Friday, December 31, 2010

Repugnance

I described nine taboo topics on an earlier blog post, looking at ideas about society that would be difficult to discuss in public because they offend mainstream values - like the claim that greater access to pornography actually reduces sexual violence.

So I was interested to see the Freakonomics Blog exploring "repugnant ideas". Steve Levitt says:

Economists are pretty much immune to repugnance. Either by birth or by training, economists have their mind open, or skewed in just such a way that instead of thinking about something in terms whether something it’s right or wrong, they think about it in terms of whether it’s efficient whether it makes sense…and many times the things that are most repugnant are the things that are quite efficient — but for other reasons, subtle reasons sometimes, are completely and utterly unacceptable.

Wednesday, December 29, 2010

Coastlines, climate and coin

One approach to explaining why different regions have different levels of wealth looks at geographical advantages. The Gapminder Foundation explores this by plotting the wealth of every country in the world on a chart along with latitude and coloured by posession of coastline/landlocked. They find that there are no landlocked equatorial regions with high incomes: almost all wealthy countries have coasts and are far removed from the equator.

(The logic is broadly that equatorial regions have health disadvantages because of chronic diseases like malaria, as well as agricultural disadvantages because of rapid evaporation of water and so on. Coastlines are important for trade.)

Curious about this I found two maps that seem to support the idea that coastlines matter. First is this map of China, looking at GDP per capita in each of its provinces (in 1997):

The correlation here is strong, with coastal regions tending to be wealthier than inland regions.

Next is the US state map by per capita real GDP, from the Bureau of Economic Analysis:

All of the richest states except Wyoming are coastal while most of the poorest states have little or no coast. (The picture is not as clear as the Chinese map, though, with a large wealthy region west of the Great Lakes.)

When people ponder global wealth inequality they don't need to assume some kind of foul play or blame unfair trade systems. Inequality could be built into the soil nations are founded on.

Friday, December 10, 2010

Good times for weird ideas

One strange side-effect of the economic crisis is that extreme critics of society are using the failure of mainstream economics as evidence to support their radical alternatives. All these extremists had been predicting failure, for completely different reasons, for years so now that it has finally happened they claim credit.

A few examples:

The Communist Part of Ireland, describe the crisis as a failure of the "monopoly capitalist system — imperialism".

Al Qaeda gloated that the recession was caused by expensive "crusades" in Iraq, Afghanistan and Pakistan, and also by the secular abandonment of Allah's laws forbidding the charging of interest on loans.

All the people who put Ayn Rand's Atlas Shrugged into the best-selling list again presumably thought that socialism and government interventionism caused the crisis.

This dude blames the cessation of economic protectionism for America's economic problems.

Rajan Zed, president of the Universal Society of Hinduism, blamed "excessive human greed" for the crisis...

...As did Pope Benedict...

...And the Dalai Lama.

And so on. Lots of people are saying they told us so, yet for contradictory reasons. They can't all be right.

In Ireland the crisis has caused a rush for scapegoats and explanations, and here too there were lots of fringe groups who had been predicting failure for years. Judging by comments on Twitter and Facebook, by the rising support for the Labour Party in polls and by the discussions on television, the new star of the crisis is the centre-left, those who explain the recession as a failure of "light touch regulation".

They blame Ireland's supposed shift to the economic right, its loose financial regulation, its prioritising welfare for banks and corporations over welfare for the poor, for the present crisis. There is a spectrum there between far-left and centrist, but they all benefit from a wider anger towards (and scapegoating of) bankers, politicians and developers.

For them the solution will involve a mucher bigger government: higher taxes on the rich and on corporations, higher social welfare, greater redistribution of wealth, and much tougher regulations. One recent focus of this centre-left anger is at the government's policy of reducing minimum wage by one euro per hour.

Not long ago I shared most of their views, I also thought we needed greater redistribution of wealth and top-down regulation of markets. I gradually changed my mind when I read things like this.

