How many people should we produce?

I don’t know how to answer this question. But recent posts by Tyler Cowen, Ross Douthat and Robin Hanson all suggest that the answer is “more”. Here’s the headline of Tyler’s recent article:

What Does the World Need? More Humans

Global depopulation is the looming existential threat that no one is talking about.

The world current has 7.8 billion people, and that total is expected to rise to 10.9 billion by 2100.  The population may begin falling in the 22nd century, but I wonder if it’s a bit early to begin planning for something so far out in the future, which is so hard to predict.  Back in 1970, most experts were worried about overpopulation, at a time when the world had less than half as many people as today.

What is the optimal global population?  I just completed Schopenauer’s 1200 page magnum opus on philosophy, which argues that the correct answer is zero.  At the other extreme, some argue that all human life is wonderful, pointing to the fact that even people living in horrible conditions—say North Korean concentration camps—typically do not commit suicide.  Both claims are plausible, but I’m not entirely convinced by either extreme.  I remain agnostic on the question.

We could apply the utilitarian criterion that the optimal number of humans is the one that maximizes aggregate global utility (perhaps including animal utility in the calculation.)  I have no principled objection to that approach, but I don’t see how to implement it.

People often criticize utilitarianism by pointing to the fact that utility cannot be measured.  I accept their point, but still find it to be a useful policy guide for real world public policy decisions.  While we cannot measure utility exactly, we can have well informed views that one situation has a higher utility level than another.  Thus is seems very plausible that South Korean public policies produce higher utility than North Korean public policies.  But when I use utilitarian reasoning I always implicitly hold the population fixed.  I find it almost infinitely more difficult to think about utility in an absolute sense.  How many Swiss people does it take to have the same total utility as 100 residents of rural Pakistan?  I wouldn’t even hazard a guess, and thus would be extremely reluctant to advance any public policy agenda on that basis.

Some population boosters point to polls suggesting that Americans would prefer to have more children. OK, but why don’t they?  Presumably there are some barriers related to the resources (time, money, etc.) required to raise children.  But then what are the public policy implications?  People would also prefer to have more money, bigger houses, more vacations, and lots of other good things.  Should public policies subsidize those goods?  For children the answer might be yes, as there’s a sort of “positive externality” aspect to raising kids.  But that just pushes us back to the optimal population question in the title of this post.  What is the answer?

Another possibility is that we should keep population roughly where it is, as change can cause problems.  Thus keep Japan’s population at roughly 125 million, Britain at roughly 68 million, and New Zealand at roughly 5 million, even though these three island groups have roughly equal ability to support human life.  But I’m not convinced that the disruption caused by Japan gradually declining in population and New Zealand gradually growing in population is all that bad.  Yes, you can point to downsides from population aging, but also some upsides (less crime, less traffic congestion, less pollution, more living space.)  So I’m not convinced by the claim that while we don’t know the optimal population, surely we know that population decline is bad.

People worry that Europe will turn into a sort of museum.  I love museums!

PS.  Suppose it turned out that the “correct” utilitarian answer to the question in the post title was that the world should become populated until living standards fell to those of a North Korean concentration camp, because all life is basically wonderful.  At that point I suspect Cowen and Douthat would jump ship, but Hanson would stick with the utilitarian logic of the analysis.

PPS.  I had always assumed that the Christian religion had a sort of “be fruitful and multiply” ethic, but Schopenauer points out that this is the Old Testament, and argues that the New Testament has a very different perspective.  Can anyone confirm?

PPPS.  Schopenauer’s The World as Will and Representation is highly recommended for disillusioned people.  Optimists might like his book on how to be happy, which is perhaps just as impressive, but in a radically different way.

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Charles Ball’s Humanity

I participated in a Liberty Fund colloquium on Zoom Friday and Saturday on the topic “Slavery and the New History of Capitalism.” It went very well.

One of the most interesting readings was by Charles Ball, an escaped slave. Ball’s book, published in 1837, was titled Slavery in the United States: A Narrative of the Life and Adventures of Charles Ball. In it, he describes his experience as a young man who was moved from Maryland’s Eastern Shore in 1805 to the cotton fields in South Carolina. One of the big issues in Cornell University history professor Edward E. Baptist’s work is whether the quotas of Ball and others were continuously raised by a ratcheting up of torture. Baptist claims that it was and, to back his point, quotes from Ball’s autobiography, but the striking thing about the 4-page excerpt from Ball’s autobiography is that Baptist left out passages that showed that his (Baptist’s) claim was untrue.

But I found something else striking: despite the fact that Ball was a slave, he took pride in his work. After detailing the fact that he picked “only” 38 pounds his first day on the job while two young men about his own age had picked 58 and 59 pounds, respectively, Ball writes:

I hung down my head. and felt very much ashamed of myself when I found that my cotton was so far behind that of many, even of the women, who has heretofore regarded me as the strongest and most powerful men of the whole gang.

