The Wages of Sin Are Death, Prison, and Taxes
Mark Kleiman (here, here, and here) and Juan Non-Volokh (here and here) have been having a polite debate on the subject of alcohol taxation. Click the links to read Iain Murray's and Stuart Buck's comments on the same topic.
Mark’s main point is that alcohol consumption creates a variety of negative externalities, such as drunk driving accidents, increased public health costs, criminality, and so on, and a tax would internalize the externality. His back-of-the-envelope calculations indicate that each beer consumed creates external costs of about $1. Juan replies by emphasizing that a tax would fall on all consumers of alcohol, not just the minority of abusers who create the vast majority of the social ills associated with alcohol (a harm Mark concedes but considers justified on net). Juan also observes that alcohol consumption can also create health benefits in terms of preventing heart disease, and some of that beneficial consumption would be deterred by a tax.
All of this is fine, but I think there’s a point that both Mark and Juan have given inadequate attention. Taxes are by no means the only way to internalize externalities. There are both civil and criminal punishments for the ill effects of drunk driving and other criminal behavior. If you actually cause harm to another person or property, you can be sued in civil court. If you get caught driving drunk, you can lose your license and go to jail. If you’re still allowed to keep your license, your insurance premiums will assuredly rise. Note that all of these types of punishment are focused on the real abusers, not the responsible drinkers. All of these facts indicate that if the external cost of a drink is $1 (Mark’s estimate), the optimal tax would have to be less than $1. To figure out how much less, we would need to calculate the expected dollar value to the consumer of the potential punishments that would result from the marginal drink. And don’t forget that taxes on alcohol already equal about 25% of the net-of-tax value per gallon (the average price per gallon of malt beverage is about $1). So we’re already about 25% of the way to Mark’s estimated external cost, without even having taken into account non-tax punishments.
Mark could still be right about the optimal tax needing to be raised (though not by the whole $1 per drink). The answer depends on two main things: first, the expected dollar-value of jail time, loss of license, and other non-tax punishments; and second, whether you’re willing to assume all policies other than the tax rate remain fixed. If the size of non-tax punishments is increased, the optimal tax will naturally decrease. And keep in mind that some of the “external” costs that Mark cites are not inherently external, such as the public health costs in socialized healthcare systems (like Medicare, Medicaid, and public ERs). As frequent readers of this blog will know, this is one of my hobby horses: when you socialize health costs, you create a political incentive for the regulation and taxation of personal lifestyle choices. Alcohol is but one example; others include eating fatty foods, engaging in high-impact sports, and being sexually promiscuous. Would we also support placing excise taxes on these other activities, which unlike alcohol currently are either untaxed or taxed at the same rate as everything else?
Oh, one other thing: the strategy of setting a tax equal to the marginal external cost only makes sense if the market is actually a competitive one in other respects, so that the price of the product is relatively close to its marginal cost of production. But in the case of alcohol, a slew of state and federal rules protect wholesalers from competition (and the laws also prevent suppliers and retailers from dealing directly with each other -- alcohol products must go through the wholesale sector). As a result, there is good reason to believe that alcohol prices are already a good bit higher than marginal cost of production.
[Note: the statistics I’ve cited here all came from my head, as a result of some research I did about a year ago. They do have original sources, of course, which I could track down if I had to, but I’m too lazy to do it right now.]
Friday, July 18, 2003
Thursday, July 17, 2003
Your Money and Your Life
Julian has an excellent article on the valuation of life up at Reason, with some further ruminations on the subject posted on his personal blog. I have just a couple of comments.
First, as a political matter, I wonder if the EPA’s short-lived plan to discount the value of life for the elderly (for purposes of doing cost-benefit calculations) would have met less opposition if it hadn’t adopted such a sharply discontinuous value of life function. According to Julian, the EPA placed a value of $2.3 on the life of someone over 70, versus a value of $3.7 on the life of someone younger. Well, it’s not like something magical happens at the age of 70. They could just as well have adopted a “years of life saved” metric, without even having to refer to particular lives. The value of your total remaining years of life would consequently decline as you got older, simply because you have fewer of potential years remaining. I wonder why they chose to look at two arbitrarily defined blocks (over 70 and under 70) instead?
Second, in the discussion on his personal blog, Julian takes on the notion of valuing a life by finding out how much money one would accept to avoid a risk. In his example, if someone would take $5K to accept a one in 1000 chance of death, you might think we could just multiply $5K by 1000 to find that the value of life is $5 million. Julian argues that this approach is mistaken because “the function is non-linear, and … asymptotic to infinity as probability approaches one and time-to-demise approaches zero. (In other words, there's no amount you'd take to be killed with certainty five seconds from now.)”
This is all perfectly correct, and it explains why we wouldn’t let a potential murderer just pay a fee of $5 million for the privilege of killing his lover. But it seems to me that, when we’re talking about environmental regulations, product liability, and so on, that the logic works just fine, because we aren’t talking about a certainty of death for any particular individual. We cannot identify in advance the specific person killed by a certain increment of pollution, or saved by the EPA regulation (or liability rule) that prevents that pollution. We only know the specific person after the fact, and sometimes not even then (because we don’t know which death was the marginal death). So in cases like these, it seems perfectly appropriate to value lives in the manner described, because for each individual we are talking about a small risk of death rather than a certainty. One odd implication of this approach, though, is that there may be many different values of life depending on the size and context of the risk. The value of life would presumably be much, much larger for a one in 100 chance of death than for a one in 1000 chance of death. Perhaps it is misleading to call this a “value of life” at all, and we should call it a risk premium instead. But at the aggregrate level, it comes out in the wash: counting $5K one thousand times is functionally equivalent to count $5 million just once.
Contrarian Thought for the Day
The erudite, ever-feisty, eminently readable John Derbyshire on colonialism.
Wednesday, July 16, 2003
Living Libertarian
I sympathize with both Mike and Jim (see the two posts below). I posit that the seeming conflict between their views actually represents a dualism inherent in libertarianism. On the one hand, libertarians tend to be among the most political people you’ll ever meet. They have some of the most definite and vociferous political opinions around, and often as not, they won’t shut up about them. They realize, with Mike, that political institutions make a difference. On the other hand, the substantive content of libertarian belief is that most people should not have to be political. If government would just restrain itself to a narrow set of vital but manageable tasks, regular people could stop thinking about politics and instead focus their energies on the things that really matter in life, like running their businesses, raising their children, and, as Jim indicates, sipping cocktails and watching the surf roll in.
Sometimes I will meet a person who is apathetic about politics, who has very few opinions about politics aside from a good dose of cynicism, but who is just trying to make his own life – and the lives of those around him – better. And I think to myself, “That's libertarianism lived, not argued.”
Californians Love Political Theory
In the post below, Jim Dow claims below that Californians--actually, he says "most people"--don't care about political theory. I don't think that he could be more wrong. Californians may not realize that they care about political theory but they do (at least if they care about maintaining their "Californian" lifestyle).
I spent a not-insignificant amount of time studying political theory specifically and so I may be biased, but let me try and justify why I think political theory is really important. I went to school expecting to study politics but not necessarily theory. Actually, I didn't even really know what theory was. But after taking some introductory classes and talking to some professors I respected, I knew that this was the interesting part of politics, the "head" of the political science.
People live in different ways in different countries in a large measure because of politics. Why should we suppose that life on one side of the Baja peninsula (in California) is so different than life on the other side (in Mexico)? Is it because of the genetic make-up of the people? We know too much science to believe that. Is it because of pre-existing cultural conditions? Perhaps there is some of that. Do natural resources and geographic circumstances make a difference? Sure. But much of the difference can be attributed to the laws and institutions that exist on different sides of the border. And while not all of that is attributable to planning, deliberation, and public reasoning--some of it is spontaneous--much of it is attributable to paths that we have taken consciously. So politics matters. What governs politics? Political theory, of course. While political philosophy may be more rigorous, it is too abstract and rigid to carry into the process of formulation. Political theory discusses what we want from society, defines our vision of the good life, makes claims about what human beings are like, and tries to delineate our obligations to one another. It also does 1,001 other things.
Why is life so much different in North Korea than in South? In the former East Germany than in former West Germany? In South Africa vs. Zimbabwe?
Our instinct might be to turn towards institutions, laws, cultural norms, natural resources, geographic situation, historical records--anything that we can touch.
But we ought to focus our attention elsewhere, turning our gaze somewhat higher. What motivates men to govern each other in such-and-such a way? What is their organizing principle? Do they believe in laws that apply equally to all or do they believe in commands given by rulers to subservients? Do they value individuals? Do they value groups? Which groups are valuable to them? Do they have an organic or a positivist vision of the state? Do they even believe in states or do they believe in the unity of their ethnicity or fellow religious believers?
Political theory studies their beliefs, which in turn governs their political actions which, for better or worse, provides the framework for their society in which to flourish or whither.