Are Regulators Rational? is a paper by Slavisa Tasic applying psychological research to regulators of economies and societies. Tasic argues that most psychological analysis of economics has tended to focus on the irrationality of markets and market participants, yet they apply as well to those trying to tame and control markets. Tasic lists a number of ways that regulators may mismanage economies.

1) Action bias
Following a crisis leaders and regulators feel pressure from the public to do something. Around the world this most recent economic crisis was met with gigantic government stimulus packets and bailouts. In Ireland the government was panicked into guaranteeing deposits in private banks, placing the entire state in danger. Regulators feel they must do something, yet doing nothing may be less harmful.

The Iraq War may be another example of action bias, with governments deciding that something had to be done, scared into aggressive action by the threat exposed by 9/11.

2) Motivated Reasoning
Regulators are as prone as the rest of us to subconsciously favour policies which bolster their own strength and influence. Other specialists behave in the same way: Tasic explains how economists may favour an economic system that involves lots of government intervention since that is going to create demand for well-educated economists to oversee it.

Regulators or economists who argue that there is no reason for regulation or controlled economies are putting themselves out of a job. It is in their interests to promote more regulation.

3) Focusing illusion
Economies are highly complex, but people tend to focus on, and overestimate the importance of, individual factors in the overall situation. The immediate benefits of a particular intervention are clear, but knock-on side-effects are not.

For example, when the state rescues a large business from collapse it saves lots of people from unemployment. However the money used to protect that company is taken from other tax-payers who suffer from the intervention. Also that large company's rivals, who are also employers, are now at a disadvantage.

Lobby groups focus on their particular area of interest, yet their desired regulation may have negative side-effects on the wider public.

4) Affect heuristic
This is the connection in human psychology between reason and emotion. In politics it is related to confusion between good intentions and good results. Tasic points out that modern society is mainly driven by self-interest, quoting Adam Smith in 1776:

it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Despite this, public discourse often focuses on good intentions instead of good results. Demands for greater foreign aid, welfare and regulation all come from positive desires to improve the world, but some may actually make it worse.

Tasic is off-hand about the minimum wage argument going on in Ireland today, insisting that it increases unemployment as "many of the workers that would otherwise work for a wage smaller than the new legal minimum now become or remain unemployed".

A final example is the well-intended Americans with Disabilities Act which, he says, increased the cost to employers of firing people with disabilities so they simply decided to avoid employing them in the first place, increasing unemployment for the group.

5) Illusions of competence
Seeing and understanding simple surface mechanisms in science or economics, people regularly feel wrongly confident that they actually understand the entire process. Overconfident regulators believe that they truly understand how the economy works, and that they are able to manipulate it.

Amusingly, Tasic points to studies connecting greater knowledge with greater humilty and an appreciation of the unknown. Physics novices are worse at assessing the difficulty of a physics problem than experienced physicists, he says. A truly knowledgeable person is one who understands better the limits of his or her knowledge.

As a consequence, those people who volunteer to control economies and societies, and claim to understand them, must be especially ignorant people, unaware of their own ignorance.

Today in Ireland we have people confidently demanding new regulations and expanded state interventions, unaware even of their own inability to regulate wisely. These, by Tasic's logic, are the last people we want in power.

Tasic's ideas are interesting but it is difficult to know what the implications are for a preferred system of government and regulation. I suggest three possibilities:

a) Libertarian/anarchistic
If we cannot understand the consequences of regulation then perhaps we should regulate as little as possible. One danger here, however, is that we also cannot predict the consequences of the massive deregulation needed to get there. So perhaps a better alternative is:

b) Conservatism
Things aren't so bad now, so perhaps we should simply keep things as they are. The global environment keeps changing, however, and that may make today's laws and regulations obsolete. From the 17th to 19th centuries Japan's Tokugawa government almost entirely sealed its borders from foreign trade, even executing fishermen who had been rescused by foreign ships and returned to Japan. This seclusion helped Japan develop economically and avoid war but left it highly vulnerable to the high-tech weaponry of the Western powers, and was abandoned utterly in the mid-19th century. So another alternative is:

c) Trial and error
A pragmatic approach, trying out new ideas and discarding them if they don't work. One problem is that interest groups may benefit from policies that harm the economy as a whole and lobby against their withdrawal. The fury in many European countries over austerity budgets that cut welfare spending shows how difficult it is to reverse regulations and interventions once passed.

