Sunday, March 12, 2017

What is the relationship between leader confidence, leader competence, and gender?

I recently came across an article titled Why Do So Many Incompetent Men Become Leaders?” from the Harvard Business Review.  It’s worth a read, and I won’t fully summarize it here, but the author essentially answers his titular question with "because the abundant confidence required to be perceived/chosen as a leader by others actually makes for bad leadership." I think that's wrong, for two reasons:
1. Leadership is partially defined by perception. The author's argument depends on a distinction between those traits required to be SEEN as a good leader by others, and those required to actually BE a good leader. In reality, though, that distinction is muddled; isn’t the former merely a subcategory of the latter? Leadership isn't an individual skill like running or lifting or shooting a basketball, where your actual measured ability is wholly independent from the social estimation of your likely ability. Leadership is an inherently social endeavor - to inspire those around you to effective action - which depends in part on how they see you. Since it's very difficult to have confidence in someone who lacks it in themselves, projecting confidence is probably a prerequisite to inspiring anyone. "Our inability to discern between confidence and [leadership] competence" is grounded in something; confidence is literally part of what defines competence.

2. Even for that part of leadership not defined by perception, confidence helps much more than it hurts. It is a proven psychological truth that confidence begets success and success begets confidence, from a very early age. The line between confidence and overconfidence is defined in relation to results, so OF COURSE the relationship between results and overconfidence is tautologically inverse. But the overall relationship between results and confidence is pretty clearly positive for most things, and the article basically tried to make it seem as if the opposite were true.

The article makes some good points, but ultimately I think there's more of a yin-yang here than it lets on. As much as I roll my eyes at male leaders' bravado, the opposite end of the spectrum is even less competent or bearable.  I made a graph to try and depict this:





Friday, March 3, 2017

There’s such a cowardice in euphemism

This isn’t a very long or substantive post.  It won’t make any new arguments, and it won’t refute arguments made by anyone else.  I’m just writing to call attention to something which angers me, in the hopes the reader will start to notice it too:   just   how   many   euphemisms statists use to justify the violence of the state.

The central insight of libertarianism is that all governance is violence.  Most people recognize on a fundamental level that violence is normally bad.  If everyone recognized that all government is violent, justifying government would be much more difficult, and the case for a smaller government would be much easier to make.  Accordingly, making the case for a bigger state usually requires you to conceal or downplay the violence inherent in what you propose – sometimes, even from yourself.  This is why statists find euphemisms so appealing: they make state solutions presentable in polite company.

The military may be the clearest example of this, and as an officer I’m exposed to even more of these euphemisms than the average American.  At the tactical level, the heart of what we do is kill people – let’s be real here – but we rarely use that word.  We prefer to say we “eliminated the target(s),” thereby abstracting the verb and dehumanizing the subject. We don’t even say we shoot people, we’re just “engaging” the enemy.  Engage! what a harmless sounding word! If we don’t kill enough people, we go back to “mop-up” the area.   If we accidentally kill the wrong person, that’s just “collateral damage.” If we torture someone, we’re just using “enhanced interrogation techniques,” or even “physical persuasion.”  And don’t worry, that isn’t a war crime – it’s just “extralegal.”

On the operational level, the folks being tortured are often unlawfully imprisoned outside the US without due process of law, but we don’t like to put it that way either; they’re merely “under protective custody” at an “offshore internment facility.” On a strategic level, we don’t like the sound of “killing foreign leaders who oppose us”, so we just call it “regime change.”  In Vietnam, our napalm was merely a “defoliant” – the casual reader would never know we were dropping fire-bombs on areas rife with civilians.  When Cambodian children are blown up each year by the remnants of our carpet-bombing campaign, we frown at the tragedy of “incontinent ordnance.”  Even bureaucratically, the entire “Department of Defense” does hardly a thing that directly defends American citizens.  It originally had a more honest title: the Department of War.

Domestically, ICE agents don’t kidnap fathers from their children, they merely deport undocumented aliens.  DEA agents don’t kick down your door and shoot your dog in the middle of the night - they just investigate leads of potential illicit substance distributors.  Policemen don’t kill black people, they just neutralize perceived threats with lethal force.  TSA agents don’t molest you and steal your shampoo, they simply look for contraband and remove it.  It’s all sterilized.  The more technical the jargon, the easier it is to stomach.

Taxation, of course, is the biggest example, as it underlies everything the government does.  Hardly a day goes by without politicians saying something to the effect of “it’s high time we ask all Americans to pay their fair share.” Of course, there’s no ASKING about it: taxes don’t work that way.  What they mean is that if you don’t pay, they’ll steal your money, and then your car, and then your home, and then your family’s possessions, eventually throw you in jail. Furthermore, what share qualifies as fair (and why) is never specified; all the speaker means by it is “more.”  All of this relies on conceptions of consent so abstract that they don’t hold water in any other linguistic context.  Statists roll their eyes at the famous “taxation is theft” meme, when really we should roll our eyes to call it anything else.

This is all related to a separate problem I’ve described before on this blog: people’s unwillingness to enforce what they endorse.  I’ve been lamenting it for years, but a few weeks ago a comedian I follow named Jeremy McClellan articulated it more precisely than I ever have.  In economics, he noted, there’s a difference between people’s stated preferences and people’s revealed preferences.  Jeremy calls this the difference between his Netflix queue (which is full of documentaries about bees he told himself he wants to watch someday) and his Netflix history (which is full of re-watched old episodes of The Office or It’s Always Sunny in Philadelphia).  In all walks of life, what we SAY we want is different from what our ACTIONS INDICATE we really want.  Studies have proven this time and again.