To answer Jim's final (and probably rhetorical) question: I hear that the weather's great in Cuba but I still wouldn't want to live there.
Tuesday, July 15, 2003
California Dreaming
The joke about Canada goes like this: Canada could have had American ingenuity, French culture and English government, but instead it ended up with English ingenuity, American culture and French government. I was thinking about this as I was sitting in a restaurant on the beach in Los Angeles. California has managed to combine the French version of the good life (sitting outside in a café drinking wine) with American ingenuity (computers, biotech, entertainment). But somehow we haven’t managed to get the third part right. Not only did we not get English government, we ended up with Italian government!
But if you could only get two right, I think we picked the right two. Which is maybe why most people don’t really care about political theories. Libertarian, communitarian, goofytarian; how can it matter when the sun is shining and the surf is high?
Monday, July 14, 2003
Revelation Rumination
What is the difference between an atheist and an agnostic? The simple answer is that the atheist denies the existence God, whereas the agnostic neither denies nor affirms the existence of God. But the line between these two is not so easily drawn. Consider the “spectrum of non-belief,” which measures the percent likelihood that one assigns to the non-existence of God. Someone with a score of 0% is a true believer in God. Someone with a score of 100% would clearly be an atheist. But what interval on this spectrum corresponds to the agnostics? Where are the dividing lines?
Interestingly, I’ve found that self-identifying atheists and agnostics both draw the lines so as to maximize the size of their own group. Thus, atheists tell me than any score of greater than 50% qualifies you as an atheist, because you think it’s more likely than not that God doesn’t exist. Meanwhile, agnostics tell me that any score less than 100% (and greater than either 0% or 50% -- I haven’t quizzed them on that end of the spectrum) qualifies you as an agnostic, because you place some probability, however small, on the possibility of God existing. Since I’m at about the 99.99%mark, I would meet both definitions, thereby qualifying as both an atheist and an agnostic.
My friend Bob proposes a sensible rule: you are an atheist if the possibility of God’s existence doesn’t actually affect your life in any concrete way. In other words, if you received definitive proof of God’s non-existence tomorrow, would your behavior change? In my case, the answer is no, because my behavior is unaffected by that 0.01% chance. But even this rule is subject to quibbling. For me, the main reason my behavior wouldn’t change is that the probability is just too small. But we can imagine other reasons for God’s possible existence not affecting you. For instance, you might think that theological ethics and secular ethics make identical demands, and so even a large change in your score on the non-belief spectrum wouldn’t make a difference. Or you might observe (correctly, I think) that believing God might exist is a far cry from knowing what he wants from you, and thus your behavior must still be guided by secular reasoning. And both of these reasons for your behavior being unaffected by the possibility of God are perfectly consistent with agnosticism or even theism.
Incidentally, here’s a great article by Daniel Dennett on defending the rights of agnostics and atheists, whom he refers to collectively as “brights.” Thanks to Radley for the pointer.
Friday, July 11, 2003
Ashton, Demi, and Coase
One implication of the Coase Theorem is that assets will tend to get allocated to their highest-valued uses, regardless of who owns them initially, as long as trade is possible. Thus, for example, it is unlikely that the introduction of free agency in sports leagues results in a different allocation of players among teams than would result under a pure draft system. Suppose that player X would bring more added revenue to Team A than to Team B. Under a pure draft, if player X is “owned” by Team B, Team A will end up buying the player (because A is willing to offer more than the minimum B will accept). Under free agency, the player owns himself, and Team A will win the bidding war. Either way, player X winds up playing for Team A.
This particular economic principle came to mind, believe it or not, when I read this Slate article on celebrity dating. The article observes that when movie stars were effectively “owned” by their studios, the studios regularly tried to arrange romantic relationships – real and faux – for their stars, in a fashion designed to increase studio profits. For example, actors would sometimes be told to dump unknown girlfriends and trade up to celebrity girlfriends. Now stars are free agents, but the romantic game is pretty much the same. These days, the actors do the dumping and trading up on their own:
But celebrity romance has not changed radically, because celebrities have become so savvy about their own images that they do what the bosses used to. "Movie stars have unconsciously become their own publicists. It is an instinctive skill. They don't need publicists to tell them what boyfriends and girlfriends are good for their career," says Paramount producer Lynda Obst.In other words, assets – in this case, celebrities – will tend to be used in a fashion that maximizes their value, regardless of initial ownership. It’s the Coase Theorem at work.
Thursday, July 10, 2003
What They Don’t Teach You in Driving School
When I was in driving school, I was taught that you should always check your rear-views and blindspot before changing lanes, to make sure there isn’t another car where you’re trying to merge. What they never mentioned is that you also need to check two lanes over, to make sure there isn’t somebody trying to merge into the same spot from the opposite direction.
No, I didn’t just get into a car wreck. But I’ve had a couple of close calls lately, and they were only avoided because I was paying attention – the other guy never was. And notice that the situation is symmetrical (neither car has the right-of-way), which means responsibility for paying attention falls on both parties.
Or maybe there’s a nuance of the traffic laws that I missed; perhaps the car that is farther ahead has the right of way (although that would still leave open the case in which the cars are neck-and-neck and merging into the same lane). Anyone out there know if there’s a rule for this situation?
Wednesday, July 09, 2003
How to Lose Without Even Trying
President Bush has decided that he's going to be really tough on petty thugs in random African countries (Liberia?) but will absolutely surrender to- and even abet what can only be described as the looting of the American treasury.
Now that the Medicare Prescription drug benefit is almost a fait accompli, I'm left asking myself, "What the hell happened?"
For an excellent and concise run-down of what is wrong with the prescription drug plan, read Deroy Murdock's analysis. The long-and-the-short of it is that the nation cannot afford an unfunded liability of $7.5 trillion when we are already running deficits in the hundreds of billions per year. Even worse is that rather than being a band-aid solution (i.e., too small for the wound), this is a case of swatting a fly with--what's the right analogy here?--a nuclear bomb.
I am the non-economist on this blog so let me offer a little bit of political analysis.
Bush apologists--amongst whose ranks I occasionally count myself--will argue that the President has no choice but to support this. It is widely viewed by the American people as a necessary policy remedy to the problem of runaway drug prices and it is especially popular amongst those most politically active Americans, the elderly.
The failure to resist is a willful blindness combined with gutlessness by pro-market types. Some of that failure is due to the fact that the usual line-up of pro-market types is marching in lockstep with the administration even when the administration is pimping policies that are rabidly protectionist (steel bills) or hopelessly socialistic (farm subsidies). Some of the pro-market, anti-government army just forgot to show up for work--perhaps they were too busy swooning before George Bush's exalted visage. But reality is a harsh master; when mountainous national debt crushes future economic growth and/or inflates our tax burden beyond recognition, history will be unkind to those who prefered "our jerk" to their principles.
Sometimes losing is ok. As someone who has studied political science, I can summon a begrudging respect for those times when one is tactically outmaneuvered by a brilliant, cunning or ruthless opponent. When one is defeated by a giant or a genius or a bad turn of events, the honorable loser shrugs his shoulder and says that he had at least given everything that he had.
But this is much worse because this was a forfeit, not merely a loss.
How difficult would it have been to explain to the American people these three (3) things?
(1) This benefit covers Bill Gates, Warren Buffett, Michael Jordan and any other member of the super-rich
(2) Medicare is already going bankrupt.
(3) This increases the cost of Medicare without doing anything to stabilize its finances
A significant contingent of principled, intransigient Congressional Republicans could have said "no" to the President's plan, and instead backed a means-tested plan tied to medicare reform, saving this country from decades of misery in the future. But the current band of spineless losers was not up to the challenge. Before centrist Democrats become too smug, let me note that it might be fair to say that this battle was really lost in 1995, when Newt Gingrich's good faith effort to reform Medicare was exploded by a campaign of demonization and lies.
How embarassing will it be to have to explain to our children that our nation's finances, medical system, and their hopes for the future were wrecked because Congress decided to bankrupt their generation?
Tuesday, July 08, 2003
Total Information Wariness
The following passage from an article by Brian Doherty in the most recent Reason magazine caught my attention:
Most objections to [heightened concerns] about anonymity and privacy can be reduced to the familiar slogan: Only the Guilty Have Reason to Fear. … That slogan may be silly, but it’s important. Not because it settles any arguments, but because it delineates boldly what’s at stake. It also makes possible a similarly bold, clearly widely believed, yet rarely voiced response: We are all guilty, and we don’t want to live in a world where there is no room to get away with being guilty.The significance of the point becomes clear when you consider the incredible array of things that are actually illegal, or have the potential to become illegal. If we could trust that information collected by the government would only be used to apprehend real terrorists, that would be one thing – maybe we’d be willing to let the government have “Total Information Awareness” for that one purpose. But we all know it won’t stop with terrorism. It will be used to apprehend drug sellers and users, prostitutes and johns, and perpetrators of so-called hate crimes. One day the list might include owners of guns. If it weren’t for the recent Supreme Court decision, the list could include sodomites.