He continues:

I had exerted myself today, to the utmost of my power; and as the picking of cotton seemed so very simple a business, I felt apprehensive that I should never be able to improve myself, so far as to becoming even a second rate hand. In this posture of affairs, I looked forward to something still more painful than the loss of character which I must sustain, both with my fellows and my master; for I knew that the lash of the overseer would soon become familiar with my back, if I did not perform as much work as any of the other young men.

He goes on to say that the overseer told him that he had good hands and would “make a good picker.” Sure enough, his productivity improved to 46 pounds the second day, and 52 pounds the third day. The next week he and the others were told that if they picked more than 50 pounds in a day, they would be paid a penny for every extra pound.

Here’s what I found interesting: not the incremental incentives but my own reaction to Ball. One of the other participants said that Ball was kind of pathetic, like a child or a puppy dog, for feeling shame at not being productive enough the first day.

I responded that I thought of the situation completely differently. I thought Ball was a man I would have liked. Here he was being enslaved but he didn’t let that take away his humanity. He still had pride in his work.

Then I told the following true story. In 1968, when I was at the University of Winnipeg, Prime Minister Pierre Trudeau’s buddy and Secretary of State (which isn’t like the position that has the same label in the United States) Gerard Pelletier had told a meeting of newspaper editors in Montreal that he was thinking of pushing for a draft in Canada. Canada has an even stronger tradition of a volunteer military than the United States has. I was 18 at the time and I wrote an angry letter to the Winnipeg Free Press, which was published in full.

I read with astonishment the article in the Free Press, October 29, entitled Non-Military Draft Plan Under Study. The only objection to the idea made by State Secretary Gerard Pelletier was that it would be difficult to put into practice. Considerations of justice do not appear to have entered his mind.

It is indicative of the temper of our times that when people propose government intervention, they do not say, “Is it right?” but only “Can we get away with it?”

In the same article Mr. Pelletier is quoted as saying that the young would like to “play their part in creating a more just society.” I am one of those young people. Because I want a just society I am taking my stand. I refuse to be coerced into serving a year for the government. Government intervention has never led to a just society and never will. (November 9, 1968.)

A week later I was thinking about the last part of my letter. I then realized who I was and said to myself, “You wouldn’t refuse. You would prefer the Army to jail. You always make the best of a bad situation. You would probably resist for a few hours at most and then would try to figure out what you could learn from the Canadian Army during this period of short-term slavery.” That’s why Ball’s first paragraph quoted above resonated with me. He made the best of a bad situation and didn’t let the fact that he was a slave  take away his humanity or his pride in his work.

This morning I woke up with a further thought. I remembered a 1957 movie titled Bridge on the River Kwai. SPOILERS AHEAD. Colonel Saito, the sadistic commandant of a Japanese POW camp in Burma, insists that the mainly British prisoners, including officers, build a bridge over the River Kwai. This, by the way, violated the Geneva Conventions. Work is not going well and there’s a lot of sabotage. But then Colonel Nicholson, played by Alec Guinness, takes over and persuades the men to take pride in their work and build a first-class bridge.

When I watched the movie, I was torn between wanting Nicholson to fail and wanting him to succeed. But the point is that he and many of his men took pride in their work. And this was a more difficult dilemma than Charles Ball had. To the extent they succeeded in building the bridge, it would help the Japanese war effort. But to the extent Charles Ball succeeded, he would help buyers of cotton.

By the way, I read a few years ago that some of the people who were actually prisoners in that prison camp were furious at the movie. They felt pride in sabotaging. Here’s Wikipedia:

Ernest Gordon, a survivor of the railway construction and POW camps described in the novel/film, stated in a 1962 book, Through the Valley of the Kwai: “In Pierre Boulle’s book The Bridge over the River Kwai and the film which was based on it, the impression was given that British officers not only took part in building the bridge willingly, but finished in record time to demonstrate to the enemy their superior efficiency. This was an entertaining story. But I am writing a factual account, and in justice to these men—living and dead—who worked on that bridge, I must make it clear that we never did so willingly. We worked at bayonet point and under bamboo lash, taking any risk to sabotage the operation whenever the opportunity arose.”[26]

I get that too. One could take pride in the work or take pride in the sabotage.

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When to blame?

This comment by Arthur Schopenhauer raises some interesting questions:

If a person is stupid, we excuse him by saying that he cannot help it; but if we attempted to excuse in precisely the same way the person who is bad, we should be laughed at.  And yet the one quality, like the other, is inborn.   This proves that the will is the man proper, the intellect the mere tool.

