphold a “vainglorious exercise in self- and national justification” for slavery.

History is our collective past, and the telling of history always goes to the victors. Let there be reconciliation without gloating, reflection not vitriol. We are not the Taliban, tearing down statues at will, but we can judiciously remove and replace some monuments to better reflect our evolution as a society.

There are plenty of other great heroes to celebrate instead: A statue of Maggie Walker, long on the planning list, seems overdue on Monument Avenue. A statue of Lincoln and his son was a welcome addition to the Richmond landscape in 2003.

[Disclosure: My great grandfather on my father’s side fought with Jeb Stuart’s Confederate cavalry at Gettysburg.  My step-great grandfather on my mother’s side fought in Stafford County for the Union army, and inadvertently defaced my father’s family’s church.] 

[Lee statue photo by Matthew Huntley from http://civilwartalk.com/threads/lee-statue-on-monument-avenue.94032/.]

First and Fourth of July

By Jonathan B. Wight

Happy 4th of July all! The celebration of America’s founding seems to have crept up this year, amidst the shootings in South Carolina and the debt crisis in Greece.  We have much to be thankful for, amidst our many problems, both domestic and international.

At a recent event I sat next to some bright and charming and well-educated people, who were as gloomy about America’s future as I’ve ever heard. They believed—fervently—that Obama was the Manchurian Candidate, bent upon deliberately destroying all that is great about America. They argued that his domestic policies, particularly the run-up of debt, would destroy the country.  His foreign policies, evidenced by the pull-out from Iraq, signaled his alliance with our Muslim enemies. “He hates America,” was the refrain heard several times.

Wow!  I knew these ideas were circulating, but didn’t expect them to be entrenched in nice folks who seemed otherwise to be fair-minded and worldly.  So, in the spirit of 4th of July, does Obama hate America? 

I don’t think so at all.  I think he has a deeper and richer understanding of America, and his articulation annoys people who want platitudes and flag waving without the nuances.

I share some themes with Obama, having living 11 of my first 16 years out of the country in Africa and Latin America, and the formative years from 11-16 in Brazil.  I have come to deeply love this country and my state of Virginia, but it was not always easy to do so. When I returned to the U.S. as a mid-year sophomore in high school, I sure didn’t feel like an America.  And I didn’t think like an American, either.  My first inclination on meeting others was to lean in and give them a kiss on both cheeks, as was proper and polite behavior in many other countries.  Of course, people in America must have thought I was daft. 

And I knew a lot about America that Americans didn’t know and didn’t care to know.  This would include the more than fifty U.S. invasions or covert operations in support of coups in Latin America.  Most of these were for the purpose of advancing special economic interests.  This surely cemented in my mind the notion of crony capitalism, which happens to be the Association of Private Enterprise Educations theme for its 2016 conference

I see America through the lens of how others see us, and that naturally make me more humble about the righteousness of our causes. Anyone who reads Obama’s autobiography would likely come away with the same insight.  This does not mean he fails to love this country. It means he loves it as somebody with eyes wide open, who knows his lover isn't perfect, and loves it anyway.  Obama’s first major mistake, bowing to the Saudi king, arose from his desire, I think, to send a message that America’s new leader understood and respected others in the world better than many others had in the past. In hindsight he should not have done so, because Americans do not recognize monarchy as divine and we do not bow to the Queen of England, nor anyone else.

But back to the main issue: do Obama’s policies reflect hate for America?  Hardly. He isn’t the warmest (emotionally) of Presidents, but I do think his heart has been in the right place. The Health Care Act is helping lower the growth in spending, while increasing coverage. That should improve human capital. The federal deficits that exploded were the result of the 2008 crisis that Obama certainly did not cause, and the bailouts saved our financial system.  

On a sad note, the march of progress sometimes leaves a mess, as depicted in this photo, taken from an apartment complex near my home. First of monthThe first of the month led to evictions, and people with bad planning habits or bad luck ended up on the street, with no money to store their possessions. Is this the metaphor for the country and its debt?

I don’t think so.  I tend toward optimism, given the long march of history.  But that does not mean that societies do not enter deep dark decades or centuries (just ask China).  Our debt problems are manageable, provided we become more pragmatic and less ideologically partisan.  That won’t happen until people stop demonizing the other side with demonic caricatures derived from Hollywood movies.  

Happy 4th.