Walker

Walker joined Difficult Run as an editor in August 2013. He graduated from the University of North Texas with an MBA in Strategic Management and a BBA in Organizational Behavior and Human Resource Management. He's currently a grad student in Government at Johns Hopkins University. He has been published in SquareTwo, BYU Studies Quarterly, Dialogue, Graziadio Business Review, and Economic Affairs. He also contributed to Julie Smith's (ed.) 'As Iron Sharpens Iron: Listening to the Various Voices of Scripture'. His other online writing can be found at Worlds Without End and Times & Seasons. He lives in Denton, Texas, with his wife.

“The Eucatastrophe of Man’s History”

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Tolkien

In his famous essay “On Fairy Stories,” The Lord of the Rings author and Oxford professor J.R.R. Tolkien coined the term “eucatastrophe.” The word was meant to portray the opposite of tragedy and embody the “Consolation of the Happy Ending”:

The consolation of fairy-stories, the joy of the happy ending: or more correctly of the good catastrophe, the sudden joyous “turn” (for there is no true end to any fairy-tale): this joy, which is one of the things which fairy-stories can produce supremely well, is not essentially “escapist,” nor “fugitive.” In its fairy-tale—or otherworld—setting, it is a sudden and miraculous grace: never to be counted on to recur. It does not deny the existence of dyscatastrophe, of sorrow and failure: the possibility of these is necessary to the joy of deliverance; it denies (in the face of much evidence, if you will) universal final defeat and in so far is evangelium, giving a fleeting glimpse of Joy, Joy beyond the walls of the world, poignant as grief. It is the mark of a good fairy-story, of the higher or more complete kind, that however wild its events, however fantastic or terrible the adventures, it can give to child or man that hears it, when the “turn” comes, a catch of the breath, a beat and lifting of the heart, near to (or indeed accompanied by) tears, as keen as that given by any form of literary art, and having a peculiar quality (pgs. 22-23).

Being a devout Catholic and key figure in C.S. Lewis’ conversion to Christianity, Tolkien concluded his essay by writing,

I would venture to say that approaching the Christian Story from this direction, it has long been my feeling (a joyous feeling) that God redeemed the corrupt making-creatures, men, in a way fitting to this aspect, as to others, of their strange nature. The Gospels contain a fairy-story, or a story of a larger kind which embraces all the essence of fairy-stories. They contain many marvels—peculiarly artistic, beautiful, and moving: “mythical” in their perfect, self-contained significance; and among the marvels is the greatest and most complete conceivable eucatastrophe. But this story has entered History and the primary world; the desire and aspiration of sub-creation has been raised to the fulfillment of Creation. The Birth of Christ is the eucatastrophe of Man’s history. The Resurrection is the eucatastrophe of the story of the Incarnation. This story begins and ends in joy. It has preeminently the “inner consistency of reality.” There is no tale ever told that men would rather find was true, and none which so many sceptical men have accepted as true on its own merits. For the Art of it has the supremely convincing tone of Primary Art, that is, of Creation. To reject it leads either to sadness or to wrath…But this story is supreme; and it is true. Art has been verified. God is the Lord, of angels, and of men—and of elves. Legend and History have met and fused (pgs. 23-24).

Merry Christmas everyone.

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The Benefits of Globalization: Trade & Migration

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We sharply disagree with this dismal view of globalisation.

Image result for free tradeSo write three scholars drawing on their latest research on globalization. “Our recent research,” they continue,

indicates that the gains from trade and migration are tremendous and that the world stands to benefit greatly from their further liberalisation (Desmet et al. 2016). The problem with virtually all quantitative and empirical evaluations of trade and migration is their static nature. They completely ignore the dynamic gains from globalisation. As we will later discuss, these dynamic gains quantitatively dwarf any short-run costs. 

After providing the theory of growth behind trade and migration, the researchers present their jaw-dropping conclusions:

Completely lifting all migration restrictions would increase real world output by 126% in present discounted value terms. Since such a policy may be unrealistic, consider instead a reform that liberalises migration so that 10% of the world population moves at impact. This would yield a present discounted value increase in real world output of 14%. Such a reform would cause some extra congestion in Europe and the US, implying that average welfare would increase by 9%, a smaller but still impressive figure. It is hard to think about any other policy that could readily be applied at the world level for which estimated benefits are as large. Migration is uniquely powerful in generating positive effects. In economic terms, having an open-door policy is a no brainer, not because of some abstract theoretical arguments, but because the measurement of the relevant forces tells us so.