While one can question any of these three claims, there is a real issue here that cannot be easily dismissed.  Thus I do not think being bad is entirely inborn, but then neither is being stupid.  Academic education is possible, and moral education is also possible.  With some effort, we can get smarter and we can get better. I doubt that any modest difference in the extent to which stupidity and badness are inborn can fully explain society’s vastly different attitude toward these two traits. And Schopenhauer’s conclusion about “the will” being the man proper leads one to ask:  Why are people viewed this way?

One possibility is that the harm from stupidity is usually internalized to a much greater extent than the harm from being bad.  We blame people for being bad because bad behavior has much greater external costs than stupid behavior.  A person can stupidly throw away a fortune at a casino with very little in the way of legal or moral sanction.  But if someone uses fraud to steal a fortune from another person, we call them evil and throw them in prison.  Stupid behavior causes harm, but much of the harm (not all) falls on the person that engages in the foolish actions.  If we consider both blame and prison to be forms of deterrence, then these sanctions are less necessary where a person is already being punished for their foolish behavior.

Think about two societies.  One is a community of average American families in Ohio, and the other is a few hundred hunters and trappers who live alone and isolated from each other in Alaska. The community in Ohio might condemn drug use, fearing that it could cause people to become irresponsible, unable to support their families.  In the wilds of Alaska, it’s unlikely that “society” would much care if an isolated hunter was using drugs.  If it interfered with his ability to hunt and trap, he would pay the price without any government sanction.

From this perspective, society’s system of morality, our code for choosing when to blame people and when not to blame people, might be viewed as a sort of tool, like a shovel or a scalpel.  Blame is a tool we use to discourage people from imposing external costs on society.

If I’m right, then stupidity that does not involve external costs would only be condemned when we actually care about the person hurting themselves.  And I think this is mostly true.  I might yell at a neighbor’s kid for scratching my car, but I won’t yell at that kid for not studying harder at school.  The child’s parents love their child much more than I do, and might yell at them for not doing their homework, for being “stupid”.  (That’s not to say parents cannot also punish children for selfish reasons, but surely the world contains at least some “tough love”.)

I am not saying that people consciously act as utilitarian moralizers, rather that we’ve evolved in such a way that we instinctively try to use our moral system in an effective way, a way that makes society work better.  We instinctively overestimate the difference between being stupid and being bad.

I’m also not saying that our moral sanctions are always appropriate—that would be absurd.  It’s highly unlikely that the prohibition of alcohol was optimal during 1920-33, but not optimal in either 1910 or 1940.  More likely, we sometimes make mistakes when deciding whom to blame and what sanctions to apply.

It’s also possible that our moral indignation is more convincing if we do not understand where it comes from and what’s its purpose is.  This sense of indignation is so innate that it might lead us to get angry at a zoo animal that kills a child that has wandered into its cage.  That anger won’t deter other zoo animals, but the basic instinct that makes us angry is appropriate in the vast majority of cases where children are intentionally harmed.

Indeed there have been times when I’ve yelled at my computer.

PS.  In politics, we are reassured if we find evidence that voters on the “other side” are merely being stupid, rather than malicious.

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Who gains under non-price rationing?

The rich!

Who gains under price rationing?

The rich.  And everyone else as well.

The economy is not a zero sum game.  Under a price rationing system, the vaccines will get out to the public more quickly and fewer people will die.  It’s true that many of the first doses would go to wealthier individuals, but that’s also true of non-price rationing.  In practice, states spent so much time fighting over how to distribute the vaccines in a “fair” way that they slowed the rollout of vaccines, leading to many needless deaths.

PS.  Of all the head-scratching decisions made by the US government during the past year, it’s hard to top the one described in this new Alex Tabarrok post.  Imagine being a government official making a decision that costs thousands of lives, and has precisely zero benefit to anyone.

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The old left and cancel culture

As far as I can tell, there are three aspects of cancel culture of concern to the old left:

1.  They recall when cancel culture was used against the left.
2. They worry that it diverts attention from achieving socialist aims, and indeed makes it more difficult to do so.
3. They believe the younger generation is too soft.

The first point is obvious. Free speech has traditionally been a liberal idea. Those of my generation will recall the Berkeley free speech movement, and those a bit older will recall the Joe McCarthy era.

The second point is less obvious. Here’s Freddie deBoer expressing frustration with defenders of cancel culture:

[C]anceling is so powerless that Bacharach feels no compulsion to discuss it in terms of power. He literally does not discuss the efficacy of canceling. I scrolled down past the bottom thinking I had missed something. He is interested in undermining canceling’s critics, but he spends no time considering the actual material value of the tactic. I’ve said this before, but it bears repeating: canceling is a political tactic that is most often defended with reference to its powerlessness, and this is bizarre. Bacharach defines the negative consequences of canceling as “getting nitpicked by an editor, yelled at on social media, or losing an occasional opportunity to rile up an auditorium.” Jacob: if that’s the extent of canceling’s power, why are you bothering to defend it in one of the biggest magazines in the country? “I’m defending this method to hurt political enemies by pointing out that it doesn’t actually hurt” is not compelling. On the contrary, it demonstrates just how unhealthy and bizarre our political culture has become. . . .

