You have good policy, good ideas, good growth all mutually supporting each other

Wednesday, May 23rd, 2018

Bryan Caplan describes his notion of The Idea Trap:

The motivation of the idea trap is twofold.

First of all, I had these empirical results out of public opinion that said pretty strongly and surprisingly that people who have higher income do not think more like economists, but people who either have experienced or expect higher income growth do think more like economists. So the level doesn’t matter, but the change does.

Essentially, the more optimistic view seems to actually push people in this economist direction. So there is that fact in my mind.

And then there was also this big literature on non-convergence where, at least for a very long time, economists were expecting that poor countries would tend to catch up to rich countries. Then they looked at the data and weren’t seeing it happening. Further, there’s this literature saying at least a lot of the reason why this is happening is that countries that are poor just very persistently have bad policies.

So I took these three facts and said, “Let’s come up with a little model. The model will have three variables, which we’ll call growth, policy, and ideas.”

The model will have the following laws of motion: Good ideas cause good policy, which is almost a tautology. Good policy causes good growth, and that’s almost a tautology. And then the last thing is, how does growth affect ideas?

What I said is, there’s a usual view that if you have bad growth, then people realize they’re making mistakes, and then ideas get better. On the other hand, maybe if you’re having good growth, people said, “We can afford to live a bit. We don’t need to worry about this so much,” so ideas get worse.

In that model, that actually gives you growth convergence, and basically, all countries tend to be mediocre. But I said if we tweak the models in light of that public opinion finding, where supposed good growth actually gives you good ideas, bad growth gives you bad ideas, this actually gives you a model of multiple equilibria, where you can have one equilibrium where everything is good.

You have good policy, good ideas, good growth all mutually supporting each other. Or you could have bad ideas, bad growth, bad policy all mutually supporting each other.

In terms of 2018, at least the story you might tell in a lot of countries is, there are countries that are in the bad equilibrium where, say, they’ve had some bad growth, which then led to bad ideas, which I generally in the paper equate with populism, leading then to populist policies.

2018 is not that great, just because the actual growth for most countries is good right now. It made more sense during the Great Recession when there was bad growth, and then there were a lot of kooky ideas coming around.

In a way, I would think of the last few years as cutting against my model because it seems like people are getting very angry and very populist when it’s hard to even find what the supposed cause of it is.

God hates a politician who takes any action without calmly and studiously studying the facts

Tuesday, May 22nd, 2018

What are the most socially valuable delusions or shared erroneous beliefs?” Bryan Caplan takes at stab at answering:

That is a good one. Hmm. I am tempted to say something along the lines of God will punish you for bad behavior. But the problem is that’s mixed in with — so many things of the bad behavior is actually good behavior and the good behavior is actually bad behavior that I’m not convinced that is all that socially useful.

Probably a better answer is the delusion that money will buy happiness. There is an enormous amount of progress that is caused by people desperately going and trying to get rich. I think the actual psychological evidence is the money won’t actually lead to all that much happiness, but the things they produce are quite a bit more likely.

Probably, in terms of the most happiness-producing stuff, I would think may be actually in the arts, where so much of the stuff was produced by people where, if they just did a reasonable ex ante calculation, would have said, “This isn’t worth it.” But the reason why we have it is because they ignored the odds or overestimated themselves, so maybe that.

“Which mistaken shared beliefs would he like to see adopted?”

Let’s see. Probably the idea that there would be some kind of eternal, horrible punishment for holding power and not having a very high degree of epistemic rationality, especially if there were a view that God hates a politician who takes any action without calmly and studiously studying the facts, and that God will punish you in a way that voters never could.

God would punish you in a way that’s far worse than the simple loss of power. If that were widely believed by people of power, I think there would be a lot more effort to actually double-check that what they’re doing really makes sense. The Spiderman Principle — with great power comes great responsibility.

You’re sent back in time to the year 527 AD

Monday, May 21st, 2018

You’re sent back in time to the year 527 AD, Tyler Cowen posits:

Let’s assume you’re good enough at learning languages. Where would you pick? And why?