Politics is no different, and that’s what makes the state so dangerous.  By normalizing and concealing and dividing up the culpability for violence, politics becomes the outlet for our stated preferences: our preachy virtue signaling on how other people ought to live their lives.  So long as the dirty work of making it so is left to someone else, we’re all too happy to VOICE our support for coercing disfavored groups into abidance by our principles.  But when it comes time to walk the walk, our actions speak louder than our words.  Our revealed preferences – as shown in our market decisions, or in our day-to-day interactions with practitioners of those same disfavored activities – are much kinder and more peaceful than our stated preferences would indicate.  The portion of people who’ll vote to deport undocumented immigrants or lock up pot smokers is vastly larger than the portion who will actually try to detain them those people themselves.

Euphemisms are a reaction to this dichotomy: a way for people to pretend what they say is in line with how they act.  They enable doublethink on the part of speaker and audience alike.  In cases where saying something plainly would offend our nobler sensibilities, euphemisms shroud the ugly truth of the speaker’s idea for long enough that it doesn’t initially raise any moral red flags, enabling us to believe two contradictory things at the same time without realizing it (or at least, without admitting it to others).

When the FDA bans an untested but promising AIDS drug, or the DEA bans an untested but pleasant recreational drug, or a taxi regulator bans Uber, or the school board bans homeschooling, or Congress bans discrimination, or some licensing bureau bans certain hair stylists, or a mayor bans untaxed cigarettes, or Evangelical senators ban abortion or prostitution, the advocates of those bans rarely focus their advocacy on what should happen to people who do it anyway.  They prefer to dwell on how great society could allegedly be were those taboo activities to simply vanish – to lure us with the fantasy that with the stroke of a pen, the people who formerly practiced such activities will instantly cease and desist.  It’s inconvenient for them to acknowledge that some will resist their moral imperialism, and even more uncomfortable for them to confront the question of just how to deal with such people.

The state can only persist for so long as it’s advocates are spared that confrontation.  Lots of people might think X is bad and wish fewer people did it, but far fewer typically think it’s bad enough to warrant imprisonment, and fewer still would be willing to enforce that penalty themselves.  If the state did not exist, plenty of people would take it upon themselves to help the poor, or research drug safety, or do any of the other important tasks that we tragically hand over to unaccountable bureaucrats today.  But hardly anyone would take it upon themselves to start wars, deport immigrants, ban Muslims, arrest pot-smokers, shut-down businesses or steal, because we are more tolerant in person than we are behind the ballot box.

The first step to realizing that is to be honest with yourself about what it is you are saying.  There are times when violence is justifiable.  Smart people can disagree about what those circumstances are, and if you have a well-thought out opinion on that which differs from mine I totally respect that.  I will debate you in good faith and take your arguments seriously – there are no easy answers in philosophy.  All I ask is that you at least allow the debate to take place by acknowledging that the tradeoff exists.  Don’t cower behind comforting platitudes or numbing technical argot to convince yourself government is all hunky-dory patriotic sunshine and rainbows.  Being wrong is forgivable; being a coward is insufferable.

Thursday, March 2, 2017

Betsy DeVos, the Department of Education, and the Constitution


Some weeks ago my friends were lamenting the slew of bills introduced by the new Republican Congress.



Dakota: Have you heard about the bill to get rid of the department of Education yet?



Alexis: THE. WHAT.



Carey: I'm totally being nosy but whatever. Lol but yes, they're saying that schools will be governed by states and localities, which in my opinion will only encourage even more inequality and segregation because states will start to use that to push economic agendas.



Dakota: Not nosy at all Carey! I'm glad you came in with more info. I wasn't aware of their "reasoning" yet.



Carey: and Ill just add that 10% of money come from the ED, which doesn't seem like lot BUT that also comes with upholding Civil Rights ie. like the Brown v Board decision. So the dismantling of ED would be awful, zero accountability.



Dakota: 😩😫😩 what are we going to do if they follow through on this crap... it doesn't feel beyond the realm of reality anymore



Alexis: Ahh returning regulation back to states and localities. The push for privatization. Smh. They're all terrible greedy people.



Me:  ^No we're not.



Alexis: Andrew Doris you're in congress?



Me: No, but I agree with some of the people you're calling terrible and greedy due to what they believe, and would vote as they're voting on the Dept. of Education., federalism, enumerated federal powers, etc. To say (or directly imply) a group of people are terrible and greedy because they believe XYZ is to imply the same about anyone else who also believes XYZ.



Sorry to hijack your commiseration - I'm appalled by Trump too and on another day I'd join in. I'm just flustered right now by everyone talking past one another and arguing in bad faith on the few issues that might yet advance under him. Supporting conservative education reform does not = wanting to hurt kids to make money. Smart and well intentioned people often disagree about this stuff. I literally stand zero to profit from those initiatives and nor do most who agree with me, including conservative Congressmen; chalking them up to "ugh they're all so greedy!" is just lazily avoiding the nuance of the issues.



Alexis: Andrew Doris I respect what you're getting at. But I stand by my assertion that congress people (on both sides of the aisle) are more aligned to maintaining their own power and financial interests than they are in the "right" choices for education for all kids. I respect ideological differences, I don't respect greed. And I work directly with education and housing policy so I have particularly strong opinions about the current regime changes and their plans.



Dave: Andrew Doris curious as to your opinion on Betsy DeVos in general. From what I understand, she doesn't have real/serious experience in education, so how can anyone reasonably claim she's the best (or even among the best) candidates for the position?





Brock: Dave, here's a pretty good piece on her:






the last paragraph is kinda of horrifying since it is a direct quote.