There is indeed a conversation to be had about canceling on the individual level and whether people deserve basic fairness when accused, what kind of fairness if so, and debates to be had about who deserved it and who didn’t. But those have nothing at all to do with politics. Politics is about power. Cancel mobs don’t have it, and they never will.

You wanted reparations; you got Dr. Seuss. Maybe time to take a hard look at why.

Many people who are on the right on economic issues (including me) are frustrated that corporations have enthusiastically embraced cancel culture.  But why shouldn’t they?  Cancel culture is a distraction for the left.  It has almost no impact on profits, whereas socialism would have a big impact.  Actual socialists like deBoer understand this, and not surprisingly are frustrated.

There’s also a reverse class warfare aspect to cancel culture.  In a Bari Weiss piece discussing the woke transformation of elite private schools, she mentions how woke culture is a tool for cool rich kids to bully less sophisticated kids:

Woe betide the working-class kid who arrives in college and uses Latino instead of “Latinx,” or who stumbles conjugating verbs because a classmate prefers to use the pronouns they/them. Fluency in woke is an effective class marker and key for these princelings to retain status in university and beyond. The parents know this, and so woke is now the lingua franca of the nation’s best prep schools. As one mother in Los Angeles puts it: “This is what all the colleges are doing, so we have to do it. The thinking is: if Harvard does it, it must be good.”

I cannot prove that old leftists believe the younger generation is too soft, but reading between the lines I suspect this is the case.  In my view, modern cancel culture excesses often rely on a misapplication of utilitarian theory.

Older cancel cultures focused on “dangerous” ideas, such as atheism or communism.  As the modern world has shifted in a more utilitarian direction, there is less interest in burning people at the stake for being atheists.  Instead, the focus has shifted from dangerous speech to “offensive speech”. Utilitarians worry that if we allow lots of offensive speech, it will reduce the utility of victimized groups.  While this claim seems plausible at first glance, I believe it’s too simple.

Let me use an analogy from camping.  If you are used to a soft life, then camping can initially feel rather unpleasant.  A stick might scratch your arm while you are walking through the woods.  After a few days you get toughened up, and slight injuries that used to bother you in the city are hardly even noticeable.

Before you jump all over this analogy, let me make two points.  First, one can also get serious injuries in the wild, such as a broken leg.  Indeed some campers die while out hiking.  I do realize that members of marginalized groups can be severely harmed by certain types of speech.  Second, just because being scratched by a branch tends to toughen one up, there’s no point in doing so intentionally.  Life will already throw plenty of discomfort your way, no need to go looking for it.

So the cancel culture is not completely wrong; there really are some types of behavior that deserve to be cancelled.  Rather the actual problem is that cancel culture advocates often overlook the fact that vigorous debate makes people tougher, and that if you try to protect people from ever being offended, they’ll become softer and then will end up being offended by things that a person in a previous generation would have simply brushed off.  Cancel culture advocates believe they are reducing the aggregate discomfort suffered by marginalized groups, and yet we may be approaching the point where the movement becomes counterproductive, at least the margin.  And that can be true even if most recent cultural changes discouraging hate speech have been a net gain to society.

I don’t doubt that behavior toward marginalized groups is better today than a few decades ago, but I feel we reached a sort of hedonic treadmill, where increasing wokeness reduces offensive speech at roughly the same rate that it reduces our psychological defenses against insult.  We are like a camper being too careful when walking through the woods.  For instance, does anyone seriously believe that constantly changing terms (say cripple to handicapped to disabled) affects the psychology of the disabled person who hears those terms?  Does a heavy person called obese in 2021 feel less bad than one called fat in 1971?  In the 1970s, we learned that inflation only fools workers in the short run.  The continual invention of euphemisms is sort of the verbal inflation of politeness.  It is equivalent to manipulating the Phillips Curve, and is about as likely to be effective.  In contrast, “fat-shaming” is always bad, whether you use the term ‘fat’ or the term ‘obese’.

The old left grew up in a different era and hence probably see the younger generation as being too soft—just as my parents’ generation felt that us boomers were too soft.  But they also worry that cancel culture will push blue-collar whites, as well as many Asians and Hispanics, into the Republican Party.  This is sort of the flip side of the worry within the GOP that Trumpism will push well-educated suburbanites over to the Democrats.  If both changes occur, then no single party has much of a constituency for socialism.  The old left probably senses that fact.  (BTW, the right has its own cancel culture.)