Turning back the clock on trade would have equally dire consequences. Increasing trade costs by 40% would lower real world output by 30% in present discounted value terms. Although globalisation might create losers in the short run, allowing the free flow of goods and people across regions and countries is still one of the best ways we know to ensure our long-run wealth and well-being.

These numbers are astronomical. The potential good that can come from liberalized trade and migration makes the rising nationalism all the more disheartening.

Minimum Wage Abroad

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Over at the World Bank’s Development Impact blog, doctoral candidate Andrés Ham looks at the effects of minimum wage hikes in developing countries. “Minimum wages in developing countries tend to be set higher, are less likely to be rigorously enforced, and labor markets are often segmented into formal and informal sectors with minimum wage policy only covering formal workers,” he writes.

Given these differences and that most developing countries implement minimum wage policies, understanding their consequences on labor markets is critical for economic growth, developing effective labor policy, and poverty alleviation.
 
My job market paper studies the impact of minimum wage policy on labor market outcomes and poverty in Honduras from 2005-2012 using repeated cross-sections of household survey data. The attributes of Honduran minimum wage policy and its labor market are similar to many developing countries, so the resulting conclusions from this case study may extend beyond its borders.

His results?

I find that a 10 percent increase in minimum wages reduces employment rates by about 1 percent. Because this result lumps formal and informal sectors together, it disguises the real effect: a significant change in labor force composition. The same minimum wage hike lowers the likelihood of employment in the formal sector by about 8 percent and increases the probability of employment in the informal sector just over 5 percent. The data indicate that individuals substitute wage earning jobs for self-employment as a direct consequence of minimum wage hikes. Wages in the formal sector increase but the observed influx of workers towards the informal sector leads to a negative net effect on informal sector wages.

Since informal sector jobs tend to be lower-paid part-time positions, average earnings in this sector often lie below formal sector incomes. Hence, there may be an adverse effect on individual well-being from these observed changes in labor force composition. To approximate the welfare effect of minimum wages, I estimate whether minimum wage increases help workers escape from extreme poverty. I find that a 10 percent increase in minimum wages has a negative but statistically insignificant effect on the risk of extreme poverty for the formal labor force. The same minimum wage hike significantly raises the risk of extreme poverty for the informal workforce by around 4 percent. This result indicates that on balance, higher minimum wages increase poverty.

I also find evidence that more formal workers are being paid less than the minimum wage. This occurs despite formal employers’ legal obligation to comply with minimum wages. Some non-compliance has always been observed in developing countries, mostly in response to imperfect enforcement from regulators (Rani et al. 2013). In Honduras, about one in three formal workers earns sub-minimum wages. As minimum wages increase, so does the level of non-compliance. I estimate that about 36 percent more formal sector workers, who should be receiving minimum wages, are underpaid by their employers.[ref]As Nathaniel pointed out to me, this indicates that Ham’s findings underestimate the negative impact of the minimum wage. If minimum wage laws were strictly complied with, the negative effects would be even greater.[/ref]

Ham concludes, “My findings imply that the costs of minimum wage increases outweigh their benefits in developing countries. The policy implication is that setting high minimum wages has detrimental effects on labor markets, well-being, and compliance.”

Hans Rosling: Combating Ignorance

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Hans Rosling

I’ve mentioned Swedish statistician Hans Rosling in a couple posts here at Difficult Run. A recent article in Nature[ref]Thanks to Robert Couch for the article.[/ref] takes a look at the influence Rosling is having throughout the world as a public intellectual. His graphics-based presentations[ref]See his site Gapminder.[/ref] of world poverty and health have helped audiences visualize the major changes that have taken place over the last couple centuries. Cognitive scientist “[Steven] Pinker admires the animations that Rosling uses. One, which depicts countries as bubbles that migrate over time according to wealth, life span or family size, allows viewers to grasp multiple variables simultaneously. “It’s a stroke of genius,” Pinker says. “He gets our puny human brain to appreciate five dimensions.”” Rosling’s approach was undoubtedly influenced by his feeling that

neither his students nor his colleagues grasped extreme poverty. They pictured the poor as almost everyone in the ‘developing world’: an arbitrarily defined territory that includes nations as economically diverse as Sierra Leone, Argentina, China and Afghanistan. They thought it was all large family sizes and low life expectancies: only the poorest and most conflict-ridden countries served as their reference point. “They just make it about us and them; the West and the rest,” Rosling says. How could anyone hope to solve problems if they didn’t understand the different challenges faced, for example, by Congolese subsistence farmers far from paved roads and Brazilian street vendors in urban favelas? “Scientists want to do good, but the problem is that they don’t understand the world,” Rosling says.