Bryan Caplan chooses Byzantium:

First of all, of course assuming you’re good at languages, Greek as a Western language would be easier. I think that is actually the biggest city in the Western world at the time. It’s the one where you’d still have at least a modest amount of Greek and Roman thought which has been preserved. Really center of civilization by that point.

That would be the place where you’re most likely to have smart people around — there’s things that you can do with your mind — and least likely to get ripped apart by barbarians.

[...]

The temptation to become a government adviser under those circumstances would be painfully high. As to whether I could actually find some role there where I would not be morally horrified is a tough call.

If I could get away with just being a teacher, if I have what I know, then to actually go and found a school and teach economics 1,300 years before the rise of modern economics and try to jump-start the Industrial Revolution and economic growth and social science and everything else. Emotionally, that would have by far the strongest pull on me.

If that weren’t available, then there’s room in business, banking, moneylending, shipping. I think I could learn those. Wouldn’t be thrilled. But it beats rowing an oar.

The new freedom would come to pass instead as the result of a Go-Getter Bourgeois business boom

Sunday, May 20th, 2018

The saga of the Me Decade begins with one of those facts that is so big and so obvious that no one comments on it anymore:

Namely: the 30-year boom. Wartime spending in the United States in the 1940s touched off a boom that has continued for more than 30 years. It has pumped money into every class level of the population on a scale without parallel in any country in history. True, nothing has solved the plight of those at the very bottom, the chronically unemployed of the slums. Nevertheless, in Compton, California, today it is possible for a family at the very lowest class level, which is known in America today as “on welfare,” to draw an income of $8,000 a year entirely from public sources. This is more than most British newspaper columnists and Italian factory foremen make, even allowing for differences in living costs. In America truck drivers, mechanics, factory workers, policemen, firemen, and garbagemen make so much money — $15,000 to $20,000 (or more) per year is not uncommon — that the word proletarian can no longer be used in this country with a straight face. So one now says lower middle class. One can’t even call workingmen blue collar any longer. They all have on collars like Joe Namath’s or Johnny Bench’s or Walt Frazier’s. They all have on $35 Superstar Qiana sport shirts with elephant collars and 1940s Airbrush Wallpaper Flowers Buncha Grapes and Seashell designs all over them.

Well, my God, the old utopian socialists of the nineteenth century — such as Saint-Simon, Owen, Fourier, and Marx — lived for the day of the liberated workingman. They foresaw a day when industrialism (Saint-Simon coined the word) would give the common man the things he needed in order to realize his potential as a human being: surplus (discretionary) income, political freedom, free time (leisure), and freedom from grinding drudgery. Some of them, notably Owen and Fourier, thought all this might come to pass first in the United States. So they set up communes here: Owen’s New Harmony commune in Indiana and 34 Fourier-style “phalanx” settlements — socialist communes, because the new freedom was supposed to be possible only under socialism. The old boys never dreamed that the new freedom would come to pass instead as the result of a Go-Getter Bourgeois business boom such as began in the United States in the 1940s. Nor would they have liked it if they had seen it. For one thing, the homo novus, the new man, the liberated man, the first common man in the history of the world with the much-dreamed-of combination of money, free time, and personal freedom—this American workingman didn’t look right. The Joe Namath-Johnny Bench — Walt Frazier-Superstar Qiana Wallpaper sport shirt, for a start.