My own views are hard to explain.  I don’t have any magic formula for determining exactly what should be cancelled and what should not.  But I do believe that a few sensible reforms would improve the situation.  Thus universities could have a board with 10 members, of which at least 3 were liberal and at least 3 were conservative.  Then, before sanctioning anyone for offensive speech, demand a vote of at least 9-1 in favor of sanctions.  That would insure that the speech really was offensive, and that the person wasn’t just being sanctioned for political reasons.  It’s an example of my preference for “rules utilitarianism.”

PS.  If there are any universities that do not have at least three liberals and three conservatives, then cancel the entire university.  Shut it down.

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Can economists be trusted?

For the most part, economists don’t give people advice on how to run their lives. Rather we tend to focus on explaining the behavior of consumers and businesses, usually assuming they are at least somewhat rational. One exception is when there is a “principal-agent problem”, the case where the people you hire (the agents) have interests that differ from you own interest.

Thus economists might advise someone to be a bit skeptical if one’s dentist recommends that you get a new crown. Is it actually needed, or is the dentist merely trying to pad his income?

There is one area where economists are especially likely to give advice–personal investments. The Efficient Market Hypothesis (EMH) suggests that it’s extremely hard for financial advisors to consistently beat the market. Because these professionals must be paid for their services, managed mutual funds tend to do worse, on average, than index funds. Thus almost all economists that I know recommend that average people invest in index funds.

Because of the EMH, the field of economics has its own distinct epistemology. We believe in the wisdom of markets. We believe that the optimal forecast of many economic variables is embedded in the consensus market forecast. AFAIK, other sciences don’t use this approach to ascertain what is true. Thus meteorologists don’t typically assume that a prediction market forecast of global temperatures in the year 2050 represents the optimal forecast, even were such a market to exist.

On the other hand, I do wonder if economists are being consistent in the way they apply concepts such as the principal-agent problem and the EMH. Doesn’t our criticism of managed mutual funds apply equally well to our own profession? Consider the following two approaches to policy:

1. Most economists seem to believe that it makes sense for our profession to do a lot of research on the macroeconomy, and then base our monetary policy on forecasts derived from computer models of the economy.

2. I believe that much of this research is wasteful, and that monetary policy should be guided by market forecasts of the relevant economic variables.

In order to see who’s right, let’s take the same analytical framework that makes economists so critical of the managed mutual fund industry and direct it toward our own field. We immediately see two problems. Just as with the financial industry, it is in the best interest of economists if society spends a lot of money financing research on predicting future macroeconomic outcomes. These are good jobs!

Second, the EMH suggests that the output of these investigations will be inferior to the consensus market forecast, and yet we usually argue that policymakers should rely on our computer models, not the consensus market forecast. Thus we seem to be dismissing the value of the EMH when it comes to our own profession, after using the EMH as a bludgeon to bash the financial services industry.

Of course one could argue that research by individual economists is a valuable input into the market forecast of inflation and GDP, but one could equally well argue that research by individual financial experts is a valuable input into the market pricing of assets.

And even if economic research should be subsidized because information has external benefits, that does not justify using a particular Fed model to set policy, rather than the market forecast.

Economists are also “agents”, and our self-interest is not the same as society’s self-interest. On the other hand, I’m also an economist, so why should you believe me? My self-interest might be to carve out a career as a contrarian.

I would respond as follows. I’m not trying to brainwash you; I’m merely pointing to some implications of ideas that many of you already know, especially those with some background in economics.  Back in 1996 (when he was defending free trade), Paul Krugman gave four suggestions to people trying to become public intellectuals.  This one struck home:

Adopt the stance of rebel: There is nothing that plays worse in our culture than seeming to be the stodgy defender of old ideas, no matter how true those ideas may be. Luckily, at this point the orthodoxy of the academic economists is very much a minority position among intellectuals in general; one can seem to be a courageous maverick, boldly challenging the powers that be, by reciting the contents of a standard textbook. It has worked for me!

That’s what I did in my new book, which comes out this summer.  And that’s what I’m doing here.  The principal-agent problem and the EMH are well-established ideas.  And it is well known that economists are highly skeptical of managed mutual funds, and often recommend indexed funds.  In this post, I’m merely pointing to the implication of applying this sort of analysis to my own profession.  Don’t automatically believe what I say—think about whether it makes sense.

After all, my best interest doesn’t coincide with your best interest.

PS.  You might argue that asset markets don’t exist for some key macro variables.  But that’s no excuse; the Fed can create them.

PPS.  Part 2 of my MMT critique is now out.  Now there’s a theory that categorically rejects the EMH!!