The whole article is worth reading. While some of Rosling’s academic colleagues may not appreciate his work, I certainly do. Combating ignorance about the state of the world is a worthwhile endeavor.

You can test your knowledge of the world with this quiz.

Did Mass Immigration Destroy Israel’s Institutions?

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The pro-institution case for increased immigration continues to get better. A new working paper by Benjamin Powell and others looks to Israel as a natural experiment. From the abstract:

The relaxation of emigration restrictions in the Soviet Union and the State’s subsequent collapse led to a large exogenous shock to Israel’s immigrant flows because Israel allows unrestricted immigration for world-wide Jews. Israel’s population increased by 20 percent in the 1990s due to immigration from the former Soviet Union. These immigrants did not bring social capital that eroded the quality of Israel’s institutional environment. We find that high quality political institutions were maintained while economic institutions improved substantially over the decade. Our case study finds that the immigrants played an active role in this institutional evolution and we also employ a synthetic control to verify that it is likely that the institutions improvement would not have occurred to the same degree without the mass migration.

The authors conclude,

This finding in no way proves that in every case unrestricted migration would not harm destination country institutions. However, as a complement to Clark et. al. (2015) that found in a-cross country empirical analysis that existing stocks and flows immigrants were associated with improvements in economic institutions, it should increase our skepticism of claims that 26 unrestricted migration would necessarily lead to institutional deterioration that would destroy the estimated “trillion dollar bills” that the global economy could gain through much greater migration flows (pgs. 25-26).

The Garden of Enid: AuthorCast with Scott Hales

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This is part of the DR Book Collection.

Image result for the garden of enidWhile Bill Watterson’s Calvin & Hobbes touched on childhood and life experience more generally, cartoonist Scott Hales delves into the details and nuances of Mormonism’s unique and somewhat odd culture while capturing the same kind of magic described above. His new graphic novel–The Garden of Enid: Adventures of a Weird Girl, Part One–follows the thoughts and experiences of Enid: a witty, contemplative, socially-awkward (“weird”) 15-year-old Mormon girl. The hilarity of the strips stems from the portrayals of embarrassingly familiar situations faced by young Mormons: stake dances, boring teachers, YW camp, EFY, etc. Reading them feels like being in on an inside joke. Their depth, however, emerges from the moments of loneliness, uncertainty, reflection, and flickers of human connection. For me, the heart of the graphic novel is summed up in Enid’s exchange with her McConkie-loving seminary teacher who dismisses her “weird questions” in favor of a supposedly “simple”, “black and white” gospel. By contrast, the God Enid believes in is a “colorful” one “who likes weird questions.” Similarly, life is not “black and white.” It’s not even gray. It’s vibrant.

The Garden of Enid is what it is to be an American Mormon in microcosm. Even though the main character is a Mia Maid, Enid’s experiences can resonate with Mormons of all ages and genders. For me, Enid is that ward member that you have an unexpected, but incredibly moving moment with; that member who totally “gets it” when you’re unable to put on a smile at church. But she also–like Calvin–can model what not to do and how to cut oneself off from others. Like the best comic strips, Enid allows you to both laugh and reflect. And it’s a nice reminder that not only is God colorful, but so is life.

You can see my full review (from which the above is taken) at Worlds Without End. You can listen to cartoonist Scott Hales interviewed on Greg Kofford Books’ AuthorCast here.

Climate Change and Economic Growth

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Philosopher Joseph Heath has an enlightening working paper on the economics and ethics of climate change. Heath is emphatic that his goal is

not to make a case for the importance of economic growth, but merely to expose an inconsistency in the views held by many environmental ethicists. Part of my reason for doing so is to narrow the gap somewhat, between the discussion about climate change that occurs in philosophical circles and the one that is occurring in policy circles, about the appropriate public response to the crisis. One of the major differences is that the policy debate is conducted under the assumption of ongoing economic growth, as well as an appreciation of the importance of growth for raising living standards in underdeveloped countries. The philosophical discussion, on the other hand, is dominated by the view that ongoing economic growth is either impossible or undesirable, leading to widespread acceptance of the steady-state view. This view is, however, a complete non-starter as far as the policy debate is concerned, because it is too easily satisfied. As a result, its widespread acceptance among philosophers (and environmentalists) has led to their large-scale self-marginalization (pg. 31).

