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In what must be considered the greatest ideological flip this century, Paul Krugman argues that excessive regulations contribute to the plight of the poor in finding housing.
Heads must be shaking all over America.
If this is true of housing, might it also be true in employment, health care, and taxation?
The argument for a negative income tax (in place of everything else) seems as strong as ever.
A new biography of George H.W. Bush by Jon Meacham is called Destiny and Power: The American Odyssey of George Herbert Walker Bush. The book brings out all the reasons why he could never be elected president today.
He was humble, he was kind, he believed in self-discipline and self-restraint. He was grateful to this country and knew that he owed a large debt to luck for being born the son of a U.S. Senator who was also rich. He made a sacrifice for his country by flying planes in the Pacific during WWII, and barely escaped death by enemy fire.
In other words, according to Donald Trump, a current presidential contender, he should be considered a “loser” for getting shot down. No contender this year has even served in the military, much less made the kind of sacrifices Bush did leading the CIA, serving as ambassador to China, and as vice-president for 8 years. Truth is, by the time he ran for re-election in 1992 he was plumb tuckered out from all that service. You could see it in his face and hear it in his voice when he came to the University of Richmond for a fateful debate.
Whether his service was good or not I’ll leave to others and I'm sure he had failings, probably some large ones. I haven’t read the new biography, just the review in The Economist entitled “The Narcissism Trap.” Still, it is enough to shake your head at the bravado, the bluster, the boasting, and outride lying that seems to pass for leadership in this election cycle. Good old virtue ethics seems as antiquated as a landline.
Perhaps it would not be bad to have a blustery braggadocio as president in a decade of peace. Yet the world has other blustery and buffoonish leaders right now, as in Russia with its invasion of Ukraine, and in China with its invasion of the South China Sea. What happens when such leaders get in a room together, with the fate of the world in the balance, and each beats his chest, makes threats, and yowls?
I was always a misfit in graduate school, getting along with neoclassical economics but knowing—knowing—that something big was missing. For a long time I thought it was that my experience growing up in various countries of Africa and Latin American had given me insights into culture and politics that were simply missing from the American mindset. One manifestation of this appeared in a discussion with a graduate school professor who stated that neoclassical economics worked identically everywhere around the world—like physics! I didn’t have a good response, but thought the professor’s statement naïve, or, worse—ignorant.
It wasn’t until a decade out of graduate school that I discovered Douglass North and voila!—the scales were lifted from my eyes. I now had the vocabulary and theory to explain what I knew was missing in neoclassical economics.
Douglass North (1920-2015), who died this week, understood that economic laws did not work the same all over the world, much as gravity does not exert the same force on the moon as it does on earth. One needs to pay attention to context, context, context. In his Nobel address he writes, “Neo-classical theory is simply an inappropriate tool to analyze and prescribe policies that will induce development” because it ignores transaction costs embedded in institutions and the (often) perverse incentives that arise because of them.
North discovered and elaborated the rules of the game through which market activity and political activity and social activity take place. I am forever grateful for his discovery. Readying Adam Smith’s Theory of Moral Sentiments in light of North’s work, one can see how Smith also tries to understand how moral rules arise and evolve. The two together make a formidable team.
[Thanks to Marlis Schneider for the initial link.]
[James Bacon is the publisher of Bacon’s Rebellion: Reinventing Virginia for the 21st Century, from where this post is reprinted, with permission.--JW]
Students at the College of William & Mary have carried on a long tradition of festooning the campus statue of Thomas Jefferson with accouterments ranging from woolen scarfs to party hats. The latest fad is to append the effigy with sticky notes denouncing the founding father as a slave holder, a racist and a rapist. The activity imitates a similar movement on the University of Missouri campus, which has been coupled with a petition to remove a Jefferson statue on the grounds that it was offensive to idealize someone who owned and raped slaves. I don’t know if the anti-Jefferson movement will gain the same momentum at William & Mary, a public university in a state where Jefferson is revered like no other historical figure. But, given the tenor of the times, some kind of debate is inevitable.
I find the negative sentiments expressed in the sticky notes to be indisputably true at one level and profoundly misinformed at another. True, by today’s standards, Jefferson’s views and behaviors were reprehensible. He did own slaves. He did sell slaves and break up slave families. He most likely (though not indisputably) did keep a slave woman as a concubine. He did believe blacks to be inferior to whites. It is not unreasonable to ask why, for all his brilliance as an author of the Declaration of Independence, a United States president, an architect, the founder of the University of Virginia, and all-around polymath, we should continue to hold him in such high esteem (or, for that matter, why we should esteem any member of Virginia’s slave-holding aristocracy).
The case I would make for Jefferson (along with James Madison, George Washington, Patrick Henry and George Mason) is not that they reflected 21st-century sensibilities, which they clearly did not, but that they articulated values and principles for the first time in history that laid the foundation for the values we hold today. We could not have gotten to where we are today had Jefferson & Company not laid the groundwork.
