Saturday, March 22, 2003

Bored Now

Many people are fascinated by war, but I’m just not one of them. I find war reportage mind-numbingly boring. The media love war, because it provides endless content to fill airtime and column inches. But it’s just not the kind of content that entertains me. Lots of bombing, yeah yeah, shooting heard at the something-or-other border, yada yada… it’s all the same. I never really dug war movies, either. Somebody wake me when it’s over.


Thursday, March 20, 2003

Just for the Record

I've been expressing my opposition to a war on Iraq for quite a long time now. But given that the war has now begun, I'll express my sincere hope (a) that we win decisively, (b) that we do so with minimal loss of life on both sides, and (c) that my concerns about inciting more terrorism turn out to be totally unfounded. This is one of those situations where I'd rather be wrong than right.

UPDATE: With respect to the war-on-Iraq/war-on-terrorism trade-off, read this excellent post by Mark Kleiman (who is and has been reluctantly pro-war), as well as the accompanying UPI story.


Tuesday, March 18, 2003

Homegrown Child Mutilation

Little Green Footballs posted this revolting photo of a Muslim mother helping her son beat himself bloody with a sword in celebration of Ashoura Day. The caption for LGF's commentary was "Cult of Blood and Death."

Radley Balko rightly observes that we shouldn't demonize an entire culture based on the behavior of a few extremists. And I think Mark is correct that condemning Muslims as a group just because of a single tradition is a form of bigotry.

But Mark makes his point in a manner that is (I think) entirely unintentional. "I wonder," he asks, "whether the folks at LGF have ever attended a bris." A bris is, of course, the ritual circumcision of male infants in the Jewish faith. Did Mark intend this to be an example of a bloody but entirely innocuous religious practice? The more I think about it -- and I've probably thought about it more than I should -- the more sickened and horrified I am by the practice of circumcision, whether performed in a religious ceremony or a hospital maternity ward.

Supposing there was ever any basis for circumcision (more on this below), there's just no justification any longer. To my knowledge, no credible study has ever shown that circumcision has medical benefits. (The word "credible" is key, as there have been numerous bogus studies, including the one about lower rates of cervical cancer among women with circumcised partners.) Some argue that circumcision reduces the likelihood of infection, but even if that's true, it's an incredibly lousy justification in the modern world, where we have ready access to (a) soap and water and (b) antibiotics. Genital mutilation should be a last resort, not a preventive measure.

And besides, the whole protection-from-infection argument always struck me as peculiar from a biological standpoint. If the foreskins really make men more subject to infections that could kill them or render them infertile, shouldn't evolution have weeded them out ages ago? Yes, I know, evolution is not a perfect mechanism -- we still have appendices, after all -- but I've never heard any plausible argument for why foreskins might have been adaptive at some point in our ancestry and then became maladaptive later on. I imagine that susceptibility to penis infections has been about the same throughout our evolutionary history, with the exception of the last century in which we have developed better medicines.

Even if there were some benefit to circumcision, is it great enough to justify the cost in terms of potential loss of sexual pleasure and personal autonomy? The foreskin houses literally hundreds (possibly thousands -- it's been a long time since I've read about this) of nerve endings. Although, like all men circumcised at birth, I haven't had the opportunity to compare, it seems highly implausible to me that removing a chunk of incredibly sensitive tissue wouldn't affect the sex act. Given that millions of men live perfectly healthy lives with their penises intact (circumcision is the exception, not the norm, in Europe), would it be so terrible to give men the option of deciding for themselves whether to become circumcised, instead of forcing an irrevocable choice on them at birth?

If Mark intended the example of circumcision to show that Westerners commit acts just as pointless and brutal as Arabs, and therefore condemning only Arabs for their bloody rituals is hypocritical, then his point is well made. But I practice equal opportunity condemnation: Arabs sometimes behave like barbarians -- and so do we.


Monday, March 17, 2003

The Dread Pirate Roberts

For over a week, I’d been planning to administer a thorough fisking to a recent Washington Times article by Paul Craig Roberts. (It’s no longer available online without a payment, unfortunately. If you really want to read it, search for “Outsourced Economy” in the February 27th archive.) But I finally realized that I just don’t have the time to give it the drubbing it deserves, so the following will have to do.

Paul Craig Roberts poses what he think is a “new” question for economists. “Is outsourcing trade?” he asks, apparently expecting the slack-jawed economics profession to scratch its collective head, wondering how they had failed to think of that question themselves. Well, maybe it’s because the answer is jarringly, crashingly obvious. *Of course* outsourcing is trade; what else would it be?

