Henry

Eugene Volokh points us to a new blog (no entries yet), which will be co-written by Gary Becker and Richard Posner. This provides a nice opportunity for casual empiricism in the cause of predictive social science. As perusors of the academic blogroll may notice, there are huge disparities between different disciplines (some of this is surely sampling error, but only some). There are lots and lots of philosophy blogs and law blogs, but many other academic disciplines, including economics, seem surprisingly under-represented in the blogosphere. I suspect that one of the important causal factors is legitimation. Junior academics may be unwilling to get involved in blogging. Not only is it a time-suck, but it may seem faintly disreputable – senior scholars in many fields of the social sciences take a dim view of ‘popularizing.’ However if there is a well known senior scholar in a discipline who blogs, it’s much easier for junior people in that discipline to dip their toes in the water without worrying that it’ll hurt their tenure chances. I suspect that this helps explain the explosion of philosophy blogs – the fact that Brian Leiter (who is responsible for a hugely influential ranking of philosophy programs) blogs lowered the entry costs for other philosophers; so too with law and the Volokhs. If I’m right, we should see an explosion in economics blogs over the next twelve months, now that Brad DeLong and other blogging economists have been joined by Becker, who’s as close to a household name as you can be in the dismal science.

I spent a chunk of the Thanksgiving Weekend reading Mark Blyth’s Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century, on which more later. Before doing a proper post, though, I want to point to an interesting claim that Blyth makes in passing; I’ve seen versions of this argument before, but never stated as punchily. Blyth argues that there is no very good reason why we should be worried about the general effects of inflation on the economy – the empirical evidence shows that there is no statistically significant relationship between growth and inflation for inflation rates under twenty per cent per year, as acknowledged even by inflation bears such as Robert Barro. The argument that moderate-to-highish rates of inflation create real economic costs is, at the very least, contestable. Yet low inflation is one of the shibboleths of modern macroeconomic policy. Why? Blyth’s explanation (borrowing from Brian Barry) goes as follows:

bq. Inflation acts as a redistributionary tax on holding debt. Stock prices stagnate and bond prices increase as bond holders demand a premium to guard against the effects of inflation. Investment is hit as inflation eats away at depreciation allowances and stock yields … In short, _inflation is a class specific tax._ Those with credit suffer while those with debt, relatively speaking, prosper. Given then that the benefits of inflation control (restoring the value of debt) are specific while the costs of inflation control (unemployment and economic decline) are diffuse, the reaction of business, particularly the financial sector, to inflation is best understood as the revolt of the investor class [italics in original]

Thus, Blyth argues that efforts to combat inflation are the result of rent-seeking by a small class of individuals (investors/creditors) with sharply defined interests who are able to push government to protect their investments even when this conflicts with the common weal. Creditors don’t want inflation – especially when it’s unexpected – while debtors benefit from it.I’m not a macroeconomist, but the basics of this argument seem plausible, even if you don’t agree with Blyth’s implied Keynesian alternative. Is there a credible alternative explanation of the clear anti-inflationary bias of most advanced industrial democracies, one that, for example, identifies real social benefits attached to low inflation? Arguments against hyperinflation don’t count, since the causal relationship between middling-to-high inflation and hyperinflation is at best underspecified.

MEMRI makes an inept attempt to intimidate Juan Cole.

bq. Dear Professor Cole,

bq. I write in response to your article “Osama Threatening Red States?” published on November 3, 2004 on antiwar.com. The article included several statements about MEMRI which go beyond what could be considered legitimate criticism, and which in fact qualify as slander and libel. … As such, we demand that you retract the false statements you have made about MEMRI. If you will not do so, we will be forced to pursue legal action against you personally and against the University of Michigan, which the article identifies you as an employee of.

MEMRI’s threat is strongly reminiscent of Donald Luskin’s threat of legal action against Atrios a while back. It seems to me (though I note that I’m not a lawyer) that the purported complaint is completely, utterly and entirely bogus. But like Luskin’s supposed complaint, the threat isn’t so much in the possibility of a successful action, as in outcomes related to that action. In Atrios’ case, the real threat was that his identity would be revealed, possibly landing him in difficulty with the university that employed him. Similarly, MEMRI’s threat seems to me to be more about trying to create difficulties for Cole with the University of Michigan than the nugatory possibility of an adverse judgement in court against him. There’s no remotely plausible theory under which the University of Michigan can be held responsible for Cole’s private activities or statements, even if they were libellous. However, a state-funded university would presumably prefer, all things considered, not to be embroiled in an action of this sort, however frivolous. Thus, the inclusion of University of Michigan in the complaint seems to me to be an inept class of an indirect threat to embarrass the university and thus perhaps put Cole in a tricky position. I’m glad to see that he’s treating it with the contempt that it deserves. Cole urges

bq. all readers to send messages of protest to memri@memri.org. Please be polite, and simply urge MEMRI, which has a major Web presence, to withdraw the lawsuit threat and to respect the spirit of the free sharing of ideas that makes the internet possible.