There may be no simple solution. But I am certainly not charmed by the populist demands for drastically increased government regulation and spending. There may still be wisdom in Henry David Thoreau's observation in 1849:

"That government is best which governs least."

Tuesday, December 7, 2010

AIDS decrease: a puzzler

There have been two loudly disagreeing views on how to reverse the AIDS pandemic in Africa. One focuses on condom use and safe-sex educational programmes. The other emphasises abstinence and monogamy.

Enter Uganda, whose strongly decreased AIDS prevalence prompted commentators from either side to claim credit.

So which group is right?

I was browsing the UN Department of Economic and Social Affairs, Population Division, when I came across their national estimates for women from 15 to 49 who are "married or in union" and currently using condoms, or whose partners are using condoms. (Click Contraceptive Prevalence here.) Results:

Uganda 1995: 0.8%
Uganda 2001: 1.9%
Uganda 2005: 1%
Uganda 2006: 1.7%

Now at its height, in 1991, AIDS prevalence ran at around 15% of all adults in Uganda. Yet these UN figures show that only four years later, in the middle of a prolonged decline in AIDS, less than 1% of women in relationships were using condoms.

So that's a puzzler. It seems unlikely that condom use could have reversed the rise of AIDS if hardly anyone was using them.

There are caveats: the UN statistics above might be stronger if they included men or women not in "marriage or union". Also a major factor for the improvements in Uganda is the grisy fact of high death rates among the afflicted: if people die before they get the chance to spread the disease then the disease naturally declines.

Also, the US Agency for International Development does show rising sales of condoms in Uganda, from less than one million in 1991 to around 23 million in 2000. Yet Uganda had a population of around 24 million in 2000, so even then the average person (if we assume only adults are buying condoms and Uganda has a young population) must only have bought a handful of condoms over the course of the entire year. There don't seem to have been enough condoms in use to explain the decline of AIDS.

Thursday, December 2, 2010

The march of the dinosaurs

The political term "conservative" differs in meaning from place to place as populations look back on different historical golden ages.

In the 2000s the US experienced a wave of "neo-conservatism" as George W Bush rose to power and took on ambitious democracy-building ventures abroad. The movement was controversial and political opponents quickly demonised it as the brutal and logical conclusion of right-wing conservativism: cutting taxes on the rich and sinking into debt to fund foreign imperialistic wars.

Yet the neo-conservatives emerged initially from the left, from social-democrats who had become disillusioned with the massive social programmes of the 1960s. As the neo-cons grew in power their ideas about American politics became the dominant ideas of the right. This rise of ex-socialist rightists left behind some of the other conservatives. From the remnants rose paleoconservativism.

Chronicles: A Magazine of American Culture is one of the main paleoconservative publications, and an astonishing glimpse into this perspective.

First the paleoconservatives have a very conservative emphasis on good manners. To them, the crude posturing of right-wing pundits like Glenn Beck is repulsive, as is the crass hedonism of the grasping rich. They complain about an alleged decline in old-fashioned politeness.

Paleoconservatives worship Christ, not the dollar and certainly not the flag ("to pledge allegiance to a flag is idolatry"), and many are Christian to the point of anti-secularism. They dismiss the modern liberal consensus over the rights of homosexuals and of abortion, seeing traditional Christianity as a central influence on American civilisation.

One great clash with Republicans comes in foreign policy: paleoconservatives favour American military withdrawal, even isolationism. For one, they are sceptical of the ability of governments to truly win their ambitious foreign wars, particularly their attempts to install democracies in regions with no heritage of democracy. Some paleoconservatives, though, hold a simple contempt for the various foreign peoples Americans find themselves fighting over. Islam is seen as a threat, Muslims as aggressive, traditional enemies to Christian civilization. The idea of fighting for Muslims in the Balkans or Middle East seems absurd.