And then there are the shelves of federal regulations with which individuals and businesses must comply (even without knowing their contents), the laws against sexual harassment, the laws against racial discrimination, ad infinitum. Given the sheer volume of these laws, combined with the built-in vagueness of many of them, and the conclusion is almost inescapable: we are all criminals now. And then consider the fact that law-enforcement officials have near total discretion to decide which laws will get prosecuted against whom, and you realize that a government with the goods on everyone is a government that can prosecute anyone it wants, any time it wants.
The moral here is that we should never evaluate a government policy in isolation. We should always judge it in light of other policies that we might or might not agree with. This is a principle that often cuts in favor of libertarian positions. For instance, we insist that proposals for national healthcare should be evaluated in light of the incentives they would create for regulation of lifestyle choices in the name of cost-control. But other times, the principle creates a problem for libertarians, because we cannot assume the existence of libertarian policies in other areas. In and of itself, the notion that the government should collect and centralize lots of information available from publicly available sources might seem no problem at all. Why would we make illegal for the government what is perfectly legal for a private eye? The problem is that information in the hands of government won’t be used to prosecute only those crimes that libertarians think should qualify. The same argument applies to three-strikes laws, mandatory minimum sentences, and a variety of other “tough on crime” measures: they’re great if applied only to real crimes, downright scary if applied to vices, faux pas, and personal foibles.
On re-reading this post, I realize it must seem incredibly paranoid. And perhaps it is. But I think the point is worth making: centralization of information in the hands of government is qualitatively different from the information simply being “out there” in the possession of umpteen different local governments, businesses, and doctors’ offices.
Monday, July 07, 2003
Telemarketers and Externalities
The discussion of the national Don't Call Registry (see "Don't Call Me Baby" below) has raised some interesting questions for me, particularly about the nature of the externality involved. When a telemarketer calls me, and I don’t buy, we both pay a cost, and both of us would rather have avoided the encounter. When the telemarketer calls someone who buys, they both gain from the call. The problem is that in order to find the person who wants to buy, the telemarketer has to call a lot of people who don’t. Overall, the buyers benefit from telemarketing and I lose; in other words, the buyers are imposing the externality on the non-buyers.
So, how to set up the initial allocation of property rights? We could let telemarketers call anyone they want, call anyone except those on a “don’t-call” list, or not call anyone except those on a “do-call” list. My rough impression is that those that buy from telemarketers are few in number but get a substantial gain. For non-buyers the amount of annoyance (per person) is small but there is large number of non-buyers. This argues for the do-call list. The benefit to the few buyers would be enough to cover the cost of getting on a list, while the costs of annoyance for the non-buyers might not.
If don’t-call lists just remove non-buyers, then why are telemarketers against this? I think part of the reason is that there is not just heterogeneity of consumers, there is also heterogeneity of products. I might buy some products but not buy others. When deciding whether to go on a list I’ll weigh the benefit of fewer calls against the expected gains from the products I would buy. The fact that I go on a don’t-call list says something about my attitude towards telemarketed products on average, not any specific product.
A little formalism: Say that the probability of a sale is p, the benefit to both the buyer and seller from the sale is x (to make things easy), the cost of a call is c, and the annoyance of a call is a. The telemarketer will call as long as px > c, while you will want them to call as long as px > a.
When I choose to be on a don’t-call list I am making a decision based on the expected value of the companies that will call based on my preferences. This could cause telemarketers to be against don’t-call lists for several reasons. As long as c is below a, there are companies that would want to call me (in an expected value sense) even though I would not want to be called by them (for email advertisements, c effectively equals 0, which is why everyone hates spam). Companies with high values of p would also want to call me, and I would want them to call, it’s just that I can’t limit my calls to only them. Don’t-call lists are efficient in separating low-p people from high-p people, but are not good at separating low-p products from high-p products.
When listening to a telemarketer I came up with this plan: Have telemarketers hooked up to small electrodes. If they call, and you don’t buy their product, you can press a number and give them a small shock – nothing dangerous, just enough to smart. Telemarketing companies would have to pay their workers a higher wage to compensate for the shocks. The worse the product, the higher the cost. Borderline companies will no longer find it profitable to telemarket. For good companies, the higher wages are passed along as higher prices to their customers (but they are the beneficiaries of telemarketing in the first place). While the non-buyers are not directly compensated, hopefully the incentive effects would outweigh the other costs.
Of course, I’d also be open to market-based plans that don't rely on electricity.
The Marketplace of Ideas
Here is another topic that came up during the seminars I attended a couple of weeks ago. Liberals who have nothing but criticism for the free market in goods and services often voice boundless support for the marketplace of ideas. This strikes me as strangely inconsistent, because the usual arguments made against the efficiency of goods/services markets apply with even greater force to the propagation of ideas. Good ideas are public goods; bad ideas create negative externalities. There is no profit/loss bottom line to weed out the low-quality ideas, unlike low-quality products. We can therefore expect to observe overproduction of bad ideas and underproduction of good ones.
In recent years, more and more liberals have taken positions in opposition to freedom of expression -- for example, hate speech laws, campaign contribution limits, and the Communications Decency Act (signed into law by Bill Clinton). Although such positions are inconsistent with liberals’ usual stance in support of personal and civil liberties, they are arguably quite consistent with liberals’ antagonism to the free market. If the imperfections of goods/services markets are sufficient to justify government intrusion, the argument goes, then *a fortiori* the imperfections of ideas markets justify intrusion as well.
My own take is that efficiency is a mighty slim reed on which to rest the defense of free expression. A better defense points to the dangers inherent in giving the state the power to make decisions about which ideas are good and bad. This defense might seem different in kind from the usual defense of free markets in goods and services, but it is not. The “perfectly competitive” model used to prove the efficiency of markets is, and always has been, a straw man. The better defense of free markets points to their efficiency *relative* to legislatures and bureaucracies, which cannot be trusted to make decisions more wisely and efficiently than private actors. Liberals, in their better moments, recognize the danger of state action when it comes to ideas; when will they recognize the similar danger when it comes to goods and services?
Wednesday, July 02, 2003
Separation of Marriage and State
Michael Kinsley says, in characteristically eloquent fashion, what libertarians like David Boaz have been saying for years.
Don’t Call Me Baby
I’m baffled by the opposition of some libertarians, most notably Radley Balko, to the national Don’t Call Registry.
Libertarianism does not mean opposition to any and all forms of government regulation. It means opposition to regulations that do not serve a relatively narrow set of goals, usually defined to include the protection of property rights. As Julian correctly observes, the Don’t Call Registry is the telecom equivalent of a “no trespassing” or “no soliciting” sign on your front lawn. Notice that the law in question does not issue a blanket prohibition of all phone solicitation, only solicitation of people who have specifically asked not to be solicited. The “no soliciting” sign analogy could not be more apropos.
But Radley takes a federalist position, arguing that even if such regulations are justified, they are not within the proper purview of the federal government. Again, Julian anticipates me, by noting that the much-abused Commerce Clause seems to apply pretty directly here: “The Congress shall have the power … to regulate commerce … among the several states.” It is true, as Radley indicates, that the Commerce Clause has been grossly abused. But the primary abuse has been justified by allowing federal regulation not just of the commerce itself, but of anything that might by any stretch of the imagination or tenuous chain of causality even *affect* interstate commerce. (This allowed the federal government to desegregate Ollie’s barbecue, a restaurant in Alabama, on the risible grounds that Ollie’s purchased ketchup and other food products from out of state.)
Radley would limit the Commerce Clause to an “original intent” notion, under which the clause could only be used to facilitate rather than impede commerce. I’m not convinced that was the only intent of the founders, but I won’t try to get in their heads. Instead, I’ll rely on the plain meaning of the text buttressed by the following point: Radley’s interpretation would mean that some forms of property rights could not be enforced by *any* level of government except by the mutual agreement of the states. For instance, no form of trespass that crossed state lines – such as the dumping of garbage into a waterway that deposits the refuse on the property of owners in another state – could be prosecuted, unless the state in which the polluters lived agreed to allow such prosecution. (And maybe not even then, since an agreement between states to “restrain commerce” might also run afoul of Radley’s interpretation.)
Now apply this to the case of telemarketers. While some states (like California) have implemented state-level do-not-call lists, they cannot enforce those lists on other states. The same problem, incidentally, applies to self-enforcement through the use of caller-ID: most of the telemarketers who call me do so from outside the identification area, typically from another state. And as one commenter astutely observed in Radley’s comments box, if one state – say, Mississippi – decided to position itself as the “Telemarketer State,” there’s not much the rest of us could do. This is unquestionably a matter of interstate commerce, well within the language of the Commerce Clause.
