Isegoria

Russ Roberts discusses his new book, How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness, with Nick Gillespie of Reason:

The evidence shows that immigrant groups tend to retain the social status that they arrive with, Gregory Clark points out:

The same goes with more recent immigrants to the United States. Due to visa restrictions, certain immigrant groups were permitted entry to the United States only if they could prove they had skills that were needed in the U.S. labor market. For example, the Africans, Chinese, Christian Arabs, Filipinos, Indians, Iranians, and Koreans who did gain entry into the United States were from the upper echelons of their home societies. And, in the United States, they enjoy significantly higher than average social status (as measured, again, by the number of doctors per 1,000 members of the group). Groups who, for various reasons, did not face the same restrictions — including the Hmong, Latinos, and Maya — entered the United States with low social status and have struggled to achieve upward mobility since. Immigration to the United States, in other words, rarely changes one’s social status.

The same pattern is echoed in Europe. In the 1960s and 1970s, Austria, Belgium, Denmark, Germany, and Switzerland created guest worker programs to recruit unskilled workers for basic factory jobs, often from Turkey’s poor, rural areas. Today, the children of those Turkish immigrants all perform worse on language and mathematics tests than domestic populations, which is a reliable indicator of lower social status. The lower status of their parents was thus reproduced in their new home countries.

By the same token, countries that selected elite immigrants to begin with now have high-performing immigrant classes. For example, the United Kingdom selects immigrants based more on education and skills. As a result, African, Chinese, and Indian immigrants outperform their British counterparts; although children of white British parents born between 1963 and 1975 attained on average 12.6 years of education, children of African migrants stayed in school for 15.2 years, those of Indian migrants for 14.2 years, and those of Chinese migrants for 15.1 years.

The most tragic episodes of social engineering include these four elements, James C. Scott argues:

The first element is the administrative ordering of nature and society — the transformative state simplifications described above. By themselves, they are the unremarkable tools of modern statecraft; they are as vital to the maintenance of our welfare and freedom as they are to the designs of a would-be modern despot. They undergird the concept of citizenship and the provision of social welfare just as they might undergird a policy of rounding up undesirable minorities.

The second element is what I call a high-modernist ideology. It is best conceived as a strong, one might even say muscle-bound, version of the self-confidence about scientific and technical progress, the expansion of production, the growing satisfaction of human needs, the mastery of nature (including human nature), and, above all, the rational design of social order commensurate with the scientific understanding of natural laws. It originated, of course, in the West, as a by-product of unprecedented progress in science and industry.

High modernism must not be confused with scientific practice. It was fundamentally, as the term “ideology” implies, a faith that borrowed, as it were, the legitimacy of science and technology. It was, accordingly, uncritical, unskeptical, and thus unscientifically optimistic about the possibilities for the comprehensive planning of human settlement and production. The carriers of high modernism tended to see rational order in remarkably visual aesthetic terms. For them, an efficient, rationally organized city, village, or farm was a city that looked regimented and orderly in a geometrical sense. The carriers of high modernism, once their plans miscarried or were thwarted, tended to retreat to what I call miniaturization: the creation of a more easily controlled micro-order in model cities, model villages, and model farms.

High modernism was about “interests” as well as faith. Its carriers, even when they were capitalist entrepreneurs, required state action to realize their plans. In most cases, they were powerful officials and heads of state. They tended to prefer certain forms of planning and social organization (such as huge dams, centralized communication and transportation hubs, large factories and farms, and grid cities), because these forms fit snugly into a high-modernist view and also answered their political interests as state officials. There was, to put it mildly, an elective affinity between high modernism and the interests of many state officials.

Like any ideology, high modernism had a particular temporal and social context. The feats of national economic mobilization of the belligerents (especially Germany) in World War I seem to mark its high tide. Not surprisingly, its most fertile social soil was to be found among planners, engineers, architects, scientists, and technicians whose skills and status it celebrated as the designers of the new order. High-modernist faith was no respecter of traditional political boundaries; it could be found across the political spectrum from left to right but particularly among those who wanted to use state power to bring about huge, utopian changes in people’s work habits, living patterns, moral conduct, and worldview. Nor was this utopian vision dangerous in and of itself. Where it animated plans in liberal parliamentary societies and where the planners therefore had to negotiate with organized citizens, it could spur reform.

Only when these first two elements are joined to a third does the combination become potentially lethal. The third element is an authoritarian state that is willing and able to use the full weight of its coercive power to bring these high-modernist designs into being. The most fertile soil for this element has typically been times of war, revolution, depression, and struggle for national liberation. In such situations, emergency conditions foster the seizure of emergency powers and frequently delegitimize the previous regime. They also tend to give rise to elites who repudiate the past and who have revolutionary designs for their people.

A fourth element is closely linked to the third: a prostrate civil society that lacks the capacity to resist these plans. War, revolution, and economic collapse often radically weaken civil society as well as make the populace more receptive to a new dispensation. Late colonial rule, with its social engineering aspirations and ability to run roughshod over popular opposition, occasionally met this last condition.

When Mao died, The Economist made a small mistake describing his legacy:

In the final reckoning, Mao must be accepted as one of history’s great achievers: for devising a peasant-centered revolutionary strategy which enabled China’s Communist Party to seize power, against Marx’s prescriptions, from bases in the countryside; for directing the transformation of China from a feudal society, wracked by war and bled by corruption, into a unified, egalitarian state where nobody starves; and for reviving national pride and confidence so that China could, in Mao’s words, ‘stand up’ among the great powers.