Yet the paleoconservatives also reject the strong pro-Israeli stance of Republicans, and they sometimes criticise neo-conservatives for their simplistic and jingoistic anti-European or anti-French perspectives. They want to abandon Israel to its own struggles; the US should simply slash its military, forget its interventionism around the world, stop acting like an empire.

Instead manpower should be shifted back to protecting America's borders, from immigrants. The paleoconservatives are bitterly opposed to liberal border controls and see the flooding of Latin Americans and Asians into the US as a disaster: "mass immigration is a greater threat to the survival of our country than any terrorist campaign possibly could be."

They also want to control the flow of trade over borders, taking a more protectionist view of economics than the free trade-obsessed Republicans. Internally they oppose the welfare state and corporate bailouts for big business, instead favouring capitalism, albeit capitalism that adheres to local tradition. Think family corner shops, not Walmart.

Unlike other right-wingers who delight in economic growth and the social and demographic change that this causes, the paleoconservatives are truly conservative, nostalgic for a better time. Clyde N Wilson writes this interesting piece on things he misses in the US today. His list includes "my city without mosques and Hindu temples", seeing only American cars on the roads, an absence of illicit drug use, intelligent journalism and "finding a motel not operated by someone named Patel." This is nostalgia, unhappiness with modern life and with the immigration of Asians. Wilson wrote about missing simple things too, polite and hard-working students, buttermilk, postage stamps "with dignity and educational value" and so on.

The paleoconservatives sometimes like old things simply because they are old, emphasising tradition, bemoaning the shallow, the commercial and immoral messages of Hollywood. Instead of a powerful, imperial United States that stretches its military across the world and injects its hedonistic, soulless culture into foreign countries, they want an isolated US, Christian, peaceful, protected, traditional, European, abandoning both hip liberalism and arrogant neo-conservatism alike. Aggressive American nationalism is sometimes dismissed too, though, for nationhood should come from real personal ties with family, community, church and ethnic tradition, linking identity to a much more local patriotism than a pan-American nationalism.

They often reject the kneejerk liberal response to race-related issues. Here Tom Landess explains that many American heroes like Thomas Jefferson and Abraham Lincoln were openly racist, arguing that the modern southern states - constantly attacked for racism - are the least racist in the country.

They also reject the libertarian movement:

The tendency, if not the actual argument, of libertarianism in the last 50 years has been to deny that Soviet communism was ever a threat, to embrace mass immigration, to endorse global free trade, to abandon and ridicule both nation and religion, and to welcome the deliberate destruction of traditional culture and morality by whatever forces (in the state or outside it) are waging war against them.

These traditionalists of course clash with feminists. Thomas Fleming argues that the traditional woman had a respected place in the home while modern women are forced to work horrible and degrading jobs:

When women did hard work outside the home, it was because they had to. They were the victims either of some terrible economic decline or of liberal capitalism’s destruction of the social networks of Christendom. Many women who do servile and menial work today are in even worse condition, because they have internalized their servitude and are proud of clerking in a store or teaching violent hooligans in a public school.

One comment below that article describes a meeting of feminists at a restaurant in 1983. A rubbish barge floated past them on the nearby river, steered by a woman. The feminists all cheered, the woman ignored them, implying that feminism was: "a few busybody termagents make a lot of money at foundations or activist groups deconstructing civilization, while real women are forced by poverty to pick up their garbage."

The paleoconservative world view is often supported by quite detailed historical analysis. Articles explore the fall of the Roman Empire, seeking comparisons with modern USA, or the Englightenment philosophers and their impact on the Founding Fathers.

The paleoconservatives argue among themselves over these points, but these are broadly representative of the movement. It stands apart self-consciously from the mainstream conservative movements in the US, quick to distance itself from them and denounce their perceived flaws. Still, to modern liberal discourse their views are often obnoxious: racist, sexist, xenophobic and fearful. There would be little time for them in most mainstream media but that, of course, is precisely why it's worth reading them a little now and then.