Colonial America imported its institutions and mental constructs from a Europe that was emerging from the Middle Ages. Collective entities such as towns, cities, guilds, social classes and ethnicities — not individuals — were imbued with rights. When Nathaniel Bacon led a revolt against the autocratic Governor Berkeley of Virginia in 1676, leading a rag-tag band of impoverished farmers and freed slaves, he called for a restoration of the “rights of Englishmen.” Virginians were entitled to rights and privileges, embodied in the Magna Carta and common law that their ancestors had fought for and won. But those rights were not regarded as universal; they were peculiar to Englishmen and derived from English institutions. Jefferson’s great contribution was to draw from Enlightenment-era principles to argue that all men were endowed by their creator with inalienable rights, including life, liberty and the pursuit of happiness. Essentially, he reinterpreted the rights of Englishmen as rights applied universally to everyone. In Jefferson’s formulation, rights did not belong to collective entities; they belonged to individuals, and they were intrinsic to a person’s existence as a human being — the core principle of 21st-century political thought.
What is perhaps most remarkable about Jefferson is that he articulated principles in direct conflict with his own material self interest as a slave holder. While Jefferson indisputably failed to live up to his own principles, it is intellectually facile and lazy to end the discussion there. It is a truism (and one of Karl Marx’s few useful insights) that economic and social classes, either the rulers or the oppressed, create ideologies that support their material self interest. One must ask: How many ruling elites in the history of mankind have ever developed a governing philosophy that undercut their material self interest? How many ruling elites in history have wrestled with the dichotomy between those principles and the way they actually lived their lives, as Jefferson, Madison, Washington and others did? The answer: precious few. Indeed, I cannot off-hand think of any other ruling elite in the history of mankind that has done such a thing.
Jefferson articulated principles that most Americans, including the people who now despise him, hold dear today. We should revere him for making the leap from rights rooted in collective entities to rights applying to all. We should respect him for making that leap in contravention of his own material self interest, and appreciate the fact that the contradiction haunted him until his dying day, even if he failed to free all his slaves and impoverish himself in the process. The journey to equal rights for all Americans certainly did not end with Jefferson, but it started with him, and he rightly deserves a place in our pantheon of heroes.
By Jonathan B. Wight
Thomas Flohr is a Swiss financier who started up VistaJet, an ultra high-end airplane service to anywhere in the world.
Here is his advice to young people:
"Stop looking at social media websites, and instead work out what contribution you can make to the world, and go and do it," he says.
"Find your niche, find what you are good at, and focus on that. And be a good person along the way - if you try to take shortcuts it will just come back and haunt you."
Jim Bacon, at Bacon’s Rebellion, takes a stab at defusing the fear-mongering that has arisen since the Paris attack. He notes:
“If Americans are concerned about random acts of terror being committed on U.S. soil, let’s keep things in perspective. The Mass Shooting Tracker has recorded more than 300 mass shooting incidents this year, killing more than 400 Americans and wounding nearly 1,200. Some are school shootings, some are suicide-by-cops, and some are tied to drug violence. I think I’m accurate in stating that only one incident — killing five and wounding two — could be construed as an example of domestic, Islamic-inspired terrorism.
"I don’t see anyone making sweeping denunciations of mentally unstable white adolescents who predominate among the school shooters, or the unemployed, middle-aged white males who predominate among the suicide-by-cop cases. There is no justification for singling out law-abiding Muslims for special scorn.”
Here are some additional statistics:
Murders in Paris last Friday: 130
Murders in Baltimore so far in 2015: 308
Murders in the U.S.: 16,121 (data are for 2013, latest annual I could find)
As Bacon notes, yes, we do have a local terrorist problem, and it consists of all the poorly socialized, generally male people, struggling with lack of meaning, relationships, jobs and other markers of stability in life, and/or who are suffering from untreated mental illness in a society that makes guns of mass destruction easier to obtain than buying a car.
Somehow we have no reservations about government knowing who drives what vehicle, for which a license to operate is required and revoked for alcohol abuse, but we have total paranoia about government knowing who owns which guns, requiring a license to operate them, and revoking that license for alcohol or other abuses.
As Douglass North notes, institutions (e.g., gun rights) arise and evolve for adaptive reasons, not because they are good, reasonable, fair, or efficient at achieving some objective.
So far as we can see in America, we have a home-grown problem of violence leading to murder, not a Muslim problem. Based on the murder statistics above, it would seem prudent for European nations to prohibit all American males between 18-30 and from entering the continent.
Are economists ethical?
One view, touted by standard economics, is that enlightened self-interest or reputation effects are a potent incentive to keep economists and other scientists honest. An outcome-based ethical framework is thus sufficient for understanding the advancement of science.
Baloney, say those of us steeped in virtue and duty ethics.
The human animal is complex, and society has evolved over millennia using a variety of complementary means for enabling trust. Outcomes do provide incentives that are critical in many contexts, but within the larger context of science they may at times pale in importance to other mechanisms.
For outcome based honesty to work, there has to be the likelihood of exposure for cheating and penalties steep enough that, when discounted for the probability of being convicted, discourage that activity.
