I saw an advertisement last night, funded (I believe) by Gray Davis’s anti-recall campaign. The primary message of the ad was that the recall would hurt California’s economy, cost too much money, and so on -- and that, therefore, voters should vote against recalling Davis. The ad showed lots of newspaper clippings with headlines about the recall’s terrible toll on the state of California.
The ad’s reasoning is disingenuous, of course. Although I don’t have those newspaper clippings in front of me, I’m willing to bet they related to the economic costs of having the recall election at all, not the costs of removing Davis from office. And since the recall election is happening whether you like it or not, those costs are sunk. We will suffer them regardless, and therefore they are utterly irrelevant to the question of how one should vote in the recall election.
Friday, September 26, 2003
False Political Advertising
Thursday, September 25, 2003
Conservatives Guilty of Being Good Debaters?
Chris Bertram at Crooked Timber observes that conservative arguments against [fill in the blank here] very often fall into three categories, to wit:
Bertram also observes that conservatives take these positions and “advance[e] them simultaneously or switch[] promiscuously among them.”It isn’t true.orIt may be true, but it doesn’t matter.orIt’s true, and it matters, but doing something about it would (a) have the perverse effect of making that thing worse, or (b) make something else worse. etc etc.
In other words, Bertram convicts conservatives of being good debaters. In my old high school debating days, we were taught that it was wise to attack all aspects of an opponents’ case if possible, casting doubt on both the significance of a problem and the viability of the solution proposed. And there’s nothing contradictory about doing so, as long as you’re sufficiently careful about how you present the arguments. You can consistently argue that phenomenon X is not widespread, that even if widespread it should not be regarded as a problem, and that even if it’s a widespread problem the policy in question would either increase its incidence or create offsetting disadvantages. (The “even if” form of argument, in my experience, was among the most powerful approaches in winning debates, because it emphasized that the listener could disagree on one or more points and still agree with you on the central proposition.) Also, it’s worth noting that all three forms of argument can be used to advance changes in policy as well as defend the status quo. They are deployed by people of all ideological stripes.
Take the case of drug legalization. The legalizer can, and I would argue should, advance all of these propositions: (a) that the harms of drugs have been grossly exaggerated by the prohibitionists, (b) that those harms of drugs that are self-regarding ought not be the subject of social control, (c.i) that prohibition exacerbates many of the problems associated with drug use, such as drug poisoning and overdoses, and (c.ii) that prohibition empowers a violent criminal class that creates real threats to the non-drug-using population. Far from being contradictory, these positions bolster each other.
Conservatives do, of course, offer many fallacious forms of argument; argumentum ad naturam (the appeal to nature) leaps to mind. Liberals do, too; ad misericordiam (the appeal to pity) is pretty common. Interestingly, Bertram’s position verges on the latter: he implies that conservatives deploy the sound argumentative strategies above as a means of dismissing “the plight of the poorest and most vulnerable people in our societies.” Aren’t there enough fallacious arguments out there to condemn, without also condemning arguments that are perfectly reasonable?
No Longer No Comment
BlogSpeak seemed like a pretty good comments service, but then it turned out that it prevented Netscape 4.0 from reading the blog page. I don't know how many people use Netscape 4.0, but I'm thinking it must be a lot, because my hits-per-day dropped almost to zero for a couple of days at least. Maybe it was just a problem with the counter, since I've been using BlogSpeak for over a week. But rather than play detective, I just decided to find a new comments service, HaloScan. The template is pretty stripped down, but at least I'll have comments again. Again, my apologies to anyone who thought my comments area would be an excellent place to save their literary endeavors.
Wednesday, September 24, 2003
Comments Down
Comments will be down until further notice. For some reason, Netscape can't access this page because of some kind of error in the comments script.