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I Hereby Resign as an Expert on Systemic Racism

 

Many of the comments on my post yesterday, “Bernie Sanders, Minimum Wage, and Systemic Racism,” March 1, were particularly good. They have convinced me that I need to walk back some of the things I said. Like most people, I hate to admit that I’m wrong. Unlike most people, I’m typically quite quick to admit that I’m wrong. Back in the 1970s or 1980s, my friend Michael Walker, who founded Canada’s Fraser Institute, asked Friedrich Hayek why people don’t seem to be convinced by evidence or logic. Hayek replied (I can just picture him doing this with his characteristic half wince/half grin) that people’s ideas are one of their most treasured forms of private property and when you convince them that they’re wrong, they suffer a capital loss. That fit my experience. But my next thought on hearing it was that you already had the capital loss; you just, to use tax lingo, realized it. And to push the metaphor maybe too far, you get a tax break on the loss. Translation: you’re better off admitting you’re wrong because then you won’t make that mistake again and you’ll get clarity for the future.

Now to the issue at hand.

I’ll focus on 8 comments.

BC writes:

Then, is “systemic racism” used synonymously with “unequal outcomes”?  If not, then what would be an example of unequal outcomes that are unfavorable for African Americans that does not reflect systemic racism?

Good question, BC, to which I don’t have a good answer. It’s the first comment that got me wondering whether there is such a thing as systematic racism, at least as defined by the NAACP’s President Derrick Johnson.

John Hall, after raising the issue of SAT scores, writes:

I think David needs to think on this issue a little harder to distinguish between this case and the minimum wage case.

I think John is right.

Vivian Darkbloom, as is Vivian’s wont, has one of the best comments, writing:

I’m opposed to a minimum wage increase to $15 for all the reasons likely discussed here previously.

Nevertheless, I’m wondering how someone in favor of such a hike would respond to this definition (and the conclusion therefrom that the hike constitutes “systemic racism”):

“[NAACP President Derrick] Johnson defined systemic racism, also called structural racism or institutional racism, as ““systems and structures that have procedures or processes that disadvantages [sic] African Americans.””

It’s highly likely that a disproportionate number of African Americans would either lose their jobs or fail to get one (or work fewer hours) as a result of such a minimum wage hike.  However, is it possible that a disproportionate number of African Americans (those that keep their jobs or manage to get one) would benefit from a wage raise and enjoy a slightly higher standard of living?

What I’m getting at here is whether, per the proposed definition, one should look  solely at those disadvantaged, or  should one weigh the *net* effect on those all those affected by the change?  Could Bernie Sanders reply “I acknowledge that there will be some loss of employment and some reduced employment as a result of this hike.  But, those negative effects are exceeded by the benefits of those who will get a pay raise”.

The same thought goes for those “disproportionately arrested” for whatever reason.  Is it possible that African Americans “disproportionately benefit” from more policing in those communities?

I don’t have a ready answer, but on the side of those opposed, one tends to refer only to those who tend to lose, and those in favor only to those who tend to gain, with neither side seriously attempting a net benefit analysis.  I think it is rare with respect to policy changes that there are only winners *or* losers rather than winners *and* losers.

I agree with Vivian that one should look at all the effects and that, in doing so, one might find that the gains to the black gainers outweigh the losses to the black teenage losers. I doubt it, because a high percent of low-wage people are employed in industries that produce goods that are sold to other low-wage people. Think of McDonald’s in Alabama, for example. But Vivian’s point remains.

Also, Vivian’s point about the disproportionately arrested black people is also relevant. Heather Mac Donald often makes the point that cops in low-income neighborhoods are valued highly by residents, including black residents, because they protect them from crime by other people and that the criminals are disproportionately black. So one would want to look at the total effect.

That last point is interesting because it was precisely the “disproportionately arrested” point that my friend made who convinced me that there is systemic racism. I called my friend to talk it out and actually got him to doubt his own claim, based on Vivian’s reasoning.

zeke5123 writes:

I think this definition [of systemic racism] is dangerous. I am reminded of an example by Kendi that lowering capital gains tax is racist, because it disproportionately favors non-blacks since blacks are less likely to have wealth.

The counter to this is if lower capital gains rates lead to net efficiency, it is a sound policy regardless of the impact on certain cross sections of the populace. Indeed, if you implement enough net efficiency policies, it is very likely that you end up lifting up all cross sections. But this is basically just saying: implement policies that are Kaldor-Hicks improvements.

Once when, with a single policy, you bring into the discussion how it impacts certain cross-sections of the populace (i.e., in this case race), you are more likely not to implement Kaldor-Hicks efficiency polices because racism is bad. No — that way lies madness. Focus on Kaldor-Hicks efficiency generally* and the rest will follow.

I think in your examples you believe changing those policies is Kaldor-Hicks efficient — that is, you think on net minimum wage is bad. But if you argue we should eliminate minimum wage (or not raise it) to reduce structural racism, then why can’t Kendi argue we should raise capital gains to reduce structural racism? I get that people can walk and chew bubblegum at the same time, but ultimately I think your case against the minimum wage is that it is bad economics; not that it harms black people because that would be your argument against raising capital gains tax rate (assuming you agree doing so would be bad).