Some opponents of the registry (read the comments sections on Radley’s and Julian’s posts) seem to think the correct libertarian response to telemarketers is to rely on class-action lawsuits. But why? It’s true that common law is often a superior institution to legislation, but not always, and there is nothing in the libertarian credo that says property rights can only be enforced one way. Some entitlements are enforced via property rules – that is, direct prohibitions of any violation. Examples include the laws against murder, rape, and auto theft. Other entitlements are enforced via liability rules – that is, forced compensation of the owners for damage caused by the violators. Examples include medical malpractice and auto collisions. I don’t think either enforcement mechanism is inherently better or more libertarian than the other; which is better depends on the type of violation we’re talking about. But if I were forced to choose which enforcement approach was more libertarian, I would have to go with property rules, because such rules don’t put someone other than the property owner (bureaucrats or judges or juries) in the position of deciding the dollar value of the entitlement after the fact. Instead, property rules give entitlement owners the ability to prevent any unapproved entry, and thus to set their own prices for allowing invasions. And notably, the Do-Not-Call registry creates a property rule instead of a liability rule.
There might be some good economic reasons for thinking a liability rule would be the preferred (i.e., more efficient) regime in the case of telemarketers, but none of the libertarian opponents of the law have (to my knowledge) made such an argument yet. As an opening salvo, I’d point out that class-action lawsuits are incredibly slow, expensive, and burdensome on the courts. Still, I’m open to considering the possibility that the Do-Not-Call Registry is not the very best solution to the telemarketer problem. But if your position is that the registry is somehow anti-freedom and un-libertarian at its core, I’m just not buying.
Segregated Education, 21st Century Style
Number of Historically Black Colleges and Universities in America: 103
Number of Women's Colleges in America: 80
Number of Men's Colleges in America: 3
Two questions spring to mind: (1) Is the dearth of Men's Colleges due solely to a lack of demand? (2) Is it appropriate for the federal government to support single-race institutions in this day and age?
Tuesday, July 01, 2003
Neither Economics Nor Astrology
Readers who would be interested in a short, sharply critical introduction to the thinking of uber-Communitarian Amitai Etzioni can go here.
Economics and Astrology?
One thing I find interesting about the blog world is the way people talk about the field of economics. This is a recent blog by Amitai Etzioni:
There has never been another science quite like economics, other than maybe astrology. In no other science could one get away with the kinds of statements that economists make on a dialy basis. For instance, following the announcement of the new tax cut, economists said it would lead to increased stock prices, in turn, making people feel richer, which would then prompt them to buy more goods, thus, giving a boost to the economy. This is all based on "common sense," but they haven't shown us a shred of evidence. Nothing along the lines of "the last four times taxes were cut (by an average of ___), stock prices rose by ___, and purchasing increased by ___. In effect, the data on the so-called "wealth effect" is very mixed. Sometimes people feel flush, sometimes they don't.Now, Etzioni is a serious advocate of a serious political position - although one I disagree with. What I find fascinating is that he is willing to dismiss economists and economics using arguments that not even he would take seriously.
THE SAME HOLDS TRUE FOR NUMEROUS OTHER STATEMENTS BY ECONOMISTS. Even a simple statement such as "when prices go up, people buy less" is not based on hard evidence. Indeed, if people see signs of coming inflation in price increases, they will buy more. Moreover, there are some goods, i.e. "luxury goods," such as premium vodka that people buy more of as they become more costly. A serious and honest science would take it from here: Under what conditions the hypothesis holds, and under what conditions it does not. But, that requires empirical research rather than pontificating and mathematical masturbation.
I agree that the “quote” he gave about tax cuts probably isn't right, but so what? In an issue as partisan as this, I imagine that every conceivable reason for and against tax cuts has been made by someone. Picking one, probably politically driven, statement as a measure of economics as a discipline is just not being serious. As to the rest of his comments: (a) There is a lot of empirical work about demand, (b) of course intertemporal decisions are taken into account, and (c) the phenomena of luxury goods is understood (although hardly a major topic). This is all stuff people know about.
My point is not about getting a specific argument wrong – if that were it I suppose I could write him and provide an economist’s take on the issue. What makes this interesting for me is that I think it illustrates a certain blog phenomena: blogs are the written equivalent of casual conversation. And in casual conversations, what you truly think slips out when you are not paying attention. A number of people seem to have no idea what economics actually says yet are quite comfortable in dismissing it anyway. While they would never say these things “in print”, we get a glimpse into their thought processes when they blog.
Monday, June 30, 2003
The Old College Try
Okay, I’ll take up Mike’s challenge: I’m willing to say the Electoral College is more justifiable than affirmative action.
First, let’s observe the different character of the rights or interests in involved. The Electoral College is a set of rules governing the translation of individual votes into electoral outcomes, much like the rules of suffrage (citizens can vote, while recent immigrants generally can’t), rules determining how many votes are enough to count (first-past-the-post versus proportional representation), and the rules determining how much strength of preferences will be taken into account (plurality winner, instant run-off, Borda count, etc.). They are *procedural* rules.
Now, I don’t mean to diminish the importance of procedural rules, but we should always keep in mind that they are *utilitarian* devices for the operation of a government. No one has a fundamental human right to participate in the governing of other human beings. “Democracy” is an ideal that classical liberals, at least, have always recognized as subordinate to more important ideals like liberty and human welfare; we support democratic regimes because we believe they are more likely to yield good results in terms of more basic ideals, not because democracy is inherently valuable. And that is why we can sometimes change the rules of democracy, such as by limiting the franchise, imposing term limits, constitutionally barring certain kinds of action favored by the majority, and so on. There is no Platonic form of democracy to which all real democracies must try to adhere.
Affirmative action, on the other hand, is not simply a matter of the procedural rules used for the election of a government; it is about the substantive policy choices made by that government with respect to individuals. Will that government be allowed to discriminate against individuals on the basis of skin color, or will it instead be bound to treat individuals equally?
Second, let’s recall the historical origin of the Electoral College. The justification of the EC was the same as the justification of the Senate, in which seats are apportioned at two per state instead of by population (and note that all of Mike’s arguments below could be applied with equal or greater force to the Senate). The federal government was not intended to be a direct representative of the people, but instead a representative of the individual States, which were the direct representatives of separate groups of people. In other words, the EC is just one more aspect of our federalist system of government.
It is true, of course, that the U.S. government is no longer so federalist as it once was, in large part because of the 14th and 17th Amendments. Some people would be willing to do away with federalism entirely, which is at least a consistent position, albeit one I disagree with. But it’s misleading to think of the Electoral College outside that context. I won’t attempt a general justification of federalism here, but I will offer an instructive analogy. Suppose that Canada and the United States concluded a new free-trade treaty, which created a new bi-national committee with the job of resolving disputes about the terms of the treaty. Now, if seats on the committee were apportioned by population, the U.S. would clearly dominate the committee and control all its decisions. And given that fact, Canada would probably reject the treaty creating such a committee – or else demand, as a condition of approving the treaty, an amendment granting Canada equal representation on the committee despite its smaller population. This, I think most would agree, would be a perfectly justifiable exercise of the Canadian government’s obligation to protect its own people’s interests. Well, a similar argument applies to the federalist structure of government within the U.S.: federalist rules are meant to create room for individual States to defend the interests (and rights!) of their citizens, even if they are vastly outnumbered by the citizens of California and New York.
Now try to apply the same argument to affirmative action. To make it work, we must imagine that the nation is actually a federation of races, who have reached a kind of contract to live together. Each race might demand certain concessions in order to conclude the contract, such as side payments and guaranteed seats in the legislature. Now, it might be argued that geographical boundaries are at least as arbitrary as race, so maybe this notion isn’t so far-fetched. And in fact, I understand that Lebanon had a system very much like this for many years. But that is not what happened historically in the U.S., and I think we should be happy about that. There are justifications for local government that don’t apply to race. First, geographic boundaries are clear, whereas the lines between races are fuzzy. Second, you can potentially change where you live, but (Michael Jackson notwithstanding) it’s pretty much impossible to change your race. Third, local governments have better incentives to be responsive to their constituents than do national governments; I don’t think the same incentive argument applies to races relative to the human race as a whole, not least because there is no such thing as race government (the self-appointment of Jesse Jackson, Al Sharpton, and their ilk notwithstanding). Fourth, the very arbitrariness of geographic boundaries can be helpful in fighting off the pernicious notion that some groups are people are better, or more in need of special assistance, than others (the occasional joke about inbred Arkansans notwithstanding). Our understanding that New Yorkers are not fundamentally better than Oklahomans forces us to recognize the instrumental character of federalist rules that seem to treat them differently.
