Friday, July 09, 2004

Suckers Wanted Here

I’ve received the following email a couple of times:

[Citibank logo here]

Dear client of Citi,

As the Technical Service of the Citibank have been currently updating the software, We kindly ask you to follow the reference given below to confirm your data, otherwise your access to the system may be blocked.

[hyperlink omitted]

We are grateful for your cooperation.
I’m embarrassed to admit that I fell for it long enough to click the link. The logo was the main thing that fooled me, and I didn’t read closely enough to catch the weirdness of the language. But fortunately, I’m not enough of a sucker to fall for the next step. The form-window that popped up asked me to provide:
Full name
ATM card number
Bank account number
PIN number
User name for online access
Social Security Number
Mother’s maiden name
Date of birth
Credit card number
Credit card expiration date
CVV2 number for credit card
Whew. If anyone is willing to give away that much information, I think they just may deserve to get their identity stolen. Interestingly, the link was set up so that it simultaneously opened the form-window just described and the actual Citibank website. Clever.


Unfashionable Libertarians for Not-Bush

Virginia Postrel is one of the smartest libertarians around, but she’s got a big blind spot about the 2004 election. First, she makes the mistake of focusing on the presidential candidates’ platforms, instead of the dynamics of their interaction with Congress:

Vote for Kerry if you must, folks. But don't pretend you're doing it because Bush's economic policies are insufficiently free market or fiscally responsible. Kerry wouldn't be any better on economics. He'd be worse.
I’ve said it before, and I’ll say it again: The pro-Kerry argument is not his platform. The pro-Kerry argument is gridlock. Tyler Cowen expands on the point.

Second, Virginia accuses Jacob Levy – and by implication, other libertarians – of supporting Kerry to be politically fashionable:
[first post] But all rationalizations aside, I have a sneaking suspicion that Kerry-leaning libertarian hawks (now that's a small demographic!) are simply kidding themselves in order to stay on the fashionable side of politics.

[second post] Jacob Levy claims geeky fashion sense and a messy office as a defense against my suggestion that his Kerry infatuation is a sign of trying to be cool. Sorry, Jacob (whom I like very much). Bad aesthetics is no excuse. Artists aren't the only ones who fashionably hate George W. So do academics.
This is at once bizarre and insulting. Libertarianism is a small, largely unknown ideology. Nobody’s a libertarian to be popular. Libertarians who “out” themselves often run a risk to their academic careers – a risk that is hardly mitigated by supporting one Democrat in one election. Bill Clinton was much more fashionable and popular than Bob Dole or the LP’s Harry Browne – so where were all the pro-Clinton libertarians in 1996? It is only now, in the light of the catastrophe that is the Bush administration, that libertarians have begun to express nostalgia for Clinton.

No, when a libertarian vocally supports a Democrat, there’s clearly a reason. In this case, it’s because George W. Bush has been a miserable failure, by both libertarian and common-sense standards.

Now, there’s a legitimate question about whether libertarians should vote for Kerry or the LP’s Badnarik. On that question, I’m torn. But realistically, since Badnarik hasn’t the slightest chance of winning, we might as well ask who is the lesser of the two major-party evils. To me, the answer is clearly Kerry – not because of his platform, and not because I want to be popular, but because the GOP doesn’t discover its limited-government principles until there’s a Democrat in the White House.

So how do we put one there? Whether you vote for Kerry or Badnarik, you’re still subtracting votes from Bush – so far, so good. The argument for voting Kerry is that each vote is a two-vote swing (one less for Bush, one more for Kerry), while voting Badnarik is only a one-vote swing (one less for Bush, no more for Kerry). But libertarian votes cast for Kerry will be indistinguishable from the votes of all the anti-trade, anti-market, pro-tax, nanny-state left-wingers. On the other hand, votes for Badnarik – especially in a key state – can easily be interpreted as “people who might have supported Bush if he weren’t a total disaster.” I think that’s a message worth sending, which is why I’m leaning slightly toward Badnarik.

UPDATE: Virginia Postrel's initial accusation of popularity-seeking seems directed only at Kerry-leaning libertarian *hawks*, so maybe her point is that Bush is clearly better on the war & terrorism issues. Not being a hawk myself, I'm unsympathetic. In any case, her second post strongly indicates that she thinks Bush would be better on economic issues as well.



Lacking anything really interesting of my own to say, I’m offering links to some recent posts I’ve enjoyed:

1. Geoff Pullum at Language Log points out something really annoying about words painted on streets. I’ve been annoyed about it myself, but I never remembered it long enough to blog about it. This is why I need a personal voice recorder in my car. And the shower.

2. Inspired by an opinion article lamenting that there’s “Little Hope Left for Weapons Ban,” David Masten at Catallarchy offers a snarky response lamenting that there’s also “Little Hope Left for Speech, Press Ban.”