He didn’t look right, and he wouldn’t… do right! I can remember what brave plans visionary architects at Yale and Harvard still had for the common man in the early 1950s. (They actually used the term “common man.”) They had brought the utopian socialist dream forward into the twentieth century. They had things figured out for the workingman down to truly minute details such as lamp switches. The new liberated workingman would live as the Cultivated Ascetic. He would be modeled on the B.A.-degree Greenwich Village bohemian of the late 1940s — dark wool Hudson Bay shirts, tweed jackets, flannel trousers, briarwood pipes, good books, sandals and simplicity — except that he would live in a Worker Housing project. All Yale and Harvard architects worshiped Bauhaus principles and had the Bauhaus vision of Worker Housing. The Bauhaus movement absolutely hypnotized American architects, once its leaders, such as Walter Gropius and Ludwig Miës van der Rohe, came to the United States from Germany in the 1930s. Worker Housing in America would have pure beige rooms, stripped, freed, purged of all moldings, cornices, and overhangs — which Gropius regarded as symbolic “crowns” and therefore loathsome. Worker Housing would be liberated from all wallpaper, “drapes,” Wilton rugs with flowers on them, lamps with fringed shades and bases that looked like vases or Greek columns. It would be cleansed of all doilies, knickknacks, mantelpieces, headboards, and radiator covers. Radiator coils would be left bare as honest, abstract sculptural objects.

But somehow the workers, incurable slobs that they were, avoided Worker Housing, better known as “the projects,” as if it had a smell. They were heading out instead to the suburbs — the suburbs! — to places like Islip, Long Island, and the San Fernando Valley of Los Angeles — and buying houses with clapboard siding and a high-pitched roof and shingles and gaslight-style front-porch lamps and mailboxes set up on top of lengths of stiffened chain that seemed to defy gravity and all sorts of other unbelievably cute or antiquey touches, and they loaded these houses up with “drapes” such as baffled all description and wall-to-wall carpet you could lose a shoe in, and they put barbecue pits and fish ponds with concrete cherubs urinating into them on the lawn out back, and they parked 25-foot-long cars out front and Evinrude cruisers up on tow trailers in the carport just beyond the breezeway.

[Ignored or else held in contempt by working people, Bauhaus design eventually triumphed as a symbol of wealth and privilege, attuned chiefly to the tastes of businessmen’s wives. For example, Miës’s most famous piece of furniture design, the Barcelona chair, now sells for $1.680 and is available only through one’s decorator. The high price is due in no small part to the chair’s Worker Housing Honest Materials: stainless steel and leather. No chromed iron is allowed, and customers are refused if they want to have the chair upholstered in material of their own choice. Only leather is allowed, and only six shades of that: Seagram’s Building Lobby Palomino, Monsanto Company Lobby Antelope, Architectural Digest Pecan, Transamerica Building Ebony, Bank of America Building Walnut, and Embarcadero Center Mink.]

By the 1960s the common man was also getting quite interested in this business of “realizing his potential as a human being.” But once again he crossed everybody up! Once more he took his money and ran — determined to do-it-himself!

Highly rated but still underrated

Sunday, May 20th, 2018

Bryan Caplan considers his colleague Robin Hanson highly rated but still underrated:

Just the sheer intellect of Robin is, for me, still hard to fathom. Just the way that I have told Robin stories that I’ve told a hundred other people, and only he notices a logical error in the story. That to me is super impressive. Just the sheer intellectual enthusiasm.

Even the topics — when he gets on what I think of as sci-fi topic, those are the parts where I am least happy. But again, if you just read the blog, the range of things that Robin has thought about is actually vast, just in terms of breadth and depth and just sheer curiosity.

I’ve said this quite a few times. When people get really mad at me, that doesn’t bother me. When someone gets angry at Robin, this is what actually outrages me. I just want to say, “Look, to get angry at Robin is like getting angry at baby Jesus.” He’s just a symbol and embodiment of innocence and decency. For someone to get angry at someone who just wants to learn…

This is an item that science says you don’t need

Saturday, May 19th, 2018

It would definitely be worth it to run some experiments on education, Bryan Caplan argues:

When you’re spending an enormous amount of money, you can take off 2 percent of it, and then use standard social science random assignment to really learn something.

It’s been pointed out that a high percentage of government spending on healthcare is for medical research, but only a very small amount of education spending is for education research.

The main disappointment there is, despite all the education research, it seems like it’s not very often actually used for any education policy. Medical research, you might have a similar pessimism, but I don’t think it’s as bad as that at least.