Tuesday, September 23, 2003
Innumeracy in the Recall Election
A recent Schwarzenegger campaign commercial charges that Gray Davis “Increased Car Tax 300%.” The L.A. Times’s “Ad Watch,” which evaluates the validity of statements made in campaign ads, deemed the figure (if not the blame) accurate: “The car tax was in fact tripled, though Davis maintains the increase was required by a law passed under former Gov. Pete Wilson…” But if the tax was indeed tripled, then Schwarzenegger’s figure is flat wrong: a tripling of the tax constitutes a 200% increase, not a 300% increase.
In Defense of Gouging
C. C. Kraemer defends the practice of “price gouging” during times of crisis (like hurricane Isabel), and he gets it exactly right, so I’m rather surprised by Tyler Cowen’s more skeptical take. Kraemer’s basic point is that higher prices induce suppliers to bring more of the scarce good – generators, batteries, flashlights, etc. – to market. Tyler responds by pointing out that, in the short run, the supply is fixed – but then he immediately offers the obvious counterpoint, which is that “in the long run the economy will stand readier with emergency flashlights.” Exactly so, and this seems to me a decisive argument. In order to stock generators and such, shop owners have to take up valuable shelf space that could have been used for other items. The added profit they can reap during times of crisis is the financial reward that compensates them for making sacrifices during ordinary periods. A policy that clamps down on “gouging” during a crisis makes it less likely that necessary items will be available during the next crisis. Also, as Kraemer notes, the higher prices attract suppliers in non-crisis regions to transport their goods to the region where they’re needed most.
There is another economic argument in defense of raising prices during a crisis. Even if the higher price does not attract greater supply to the market, a higher price for the fixed quantity assures that the goods are allocated to their highest-valued uses. When the price is kept low, the first consumer to walk in the door is more inclined to buy a large quantity when a small quantity would do. Perhaps he’ll buy bottled water not just for drinking during the hurricane, but for watering his indoor plants. As a result, the next consumer finds himself unable to buy water for drinking, even though he’s willing to pay much more than the fixed price.
One more defense of price hikes during crises is that it encourages people to think ahead. If you live in a hurricane-prone region, it makes sense to have a stock of fresh water and batteries on hand instead of rushing to the store and fighting the crowds at the last minute. When I lived in Washington, D.C., I made a point of buying umbrellas when it was not raining. To the extent that people think ahead like this, the magnitude of price hikes during crises is dampened because the demand is lower.
So why does Tyler oppose such a policy on “libertarian freedom grounds” alone, when strong economic grounds exist as well? His point seems to be that gouging creates resentment, and “not wanting to be gouged is a preference too.” Of course, the desire not to be gouged may be no different from the standard desire to pay a lower price, in which case the argument carries no weight. But the resentment may also play the added role of punishing gougers by depriving them of future sales (of the same goods and other goods they sell) in non-crisis periods. This, Tyler suggests, is a desirable norm because it keeps the gouging in check: “our current norms help keep our suppliers in line and limit their ability to defraud us.” While there is truth to this point, it does not follow that a law is needed to reinforce the norm. The resentment does the job on its own, by forcing suppliers to take into account the lost trust and good will resulting from steep price hikes, while not putting them in the legal straightjacket of never raising prices during a crisis.
It is true, as Tyler says, that we can critically evaluate whether stronger or weaker fairness norms would be desirable. The more competitive are the markets in question, the less important such fairness norms should be. Why? Because when there is competition among suppliers of emergency provisions, a supplier who raises his price more than is necessary to compensate for stocking costs will lose out to other suppliers – either immediately or during the next crisis. In more monopolistic situations, by which I mean situations where both actual and potential competition is weak, a stronger norm might be necessary. (This may be the point of the Mankiw/Akerlof paper Tyler cites, which I can’t seem to access.) But the broader point is that, given the strong economic defenses of price hikes during crises, it seems wiser to rely on flexible private norms over inflexible anti-gouging laws.