3. Will Wilkinson gives a healthy fisking to Lawrence Mishel, who’s wringing his hands about inequality while supporting government regulations that create poverty. Linguistic bonus: After Mishel dares to “daresay” something silly, Will ups the ante with a “double-dog daresay.” Hey Neal, what’s the past tense of “daresay” – “daredsay” or “daresaid”? Does it matter whether it’s one word or two?


Wednesday, July 07, 2004

In Defense of the Wal-Mart Model, Part 2

At the end of my previous post on Wal-Mart, I promised to consider Daniel Davies’s third point against Wal-Mart’s alleged productivity improvements. So here it is.

3. Employment practices - transferring risks to those worst equipped to bear them
… When one adopts “flexibility” in labour practices, and gains an improvement in output/input ratios as a result, then it can be made to look as if a massive productivity improvement has been made for free. This is not always the case. A large part of this apparent improvement in the company’s ability to generate outputs from inputs has come about simply as a result of taking the cost of mismatches between inputs and demand, and shifting it away from the company onto the shoulders of some other bugger - either the worker or the taxpayer through the benefits system. As Jerome Levy pointed out in the 1930s, one of the historical functions of the corporation has been the provision of implicit unemployment insurance to the working class, allowing them to smooth the volatility in their incomes by taking fluctuations in overall demand as variances in the profit rate. When an employer decides that he no longer wishes to provide for this cost, it doesn’t go away. WalMart are, notoriously, one of the most aggressive employers out there when it comes to alleged off-the-clock working practices, union-busting, sending workers home or keeping them waiting for shifts, and having a surprisingly high proportion of their cost base subsidised by the welfare system. If this cost of higher volatility in labour incomes is taken up by Joe Soap the taxpayer through social insurance, then it shows up in the figures as an increase in corporate productivity and a swelling of the bloated government sector.
There are a couple of different arguments mixed together here, so I’ll take them in turn. The first is that Wal-Mart has essentially shifted costs – specifically, the costs associated with bearing risk – onto the workers. As with Davies’s prior arguments, there’s probably some element of truth here, in that productivity gains may be overstated if some reduced costs are actually shifted costs. But does that mean the workers are actually worse off as a result of Wal-Mart? Wal-Mart has to offer terms of employment that will attract workers away from their next best alternative – either unemployment benefits or other employers. I conclude that, for whatever annoyances may be associated with working at Wal-Mart, the workers they hire must consider the package of benefits and costs to be better than the alternatives, all things considered.

The perception seems to be that Wal-Mart’s profit-seeking management has simply demanded a reduction in labor benefits. But employers can’t simply command a reduction in wages or benefits any time they want; and they can’t simply command a greater amount of work for the same wages and benefits any time they want. If they could, they would have done it already, long before Wal-Mart. Sure, Wal-Mart would like to be able to be able to get more work for less money, because that means higher profits – no surprise there. But people have always been greedy, and businesses have always been profit-seeking. Are we to believe that people are just greedier now than they used to be? Any analysis that purports to show that “profit-seeking” or “greed” explains a change in economic outcomes must meet the burden of explaining why the same profit-seeking and greed didn’t lead to the same outcome much earlier.

Davies’s argument also raises the question of efficient risk-bearing. It seems logical that a large corporation, which can pool risks over many workers, is a more efficient bearer of risk than individual workers. But if that’s true, then there’s an obvious deal to be made: Wal-Mart could reduce or eliminate some of the risks associated with sudden layoffs, showing up for work and being told to go home, etc., and then reduce the workers’ wages slightly to cover the risk. If it’s truly the case that Wal-Mart is the more efficient bearer of risk in this case, then that deal should make everyone – both the workers and Wal-Mart – better off. The fact that this deal hasn’t been made is prima facie evidence that Wal-Mart’s employment practices must improve productivity in some way, rather than just shifting risk to the workers.

The second argument is that Wal-Mart is taking advantage of the public welfare system by encouraging its employees to sign up for benefits, implementing sudden layoffs, and so on. What’s interesting about this argument is that it casts public benefits for workers (such as unemployment insurance) as a form of corporate welfare – surely a novel argument. I wonder if the liberals who (rightly) rail against corporate welfare would be willing to eliminate the benefits in question? In any case, as far as I know, Wal-Mart has never lobbied for the public welfare laws. It has just provided its workers a service by telling them how to access publicly available benefits. At worst, then, Wal-Mart is guilty of responding rationally to a public policy that was created by others and justified on grounds of helping the little guy. (I’ll take the forgoing statements back if I’m shown evidence that Wal-Mart has indeed lobbied for the expansion of public welfare.)