It’s not as bad as there being a big literature saying that highlighting is totally ineffective for improving student learning. Yet almost every kid in America still has a highlighter. It’s actually on the list of mandatory school supplies for Fairfax County: “You must have a highlighter.” This is an item that science says you don’t need. Yet everyone must have one to be at school.

Most parents don’t care about test scores

Friday, May 18th, 2018

Have K–12 vouchers underperformed?” Tyler Cowen asks Bryan Caplan:

I would say yes. This actually barely appeared in my book because it was not really central to any of the topics I was talking about. But my understanding of research on K–12 vouchers is a lot of people thought that they would substantially raise standardized test scores. And it’s hard to see a big gain there.

This is puzzling because it sure seems like there’s way better ways to improve test scores, starting obviously with just teaching the test. Many people say people are teaching the test all the time. Whenever I actually look at my kid’s schools, like, what are you talking about? There’s three practice tests. If I wanted to teach the test, there would be a hundred practice tests. That’s how I would handle it if you told me, “Get test scores up.”

I think the main thing that we learn from this is that most parents don’t care about test scores. When you give them a choice, they aren’t looking around for the school that will raise kids’ test scores the most.

They’re looking around for other things. Part of it is just convenience or location. Probably another big part of it is whether the kids are happy. I think we agree this is actually one of the most undervalued benefits of school choice, just giving kids some options so that kids that are crying and miserable at one school can go and take that money and go to another school.

Tom Wolfe is dead, but the Me Decade lives on

Thursday, May 17th, 2018

Nick Gillespie of Reason argues that Tom Wolfe’s enduring — and fundamentally libertarian — contribution to contemporary discourse is his 1976 New York essay that christened the ’70s the “Me Decade“:

Writing during a time when most wise men (and they were mostly men back then) were obsessed with inflation, unemployment, and other measures of macroeconomic malaise, Wolfe was nearly alone in underscoring that consumer goods and lifestyle options had been radically democratized in postwar America. Forget the soul-killing depredations of the Cold War, giant corporations, cheap money, rising taxes, and government’s expansion into every nook and cranny of life, he counseled. Wolfe focused on the pent-up psychic demand for freedom, individualism, and meaning in a country that had recently withstood a decade-plus of Great Depression and World War. The only thing worse than the impending apocalypse due to nuclear war, environmental catastrophe, overpopulation, or the Second Coming was that the world wouldn’t end and we’d have spent our time on Earth punching the clock for a soul-killing job with great dental benefits. In the goddamn Bicentennial Year, Wolfe argued, Americans were done with building Maslow’s pyramid of needs for other people, especially their social betters. Who among us was going to follow slow-witted concussion-cases like Jerry Ford or lusting-only-in-his-heart Jimmy Carter into the twilight’s last gleaming? It was our time to shine, baby!

This disease of credential inflation seems to be serious

Thursday, May 17th, 2018

Normally, Bryan Caplan hates it when people go and find one new story as proof of something:

But there was a recent one from South Korea so vivid, where even if you say that it is cherry picked, still, that such a cherry exists says something.

This was a story about, the government in South Korea wanted to hire four janitors, and most of the applicants had college degrees. In the end, they hired three BAs and one AA to be janitors there. This disease of credential inflation seems to be serious in countries where people think of education as something that’s central to their success. I don’t think so.

You never hear about a tiger laughing

Wednesday, May 16th, 2018

What’s the most interesting thing you’ve learned from personality psychology?” Tyler Cowen asks Bryan Caplan:

At least one thing that might be a good answer is that cheerfulness loads on extroversion.

There’s something actually very social about happiness. When you read this, it makes so much sense — how little of happiness seems to be about material possessions and how much of it is about having good relationships with other people.

You can think about animals. When I read you something about animals, the animals that laugh, they’re all social animals. Dogs laugh, chimpanzees laugh, humans laugh. You never hear about a tiger laughing, these very asocial animals. At least that’s one that I often do think about, is this connection between social interaction and being happy.