Me: Dave - thanks for asking - lots to say.



1. My opinion on Betsy DeVos in general is strongly positive. I support her nomination because she is perhaps the foremost champion of school choice in the country, and I believe (like very many independent and even left-leaning experts, including some of my center-left professors at Hopkins) that school choice is the single reform that stands to most benefit our education system (and especially disadvantaged students). I recognize that the impetus for school choice must come from the state and local level and don't think DeVos will be a panacea, but with DeVos in charge I can at least be sure the Federal Govt. won't try to get in the way of those initiatives or make them harder to implement, which has happened in the past. (That's also part of why I don't think the Department of Education should exist at all, with the other reasons being it's poor track record and the pesky fact that it's plainly unconstitutional).


2. I disagree that DeVos doesn't have any "real/serious" experience in education; on the contrary, she has been vigorously and intimately involved in education activism for almost thirty years. According to her Wikipedia page she founded an institution funding education reform back in 1989, was chairwoman of the board of Alliance for School Choice, founded an education PAC called All Children Matter in 2003, was on the boards of directors for the American Education Reform Council, Advocates for School Choice, and the Education Freedom Fund, and chaired the boards for Choices for Children and Great Lakes Education Project. She remains Chair of the American Federation for Children and in the 90's she served on the board for Children First America. She has clearly devoted her life to education issues! She also had executive business experience back in the 80's.



If that doesn't count as experience, what does? Being a teacher is not the sort of experience that deals with national-level education issues. Obama's appointee Arne Duncan wasn't a teacher either, and was also a multi-millionaire, but nobody cared because he was union-friendly. Senator Warren's only attempted "gotcha!" thing on experience during the hearing was her lack of experience dishing out $70 billion worth of loans, which was ironic because if we limit the acceptable candidates to those who have managed such massive loan portfolios, we're left pulling from the exact group of people whose influence Senator Warren most hopes to extricate from politics: big bankers.



3. IRT Brock’s article, I find nothing horrifying about it, including the last quote. It's obvious the "return on investment" she is referring to is not selfish financial gain, and she says as much. Nothing about her 30 years of tireless effort and hundreds of millions of dollars in philanthropy poured in to this cause has been a profitable endeavor, and the family is so rich they hardly have incentive to start running small-time private schools anyway. Like the George Soros or Koch brothers, their wealth frees them to pursue un-profitable causes they care deeply about to try and feel good about themselves for making a positive difference in the world. There is nothing immoral about funding causes you believe in, and it's clear she believes very passionately that she is dedicating her time and fortune to helping poor people get a better education.



You may disagree with her on that, but don't pretend it's the same as corruption. Certainly the other side does the same. It's widely known that the bulk of DeVos' opposition came from the teacher's union lobby, which dump vastly more money into influencing politics in their direction than the entire DeVos family combined. The line of thought on the left these days seems to be that if you donate money to progressive causes you have a big heart, but if you donate to conservative causes it's pure graft and ominous big-money puppeteers buying rents. If anything about her nomination was bought with big-money, it was the fierce opposition to her on grounds of preposterous non-issues like the out-of-context Grizzly Bear quote, making it seem like she was a complete dullard or a religious fanatic. None of that is true.



Dakota -

(1) Sure, experience as a teacher doesn't have to be a prerequisite for this position. But some semblance of an understanding of current US law surrounding education should be. DeVos demonstrated a lack of understanding or even basic preparation to understand this during her confirmation hearing.

(2) In my opinion, every student in the U.S. should have the opportunity to attend a school that (a) isn't falling apart, (b) is equipped with trained staff, (c) is prepared to educated them, and (d) has the materials and funding to do so. States shouldn't have an option to choose whether they want to do with this all students. For example, disabled students should have the same rights to education in every state, something DeVos would not commit to saying she would uphold on a federal level. Also, it's incredibly concerning to me that she wants to take funding AWAY from public schools and put them toward private schools.

Schools in my neighborhood are LITERALLY crumbling. One of our schools shut down for a few months a year ago because the ceiling tiles literally fell in in a classroom. Okay? Please let's not provide LESS FUNDING to our struggling public schools.

(3) On that note, forgive me if I find it a little bit gross that someone pours 100s of millions of dollars into a political machine and comes out in charge of an entire national system, in which she has expressed plans to take money out of the already underfunded public program and put it into the already wealthy programs.

There is nothing unprofitable about their pursuits in education. Even if they lose money (which I doubt they do, but even if they do) they're gaining an immense amount of social capital and influence through this.

(4) I grew up in public schools. GOOD public schools. And my schools were cramped. In high school we had to use trailer classrooms because the school was so overcrowded we couldn't fit all the students in the building at once. Our books were not great either. And I went to some of the nicer public schools in the areas I grew up in NJ and VA.

We need someone who's ready to take on the issues inside public schools, not divert attention away. What's going to happen to the kids who can't get into a charter school or a private school under DeVos? What on earth is she going to do for them?





Me: Hi Dakota.  I’ll go in order of the points you numbered:

(1) I concede DeVos did not acquit herself well in the hearing.  I don’t think that means she lacks “even basic understanding” of the Education system.  Most of the videos I saw of her were Senators asking her lawyerly, accusatorial questions that pre-supposed liberal assumptions, which she couldn’t answer clearly only because she doesn’t share those assumptions.

(2) I agree with a, b, c and d.  So does DeVos.  Where we disagree with you is simply on whether federal regulators are any likelier than state regulators to guarantee that opportunity.