*I would worry about situations where a policy causes massive losses to Group A to benefit Group B by the losses plus epsilon. There are mismeasurement errors, political risks, etc. So, I would limit Kaldor-Hicks efficiency where there is not (i) massive losses to a particular group and (ii) the gains clearly outweigh the losses. For me, a good rule of thumb is a strong presumption of liberty.

I pretty much agree with what zeke said, including that it’s a dangerous definition and that there’s a strong presumption of liberty. My guess is that my presumption of liberty is even stronger than his, but that’s just a guess.

Knut P. Heen writes of Derrick Johnson’s definition of racism, which I adopted but am now furiously backpedaling on:

A definition of systemic racism which excludes all races but one. Great. I thought this was the definition of racism.

Touche.

Andrew_FL writes:

Minimum wage laws have disparate impacts on many groups, but no one would say the minimum wage is part of “systemic ageism” or “systemic credentialism” even in the rare case of someone who would both correctly understand the consequences of such laws and be inclined to agree with this definition of “systemic racism”

The whole notion is more about proving that we are all guilty collectively of a crime none of us can be said to be guilty of individually. Of course, if committing the category error of attributing racialist ideology and malice to non-human things like “systems” leads to a vast deregulatory push in housing and labor markets, that’s great. If it leads to a mass redistribution of wealth from the supposed perpetrators to their supposed victims, not so much.

The first paragraph is particularly on target. Andrew’s second paragraph points out the perils of using bad arguments for good policies: they can also be used for bad policies. Better just not to use bad arguments, period, even when they help you, which is getting to where I’ll get to soon.

Tom Nagle writes:

While I concur with all your facts, your concluding logic seems flawed when you assert that “Bernie Sanders, therefore, advocates systemic racism”.

Think in terms of a Venn diagram. Circle A is defined to encompass all policies that embody systemic racism as defined in your post. Overlapping a small part of Circle A is another Circle, label it B, that encompasses all policies designed or intended to increase the share of national income earned by low wage workers. Bernie Sanders is a socialist who likely supports all the policies in Circle B. But is it fair to claim that Sanders “advocates systemic racism”–that is, the policies in circle A–even if the overlap is small, the consequences unintended, and he clearly does not support an overwhelming share of the policies that could be classified as systemically racist. Would it be fair to state that “David Henderson advocates the suppression of women’s rights in Afghanistan” because that is an unintended consequence of pulling the US military out of there, a policy that you support?

Good point. Tom, by the way, is the person who convinced me, with the police example, that there is systemic racism. As I noted above, in response to Vivian Darkbloom, he is starting to wonder about his own belief.

Finally, BW writes:

Here is a relevant Slate Star Codex post.

I read it. As is often true, that post is very good. Damn the New York Times.

So where am I? I’m back to doubting that we have systemic racism. And this might answer the first questioner, Dylan. He asked what I had thought systemic racism was before Tom Nagle convinced me that it existed. I had in mind things like slavery, compulsory segregation of restaurants, government requirements that people on buses and streetcars be segregated, etc.

Moreover, I doubt that the concept is useful. Let’s say that you convince me that Bernie Sanders does not believe in systemic racism. And, by the way, the commenters have convinced me. Does that make me dislike his proposal for a $15 minimum wage any less? No. Does it mean that the $15 minimum wage would not cause as much harm as I think it would? No.

I hereby resign as an expert on systemic racism.

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The confidence man

A few months back, Alex Tabarrok criticized the delay in approving the new vaccines:

I am getting very angry at people like Anthony Fauci who say that FDA delay is necessary or useful to alleviate vaccine hesitancy.

Fauci told Fox News that the FDA “really scrutinises the data very carefully to guarantee to the American public that this is a safe and efficacious vaccine. I think if we did any less, we would add to the already existing hesitancy on the part of many people because … they’re concerned that we went too quickly.”

The WSJ says much the same thing just with a slightly different flavor:

…this regulatory rigmarole is essentially a placebo to reassure the public it will be safe to get inoculated.

The ‘we must delay to allay’ argument is deadly and wrong.

Now Fauci is at it again, this time with first-dose-first:

“We’re telling people [two shots] is what you should do … and then we say, ‘Oops, we changed our mind’?” Fauci said. “I think that would be a messaging challenge, to say the least.”

Fauci said he spoke on Monday with health officials in the United Kingdom, who have opted to delay second doses to maximize giving more people shots more quickly. He said that although he understands the strategy, it wouldn’t make sense in America. “We both agreed that both of our approaches were quite reasonable,” Fauci said.

So the “experts” have decided that the risk of the public eventually figuring out that they were lied to, and that thousands died needlessly, is smaller than the risk that the public will lose faith in the experts if they change their minds?  Yes, I guess that’s possible.  But what sort of training in social psychology does Fauci have that would allow him to make that sort of life and death decision?