The emphasis is David Friedman’s:

The current estimate is that, during the Great Leap Forward, between thirty and forty million Chinese peasants starved to death.

Nathan Lewis suggests six great things an independent Scotland could do:

Britain, today, is basically Spain or Italy plus the financial industry centered in London. Britain has been in decline for a long time. Eventually, the financial industry will locate elsewhere, most likely Shanghai.

Or, perhaps, Scotland. I think Scotland could again become a world leader in commerce and finance, as it was in the 18th century – along with other unlikely places like Holland, Hong Kong, Japan and Switzerland … or New York … who also had their time in the sun, until they blew it.

But, first Scotland would have to get off the sinking British ship. Here are six great things an independent Scotland could do to become one of the most prosperous places on Earth:

1) Get a rational tax system. There are two basic questions to answer regarding taxes. One is: how much, as a percentage of GDP, do we want to raise in the form of tax revenue? I suggest that about 15% (total government) is a good number, which can provide most of the government services we value today, while also presenting a very manageable burden upon the private economy. Singapore (14%) and China (17%) serve as good examples here.

The second question is: how to raise this amount of revenue in a fashion that causes the least harm and distortion to the private economy? Hong Kong’s flat-tax environment again provides an excellent example, although there are other modalities that could work, including systems based mostly on consumption-related taxes.

2) Get a rational currency policy. As a small country, with a high degree of trade, Scotland would have difficulty with a fully-independent currency. The exchange-rate fluctuation with other major world currencies would be troublesome. However, Scotland could adopt an “open currency” model – in other words, people could officially use any currency they see fit.

Into this “open currency” environment, Scotland’s government (or private entities with government sanction) could introduce gold-based currencies, which people could also use as they wished – or not use, if that is appropriate. In this way, Scotland would be providing an alternative to today’s fiat-currency madness, which people could adopt voluntarily if they felt it was helpful. Or, they could stick with dollars, euros and pounds if they felt that was best. After a few decades, I think many would find that Scotland’s gold-based solution was superior, and would either adopt the Scottish “gold sovereign” as an international currency, or imitate it.

3) Remake public social services. I’ve argued that Japan’s current fiscal problems, related to public pensions, healthcare, and other welfare services, are mostly characteristic of welfare programs that were invented in the late 19th century, and were appropriate for the 1950s and 1960s, but are no longer appropriate today. Independence would be a chance to introduce new public policy structures that are appropriate to today’s reality of long lifespans and low birthrates, without being too expensive. Hong Kong, formerly part of the British Empire, provides universal public healthcare at a cost of 3% of GDP.

4) Get a “competitive advantage” versus other financial centers. Financial surveillance and taxes in the U.S. are becoming intolerable to about everyone. Europe is not much better; besides, people are at risk of being “bailed-in” at any moment. Switzerland was once a haven for wealth and free finance, but that is not so true today. There’s a great market need for a place today that could be what Switzerland, or New York, was in the past. Singapore seems to provide about the best alternative at this point, along with places like the Cayman Islands.

5) Get a great environmental policy. Scotland used to have one of Europe’s great fisheries. In the 13th century, the natural oyster beds of the Forth covered over 129 square kilometers. Alas, by 1957, the Firth of Forth was found to have no oysters at all; they had been harvested to biological extinction. The nice thing here is that oysters (or other fishing) are no longer an important industry, so nobody cares if you ban fishing altogether. Perhaps, after forty years or so, Scotland will have again one of the most bountiful marine environments in Europe, if not the world.

Today, prosperity and abundance don’t necessarily have an environmental cost at all. The coal-burning factories of 19th-century Scotland need not be recreated. Additional progress could be made by phasing out personal automobiles by way of high taxes on petroleum and cars, much like Singapore or Britain today. Essentially, this would be a return to the train-centric arrangements of Scotland in, for example, 1890. Although Scotland is a major oil and gas producer, domestic energy efficiency would allow both greater energy independence and also more revenue from export sales.

6) Respect freedom and liberty. Tired of the surveillance state of Britain, the U.S., and (following close behind) the Eurozone? Move to Scotland.

This should be a familiar list. Indeed, it was the Scottish “political philosophers” who put much of it into words, a long time ago. The world then was also characterized by oppressive, militaristic statism, notably in the case of Louis XIV of France (1638-1715) and also James II of England (1633-1701). The Scots took a different path, and began their first era of world-beating success.

Scotland (population 5.3 million) could become much like Singapore (5.4 million) or Hong Kong (7.2 million), or even Monaco (36,000), a popular alternative to oppressive statism and economic decline throughout the developed world.

Along the way, Scots could get rich.

It is clear that the image of a static 1 and 99 percent is largely incorrect, Mark S. Rank and Thomas A. Hirschl have found:

It turns out that 12 percent of the population will find themselves in the top 1 percent of the income distribution for at least one year. What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution, 56 percent will find themselves in the top 10 percent, and a whopping 73 percent will spend a year in the top 20 percent of the income distribution.

Yet while many Americans will experience some level of affluence during their lives, a much smaller percentage of them will do so for an extended period of time. Although 12 percent of the population will experience a year in which they find themselves in the top 1 percent of the income distribution, a mere 0.6 percent will do so in 10 consecutive years.