I don’t know where you live, but I suspect that part of the reason schools in your neighborhood are “LITERALLY crumbling” is because they are run by government officials, who are unexposed to the market pressures which typically prevent businesses from falling into disrepair (in other words, because of public monopoly). If your goal is like mine - to, as you put it, ensure that “every student in the US has the opportunity to attend a school” that meets your four criteria a b c and d – it seems to me the students in your neighborhood currently forced to attend that crumbling school should be given the chance to attend a different school if they like.  Whether that different school is public or private shouldn’t matter.  That’s all school choice is about.



It’s not about “taking money out of the already underfunded public program and put it into the already wealthy programs” – which leads me to your point (3).  First, the problem with public education in this country is not that it’s underfunded.  Per-pupil, inflation adjusted K-12 education spending has tripled since 1970.  Even President Obama admitted that, quote, “not a dime of whatever new money we might spend would do anything – not so long as it is poured into schools as we organize them today. To make education work for all our kids, we need to tear up our current educational system and reorganize it from the ground up." The problem is that public schools are wasteful, poorly organized regional monopolies, and the solution is the same market forces that eliminate waste and inefficiency in every other sector of the economy.  School choice doesn’t take money away from public schools and give them to private schools necessarily; it’s more accurate to say it takes it away from bad schools (public, private or charter) and gives it to good schools (public, private or charter), with good or bad determined SOLELY by the decisions of parents about what they think is best for their children.



(4) You ask: “What's going to happen to the kids who can't get into a charter school or a private school under DeVos? What on earth is she going to do for them?”



The answer: make their current school more responsive to the wants and needs of students like them, while at the same time giving them more options than they currently have.

Even for kids whose parents choose to keep them at their current school, the beauty of competition is that it makes ALL products in the market better.  Comcast sucks because it has regional monopolies in major cities, like Baltimore; Nike and Adidas don’t, because they have to compete with dozens of shoe companies for market share.  The left is the first to point out how important it is to break up monopolies in any other sector, because it’s widely acknowledged that monopolies are a rent paid to powerful interests, and introducing competition helps consumers.  Why is education different?  The worst-case scenario is better public schools.


The best-case scenario for those students is that they do indeed get to pick a school better tailored to their own interests or abilities. “Getting into” a charter or private school usually isn’t like gaining admission to a selective college where there are stringent academic standards.  Especially at the elementary level, the main thing holding back students trapped in bad schools is cost: inability to afford those better private options. School vouchers fix that.  From trade schools to arts-heavy schools to sports-heavy schools to schools for people with various disabilities, markets allow for customization that uniform, one-size-fits-all public education simply doesn’t, and that makes everybody happier with their education outcomes.



Brock – If you think Betsy DeVos running a PAC is unprofitable, then i really don't know where to start. And pardon me. It sounds to me that you're basically advocating for a plutocracy. You don't say it clearly here, but your arguments are tacitly opposing campaign finance reform as well, which i find really really alarming.


Also, i don't know if you know about the School Choice Alliance, but their system of providing scholarships to charter schools or private schools, does NOT yield a meritocracy and to think as much is plain ignorant of educational issues. A student living Hollywood or Beverly Hills is much more likely to win a scholarship than the kid from south central LA simply because he has more guidance, free time (many low-income students have to work at 16), access to educational material, extra-curricular, etc.


Also a dig at the Education Department being unconstitutional.... If your referring to michelle bachmann's assertion that education should be left to localities and states. Well, I purely disagree cuz there are somethings that are facts and need to be enforced at the federal level in schools. Rural areas where schools can get away with teaching creationism, that the world is 6,000 years old, or that climate change is not real, is really not acceptable today. This whole unconstitutional argument is bullshit and a traditionalist viewpoint is unsustainable. Quite frankly everything is unconstitutional until someone writes it in the constitution. African American's voting was unconstitutional until we amended it. Women's right to vote was unconstitutional until it wasn't. So forgive me if i dont hold reverance for some 240 year old document that slave owners (brave and forward thinking slave owners mind you) drew up because they felt they didnt have political representation (oh the irony).



Me: Hi Brock.  Lots to respond to with you too.

Please explain to me how DeVos has made money from her 30 years of activism for school choice.  I sincerely don’t see how.  For sure, political rent-seeking in general is very profitable, which is part of the reason it’s so important to reduce the rents politicians have to offer.  But to my knowledge, DeVos does not run any franchise of private schools where she’d be in a position to make money from a transition to school choice nationwide.  And certainly, she was already a billionaire before she took up the cause, with lots of more lucrative ways to make money then trying to gradually nudge policy.

I will spare you the hassle of inference – I do oppose campaign finance regulation.  That is not the same as advocating plutocracy.  Even setting aside constitutional considerations, the purest plutocracy is a set of 535 entrenched politicians invulnerable to electoral challenge.  Campaign finance regulations are problematic in part because they often serve as “incumbent protection acts” by making Congressmen much more difficult to unseat.  In any case, the link between campaign funding and electoral success is tenuous, and the government shouldn’t be censoring political speech from reaching its citizens’ ears no matter how much it costs nor who wants to fund it.



I’m a little confused by your meritocracy argument, because none of the disadvantages you listed are unique to an elective school system.  Yes, wealthier students with more free time, resources and parental involvement are more likely to succeed academically and gain admission to the most competitive private schools – but this is also true in the status quo, so it’s not an argument against school choice.  If anything, school voucher programs help negate this problem by narrowing the gaps in resources that currently allow only the wealthiest students to attend private schools.