Another new blog that deserves some attention – IP-Watch, monitoring “the behind the scenes dynamics” of intellectual property. The politics of intellectual property is exceptionally murky and non-transparent – dubious deals done at the international level which are then presented as _faits accomplis_ to national publics. IP-Watch starts with a particularly good account of the shenanigans over the recent broadcasting negotiations. One worth visiting regularly.

Update: via BoingBoing, Jamie Boyle has written a nice polemic for the FT on how intellectual property policy is made.

My wife and I just bought our first jointly owned car – when we were negotiating the final details at the car dealership, they tried to use the hard sell to get us to buy Lojack, a vehicle recovery system. We didn’t bite (I don’t like hard sells), but I got to thinking afterwards that buying Lojack would have been an economically irrational contribution to a collective good (which is not to say, of course, that it would have been the wrong thing to do).

The system involves a difficult-to-detect tracer that’s put somewhere in your car – then, if the car is stolen, the police will have a much greater chance of recovering it and catching the thieves. The catch is, of course, that it doesn’t offer any visible deterrent to stealing your car – your only individual benefit is the somewhat dubious reward of getting your vehicle back, perhaps in several pieces after it’s been to the chopshop. However, Lojack offers real collective benefits if it works as the manufacturers claim. If you live in an area where there are lots of Lojack users, then car thieves are likely to be collectively deterred (or caught if they aren’t deterred).

The problem is, of course, that there will be a strong likelihood of underprovision of the collective good. If you live in a neighbourhood where there are lots of other Lojack users, then you have little incentive to buy it yourself – you can free ride on your neighbours. If you live in a neighborhood with few or no Lojack users, you still have little incentive to buy it – the marginal improvement that you make to general neighborhood security is of little value to you, compared to the substantial dollop of cash that you would have to pay to install Lojack. My musings came to an abrupt halt, however, when a Google search revealed that my clever idea had already been written up several years ago by Ian Ayres and Steven Levitt, who suggest that individual Lojack users get less than 10% of its total social benefits (I note for the record that Levitt not only comes up with fun ideas, which is no more than any decent blogger or punter can do; he really excels in finding unusual data sources to test those ideas). As Ayres and Levitt suggest, if you’re an economically rational actor, you should go instead for the Club, which shifts the risk from your car to your neighbour’s.

Duncan Black has it about right:

bq. The Dems should be going after the techno-lib vote by fighting against the Intellectual Property grab which is currently going on. Give people their porn, their Napster, and their unfettered Tivo. And, yes, I am respectful of genuine intellectual property rights but DMCA, the Mickey Mouse Preservation Act copyright extension and the inevitable progeny of both will soon make it impossible to say or do anything without handing over a license fee.

To which I can only add that the Democrats should be doing this anyway, because it’s the right thing to do. Just because the movie and music industry are ‘our’ plutocrats doesn’t mean that Democratic politicians should be supporting their attempted land grab. One of the few real rays of hope for the modern left is the public domain and Creative Commons movement. The left should be supporting what it’s doing – helping to create a free space for collective and individual endeavour. Handing the strangling cord to entrenched interests probably isn’t good politics; it’s certainly bad policy.

Nick Confessore makes a self-described crazy proposal.

bq. Imagine an endeavor under which the official Democratic Party sponsored a non-profit health-insurance corporation, one which offered some form of health insurance to anyone who joined the party — say, with a $50 “membership fee.” Since I’m not a health care wonk, I don’t know how you’d structure such a business, or what all the pitfalls might be, or even if such a thing is possible or desirable. But I can think of some theoretical advantages. The Democrats could put into practice, right away, their ideas for the kind of health insurance they think we all ought to have. They could build their grassroots and deliver tangible benefits to members. Imagine a good HMO, run not for profit and in the public interest, along the lines the Democrats keep telling us all existing HMOs and health care providers should be run.

I don’t know enough about health care to comment on whether this would work or not as a policy (I’m somewhat sceptical, but can’t give good reasons for my scepticism). I will note, however, that this is how European Social Democrats (and the Christian Democratic parties who sought to imitate them) generated mass appeal in the late nineteenth and early twentieth centuries. In the days before the welfare state, they provided an enormous variety of services to party members including health, life insurance etc etc. While Confessore’s idea may or may not be crazy, it’s by no means ridiculous.

A request aimed at those out there with halfway decent coding skills – somebody, somewhere, should write an MT-Disemvowel plugin for Movable Type. For those not familiar with the concept, disemvowelling, pioneered by Teresa Nielsen Hayden, is the most effective troll-repellent yet invented. You leave the troll’s comment up, but remove all the vowels from it. It can still be read by anyone who has a bit of patience, but makes the troll look rather ridiculous. So far, on the very few occasions I’ve had to use it, it’s worked absolutely perfectly. The only problem is that it’s a bit of a nuisance – it takes a couple of minutes to remove the vowels manually from the longer harangues. Seems like something that a not-very-complicated .cgi script could accomplish in a flash – anyone out there up to the task?