Monday, September 22, 2003
What Consistency Consists Of
A few months ago, Julian and Will both observed that Ralph Waldo Emerson’s famous quotation, “A foolish consistency is the hobgoblin of small minds,” has been the victim of a gross misinterpretation. Emerson was not defending the holding of contradictory views at the same time; rather, he was defending the virtue of being willing to change one’s mind, rather than forcing one’s present views to be consistent with what one said in the past. As Julian notes, self-contradiction is hardly a virtue: “The notion that there's something wrong with consistency within one's own views at a given time—the idea, in other words, that you should just arbitrarily apply a principle in some cases but not in others, is pretty bizarre, and I can't think of anything to recommend it.”
It occurs to me, however, that while consistency-within-time is the greater virtue in philosophical matters, consistency-over-time is often the greater virtue in law and public policy. One of the fundamental principles of the rule of law is that individuals should be able to predict how the law will apply to their specific cases, both in the present and the future. The ability of people to predict the rules gives them a greater capacity to plan their lives, form commitments, make investments, and coordinate their behavior with others. Of course, this doesn’t mean the rules can never change; indeed, it is desirable for people to know that the law will sometimes change in ways that take account of new circumstances. But in general, there is value to having a degree of constancy in the rules to facilitate individual planning.
As my one-time dissertation advisor (and now coauthor) Mario Rizzo has pointed out, there is a difference between logical consistency and praxeological consistency. (He drew this distinction partially from Mises, but I don’t think Mises was especially clear on the subject.) Policies that are praxeologically consistent are those that people can rely on for purposes of choosing their behavior; it can also mean policies that minimize interpersonal conflict and allow people to coordinate their actions. Policies that are logically inconsistent might nonetheless be praxeologically consistent. For instance, the doctrines of tort law might be justified on normative grounds that are foreign to property or contract law. And yet as long as the resulting rules are sufficiently clear and predictable, they can provide the basis for intelligent planning by individuals. Changing one of the rules might make the two branches of law more consistent with each other, but less consistent with what has gone before – possibly botching people’s plans in the process.
Take, for example, the recent trend in tort law toward holding people liable for the self-regarding choices of others – e.g., the possibility of holding McDonald’s liable for the obesity of its customers. Obviously, the underlying principle here is that individuals cannot be held totally responsible for their own actions. Fortunately, this notion has not yet taken firm hold – the McDonald’s suit hasn’t succeeded yet (though it still might, and there are plenty of other examples in tort law of people getting compensated for harms brought on by their own poor judgment). But let’s suppose that it eventually does take hold. We might still be spared a horrendous legal outcome by the fact that contract law has been somewhat more resistant to anti-responsibility norms. A contract like this one pointed out by Amy, in which restaurant customers sign a waiver before consuming a sinful dessert, would still be upheld in court. As a result, the law would be logically inconsistent but praxeologically consistent: customers and restaurants could still make their transactions with a reasonable ability to predict the outcome. But then suppose that contract law were forced to become consistent with tort law. Restaurant owners might suddenly find themselves liable for numerous activities (like serving desserts to waiver-signing customers) that they had thought would be just fine. If they had known how the law would change, perhaps they and their customers would have behaved differently. Worse, the change in the contract law could create a plethora of unintended consequences in other endeavors where waivers are involved: bungee-jumping, medical procedures, and so on. For a time, at least, turmoil would reign.
On the other hand, plenty of policy examples demonstrate the importance of consistency-within-time relative to consistency-over-time. The S&L debacle is a nice example of a case in which it would have been better to adopt any consistent policy (either FSLIC plus extensive investment regulation, or no FSLIC and minimal investment regulation) instead of the inconsistent policy we did choose (which allowed S&L’s to keep over-risky investment portfolios and stick the taxpayer with the tab when their investments turned south). Moral hazard is just one possible result of inconsistent policies existing simultaneously.
My question, then, is whether there is some principle for choosing between consistency-over-time and consistency-within-time. Is there a weighing process? Or should one always outweigh the other whenever they conflict?