If Wal-Mart is indeed shifting costs onto the taxpayer – and maybe it is – then Davies is correct to say that the productivity improvements attributed to Wal-Mart have been overstated. But then my question is, whose fault is that? If you give your teenage daughter a high-limit credit card, and she runs to the mall and blows scads of money at the Gap and Express, is that Gap’s and Express’s fault? The “external cost” of the stores’ transactions with your daughter is one that you’ve brought on yourself by putting your own pocketbook on the line. And the same goes for state policies that deliberately create public benefits which encourage changes in behavior. If people engage in greater health risks because of free state-run health clinics, that is a cost the state has brought on itself (and the taxpayers). And if workers more willingly take less-secure jobs because of state unemployment benefits, that is again a cost the state has brought on itself (and the taxpayers). To blame Wal-Mart for “chucking [its] grass cuttings over the fence” (Davies’s phrase for imposing costs on others) is to deflect attention from the policies that gave Wal-Mart a positive incentive to do the chucking.

And just to be clear, the “chucking” in this case takes the form of hiring people, laying people off, and providing the workers with information that makes it easier for them to access state benefits. The former two are standard practice for any employer, and the latter is something the state does itself on a regular basis.


Monday, July 05, 2004

Moral Philosophy as if Incentives Really Mattered

Matthew Yglesias makes the following comment in a discourse on Spider-Man 2 (warning: spoilers in Yglesias’s post and the last paragraph of this one):

But as we move forward into modernity, intellectual types lose their faith [in heaven and hell]. But there's still a desire to come up with a moral system that people will want to follow. Hence we start hearing complaints that normative view X or Y is "too challenging" because morality, apparently, is supposed to be easy and it's just not cool for Peter Singer (and others) to go around telling us that it might suck to do the right thing.
The implication is that there’s something facile or illegitimate about criticizing a moral philosophy for being “too challenging.” But even if the difficulty of following moral dictates is not the only relevant factor, surely it’s at least one relevant factor.

I take it as given that the purpose of a moral system is to guide the behavior of actual people. People are not angels; they cannot be expected to follow moral rules purely because they have (allegedly) been justified by religious or philosophical reasoning. Nor are they devils; they will sometimes set aside personal gain for moral reasons. In the real-world middle ground between angels and devils, whether people follow moral rules depends on the persuasiveness of the rules’ justifications, how fully people have been socialized to respect the rules, the degree of temptation they face to break the rules, and the degree of difficulty involved in following the rules. Given the last two factors, it follows that some moral systems may fail to guide the behavior of actual people – or more importantly, fail to guide their behavior in the intended manner – because the rules ask too much. To be more specific, the rules may ask too much incentive-wise, by demanding that people sacrifice too much; and they may ask too much information-wise, by requiring costly or inaccessible knowledge for their concrete application. (Mario Rizzo refers to the latter issue as “the knowledge problem of ethics,” which is analogous to Hayek’s famed knowledge problem of economics.)

Now for the crucial Spider-Man application. When Peter Parker begins to think that being Spider-Man entails giving up everything good in his life (romance, career success, etc.), he starts to become despondent. The physical manifestation of his depression is the temporary loss of his super powers. In short, the excessive moral demands of being a selfless superhero make him less effective as a hero. His powers only return when those he loves most – Aunt Mae and Mary Jane – are directly threatened by Dr. Octopus, and the return of his powers enables him to save the day. The activation of his own loves and desires brings out the best in him. The moral of the first movie, in the words of Uncle Ben, was that with great power comes great responsibility. But I think the moral of the second movie could easily be: if the burden of responsibility becomes too great, it becomes self-defeating.

(See also the comments from Henry Farrell and Brayden King, and Yglesias's favorable response.)


Sunday, July 04, 2004

July 4th Heresy

Like most libertarians, I like to complain about nanny-state regulations, especially on July 4th. And like most red-blooded Americans, I like to blow stuff up, which makes anti-fireworks regulations especially galling. I’ve noticed at least two libertarian bloggers complaining about anti-fireworks laws, and in my gut, I want to agree with them. If drunken fools blow their hands off, that’s their problem, right?

The problem is that exploding fireworks is not a purely self-regarding action; arguably, it’s not even close. The primary danger – and I realize it’s not a problem everywhere in the country, but it’s definitely a problem in Southern California – is that fireworks can start fires. In dry areas, that can lead to out-of-control conflagrations that destroy hundreds or even thousands of homes, not to mention taxing the efforts of firefighters, filling the sky with black soot, reducing air quality, sometimes shutting down highways and inconveniencing large numbers of people.

I hate to admit it, but I think regulating fireworks, and even implementing an outright ban in especially fire-prone areas, is probably a good idea. Will people flout the regulations, leading to smuggling and black markets? Yes, but I still suspect the gains exceed the losses (though I’m open to evidence showing that my concerns are out of proportion to the problem). We can’t eliminate the risk entirely, but we can at least reduce it substantially.