Update: gratitude and kudos to Novalis, who within eight minutes of the request reheated some previously existing code to create the Dsmvwllr.

While we’re on the subject of essayists and bloggers, I’ve always liked this bit from Samuel Johnson.

Mark Schmitt comments on how the Republicans in Congress have increasingly opted for getting the bare minimum vote necessary to pass legislation – 50% plus one. He notes that he’s “sure there is a whole body of political science literature on this question, and the rational choice model that dominates the field would probably predict exactly this behavior.” He’s right – the body of work in question is called minimum winning coalition theory. What’s interesting is that this theory is based on the hypothesis that politicians are only interested in divvying up the spoils of office – i.e. that they have no substantive interest in policy. Rational choice social scientists predict that actors may form wider coalitions than the minimum winning ones to pass legislation when they are genuinely interested in policy outcomes. Cue Sam Rosenfeld:

bq. There’s a mentality in the Republican leadership that if a significant number of Democrats support a bill somehow it’s tainted. …“Part of it goes back to the K Street thing, where they want to be able to say to their funders that the only people who can deliver anything for you are Republicans.” If House Republicans can make their Democratic counterparts irrelevant to the process of passing the nation’s laws, they can make them irrelevant to big political contributors.

Looks to me as though this particular hypothesis is getting some strong empirical support.

Now that Arafat is dead, it’s at least possible that Israel and the Palestinians will recommence negotiations. One important question is how the US can best try to encourage peace. During the election campaign, both Kerry and Bush tried to make clear their unconditional support for Israel. However, on one reasonable reading of the situation in the Middle East, promises of unconditional support may not be in Israel’s best interests.

[click to continue…]

For anyone planning to come along to the debate, there has been a venue change – the details are below. For anyone wanting to know what I’m going to say in response to the question, the short answer is ‘no, they didn’t.’

WHEN:
Thursday, November 18
7:30-9:00 pm

WHERE (note new location!):
Porter’s Dining Saloon
1207 19th St. NW (19th and M Street)
Washington, DC

Adam Posen at the IIE has an interesting article in today’s FT about the political motivations and consequences of Bush’s economic policy.[1] For me, the key quote:

bq. However, the Bush administration is putting its political staying power ahead of economic responsibility – indeed it is weakening the independence of those very institutions on which Americans rely to check economic radicalism. For example, the current Republican congressional leadership is trying to override the constitutional design whereby the Senate acts as a brake on the executive branch and on the self-interest of “majority faction”. Bill Frist, senate majority leader and George Allen, the Republican senate campaign committee chair, said their unprecedented direct campaign against Tom Daschle, the defeated Senate minority leader, should warn moderate Republican and Democratic senators not to be “obstructionist”, even though that is precisely what the Founding Fathers intended the Senate to do.

bq. … Markets tend to assume that the US political system will prevent lasting extremist policies so, even now, observers discount the likelihood of the Bush administration fully pursuing – let alone passing – this economic agenda. If the thin blue line of Democrats and the responsible Republican moderates in the Senate bravely fulfil their constitutional role, perhaps the damage will be limited. If not, we can foresee the US economy following the path to extended decline of the British economy in the 1960s and 1970s and of Japan in the 1990s.

I think that there’s an important message for the anti-Bush opposition here, if it can only articulate it clearly and simply. The current administration claims to be both conservative and strict constructionist; it’s neither. In fact, it’s trying to short-circuit the basic constitutional checks and balances of the US political system in order to ram through its agenda. The US apart, presidential democracies are extremely fragile, in large part because presidents tend to grab all power to themselves. This is exactly what the Bush administration is doing, both in its sweeping constitutional arguments about the extent of presidential privilege, and in its efforts to impose strict discipline on the Senate. This is something that shouldn’t only be worrying to lefties – it’s something that should be of deep concern both to serious conservatives, and to libertarians who are worth their salt.

fn1. No hyperlink because it’s behind their paywall.

One of the problems of writing about current affairs is that your claims are often overtaken by events. So it goes for the article that Dan Drezner and I have in the current issue of _Foreign Policy_. We said (accurately at the time of writing) that blogs in Iran have provided a partial substitute for reformist newspapers that have been shut down, and that “government efforts to [censor the Internet] have been sporadic and only partially successful.” The Iranian blogosphere is one of the very few inarguable cases of how the Internet can sometimes create more pressure towards democratization. However, almost immediately after our article went to press, hardliners in Iran began to crack down on reformist websites and blogs. Now that the anti-reformist elements in the government have decided to take action, I suspect that the outlook for political blogs in Iran isn’t very good, although outside protests and negative publicity may help limit the extent of the backlash (it’s worked, at least in part, in the past).