In short, I think treating the Electoral College the same as affirmative action misses out on the specific political goal of that institution: to resist centralized government. Perhaps it doesn’t work terribly well in achieving that goal, but at the very least we should recognize the interest in constraining government as a compelling one. If we condemn the EC (and the Senate!) for failing to represent all individuals equally, perhaps we should also consider granting China votes in the United Nations proportional to its share of the world population.
Logic as Bludgeon, Pillory, or Household Chemical
Despite our transparent pretense about “searching for truth,” we often use logic in political arguments to force our opponents to say things against their will. Read a Socratic dialogue some time—Gorgias is a good one—and you can watch the master himself forcing reluctant and truculent people into rethinking their most basic assumptions by showing them how what they take for granted might lead to conclusions that they abhor. (Plato’s Socrates also abuses this power and his interlocutors often concede points that are highly dubious, but this is an investigation for another post.)
The misapplication of logic commonly manifests itself in the assertion that there must some sort of consistency between one’s position on the death penalty and on abortion. (E.g., the accusation is often erroneously leveled that one who is “pro-life” cannot also be in favor of capital punishment. In what seems to be a race to see who can abuse logic most brutally, it is often counter-charged that those who support the right to an abortion but oppose the death penalty prefer murderers to children.)
But logic can also be a powerful solvent for obscuring epiphenomena, a sort of acid that burns through the sticky patina of arguments informed by self-interest and circumstance, thereby revealing interesting, insightful, counter-intuitive conclusions. Here’s one: it seems to me that no one can be consistent who opposes affirmative action but favors the Electoral College, or vice versa. Affirmative Action, as we have all heard this week, is accused of being a system in which the rules are rigged so that fair competition is subverted for the considerations of a favored class of people. By parallel, the Electoral College is accused of subverting the will of the majority for the interests of a favored class of people in rural, mostly empty states.
Reasoning by analogy, consistency requires a uniform response to both. So it seems to me that the liberal who is in favor of affirmative action but opposed to the Electoral College is treading on thin ice. Ditto for the conservative who decries Affirmative Action but thinks that the Electoral College is swell. In each case the overarching (or is it underlying?) logic of the rules of the game is subject to a glaring exception that, in many but not all cases, changes the outcome.
Now, conservatives might say that the Electoral College is in the Constitution and has the virtue of being an old habit where Affirmative Action doesn’t. And liberals might say that Affirmative Action rectifies a past injustice and improves our society, where the Electoral College doesn’t.
Whatever. I maintain that those arguments are secondary to the fundamental structure of these two institutions. Non-ideologues should seek to align their views on these two seemingly unrelated topics.
Friday, June 27, 2003
More Gadflies in the Agora
I am proud to announce that Agoraphilia is now a group blog. It is my pleasure to introduce my two new co-bloggers: Jim Dow and Mike Diamond.
Jim Dow is a professor of finance here at Cal State Northridge. His specialties include macroeconomics and monetary policy. He describes his politics as “Libertarian Lite,” a term whose meaning will presumably become apparent in his posts.
Mike Diamond is the pseudonym of a professional living and working in Washington, D.C. Because his job is related to politics, he has had to keep his crankier opinions to himself… until now. I’m pleased to offer him a forum.
Let the fun begin!
Booyah for Buggery
I wasn’t sure how I felt about Lawrence and Garner v. Texas – you know, the sodomy case – until I heard the decision. On the one hand, laws against sodomy are abominable intrusions of government into personal matters. On the other hand, I believe in federalism, and it wasn’t obvious to me that the Constitution should be construed to prohibit this particular kind of regulation at the state level.
So I thought I was ambivalent, until I heard yesterday morning on the radio how the case had been decided. I let out an involuntary whoop of joy. I guess now I know what my real opinion was.
So What Department
Mark Kleiman thinks the following statistics are self-evidently depressing:
Annual U.S. expenditure on books: $17 billionWhere’s the problem? First, books are durable, while alcohol is not. When I finish a book, the book hasn’t been consumed – I can lend it out to friends and relatives, and often do. Many of the books I read are books I’ve either borrowed from friends or checked out from the library. Alcohol is worthless to anyone else once I’ve drunk it.
Annual U.S. expenditure on alcohol: $105 billion
Second, I’m hardly a philistine non-reader, yet even if I purchased every book I read, I doubt I could come close to equalizing spending on alcohol and books. If I have four alcoholic drinks a week (a conservative estimate) at L.A. bar/restaurant prices, that comes to about $25 a week – the equivalent of one hardback or three paperback books. I’m afraid I don’t read that many books, so I’d be hard put to criticize all the non-academics out there for not doing so.
Third, books aren’t the only readable things out there. We have magazines, newspapers, journal articles, and cereal boxes, all of which I (and probably many other Americans) consume in much greater quantities than books.
Thursday, June 26, 2003
The Geekqualizer
If you’re reading this blog, you might want to go take the Geek Test.
I scored 23%, which qualifies me as a “Geek,” but not a Total, Major, Super, Extreme, or Dysfunctional Geek. I guess I’m less of a geek than I thought. My RPG days got me a lot of points, as did my interest in science fiction, but I missed out on most of the computer-nerd questions. Interestingly, I got two points specifically for being an economist – one for “I want to be (or have been) an economist,” and one for “My profession requires a certain level of geekiness.”
If you have a blog, don’t forget to check one of the boxes for “I can think of other things that should get me points on this test.”
Tuesday, June 24, 2003
Affirmative Equivocation
In a Solomon-like attempt to split the difference on affirmative action, the Supreme Court has upheld the University of Michigan Law School’s affirmative action program while rejecting the University of Michigan’s undergraduate affirmative action plan. And what is the difference between those two programs? Primarily, that the undergraduate program is more explicit and honest about its racial preferences. While the law school’s admissions process allows for a concern for diversity to be considered as one factor among many when considering individual applications, the undergraduate admissions process assigns a specific number of bonus points (20 out of 150 total) to applicants who belong to particular minority groups. Amy pithily sums up the Court’s bottom line like so:
Nutshell: it's a-okay for colleges to like some people more than others because of the color of their skin, just as long as they don't like them too much more.But it’s even worse that that, because the Court has created a reward for dishonesty. In terms of the incentives now faced by academic institutions, the new rule could be summarized like so: It’s a-okay for colleges to like some people more than others because of the color of their skin, so long as they are sufficiently vague and surreptitious about how they implement their biases.
See here for my comments about the efficacy of affirmative action programs as a means of achieving diversity.
Monday, June 23, 2003
Turning Market Failure on Its Head
I’ve finally returned from two weeks of seminars, sponsored by the Institute for Humane Studies, for college-age students interested in classical liberal (i.e., libertarian) ideas. These events are always exhilarating because they rekindle my interest in topics that might seem old hat to me, but that are often new and exciting to the uninitiated.
One topic that came up with some frequency was the notion of “market failure.” Economics textbooks almost always use this term as the category heading for such potential sources of inefficiency as positive externalities, negative externalities, and public goods. But the more I think about it, the more I realize this is something of a misnomer. Externality and public good problems are hardly unique to markets; they occur in virtually all institutional settings, particularly legislatures and bureaucracies. Labeling them “market failures” sends the erroneous message that markets are especially or even exclusively susceptible to these sorts of problems, whereas the truth is almost precisely the opposite. Instead of calling these problems “market failures,” we ought to simply call them “failures,” or, if you feel the need for an adjective, “institutional failures.”
I’m not just making the hackneyed (though correct) claim that textbook discussions of “market failure” ought to be balanced with discussions of “government failure.” The best textbooks do, in fact, include at least some material on the failings of governmental institutions. My point is that the *same problems* afflict both markets and governments. In governmental institutions, any action (a legislative vote, support for a new administrative rule, etc.) that is beneficial automatically creates positive externalities, and any action that is damaging automatically creates negative externalities. Governmental actors rarely, if ever, bear the full benefits and costs of their actions, but instead are shielded by the bundling of issues in political discourse, the dilution of their individual impact in the context of large-group decisions, and the rational ignorance of voters (among other things). The reason large encompassing-interest groups like taxpayers and consumers cannot organize effectively for political action, whereas special-interest groups like steel workers and farmers can, is that the former face massive public-good/free-rider problems that the latter do not.
I’m making an argument for symmetry here: externality and public goods problems afflict both markets and government, and therefore should not be classified under the misleading title “market failures.” But actually, there is a good case to be made for reversal rather than symmetry: market institutions tend to solve externality and public good problems, whereas governmental institutions tend to create them. Private property, for instance, internalizes the positive externalities associated with improving land or using it for a productive purpose. (E.g., if someone drains a swamp in a commons area, he creates benefits for everyone who might potentially use the area; private property concentrates those benefits on the owner.) Indeed, I would be willing to argue that market institutions evolved, and outstripped other forms of social organization, precisely because of their tendency to solve the kinds of problems usually labeled “market failures.”