Now let’s talk about the constitution.  I don’t have reverence for the judgment of slave owners from 240 years ago either, but I do have reverence for the concept of political legitimacy.  If we are to even pretend that we are a nation governed of, by, and for the people, the government has to be able to point to some widely popular and agreed-upon social contract as the source of its authority to wield force on those people.  That contract is the only thing that separates government from the Mafia or a common gang, which may have unwritten rules, but doesn’t pretend to be a singular moral authority ruling by consent over every inhabitant of a certain territory.  As a libertarian, I’m willing to entertain the idea that the entire constitution is bullshit – but if that’s true, the implication isn’t that the government has MORE power/authority and can do whatever it wants!  The implication is anarchy – that the government has no authority at all – because that document is the only thing that gave it any. 



So for your sake, as an advocate of greater government powers than I prefer, let’s assume the constitution is not bullshit, but is in fact morally authoritative and legally binding.  In that case, you are quite right that “everything is unconstitutional until someone writes it in the constitution” – so do tell me, when did someone write the power to regulate education into the constitution?  I can’t seem to find where that’s written.  I CAN see where voting rights for black people and women were added, in the 15th and 19th amendments, respectively.  If you concede education-related powers are not written in there yet, but think the federal government OUGHT have the power to regulate education moving forward, perhaps you should propose a 28th amendment granting it this power, and then we could debate the merits of that.  But until such time, it’s not a “traditionalist viewpoint” to expect politicians to follow the law they’ve each sworn to support and uphold.





Dakota: Andrew I'd be happy to continue this conversation in a message if you're open to it but broadly speaking I think our different perspectives come down to trust, historical precedent, and having something to lose.



I don't trust that the states will dispense education fairly across the spectrums of wealth, race, disability, etc.



History tells me that if the states had control of education I would not have been able to attend the same school as you. And my school would not have been as equipped as yours. I am not white.



My neighborhood is made up of mostly lower-income, Black residents. We had a really successful public high school a few decades ago. It burned down. There's still speculation as to how. But the fact is students were split up until the next one was ready and it was an entirely different story after that.



It's clear to me that you're not indifferent to this issue Andrew, which I really appreciate and which is why I'd be happy to continue the conversation if you're open to hearing more of my perspective and what it's rooted in.



Me: Hey Dakota, I’d always meant to message you after that discussion we had on Betsy DeVos and the Education Department but I hadn’t gotten around to it until now.  I am open and interested to hear more of your perspective so hopefully you’re still up for the discussion – but if not, just tell me and I’ll get lost!  There’s a TL;DR version at the bottom in case you don’t feel like reading all of it.



I can totally understand and appreciate this historical reasons why you “don’t trust that the state governments will dispense education fairly across all spectrums of wealth, race and disability, etc.”  They historically have not.  I don’t trust them either.



I’m sincerely curious, though, why you would trust the federal government to do that any better?  That’s where we differ:  I don’t trust them either.  As I’m sure you know, the feds also have a long history of racial oppression in their own policies.  FDR basically built the New Deal off the backs of black people, for instance, and Nixon or Reagan’s War on Drugs targeted them as well.  I don’t know which state you live in, and I’ll concede that some have historically been even more regressive than the federal government.  But especially now that Trump is in charge, it seems to me that the more powers we devolve from the federal level to the state level, the more likely those powers will be wielded in a responsible or progressive way.



This isn’t limited to education.  This are lots of issues on which the states disagree with one another: marijuana legalization, gay marriage, right to work, the minimum wage, healthcare, etc.  On these issues, the federal government has two options: it can allow each state to do their own thing, or it can overrule them all and enforce its own, one-size-fits-all policy on all 50 states.  Which we prefer on a case-by-case basis will likely vary based on what our federal leaders presently hold on that issue, but unfortunately we can’t pick and choose which times states’ have rights; if we want to be ideologically consistent about federalism, we have to decide which general stance we find most conducive to liberty and progress.  To me, it seems clear it’s typically better for liberty and progress (not to mention more in line with the 10th amendment of the constitution) if we generally allow states to each do their own thing.



My reasoning is this…society progresses at different paces in different places.  Every time we make progress as a society, some states are ready for that change faster than others.  And, every time we make a mistake as a society, some states push for it more eagerly than others.  Take the War on Drugs; states rights’ are proving super important there!  Federal law classifies marijuana as a Schedule I substance and has stiff mandatory minimum sentencing guidelines, which are really stupid and oppressive, especially for minorities and the underprivileged.  But thankfully, dozens of states have legalized medicinal marijuana and several have legalized it outright, all in defiance of federal law.  More follow suit every year.



As a progressive, you probably oppose the war on drugs too, and likely agree with me that this is a good thing the states are doing this. When the federal government sets policies we disagree with, we as socially tolerant people value the ability of more progressive states to set more progressive policies without being interfered with (perhaps like the minimum wage in Seattle, for another example).  Eventually, as other states see that the sky hasn’t fallen in those progressive states, change becomes less scary and they become more willing to experiment with these changes themselves.  Inversely, if a state passes a law that doesn’t go so well, other states can heed that warning and avoid the same mistake BEFORE it’s implemented all across the country.  And in the interim, people who prefer to live under one set of policies over another can “vote with their feet” by choosing to live in a state that agrees with them (more easily than they can move to a whole different country if they disagree with national policy).  This “laboratories of democracy” principle helps prevent wrongheaded national majorities or pluralities (like the one that elected Trump!) from imposing bad policies on all of us.



The flip side of that coin, though, is if we want to be ideologically consistent, we have to allow states rights’ even when some states disagree with us.  So if we value it on drug reform, how can we oppose it on education reform?