Drawing on the economic research of economists Nicholas Stern and William Nordhaus, Heath proceeds to point out how misleading language often distorts and exaggerates the negative impact of climate change:

Stern adopts a similar mode of expression when he suggests that “in the baseline-climate scenario with all three categories of economic impact, the mean cost to India and South-East Asia is around 6% of regional GDP by 2100, compared to a global average of 2.6%.” The casual reader could be forgiven for thinking that the reference, when he speaks of “loss in GDP per capita,” is to present GDP. What he is talking about, however, is actually the loss of a certain percentage of expected future GDP. In some cases, he states this more clearly: “The cost of climate change in India and South East Asia could be as high as 9- 13% loss in GDP by 2100 compared with what could have been achieved in a world without climate change.” The last clause is of course crucial – under this scenario, GDP will not be 9-13% lower than it is right now, but rather lower than it might have been, in 2100, had there not been any climate change…In other words, what Stern is saying is that climate change stands poised to depress the rate of growth. This type of ambiguity has unfortunately become common in the literature. An important recent paper in Nature by Marshall Burke, Solomon M. Hsiang and Edward Miguel, estimating the anticipated costs of climate change, presents its conclusions in the same misleading way. The abstract of the paper states that “unmitigated climate change is expected to reshape the global economy by reducing average global incomes by roughly 23% by 2100.” The paper itself, however, states the finding in a slightly different way: “climate change reduces projected global output by 23% in 2100, relative to a world without climate change.” Again, that last qualifying clause is crucial, yet it was the unqualified version of the claim found in the abstract that made its way into the headlines, when the study was published (pgs. 15-16).

Heath acknowledges that

these potential losses are enormous, and they call for a strong policy response in the present. At the same time, what these economists are describing is not a “broken world,” in which “each generation is worse off than the last.” On the contrary, they are describing a world in which the average person is vastly better off than the average person is now – just not as well off as he or she might have been, had we been less profligate in our greenhouse gas emissions. It is important, in this context to recall that annual rate of real per capita GDP growth in India, at the time of writing is 6.3%, and so what Stern is describing is, at worst, the loss of approximately two years worth of growth. At the present rate of growth, living standards of the average person in India are doubling every 12 years. There are fluctuations from year to year, but the mean expectation of several studies, calculated by William Nordhaus, suggests that the GDP of India will be about 40 times larger in 2100 than it was in the year 2000 (which implies an average real growth rate of 3.8%). The 9-13% loss, due to climate change, is calculated against the 40-times-larger 2100 GDP, not the present one (pg. 16-17).

The full paper has more details and additional arguments. But this is the kind of serious cost/benefit analysis we need to be having about climate change.

Illiberal Reformers: An Interview with Thomas Leonard

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This is part of the DR Book Collection.

A few years ago, I took an interest in the history of the Progressive Era. This interest was peaked by conservative author Jonah Goldberg’s polemic Liberal Fascism and moved to more academic research during my undergrad. I studied the history the labor unions and the words and ideas of major progressive icons. One scholar whose work I came into contact with and continued to follow over the years was Princeton economist Thomas Leonard. I’ve known for the last few years that Leonard was working on a book that explored the relationship between progressive reformers’ economic agendas and their enthusiastic support of eugenics. Finally, his Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era was published this year through Princeton University Press.

The book meticulously demonstrates that the progressive impulse toward inflating the administrative state was driven largely by self-promotion (i.e, the professionalization of economists), racist ideologies (i.e., the fear of race suicide),[ref]Even seemingly good things like national parks had racist overtones.[/ref] and an unwavering faith in science. Not only should the “undesirables” of the gene pool be sterilized, but they should be crowded out of the labor force as well. Those considered “unfit” for the labor market included blacks, immigrants, and women. In order to artificially raise the cost of employing the “unfit,” progressives sought to implement minimum wage (often argued to be a “tariff” on immigrant labor), maximum hours, and working standard legislation.

There is far more in Leonard’s book, which not only provides keen insights into progressive economics, but provides an excellent historical overview of race and eugenics in the Progressive Era. Check out his interview on the podcast Free Thoughts below.

When Trigger Warnings Don’t Work

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“Related imageTrigger warnings” have been all the rage lately. They’ve sparked a national discussion, but what have they really accomplished? “What is a trigger warning?” asks Mariah Flynn, the Education Program Coordinator for the Greater Good Science Center.