It is true, of course, that numerous externality and public good problems persist even in market systems. But blaming the market for the existence of those problems is not unlike blaming traffic lights for impeding traffic, or blaming language for breeding miscommunication. This is glass-half-empty thinking at its worst, because it damns the solutions for the problems they emerged to solve.
Friday, June 13, 2003
MIA; plus, More on Fishing Rights
I was a lecturer at an Institute for Humane Studies seminar in Annapolis, Md., most of this week. I got back last night, but tomorrow I'm leaving for another IHS seminar, this one a bit closer to home (Pitzer College, about an hour's drive east of here). It's great fun conversing with bright, interested students about free markets, private property, and so on, but also very tiring and time-consuming. Hence the lack of blogging.
Tom Palmer, one of the other lecturers at the seminar, informed me that I may have been mistaken about how Iceland and New Zealand's fishing rights systems actually work. In a previous post, I said, "But the overall TAC [total allowable catch] is actually set on the basis of scientific analyses by some body of experts; and though [Ronald] Bailey doesn’t say where this body came from, I’m betting it’s actually either a government agency or a private agency with a government mandate." Apparently, I would have lost that bet. According to Tom, the TAC is set by the owners of the ITQs -- that is, the fishermen who own the fishing rights. If so, then my objection to calling this system privatization instead of regulation is not nearly as strong. Essentially, this system corporatizes the fishing industry, making all fishermen stockholders in a body that collectively owns the fishing region in question. This is potentially problematic because it creates a kind of government-sanctioned monopoly (every fisher is automatically a part of the collective fishing body), but that problem may not be significant if the collective competes against the fishers of other regions of the world -- e.g., the Icelandic fishing collective competes against fishers from New Zealand, the U.S., Japan, and elsewhere. Whether that's true or not depends on how global the fish market is, and I don't know the answer to that question. But in any case, the fishing-rights systems of Iceland and New Zealand appear to be a good deal more clever, and more market-oriented, than I gave them credit for.
Specifically, the corporatization approach gives the individual ITQ owners an incentive to set the overall catch optimally, because voting to increase the overall catch is not the same as voting to increase one's individual catch at the expense of others. Any decision about the TAC that increases the value of the whole fishery also increases the value of the ITQ, which represents a fixed percentage of the overall catch, and therefore the ITQ owners have an incentive to vote correctly -- an incentive that an independent regulatory body would not have.
Wednesday, June 04, 2003
A Political Map With No Latitude
A map of political blogs shows the Volokh Conspiracy in the center. V-Conspirator David Post finds this mildly surprising, but it actually makes perfect sense once you consider the libertarian bent of many of the Conspirators. In a one-dimensional (left to right) political map, the typically radical views of libertarians "average out" to moderate. The libertarian’s support for legalization of drugs cancels out his opposition to the welfare state, for instance, so that he appears to live in the political center.
A better (though still imperfect) political blog map would be two-dimensional, like the ones found at Advocates for Self Government and Politopia.
Why I Can't Be a "Masculinist"
Interesting column by Wendy McElroy on the "masculinist" movement. They have some reasonable points, but I could never join them, because they got the word all wrong. If you're following the "feminist" template, the correct neologism should be "masculist." Either that or start calling the feminists "femininists."
Tuesday, June 03, 2003
Restroom Rebuttals
My assertion below that men create bigger restroom messes than women has attracted a couple of responses. Apparently, there is some evidence that women’s restroom habits are even filthier than men’s. Geez, next you’ll be telling me that husband-beating is as common as wife-beating… oh, wait, Amy already told me that. Anyway, my sister Ellen sent me some choice comments on the cleanliness of women’s restrooms (which I’ve taken the liberty of expurgating somewhat). Read on if you dare, as this is not for the faint of heart:
Though I don't especially want to use a bathroom that guys are in, partly because girls go to the restroom to go talk about the guys they're with and do makeup touchups and such that should be kept secret from the guys during the first few outings/dates, I think bars may be an exception to the mess-rule. Girls after a few drinks, or maybe just girls in bars, I don't really know, are NASTY. They pee all over the damn seat (hello, you wouldn't have to hover, if you'd all just sit the hell down to pee and thus avoid messing up the seat for the next person, who will then have to hover, mess up the seat more, and so on...). Girls leave wads of toilet paper on the ground. Are they afraid of clogging the toilets? Who knows? … Soiled pads often don't make it to the trashcan, though I can't imagine why some girl over 21 wouldn't be using a tampon when she's out on the town looking hot. This is not to say that tampons always make it down the commode or to the trashcan either. Those can be lying around too. And I think girls are scared of their own feces! I can't tell you how many times I've walked into a restroom to find a turd still in the toilet from the last person. Why didn't she flush it? I mean it was HER turd. … I won't even go into the poop on the seats bit. I don't know how the hell that happens. … And then the sinks are clogged because apparently drunk girls think that the sink is just as good as the trash for throwing away paper towels after washing their hands. The ones that wash their hands, that is. Girls always go into the bathroom and do their business with only one free hand -- the other one is holding their drink. And then since one hand is needed to turn on the sink for the wiping hand to get washed, they just don't do it. Can't put down that drink! … It's actually kind of nice when girls go smoke in the stalls (Austin is beginning to crack down on smoking in public places), because that's often all they were doing, so they didn't worsen the mess during their stays in the stalls.I stand corrected.
Too Much Information
This is a fascinating article, but I hope Salam Pax doesn’t wind up dead because of it.
Monday, June 02, 2003
The Anal Film Critic
I saw “Bruce Almighty” last night, and it was actually quite funny. Not Jim Carey’s best, but I got a few good belly laughs out of it, which is all I was really expecting. But, as per usual, I have a couple of nits to pick.
Nit #1: The writers of the movie clearly had no concept of how blood typing works. Jennifer Aniston’s character says she should donate blood because she has a rare blood type: AB+. Well, AB+ is indeed rare, constituting only 3% of the population, but that doesn’t make it desirable in the blood banks. People with AB+ blood are universal recipients (they can receive any blood type), but very exclusive donors: only other AB+’s can receive from them. Thus, any blood donated by an AB+ person can only be used by 3% of the recipient population. The type of blood most in demand is O–, because it can be received by anyone – most importantly, people whose blood type is unknown. Also (small spoiler coming), Jim Carey’s character eventually winds up in the hospital and sees that he is receiving AB+ blood. The implication is that he is truly blessed by the fact that AB+ people like Aniston have chosen to donate. But unless Carey’s doctors screwed up royally, he too must be AB+, in which case he could have received blood from anyone.
Nit #2: Okay, you really should stop reading now if you’re averse to spoilers. As I predicted when I first heard the premise of the movie, the only constraint on the use of God’s power is the free will of individuals: you can’t make people act contrary to their own choices. If you’re looking for a half-plausible explanation for why God can’t just snap his fingers and make the world a wonderful place, that one’s not half bad. But the obstacles Carey meets in the movie seem to have little to do with free will. The first major difficulty he encounters is limited cognitive resources: he doesn’t have enough brain power to organize and respond to the millions of prayers he receives each day. But hold on a minute – I thought God was supposed to be omniscient and omnipotent, in which case brain space shouldn’t be an issue. God should be the consummate multi-tasker, able to comprehend and reply to an infinite number of prayers while watching the Grand Ole Opry, reading Mad Magazine, and singing “Does Your Chewing Gum Lose Its Flavor.” [Bonus points for anyone who can name that pop culture reference.] Later, after just granting everyone’s wishes so he won’t have to listen to every single prayer, Carey finds himself bound by little things like economic laws – e.g., when thousands of people win the lottery, each person only wins about $17. Again, this seems like the kind of thing that should be well within the power of an all-powerful being to change. If God can alter the laws of physics, economic laws (and the rules of math, for that matter) should be a no-brainer. And in any case, being omniscient, he should at least have become immediately aware of any undesirable consequences of his wish-granting.
Forgive me, because it’s a bit unfair to hold a lightweight comedy up to rigorous standards of philosophical and theological consistency. If Carey had not encountered the problems mentioned above, the movie would not have been nearly as fun. But I’m sticking to my guns on Nit #1, because O– blood is both rare (only 7% of the population) *and* useful.
Thursday, May 29, 2003
Castrating Prosperity
I don’t entirely agree with this article by John Bolt -- indeed, I’m not sure I entirely understand it -- but I appreciate his coining of a new term in political economy: “the gelded worldview,” meaning “a worldview that is incapable of conceiving the very idea of being fruitful and multiplying.”
Economists usually call this the “fixed-pie fallacy” -- an inability or unwillingness to recognize that trade and free markets are not zero-sum games, but games in which it’s possible for the size of the pie to grow. But invoking the notion of sterility is so much more… evocative.