TL;DR – You said you think our differing perspectives come down to “trust, historical precedent, and having something to lose.”  You’re certainly right about two of those things: you do have more to lose, and I’m sure you understand the historical precedent on a more personal level than I will ever be able to grasp.  I sympathize with that and respect your perspective. But when it comes to trust, I don’t think I’m any more trusting than you are overall; it’s more a question of, “which institutions do you trust more, and why?”

Wednesday, March 1, 2017

Evidence for Libertarian Economics


The debate I transcribed in my last post did not end there, but it did veer into a separate topic.  I’ve placed the rest of it here on a second post for easier readability and organization.  I continued my remarks by asking JJ, my debate companion, the following:



***

If we are comparing two policies, why do I have the burden of proving my preference works better than yours, and not vice-versa?  Personal freedom is not some cooky newfangled social experiment dreamed up by policy wonks; it is the default condition of humankind.  The state is the experiment.  And because the state is defined by violence, it seems to me the ethical burden is yours to give me evidence that’s more effective than the peaceful alternative.

Whoever has the burden would have an easier time comparing real-word outcomes if my ideas were ever permitted to have any case studies.  Unfortunately, however, governments are rarely inclined to forfeit their powers, which is part of the reason successfully restraining them is so often a benchmark of social progress.  Early governments were monarchies; at one time, constitutional democracies had never been tried.  Until recently, gay marriage had never been legalized.  At each stage in between, developing society required somebody with nothing but theories in their head to take the plunge on an untested reform they had intuitive reason to believe would make the world more just.  Not all of those theories are worth a try and it’s fine to think mine are not.  But until such time as the state steps aside somewhere and lets us test it, you can’t argue against our testing it on the logic that it’s never been tested!



JJ: Why do you have the burden of proof? Er because as someone who studies developed and under developed countries, your idea (as you have pointed out) does not have real world studies (as communism in its entire theory does not have any real world studies).

This is not because, as you seem to think, governments are so power hungry. It's because IF the government does not provide adequate social services and there are no alternatives (privatized) options, it gets overthrown.

To the extent that economies function prosperously, we find that states with strong centralized governments & legal systems, who effectively REGULATE their economies, do the best economically. Why is this? Because privatization, as I mentioned, has a tendency towards corruption. Without strong regulation, monopolies arise, family/nepotism & ownership is centralized within tribe-like structures. As I keep telling you, it is a balancing act & removing gov in that removes the public good from the equation, leading to mass inequality. We are literally watching this happen in the US (e.g financial crisis)

Libertarianism, to the extent that is has been tested, I would say is closest in the IMF/washington consensus policies, which have had governments all over the world cutting social services, removing minimum wages & workers regulations, etc. Your idea is a top-down approach, that with less regulation, companies will do better & the success will trickle down to the people. It is widely regarded by the development community to have failed dramatically.

Trickle-down does not work. Instead, what we have seen in countries that cut these services are an explosion of NGOs to provide the basic social needs of the population, since the governments are not effectively redistributing their country's wealth. Where do the funding for those NGO primarily come from? From other governments (USaid, EU, UN, etc)

1. Since particularly in the US we are not taxing effectively, this is primarily taking taxes from the middle class here to subsidize our [huge global] companies, not small family businesses btw, being able to exploit workers in other countries

Oh yeah and without any gov regulation, new companies in other countries can't compete with well-established global ones. This is why China, for example, has done so well since it has blatantly protected its economy from global companies, allowing them to develop before competing with others. The US has actually destroyed whole economies by promoting lack of regulation in other countries

2. If, say, the US gov was to stop funding social services in these countries through grants to NGOs, either other governments would step in to do so (china), social/political organizations (muslim brotherhood), or the people will literally not be able to survive. When people do not have basic social services, they revolt against the government, & often the system that failed them i.e. capitalism (e.g communism).

Here are your options. I like the enthusiasm, but just like communism, your theory IS actually being tried out today, and gov deregulation has in fact flat out failed economically.





Me: I finally got time to respond to this.  I’ll start by zeroing in on this quote:



“To the extent that economies function prosperously, we find that states with strong centralized governments & legal systems, who effectively REGULATE their economies, do the best economically.”



I don’t think that’s what we find at all, and I’m going to provide a lot of links with counter-evidence.



As you mentioned, nowhere to my knowledge has a perfectly free market.  Almost all economies on earth are mixed economies.  This makes empirical analysis of either of our contentions rather difficult: each side can point to all the bad conditions in a place as a symptom of the other side’s ideas, and all the good conditions as proof their own ideas work.  Unfortunately we cannot isolate every variable like we can in chemistry or physics, so an enormous portion of economic analysis out there is really just confirmation bias one way or the other, from think tanks or academics who decided what they wanted to prove before they set out to research it.



But the closest we can come to objective real-world analysis is by creating a spectrum from “most free/unregulated economies” to “most heavily regulated economies,” and comparing outcomes from different sides of the spectrum.  There are several indices which have done this.  One of them is the “Economic Freedom of the World” rankings done by the Cato Institute and their Canadian counterpart the Fraser Institute; another is the “Index of Economic Freedom” compiled by the Heritage Foundation and Wall Street Journal.  Another one is the State of World Liberty Index, which defined liberty as “"the ability for the individual to live their lives as they choose, as long as they do not infringe on the rights of others to do the same.” It’s not an exact science and we can certainly nitpick, but by and large these ratings systems agree with one another about how relatively free or regulated a nation’s economy is.  For instance, Hong Kong, Singapore, New Zealand, Switzerland, and Canada each rank highly on these measures, whereas Eritrea, Venezuela, Uzbekistan, Syria and North Korea each rank very poorly.