Two economists find in a new study that we are no closer to replication in economics research than before. Andrew C. Chang and Phillip Li, at the Federal Reserve Board, released “Is Economics Research Replicable? Sixty Published Papers from Thirteen Journals Say ”Usually Not.”
Chang and Li attempt to replicate 67 empirical papers appearing in 13 high level journals. The results are encouraging in that they are able to replicate almost half of the key results. The results are devastating in that they cannot replicate more than half the results, even after obtaining the data and codes from the authors!
Empirical economics is somewhat like alchemy of the 15th century—fumbling about trying to make gold out of lead. There is some “science” here and far—far—more “art.”
I am not opposed to art in economics. I think it is only way we can advance, but we have to acknowledge the ethical foundations for such work, namely, the ethic of truth seeking for its own sake, and the disavowal of self-interested utility maximization as an acceptable ethic in this endeavor.
For an extended argument, see “The Ethical Economist: Duty and Virtue in the Scientific Process,” in The Oxford Handbook of Professional Economic Ethics, George DeMartino and Deirdre McCloskey, eds. (Oxford University Press, forthcoming 2016).
Steven Levitt and Ming-Jen Lin are out with a new NBER Working Paper provocatively titled, “Catching Student Cheating.”
Here’s the abstract:
We develop a simple algorithm for detecting exam cheating between students who copy off one another’s exam. When this algorithm is applied to exams in a general science course at a top university, we find strong evidence of cheating by at least 10 percent of the students. Students studying together cannot explain our findings. Matching incorrect answers prove to be a stronger indicator of cheating than matching correct answers. When seating locations are randomly assigned, and monitoring is increased, cheating virtually disappears.
The downside to Levitt and Lin’s research is that use purely statistical evidence to “finger” the cheater students—by looking at those who sat next to each other and shared a disproportionate number of wrong answers. The Dean of the “top American university” where the data originated refused to proceed with enforcing sanctions against the most egregious perpetrators (even though some of these students confessed). Perhaps statistics aren’t all they are cracked up to be, and prosecutors want more than simply a DNA cold hit to convict.
I teach at a school with an Honor Code, which I take very seriously but am sure not all students do. Our ethic is to give makeup exams to students who take them unmonitored in whatever place they like in the building. We do disallow the use of electronic devices of any kind, with the exception of simple calculators.
Over the years I have devised strategies to thwart the cheaters: Students who sit next to each other receive an exam booklet in which the multiple choice questions and the correct options are scrambled. Or, I hold the exam in a room large enough for every student to sit next to an empty seat.
I also have the liberty, at a small liberal arts college, of assigning many writing assignments throughout the semester, and creating essays and short answer questions for exams. I try to structure these open-ended questions in a way that allows me to distinguish who has deeply thought about the material, and who has merely crammed.
I adore working in an environment in which trusting students is the sine qua non. But that doesn’t mean abdicating responsibility for making life harder for that cohort (10%?) who would abuse the system.
Suppose you’re a professional economist, and like virtually all other professional economists, spent five years in graduate school and never heard the word “ethics” mentioned.
How do you learn about your professional obligations?
Fortunately, AIRLEAP, the Association for Integrity and Responsible Leadership in Economics and Associated Professions (that’s a mouthful) is holding a training session in Washington next February, in conjunction with the Eastern Economic Association:
Leadership Training Seminar at the Annual Conference of the Eastern Economic Association
On February 25th there will be a special one-day training seminar that is being offered by the Eastern Economic Association during its annual conference in Washington, DC. It takes place the day before the conference sessions begin. People may attend the seminar as a separate event, or may attend it as part of the conference. The cost (which includes lunch) is $230.
The seminar is entitled, "Principles of Ethics, Scientific Integrity, and Responsible Leadership: A One-Day Training Seminar for Economists." It is being taught by Distinguished Professors George DeMartino and Deirdre McCloskey, authors of the Oxford Handbook of Professional Economic Ethics, with presentations by Erica Groshen, Commissioner of the Bureau of Labor Statistics; Keith Hall, Director of the Congressional Budget Office; and Brian Moyer, Director of Bureau of Economic Analysis. The keynote luncheon speaker will be Professor William Easterly who will discuss his new book, The Tyranny of Experts. Also speaking will be Amelie Constant (IZA), Samuel Otoo (World Bank), W. Charles Sawyer (Texas Christian University), and Benjamin Simon (Dept. of the Interior).
For registration, click here (https://www.memberplanet.com/events/airleap_membership/pet-1#.VkCU-hCrSkY)
Mark D. White
Here's a fantastic job opportunity at University of Maryland, College Park, for philosophers who study economics. (Hat tip to Claire Morgan at Mercatus and George Mason University.)
From the posting:
Assistant Professor (tenure track). AOS: moral philosophy, political and social philosophy, philosophy of economics, and/or business ethics. AOC: open. The successful candidate will actively research and publish, teach graduate and undergraduate philosophy courses, mentor graduate students, and serve on administrative committees. The position will be in Philosophy, but the successful candidate will be affiliated with the Ed Snider Center for Enterprise and Markets at the University’s Robert H. Smith School of Business.
The entire posting with application details is here.