My complaint with the article (aside from my confusion about the more oblique religious references) is that Bolt ties the idea of fruitfulness too closely to the Laffer Curve, although he doesn’t call it that. The Laffer Curve is a graphical representation of the notion that, since both a zero-percent and one-hundred-percent tax rate would produce no government revenue (the former for obvious reasons, the latter because no one would be willing to work), there must be a tipping point beyond which increases in tax rates actually lead to decreases in government revenue. While this is certainly true, there’s really no great evidence that the U.S. currently resides on the right (decreasing revenues) portion of the Laffer Curve; and in any case, I wouldn’t rest the case for low taxes on a reed that weak. Even on the left side of the Laffer Curve (where higher tax rates lead to higher revenues), it’s still the case that taxes create dead-weight losses and inefficiency. This is true first because taxes distort incentives to be work and be productive, and second because the tax dollars are highly unlikely to be used on projects that actually satisfy the real needs and wants of the taxpayers they are taken from. (As an aside, I should also point out that tax cuts aren’t really tax cuts if they’re not accompanied by reductions in spending, because the resulting debts must eventually be paid off by future taxpayers. Alex Tabarrok has a nice article on this point.)
Still, Bolt makes some good points, and “the gelded worldview” has now entered my personal lexicon.
Wednesday, May 28, 2003
Excretory Econ 102
As promised, I will now make the economic case against unisex restrooms. Mary Anne Case, creator of the toilet survey, “advocates ‘a model akin to the typical airline toilet,’ providing ultimate privacy without segregation (though she’s learned that many women prefer a same-sex environment).” From an egalitarian perspective, she may be onto something: unisex toilets assure equal waiting time for both men and women. And there could also be an efficiency advantage, because it’s pretty pointless for women to be waiting in line when the men’s room is empty. So why haven’t unisex restrooms become the standard instead of the exception?
My favorite theory (though perhaps not the best) is that separate restrooms constitute a form of zoning. Although zoning regulations have taken heat from some economists -- and many libertarians -- for abridging property rights, there is actually a decent economic argument for them: they help to internalize externalities. When industry and residential areas are located too close together, pollution from the former is more likely to adversely affect the latter. Since polluters are generally less sensitive to (or less easily harmed by) pollution than outside parties, zoning can reduce conflicts by grouping polluters together.
I’m not actually defending zoning regulations here, because a combination of traditional legal and market mechanisms can achieve the same or similar result. If placing your factory near residential areas leads to greater liability payments than placing your factory near other factories, you’ll be inclined to locate in established industrial areas. Zoning regulations, on the other hand, are much more likely to be affected by bureaucratic rent-seeking and political nonsense. (For instance, Giuliani’s famous anti-sex-shop zoning laws, passed in New York City several years ago, defy any kind of economic logic by prohibiting a sex shop from locating within [something like] 100 yards of any other sex shop. Far from concentrating the alleged externalities created by sex-oriented businesses, this regulation actually forces such businesses to spread out into areas dominated by other activities. The goal, of course, was not to control externalities, but to stamp out sex-oriented businesses altogether.)
The point is that zoning, whether accomplished by market or government, can reduce costs by concentrating external effects in a single area. And that, I think, is the primary function of separate men’s and women’s restrooms. You see, men have an unfortunate tendency to -- how shall I put this? -- whiz all over the place. This creates an externality for anyone else, male or female, using the toilets in question. But the magnitude of the harm is greater for women, because they actually have to sit on the toilet seat every time, whereas men have to do so less than half the time. Segregating the men and women concentrates splash-externalities on the group most likely to create them and least likely to be harmed by them.
In addition, I suspect it’s less time-consuming to clean one toilet with twice as much filth than two toilets with a normal amount of filth. If you had two toilets in a single unisex restroom, both would get used by men, and hence both would require cleaning on a regular basis. Having two separate toilets, one for each gender, means that one of the toilets (the one in the women’s room) can be cleaned substantially less often, while the other (the one in the men’s room) will only need to be cleaned slightly more often. The overall cleaning burden will fall as a result.
The economic perspective presented here also provides a ready answer to an age-old conundrum: should male transvestites use the women’s room? Answer: only if they squat to pee.
Excretory Econ 101
Mary Anne Case’s “toilet survey” (brought to my attention by Gene) got me thinking about the economics of restrooms. Case’s primary research question is why lines for women’s restrooms are so much longer than they are for men’s restrooms – her hypothesis being that it’s *not* because women take longer to go, but because there are more “excreting opportunities” in men’s rooms. But somehow she has missed what jumps out to me as the most obvious question: why are there lines for restrooms at all? In general, queuing is the tell-tale sign of an under-priced product or service, the paradigmatic example being the queues for rent-controlled housing units. And indeed, with the rare exception of pay toilets in certain locations like airports, restrooms are generally free to the user. But why? After all, there is (to my knowledge) no law requiring a price of zero on restroom use. Free toilets seem to be a product of the free market. Naturally, I have some theories.
First theory: timing issues. Since the lines only appear at certain times (e.g., between halves at a football game or during prime-time at a nightclub), there is no need to price them all the time. Eventually, everyone gets to use the restroom, because the waiting time pushes some customers into the more open times (say, when the second half has begun). While this is true, the usual solution for this sort of situation is peak-load pricing: setting different prices at different times of day, such as when a toll road only charges a toll during rush hour. Peak-load restroom pricing would reduce the demand for restroom use during prime hours while increasing revenue for the owner. Such a pricing scheme would also have the salutary effect of allocating precious restroom time to those who value it most. Those who consider the price worth it because they really have to go now would pay; those who can hold it would do so to avoid paying.
Second theory: high transaction costs. Restrooms are generally bundled with other goods and services, such as meals, cocktails, and sporting events. Now, that fact in itself doesn’t explain why they aren’t priced; a restaurant could, in principle, put “toilet use” on its menu like everything else. But there are numerous other items that establishments choose to place in the public domain as well, even though they could in principle charge for them. Restaurants allow customers to use salt and ketchup freely, for instance. Setting a price of zero does lead to some overuse – as customers consume these products until the marginal benefit is zero – but the mild inefficiency from overuse is presumably swamped by the expense of monitoring and charging for each shake of the ketchup bottle. Similarly, the cost of charging for restroom use might be greater than the efficiency gain from superior rationing of toilet time. On the other hand, pay toilet technology is well established and cheap: just put a coin-operated lock on the stall doors.
Third theory: customer annoyance. People regard restroom use as something they *ought* to get for free if they’re paying customers (or for that matter even if they’re not). Any establishment that started charging for restroom use would lose customers who resent having to pay, so it’s more profitable to just charge more for the establishment’s primary products or simply to absorb the cost. This theory strikes me as plausible, if a bit ad hoc, but it relies on a specific factual assumption: that people are more annoyed by having to pay than by having to wait in line when they really have to go. (Some evidence this might be the case: if women really disliked waiting enough that they’d be willing to patronize other establishments, there would be a strong market incentive for expanding the size of women’s restrooms, which does not seem to have occurred.)
I suspect the reality is a combination of all three theories. The gains from toilet pricing only accrue at times when there are significant queues, because only then is it important to make sure those who value the restroom time most get it. Charging during other times would annoy customers without any compensating effect from reduced waiting time for those who need the restroom most. But peak-load pricing involves higher monitoring and enforcement costs, because a simple lock on the stall door can’t discriminate based on time. Plus, for every person gratified by the opportunity to use the restroom faster because she paid, there’s another person annoyed at having to wait because she didn’t pay.
Next: the economic case against unisex restrooms.
Tuesday, May 20, 2003
Fishy Reasoning
Overfishing is seriously depleting oceanic fish populations, and Ronald Bailey is correct to observe that this is a classic example of the tragedy of the commons. When an asset is owned in common, so that any of a large number of people can use it freely, the asset will almost inevitably get overused. Nobody has an incentive to conserve such resources, because the benefits of using them are private, whereas the costs of using them are public and dispersed over a large group. As Bailey puts it, “A fisher has no incentive to leave a fish in the sea so that it can reproduce because she knows that the next fisher will come along and take it anyway, so she may as well reap the rewards of the catch immediately.” (Aside: I do sympathize with the desire to mix in feminine pronouns to achieve linguistic gender parity, but it strikes me as odd to do it in a profession that is I’ll bet is overwhelmingly dominated by men.)
Bailey also says (and I agree) that there are two ways to deal with a commons problem, regulation and privatization, and the latter – when possible – is generally preferable. For example, privatization has done wonders for elephants in Africa. But privatization is not always feasible, and the oceans are a textbook example. Unless the boundaries of fishing territories are drawn so broadly that schools of fishes rarely cross them, there will still be external costs associated with the decision to catch more fish.