The results?   On each of these indices, there is a tremendous correlation between more economic liberty (aka LESS centralized state regulation**) and more economic prosperity, especially relative to other nations in their same region.  Cato summarizes their findings:


“Nations in the top quartile of economic freedom had an average per capita GDP of US $41,228 in 2014, compared to US$5,471 for bottom quartile nations. Moreover, the average income of the poorest 10% in the most economically free nations is about twice the overall average income in the least free nations. Life expectancy is 80.4 years in the top quartile compared to 64.0 years in the bottom quartile, and political and civil liberties are considerably higher in economically free nations than in unfree nations.”


This is as true in developing parts of the world as it is among the wealthy.  You mentioned Singapore’s success?  It ranks second in Economic Freedom!  Paying their public employees enough to deter corruption doesn’t mean it’s economy is characterized by strong central regulation; it’s been one of the freest markets on earth for decades now.



Estonia’s another country in a poor region that got relatively rich by following the free-market recipe.  I’ll quote directly from it’s Wikipedia page:  Estonia has the highest gross domestic product per person among the former Soviet republics.[10] It is listed as a "high-income economy" by the World Bank, is identified as an "advanced economy" by the International Monetary Fund, and is a member of the Organisation for Economic Co-operation and Development. The United Nations classifies Estonia as a developed country with a very high Human Development Index,[5] and the country ranks highly in measures of press freedom (3rd in the World in 2012[11]), economic freedom, political freedom and education.”



Even Sweden, believe it or not, is not as socialist as many people make it out to be.  Most of the economic progress Sweden has experienced since 1990 is a direct consequence of deregulation.  This Reason video explains:



Sweden adopted its famously progressive policies during the 1970s, but after years of sluggish economic growth the land of ABBA altered its course in the 1990s, adopting a host of free-market reforms, from deregulation to tax cuts.  Although much of the disco-era welfare state remains, economist Andreas Bergh credits the free market reforms with reviving his nation's economy. "Sweden is moving in the market economic direction," says Bergh.



Of course, none of those countries are AS libertarian as I would prefer, but if you want case studies about how less regulation is better than more, that’s as close as you’ll get.


**For sure, one of the biggest distinguishing traits between rich and poor countries is the presence of clearly established property rights.  For example, a Peruvian economist named
Hernando de Soto Polar has done a lot of work explaining how the inability to get a title or a deed to own land prevents the global poor from having a real address, and thus from getting credit or a loan and advancing their station.  We DO need the government to establish those fundamental property rights and enforce contracts to facilitate exchange; if you want to call that a regulation, fine, but to me it’s just a precondition for the market to even exist.


***

Inversely, there is EXTENSIVE evidence that strong, centralized regulatory schemes burden business and kill economic progress all across the world.  Here’s a good article from The Economist on that.



Here’s another source with some additional studies:



à a study done for the European Commission by economists at the University of Paris looked at public employment in 17 countries between 1960 and 2000. It found that for every public-sector job created, 1.5 private-sector jobs were destroyed.”



à a study of President Obama’s stimulus bill by Timothy Conley of the University of Western Ontario and Bill Dupor of Ohio State concluded that, while the stimulus created or saved some 450,000 government jobs, it destroyed or prevented the creation of more than twice as many private-sector jobs.



àHarvard’s Robert Barro finds a “significantly negative relation between the growth of real GDP and the growth of the government share of GDP.”



Here’s a list of heavily regulated economies which I would argue have seen their economic performance hampered as a result:



àGreece.  Greece’s collapse is famous by now, and almost entirely due to unrestrained growth of government’s role in the economy.  This video is a little melodramatic but essentially correct nonetheless.



àSpain.  This is perhaps my clearest example.  They are famous for stifling their businesses with obscene amounts of red tape – Jace and I studied abroad there together and I bet even he would admit that.  Then when they run out of tax dollars it sparks mass protests from people who don’t realize there’s simply not enough money to go around.



àFrance is also running out of other people’s money. As of 2012: “The budget has not been balanced for almost four decades. Many local authorities are deeply in debt. At 2.8 million, unemployment is at a 12-year high. State spending amounts to 54% of GDP. State debt stands at 85% of GDP and some analysts forecast that it could rise to 95% by 2014.


And historically, for certain, the radical departure from anything resembling market principles brought about by Francois Mitterand in 1981 caused economic disaster for France:



“Declaring that there was nothing wrong with dreaming, the Mitterrand administration declared war on finance, nationalising banks as well as big companies, state spending was boosted. Wages went up. Capital flowed abroad. Though some social measures such as the abolition of the death penalty brought lasting reform, the experiment ended in economic disaster as inflation soared, the franc was devalued and unemployment rose after the president was obliged to change tack, adopting policies that increased unemployment, slowed growth and lowered France's status vis-a-vis Germany.”



àIn Denmark, the welfare state is out of control and clearly dissuading work, making the country poorer. 



àArgentina has become poorer and poorer in direct proportion to how heavily regulated it has become.



Portugal and Italy are in the same boat.  I could go on.



In each of these cases, you might defend those countries as not so bad...OR you might counter that this isn't an argument against regulation overall, just me cherry-picking cases where the pendulum swung too far in the direction of socialism (an imbalance in your Yin-Yang, by analogy).  That's fine and a perfectly reasonable position to hold, but it then becomes your burden to provide examples in the opposite direction: where has a UNDER-regulation allegedly hurt the economy?



And before you argue the 08 crash, re-read the response I sent you to that a few months ago over messenger!!!