And if first-dose-first is not reasonable for the US, then why is it reasonable for the UK?

Fauci said the science doesn’t support delaying a second dose for those vaccines, citing research that a two-shot regimen creates enough protection to help fend off variants of the coronavirus that are more transmissible, whereas a single shot could leave Americans at risk from variants such as the one first detected in South Africa.

Then why does Fauci approve of the J&J vaccine, which is one dose?  You might argue that J&J was tested as one dose, but that doesn’t answer the question.  AFAIK, the test of J&J vaccine did not show any more efficacy against the South African strain than did one dose of Pfizer or Moderna.

Fauci acknowledged that the United States repeatedly has shifted strategy during the pandemic — including his own reversal on whether Americans should wear face coverings — but said that the stakes are higher when it comes to communicating about vaccines.

“People are very skeptical on vaccines, particularly when the government is involved,” he said.

But if the stakes are higher, isn’t that even more reason to get it right?

Personally, I believe that the public would have more respect for experts if they didn’t repeatedly lie to us for our own good, if they honestly told us exactly what they believed.

I was just a boy when I first heard the term ‘confidence man’. The phrase sounded sort of good—a person who inspires confidence. Later I learned that it was equivalent to con man. Thus confidence is a two-edged sword, something that can help you or hurt you.

Don’t try to make me confident; act in such a way that I will respect you.  That will give me confidence.

Right now, I don’t have much confidence.

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White Guilt and Reparations: A True Story

Co-blogger Bryan Caplan’s post this morning on collective guilt and the subsequent discussion in the comment section reminded me of something that happened my first day of a microeconomics class in 2001. At the end of the opening class, a number of people came up to ask questions. One was a young black woman who said, “Professor, what do you think of reparations for slavery?”

I answered, “I promise I’ll answer but first I want to know what you think.”

She said, “I favor them.”

“And those reparations would be paid for by white people?”

“Yes,” she answered.

I turned to a white guy who was waiting to ask a question, and I took a risk.

“Where are your grandparents from?” I asked.

“The Netherlands,” he answered.

I then turned back to the woman who had asked and said, “I’m ready to answer you. His grandparents came to this country well after slavery had ended. I think it’s wrong for the government to tax people who didn’t even inherit wealth from slavery to give to the great, great grandchildren of former slaves.”

Note: Of course it’s possible that his grandparents inherited wealth from their predecessors having had slaves in the Netherlands. I don’t know the history of slavery in the Netherlands. But the odds that they gained big time and came to the United States as wealthy people were probably pretty low.

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People Have Purposes; Markets Don’t

In a comment on my blog post on the GameStop controversy yesterday, Jonathan Seder wrote:

Remember – the purpose of the capital markets is to facilitate price discovery for equities, and to direct capital to the most productive uses. Passive investors are outsourcing that job to traders – individuals and pros – who gather information and try to identify pricing errors. (I think there’s an argument to be made that people with business expertise have some moral obligation [on top of the financial incentives] to play The Game rather than being passive investors.)

Jonathan’s first sentence is incorrect. He has confused, as many people do, one beneficial result of markets with their purpose. Markets don’t have purposes; people do. Markets come about as a result of people pursuing their purposes. When I buy shares or sell shares, my purpose is not to facilitate price discovery. My purpose is to buy shares or sell shares and, hopefully, make myself better off. Ditto the person or institution on the other side of the buy/sell order.

The distinction between purpose and results is not specific to capital markets. It applies to all markets. In pursuing our own self-interest in any market, we, buyers and sellers, drive the price to some level that informs other people. Let’s say, for example, that the demand for and supply of computer programmers leads to entry-level programmers making $80K a year, and that the demand for and supply of social workers leads to entry-level social workers making $45K a year. Those price signals are valuable information that can help guide decisions of undergrads who are willing to pay attention to them. But the purpose of those price signals is not to tell people what jobs they should train for. Those price signals don’t have a purpose. People have purposes. Price signals are inanimate.

Notice that throughout the paragraph I quote from Jonathan, he makes the same mistake of attributing purposes. He writes:

Passive investors are outsourcing that job to traders – individuals and pros – who gather information and try to identify pricing errors.

I’m a passive investor, but I’m not outsourcing that job to anyone. Those traders are taking on the job themselves and they are trying to identify pricing errors for the same reason I’m investing: to make money. I’m glad they’re doing it. But I’m not asking them to do it.

Jonathan goes even further, writing:

I think there’s an argument to be made that people with business expertise have some moral obligation [on top of the financial incentives] to play The Game rather than being passive investors.

Whence that comes that moral obligation? Simply because they have information and expertise, they should, for reasons not connected to financial incentives, play “The Game?” I don’t agree.

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