No single paper is that good

Monday, May 14th, 2018

Tyler Cowen kicked off his talk with Bryan Caplan by citing Caplan’s own statement that “no single paper is that good”:

What I meant by that is that if you look at any individual piece, in social science specifically, it’s very hard to see that a reasonable person would fundamentally change their mind based upon any one of them.

People often have an idea of, there’s the really good papers where you should have a mind quake, and you never see the world again in the same way after that. For me, all of them fail to measure up to that standard. I think the way that you really learn something is by reading a vast empirical literature.

The direct cause of this was… I think Noah Smith had a challenge: “Name the two or three papers on each topic that are really convincing.” I was thinking about that and said, “Honestly, I can’t think of any papers like that unless you’re going to cheat and count a literature view as being that kind of a paper.” Just realizing that the way that you actually achieve social science knowledge isn’t by finding the one crucial — might be a natural experiment that shows exactly how the world works — but by assembling a wide variety of evidence and then muddling through.

Don’t go for kills

Sunday, April 29th, 2018

I don’t know why the makers of Saturday Morning Breakfast Cereal went with Moneybattle:

SMBC Moneybattle

They could have drawn curved swords, used “slashes” instead of “stabs,” and called the whole thing — wait for it! — Sabermetrics:

Children in the snow

Wednesday, April 25th, 2018

Military sci-fi writer John Ringo grew up in 23 foreign countries, where his father worked as a civil engineer, including Iran before the fall of the Shah. He shared this story with an audience at LibertyCon in Chattanooga. It’s about Children in the Snow:

January of the first year I was there. I was ten years old. My father is working in Abadan, we were living in Teheran. He would work down there for three weeks, then come back to Teheran for a week, back and forth.

My mother decided that we were going to go down and visit my dad in Abadan. And we were going to take the train. It was winter, and Iran has more snow than you would expect. It’s a lot like Utah, actually. The weather was very, very cold. As a matter of fact, that year, right around Christmas, it had snowed so heavily that the roof of the airport collapsed from the snow. And I had to go upstairs and shovel the flat top of the building. Until I couldn’t move any more and we got an Ash Kali. And I’m not even going to explain what an Ash Kali is… just “day laborer.”

The train went down overnight. And, at one point, we were stopped on a siding and I woke up in the middle of the night, because the movement had stopped. And I kind of got out to look around, and we were in this upland valley in the Zagros Mountains. It was one of those nights that was so cold that you could see the trees cracking. There were these leafless poplar trees, and snow, and you kind of see a village off in the distance. The cold poured off the window.

While I was out there, I noticed some movement. And my mom had told me, and it was true, that they still had train robberies. So I was like “Cool! It’s bandits! What am I going to do?” I was an adventurous ten-year-old kid, right? Ooh, maybe bandits are going to be boarding.

But it wasn’t bandits. It was women and children in rags… who were going along the train track, picking up coal and rice and wheat that had fallen off the train… so they would have a little bit of heat, and a little bit of food, to make it through another day.

That image was, you can call it childhood trauma, if you like. And every time that I see certain directions, I realize that we’re heading in the direction… we are either headed towards children in the snow, or we are headed away from children in the snow. So at a certain level, everything that I do… is to try to make a world where the only reason that children go out into the snow is to play.

Leftists should appreciate The Case Against Education

Tuesday, April 24th, 2018

Bryan Caplan argues that there are many results in The Case Against Education that leftists should appreciate:

1. Lots of workers — especially less-educated workers — are paid less than they’re worth.  If signaling is important, there are bound to be numerous “diamonds in the rough” — good workers who are underpaid because they lack the right credentials to convince employers of their quality.

2. Lots of workers — especially more-educated workers — are paid more than they’re worth.  Again, if signaling is important, there are bound to be lots of bad workers who are overpaid because they obtained misleadingly strong credentials.