Finally, let’s get to the rest of your response.  You write:



“Why is this? Because privatization, as I mentioned, has a tendency towards corruption. Without strong regulation, monopolies arise, family/nepotism & ownership is centralized within tribe-like structures.”



This is 180 degrees from the truth, for two reasons.  First, it is literally impossible for a privatized industry to be corrupt – if it’s truly private, there’s no government involvement by definition, and so nothing to be corrupted!  What you may refer to is partial privatization, which often happens with prisons or military contractors, where the government still PAYS for the thing with tax dollars, but the actual management of the activity is conducted by some private organization.  This is not libertarian!  I usually oppose such arrangements just as fiercely as you do.



But second and most importantly, strong regulation is NOT what prevents monopoly and nepotism; it is much more accurate to say it’s what CREATES monopoly and nepotism, thanks in large part to regulatory capture.  When politicians are bought and sold by private interests, regulations are those things they are selling.



As you’re probably aware, regulatory capture is the tendency of regulating agencies, first discovered by Chicago school economist George Stigler, to create regulations which favor the biggest and most established interests in the sector they regulate.  Over the years economists have gotten a better understanding of just how it happens, and the opening paragraph of this more recent UChicago paper describes that pretty well:



 “When economists talk about regulatory capture, they do not imply that regulators are corrupt or lack integrity. In fact, if regulatory capture was just due to illegal behavior, it would be easier to fight. Regulatory capture is so pervasive precisely because it is driven by standard economic incentives, which push even the most well-intentioned regulators to cater to the interest of the regulated. These incentives are built in their positions.  Regulators depend upon the regulated for much of the information they need to do their job properly. This dependency creates a need to cater to the information providers. The regulated are also the only real audience of the regulators, since taxpayers have all the incentives to remain ignorant. Hence, the regulators’ on the job performance will be naturally defined with the regulated in mind, pushing the regulators to cater to the interest of the regulated.  Finally, career incentives play a big role. The regulators human capital is highly industry specific and the best job for people holding that specific human capital are with the regulated. Hence, the desire to preserve future career options makes it difficult for the regulator not to cater to the regulated.”



Hopkins’ Steven Teles teaches a whole chapter on this, and so does the very-liberal Dean Baker who I had the pleasure to have a class with.  Regulators have such a specialized knowledge-base and skillset that they have well-blazed career paths right into the top of the companies they regulate, and accordingly have an incentive to not be a hard-ass and get blacklisted by those companies.



Here’s a long list of real-world examples of this happening in the US and other places:  https://en.wikipedia.org/wiki/Regulatory_capture#United_States_examples.

Another just off the top of my head is UPS and Fedex, where ground shipping and air shipping were regulated differently, and each was lobbying the government to tax their competition’s preferred shipping method more strenuously so they could gain market share.  Clearly this is not how companies compete with one another in a healthy economy.



Sometimes the regulatory agencies are actually even CREATIONS of the industry they supposedly regulate, because powerful companies see the potential benefit they could derive from borrowing the state’s power and actually lobby to have themselves regulated so they can write the rules. There’s good evidence this helped create the FDA, for instance: at the time it was founded, major US meat companies wanted to ship their product to Europe, but Europe had higher standards for meat.  To compete in Europe, these big companies had to increase their meat quality – but this would prevent them from competing here in the US, against smaller companies who could sell cheaper meat at lower qualities.  Creating the FDA allowed these big companies to force ALL meat providers to meet the higher standards, allowing them to compete in Europe without losing business here at home.



Long story short, regulatory capture is not an unfortunate, isolated aberration from the norm.  Regulatory capture is the rule.  As I said when you showed me the article by Johnson and Kwak about the Wall Street collapse:



“Corruption requires two complicit parties.  Libertarians are the first to agree that politicians are too cozy with Wall Street or corporate leaders, but that is a consequence of regulation!  Wall Street is just adjusting to the rules of the game.”



The stronger the government’s regulatory powers, the more those powers will be used to the benefit of the most powerful, often enlarging their profits and strengthening their already-dominant market share to the detriment of both consumers and their competition.  This is a recurring, foreseeable and inherent problem with regulation, not some kind of market failure!



Next you write: “Your idea is a top-down approach, that with less regulation, companies will do better & the success will trickle down to the people. It is widely regarded by the development community to have failed dramatically.  Trickle-down does not work.”

So trickle-down economics aren’t actually a thing.  They don’t exist!  Nobody supports it, and nobody ever really has.  Much like “neo-liberalism,” that term is a pure creations of the left, used exclusively by people who oppose the set policies they allegedly represent, and use them as hobgoblins to argue against those policies.

The set of policies you describe as the “Washington consensus,” though - low taxes, low regulation, private services – do indeed work, as I described above.

“Oh yeah and without any gov regulation, new companies in other countries can't compete with well-established global ones. This is why China, for example, has done so well since it has blatantly protected its economy from global companies, allowing them to develop before competing with others. The US has actually destroyed whole economies by promoting lack of regulation in other countries.”



Sheesh, now you sound like Trump!  Protectionism is probably the single most widely discredited idea in all of economics.  There are benefits to native companies, as you mentioned, but those benefits are more than outweighed by the cumulative harms to both foreign AND local consumers.  The reason China has done so well is closer to the opposite half of this argument: the explosion of international trade enabled by globalization and the decisions by rich trade partners like the US to decrees tariffs and regulations on their imports.  This enabling global economies of scale to emerge which have elevated almost a billion people from desperate poverty since 1970 in China alone.  If I get my way and free trade is promoted abroad, the same benefits will extend to India and other densely-populated third-world nations with surplus labor in the coming decades; if Trump or Sanders get their way, they will not, and those places will likely remain poor.