Roberts uses the word outsourcing to refer to “when a U.S. firm or industry relocates its capital and technology in China [or some other less developed nation], where it employs Chinese [or Indonesian, or Pakistani…] labor to produce goods for the U.S. market.” Hmm…sounds an awful lot like trade to me. Trade simply means the exchange of goods and services for money or (in a barter system) other goods and services. Any time Americans buy goods or services from abroad, that’s trade. It doesn’t matter whether American consumers buy final products or American firms buy labor services -- either way, we’re paying foreigners to do things for us.

Roberts is eager to distinguish outsourcing from trade because he wants to sound like a conservative “free trader” while making arguments to the contrary. But the case for this particular form of international trade is pretty much the same as for all international trade. And the contrary arguments are as bogus as they’ve always been.

Roberts’s bugbear is the prospect of American jobs being exported merely to take advantage of lower labor costs. He seems to think this is distinct from the issue of comparative advantage, the usual justification for free trade among nations. What he misses is that lower labor costs are one of the means by which comparative advantage is revealed. God doesn’t come down and declare, “Make athletic shoes in Indonesia! Write code in North America!” Instead, wages and prices act as signals to convey the relevant information. Employers pay wages just high enough to attract workers away from their next-best options. In underdeveloped nations, workers tend to have fewer desirable outside options, so their wages tend to be lower. In developed nations like the U.S., they typically have better outside opportunities, so their wages are higher. The wage differential induces employers to hire the workers with the lower opportunity cost, thus freeing up the workers with better options to do something else.

In the past, this process has typically manifested itself in the movement of manufacturing and other low-skill jobs to the third world (Nike’s factories in Indonesia and Pakistan are probably the most visible example), while skilled jobs expand at home. But Roberts thinks he’s found a new argument, because a recent Business Week article told him that it’s no longer just low-skill jobs that are being exported. Now, American firms are hiring foreigners to do work in finance, accountancy, programming, engineering, etc. You can almost hear Roberts’s brain clicking: “Manufacturing jobs left last year, high-tech jobs are leaving this year… Good God, *all* the jobs are leaving!” But a more careful reading of the BW article (from the 3 Feb 2003 issue, not available online) reveals some of what’s actually happening:
In the 1990s, Corporate America had to import hundreds of thousands of immigrants to ease engineering shortages. Now, by sending routine services and engineering tasks to nations with a surplus of educated workers, the U.S. labor force and capital can be redeployed to higher-value industries and cutting-edge R&D. “Silicon Valley doesn’t need to have all the tech development in the world,” says Doug Henton, president of Collaborative Economics in Mountview, Calif. “We need very-good-paying jobs. Any R&D that is routine can probably go.” Silicon Valley types already talk about the next wave of U.S. innovation coming from the fusion of software, nanotech, and life sciences.”
To put the argument somewhat differently, we shouldn’t expect to see a clean division wherein only manufacturing jobs, or only low-tech jobs, move to other countries. Comparative advantage is primarily a matter of differences in personal skills and talents, not geography. Just as there are unskilled people in all parts of the world, there are skilled and educated people all over the world, too. It’s unreasonable to think that *all* programming will take place in the West and *all* garment-making will take place in India and China. Instead, free trade drives a global division of labor that may have little relation to national boundaries.

And that’s a good thing. Ultimately, it means more goods and services getting produced at lower cost, with lower prices for consumers. Yes, some people will lose their jobs in the transition, and they will have to find new ones; that’s how the market process moves labor and capital to their highest-valued uses. But on the whole, we become wealthier because our dollars go further.

And here’s the added bonus: as foreign markets become more developed, their residents become more affluent. As capital flows in, productivity increases, and wages begin to rise. The poor foreign workers begin to make money – not much at first, but more than they would have made otherwise – which they can use to improve their standard of living, save for the future, educate their children, and even buy American goods and services.

The free trade position is caught between a left-wing rock and a right-wing hard place. Leftists excoriate free trade because it allegedly harms the residents of foreign nations, by exploiting their cheap labor and selling them goods at inflated prices. Rightists like Roberts, on the other hand, say free trade helps the residents of foreign nations at the expense of Americans. In short, free trade is bad if harms foreigners, and it’s bad if it helps them!

Fortunately, the anti-traders of both left and right are wrong. Free trade does create jobs for foreigners and improve their standard of living. But the gains for foreigners need not mean losses for Americans, because trade is not, as Roberts seems to think, a zero-sum game.


Sunday, March 16, 2003

Rationalizing Rationality

Julian and Will have a discussion going on the meaning of rationality and its relationship to ethics. The discussion was stoked by Matthew Yglesias’s observation that libertarians have a marked tendency to characterize their own views as more “rational” than others’.