3. A lot of education is meaningless hoop-jumping.  Campus radicals have long accused the education system of imposing an irrelevant, backward-looking, elitist curriculum on hapless kids.  I say they’re right.

4. The education market is inefficient.  In signaling models, education has negative externalities.  My story therefore implies a serious market failure, where self-interest leads students to pursue more education than socially optimal.

5. Locked-in Syndrome.  Due to conformity signaling, the market for education isn’t just inefficient; it’s durably inefficient.  The education market doesn’t just fail; it durably fails.

6. The government’s “ban” on IQ testing is grossly exaggerated, and does next to nothing to explain employers’ reliance on credentials.  While the Griggs case nominally imposes near-insurmountable hurdles on IQ employment testing (as well as virtually every hiring method), it is cursorily enforced.  Lots of U.S. employers admit they use IQ testing, and the expected legal costs of doing so are tiny.

7. Credential inflation is rampant.  Technological change explains only a small fraction of the evolution of the modern labor market.  The popular perception that workers need far more education to get the same jobs their parents and grandparents had is deeply true.

8. Working your way up takes ages.  While there’s good evidence that worker ability raises pay, the process takes many years.  If you’re smart but uncredentialed, even a decade of work experience isn’t enough to fully catch up.

9. In many ways, the labor market used to be better for people from poor and working-class families.  Sure, average living standards are much higher today than in 1950.  But in 1950, there was far less stigma against high school dropouts, and very little stigma against workers who didn’t go to college.  Moderns who look at college graduates from poor families and see “social justice” are neglecting the troubles of the massively larger number of kids from poor families who never get college degrees.

10. Forcing middle-class aspirations on everyone causes misery and failure for poor and working-class kids.  Lots of kids loathe school.  They’re bored out of their minds, and humiliated by teachers’ endless negative feedback.  Such kids disproportionately come from poor and working-class families.  But since the middle- and upper-classes control the curriculum, they’ve stubbornly moved to a “college-for-all” approach to school — and turned vocational education into an afterthought.  The result: Most poor and working-class kids endure thousands of sad hours, then leave school unprepared for either jobs or college.

What caused the 1968 riots?

Sunday, April 8th, 2018

MLK’s assassination kicked up a wave of riots, but why exactly?

Modern thought has a tendency toward economic reductionism, viewing every historic problem as a mechanical working-out of underlying economic processes, and every solution in those terms.

After the 1960s riots, governments leaped in with public housing and economic redevelopment programs that did little to stem the decline of riot-haunted cities. After 9/11, we heard anguished discussions about poverty and economic stagnation in the Middle East. And when the United States elected Donald Trump president, reporters circled old factory towns like vultures, feasting on images of rusted-out manufacturing plants that could be fed to readers as the “reason” behind the political upheaval.

These things do matter. But in the words of sociologist Seymour Spilerman, who did some of the seminal research on the 1960s riots, they’re “background conditions.” The economic deprivation inflicted by America’s racial caste system was real and abominable — and yet, says Spilerman, “in general, it’s not economic conditions which are the immediate precipitants of riots.”

While a general level of deprivation may make riots more likely (if for no other reason than because the poor have so little to lose), variations in economic deprivation don’t. In the 1960s, blacks were economically oppressed everywhere, but there were still places where things were better or worse. So if economic conditions lead to riots, we’d have expected to see the most civil disorder in the places with the worst hardship. But that’s not what the data show.

Nor did economic factors predict when riots broke out. After all, the 1960s were a period of unusually rapid economic progress for black Americans, thanks to anti-discrimination campaigns and the Civil Rights Act. If poverty and unemployment were driving rioters, the 1960s should have been one of the most racially peaceful decades in American history.

What did cause the riots, then? Well, rage and despair and a lot of hard-to-quantify socio-political factors. But taking them all in total, I’d sum them all up with one word: respect. Whatever our economic conditions, we also want — we need — to command a certain minimal amount of admiration from our fellow citizens.

[...]

In the late 1960s, as the legal barriers fell, the gulf between legal status and social reality may have chafed more than usual.