Bailey contends that ocean privatization has worked in some locations, but the mechanisms he cites don’t really qualify as privatization. They are essentially regulatory solutions improved by the injection market forces at the margin. Bailey’s leading examples are Iceland and New Zealand, where fisherman are assigned “individually transferable quotas” (ITQs) that entitle them to a share of the total allowable catch (TAC). ITQs can be traded among fishermen so that a market in the quotas can emerge, and this is what creates the illusion of a privatization solution. But the overall TAC is actually set on the basis of scientific analyses by some body of experts; and though Bailey doesn’t say where this body came from, I’m betting it’s actually either a government agency or a private agency with a government mandate. In other words, we’re talking about a solution that is, at its fundament, regulatory.
Bailey says “The result of privatization is that fishers have a strong incentive to maximize the number of fish in the sea because their allowed catches go up as the fish population increases.” But this is actually no different from the incentive they have in a commons situation. In the commons, if a fisherman chooses to reduce his catch, the benefits (or avoided costs) of doing so are spread out among all fishermen. Being a fisherman himself, he will reap some fraction of that benefit, but not *all* of it, and that’s the source of the problem. And under the ITQ system, that problem remains: if a fisherman releases fish, the benefits will be spread among all holders of ITQs. As a holder of an ITQ, he’ll get some fraction of the benefits, but not all of them. The only thing inducing the fisherman to reduce his catch in the ITQ system, as compared to the commons system, is that he’ll be punished if he exceeds his quota. It’s the regulatory aspect of the system, not the market aspect, that does the heavy lifting here.
My point is not to criticize the ITQ system. As Bailey observes, it seems to be working, and full-on privatization is probably infeasible in this type of situation, at least with current technology. In such circumstances, regulation may be the best available option. The inclusion of a market mechanism for transferring rights among fisherman is useful because, among other things, it assures that fishing rights are allocated to the most efficient fishermen. Similarly, pollution vouchers assure that rights to pollute are allocated efficiently among firms, so that reduction of air pollution is accomplished at the lowest possible cost. But it would be inaccurate to say that the pollution voucher system is privatization instead of regulation. The total quantity of pollution vouchers is set by a regulatory body, just as the total number of ITQs is set by a regulatory body. It’s great to see that market mechanisms are being used to improve the efficiency of regulation – but it’s still regulation.
Tribute
The final episode of “Buffy the Vampire Slayer” airs tonight.
Stop all the clocks, cut off the telephoneOther tributes:
Prevent the dog from barking with a juicy bone.
Silence the pianos and with muffled drum,
Bring out the coffin, let the mourners come.
…
The stars are not wanted now, put out every one.
Pack up the moon and dismantle the sun.
Pour away the ocean and sweep up the wood.
For nothing now can ever come to any good.
- excerpted from “Funeral Blues” by W. H. Auden
The Weekly Standard
The L.A. Times
TV Guide
Monday, May 19, 2003
I Know the Feeling
The academic life has many desirable attributes. But as Jeff Cooper eloquently observes, grading is not one of them:
Must ... read ... final ... exams .... Must ... not ... permit ... self ... to ... become ... engaged ... in ... fascinating ... discussion ... of ... legal ... realism ... and ... formalism .... Must ... focus ... on ... dry ... repetitive ... essays .... AAARGH!
Hulk SMASH puny exams! Hulk SMASH students who didn't listen to Hulk in class all semester! Hulk SMASH!!
(Er. Sorry. I'm okay, really. Must go back ... to ... reading ... exams ....)
Saturday, May 17, 2003
West Virginian Contradiction
A conversation with my dad about John Ashcroft’s fair-weather federalism – in which my dad observed that Republicans’ lack of support for states’ rights goes all the way back to the first Republican president, Lincoln – reminded me of a bizarre legal anomaly that I noticed a few years ago: that West Virginia should not be a state. Or at least, it can only be a state if you buy the South’s position on the legality of secession.
Why? Because the acceptance of West Virginia as a state relied on two distinct acts of secession. First, Virginia had to secede from the Union; and second, West Virginia had to secede from Virginia. Now, Lincoln and the Republicans took the position that the secession of southern states was illegal and unconstitutional and hence *never happened*; for the entirety of the Civil War, they were not a separate nation or nations, but union states in rebellion. If that’s so, then Article IV section 3 of the Constitution still applied to Virginia:
New States may be admitted by the Congress into this Union; but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.In other words, as long as Virginia was part of the Union, as the opponents of secession claimed it was, then West Virginia could not have become a state without the consent of the Virginia state legislature – consent that I’m pretty sure was never given.
(It’s not obvious to me whether the final phrase about consent of the legislatures concerned applies to the clause before the semicolon about forming a state within the jurisdiction of an existing state, or if that phrase only applies to states formed by the junction of states or parts of states. But it doesn’t matter, because either way West Virginia’s statehood would have been unconstitutional – either because it was ruled out entirely, or because the Virginia legislature’s consent was never given.)
There is, of course, a legal theory that would justify West Virginia’s statehood: the theory that secession of a state is legal and constitutional. If Virginia actually left the Union, then the constitutional provision above did not apply. The acceptability of secession was, of course, the position of the southern states. But this theory was rejected by precisely the people who voted to admit West Virginia to the Union.
UPDATE: Turns out that Lincoln consulted the members of his Cabinet on this question, and received differing opinions. Salmon P. Chase offers an interesting argument in defense of admitting West Virginia as a new state: that while some Virginian state legislators were in rebellion, other Virginia state legislators and loyal citizens established a convention in Wheeling (a town in what is now West Virginia), and that body constituted the only legitimate legislature of Virginia. Thus, the Constitution required only this legislature’s consent. A clever argument, but I don’t think it quite works. Article IV section 3 requires consent of the legislatures, plural, of the states, also plural, concerned. Now, the Wheeling convention was either the legislature of Virginia or the legislature of West Virginia, but it cannot have been the legislature of both! Therefore, at least one required consent was missing. Now, I suppose one might claim that this position would have denied the people of West Virginia their right of self-determination, i.e., their right to govern themselves without the consent of people living in the Virginian counties in rebellion. But notice that self-determination is the basis of the secessionist argument, so again, the Unionists could not support that argument without contradicting themselves. Also, it’s worth pointing out that the Constitution has specific language prohibiting this form of secession (one part of a state unilaterally separating itself from the rest to become a new state), whereas it does not contain any language prohibiting secession of a state from the union as a whole. So it’s odd, to say the least, to contend that the Constitution allows the former yet prohibits the latter.
Tuesday, May 13, 2003
Overreach Around
WARNING: X2 spoilers in this post.
If you watched X2 and didn’t catch the mutants-as-homosexuals metaphor, you just weren’t paying attention. That scene where Iceman comes out to his parents (and his mother asks if he’s tried *not* to be a mutant) was rather far from subtle. Still, I think this L.A. Times article pushes the analogy a bit too far. The article’s author sees homosexual metaphors in every character and subplot of the movie, including these:
• Jean Grey is torn between Wolverine and Cyclops, “unable to consummate her love for either.” Hold on a minute -- she did choose, right? And besides, she and Cyclops slept in the same quarters, so I’m figuring they consummated their love on a pretty regular basis. In any case, the love triangle is an incredibly common theme in film and fiction -- does every love triangle now count as evidence of a homosexual subtext?
• After Jean Grey apparently commits suicide “in part due to her own sexual identity conflicts” (huh?), “Cyclops and Wolverine are forced to console one another, though they cannot make direct eye contact.” But it’s well known that heterosexual men (including non-mutants) aren’t overly prone toward displays of emotion toward each other. That commonplace observation hardly qualifies as a covert message about homosexuality.
• This one’s my favorite: one scene in the movie features “a phallic symbol in the shape of a soda bottle, handed from one character to another who blows on it to make the soda cold.” And here I thought we’d outgrown the Freudian notion that every elongated shape represents a penis.
This article’s author is so eager to impute a particular social message to X2 that he actually undersells the movie. Yes, there was a homosexual metaphor in X2 -- and also a race metaphor, a war-on-terrorism metaphor, a clash-of-cultures metaphor, and probably a few others I didn’t catch. Procrustean literary criticism only obscures the thematic breadth of the film.
Monday, May 12, 2003
The Rational Romantic Strikes Again
Yet more evidence for the search theory of romance, discussed in three previous posts. The following letter appeared in Carolyn Hax’s advice column:
Dear Carolyn: I was dumped by my girlfriend of two years for a logical but emotionless reason: "There are 6 billion people in this world, I think we should try and find a better match for each other." This was my first serious relationship and I dove into it headfirst only to be rudely initiated into the dating game. Now I have adopted a cynical view. Love is a game where we always try to "trade up," and if we can't or run out of time, we settle for the closest competitor. Could it be that in this individualistic society we have trivialized this sacred bond called love?Dear Cynical: Dude, that’s rough. Say, could you give me her number?
— Cynical, 23 Years Old
(Carolyn’s reply: “Or, love is still love and you're just bitter because you got dumped. Either way, you're going to answer your own question by falling in love again, which is why this "game" is so great.”)