This is a useful context in which to emphasize the narrow definition of the word “rationality” as employed by economists – a definition I would like to see adopted more widely. To an economist, rationality is almost entirely a matter of consistency between ends and means; an action is rational to the extent that it increases the perceived likelihood of achieving one’s own goals, whatever they might be. Rationality is not a normative stance, as it does not pass judgment on the correctness or desirability of others’ goals. It isn’t anti-normative, either: it doesn’t say you can’t pass judgment on others’ goals, only that such judgments are not strictly a part of rationality.

I said rationality is “almost entirely” just a matter of consistency because there are two more specific requirements that economists build into their notion of rationality. The first is completeness, meaning that a person is actually capable of comparing alternatives at all. The second is transitivity, meaning that if you prefer A to B and B to C, you also prefer A to C. Strictly speaking, these are both assumptions about the kind of goals people have, not merely the consistency of their choices with their goals. These assumptions are justified, though, by the fact that “consistency” doesn’t have much meaning without them. If there are people with incomplete or intransitive preferences (and there may well be such people), then to that extent the term rationality just doesn’t apply. For instance, the same action could be simultaneously consistent and inconsistent with the same set of intransitive preferences. If I had my druthers, economists would stop saying that completeness and intransitivity are part of the definition of rationality, and instead say that they are necessary conditions for rationality to be applicable as a concept.

Julian argues that the economists’ notion of rationality may be excessively narrow. As an instance of behavior that is seemingly consistent with the maximization of the satisfaction of one’s goals, but that many people would nonetheless consider rational, he offers the notion of satisficing, which means accepting any outcome that meets a certain minimum standard. For instance, a satisficing dater might stick with a girlfriend who is not ideal but who meets certain minimum requirements for looks, personality, and so on. However, satisficing turns out to be an instance of maximizing behavior in the context of a dynamic search. When it is costly to search for something – say, a new mate, or a lower price on a product, or a job with a higher wage – you have to weigh the cost of searching further against the expected gains from finding something better than the status quo (as well as the distinct possibility of ending up with something worse than the status quo). It’s a standard result from search theory that a rational person facing these conditions will adopt a reservation level of satisfaction (quality of mate, price of product, wage of job) and stick with any outcome at least that good. In other words, he will engage in satisficing behavior.

Julian correctly observes (in somewhat different words) that one can always cook up a utility function that produces the behavior one is trying to cast as rational, and I agree there’s something suspect about that. But the question we should ask is whether the behavior in question can *reasonably* be construed as maximizing, and in the case of satisficing, I think it clearly can. Find a person who is engaged in satisficing behavior, such as buying a product once they find a price below a certain threshold level (as I did today, when I bought a Playstation 2 for $180; my threshold was about $185). Then ask that person why they are acting like that. I think the answer will almost always be that it’s too time-consuming or annoying or inconvenient to keep looking longer when you’ve already found something good enough. The reference to the search cost is a dead giveaway that the satisficing behavior is really maximization in a dynamic context.

As another example of behavior that is seemingly not maximizing, and yet might be construed as rational, Julian offers Nozick’s idea of moral side constraints on behavior. This is example is stronger, I think, because it raises a big fat question mark about what a “constraint” is. Economic models typically assume that an agent maximizes utility subject to a set of objective constraints such as income, prices, gravity, etc. Morals could be incorporated in the model as constraints like any other, but they are notably subjective constraints. I can choose to follow a different moral code; I cannot choose to change the laws of physics. And once we realize that constraints may be subjective, all kinds of stuff is up for grabs – maybe those prices aren’t really objective constraints, because I could take a five-finger discount.

But I think the narrow definition of rationality is still helpful here. Indeed, it may be the only thing that allows us to address the conundrum while retaining a non-vacuous notion of rationality. While philosophers can talk about binding moral side constraints, in reality we all know they are not generally so binding. We would like to act morally, but we also face temptations that occasionally prove too strong to resist. In econo-jargon, the marginal rate of substitution of moral behavior for other desirable things is, for most people, not infinite. Thus, morality may be treated as one more preference among many, and rationality need say nothing more about it than about one’s preferences about apples and oranges.

This is not to say that morality is undebatable, or that rationality has nothing to say about morality. It simply means that we shouldn’t try to stuff all moral arguments into the rationality sack. (The attempt to do so is precisely what is so irritating about Rand: she tries to characterize all her arguments as following directly from rationality and pure logic, when in fact she imports value premises from the beginning.) Broadening the definition of rationality to include more than testing consistency of means and ends rarely illuminates moral discourse, and often just confuses matters. Rationality is more helpful as a concept if we use it to make a certain kind of directed and internal critique; e.g., we might say that particular moral rules are irrational if they systematically thwart achievement of whatever goals the rules are supposed to advance. That job becomes much more difficult when the definition of rationality is so expansive that any charge of “irrationality” could be just another way of expressing disagreement.