The term, often used interchangeably with “content warning,” is a heads up that readers may encounter distressing content—and in recent years, trigger or content warnings have become controversial. To some, like University of Chicago administrators, such warnings keep students from being challenged or engaging with provocative course materials. Others feel that such warnings are useful tools that keep learners from having a strong emotional response to certain kinds of content, usually depicting physical or emotional violence.

For all of the excitement around trigger warnings, they’re actually quite rare. In an effort to gather more information about their use on college campuses, the National Coalition Against Censorship conducted a survey of over 800 educators from the Modern Language Association and the College Art Association—and found that only one percent reported that their institutions had adopted a policy on trigger warnings. Moreover, only fifteen percent of respondents said that students had asked for warnings.

In many respects, framing content warnings as a “censorship” or “free speech” issue is not helpful to professors or students. There is no evidence that they lead to the widespread suppression of troubling material or class discussion. At worst, warnings are merely gratuitous for a majority of students. At their best, however, content warnings can actually help students engage with course material and develop a caring relationship with their teachers.

So while some students may claim they are too “triggered” to read classical mythology, actual policies regarding trigger warnings are rare (even if campus politics are not). Yet, Flynn points out that

[a]bout three-fourths of us will experience trauma over the course of our lifetime. About ten percent of those people will develop post-traumatic stress disorder (PTSD), experiencing symptoms like flashbacks, memory gaps, depression, or hyper-vigilance.

Avoiding triggering topics—a very common strategy for people with PTSD—isn’t the best way to process traumatic events. Avoidance of triggers is a symptom of PTSD, not a cure. In fact, exposure therapy (a specific type of cognitive behavioral therapy where patients are exposed to physical or mental reminders of their trauma) is not only most common method for treating PTSD; it’s also one of the most effective.

This research might lead some to suggest that perhaps we don’t need to be so concerned about student’s exposure to triggering content, if exposure is the best way for them to process past traumatic events. However, exposure therapy works best under the care of a trained therapist. Even though exposure is an effective way to deal with PTSD, instructors aren’t therapists and the classroom is not an appropriate place for such a therapy.

Trigger warnings are also challenging to implement, because identifying potential triggers isn’t easy. Individuals with past trauma are often triggered by seemingly neutral things that have nothing to do with the content an instructor might present in class—the scent of a certain type of cologne or hearing a song associated with the traumatic event they experienced. Educators won’t always know what might trigger a student who is a victim of trauma and can’t possibly provide a warning for everything that might be a trigger.

Flynn suggests three ways of tackling the issue:

  1. Be upfront about what students can expect from your course.
  2. Consider alternative readings or activities.
  3. Offer information on other coping strategies and self-care.

There are ways to be sensitive to the experiences and mental health of students. Implementing trigger warnings doesn’t seem to be the most effective means of doing so, especially when the policy is hijacked by political agendas.

Historians vs. Economists: The History of Slavery

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Chiwetel Ejiofor as Solomon Northup in 2013’s ’12 Years a Slave’

A new article over at The Chronicle of Higher Education provides an excellent review of a controversy that has been brewing over the last couple years that should be of interest to those who care about history and economics. The controversy surrounds the new history of slavery and capitalism, marked by books like Johnson’s River of Dark Dreams, Beckert’s Empire of Cotton, and especially Baptist’s The Half Has Never Been Told. The main claim among these historians is that slavery was essential to American capitalism and the emergence of the Industrial Revolution. Economists and other social scientists are not convinced. “Most economic historians,” the article states,

have argued that “cotton textiles were not essential to the Industrial Revolution,” and that cotton production did not necessarily depend on slavery, according to [Dartmouth economist] Douglas A. Irwin…Summarizing economists’ thinking…Irwin points out that cotton was grown elsewhere in the world without slaves. Cotton production continued to rise in the United States even after slavery was abolished. “In this view, the economic rise of the West was not dependent on slavery,” Irwin says, “but came about as a result of an economic process described by Adam Smith in his book The Wealth of Nations — a process that depended on free enterprise, exchange, and the division of labor.”

Economists see the problem with the new histories on slavery as

stem[ming] in part from how the discipline of history has developed. In the ’60s and ’70s, historians and economists battled over economic history. But as historians turned toward culture, and economists became more quantitative, economic history increasingly became just a subfield of economics. For a variety of reasons, including the 2008 crisis, historians are turning their attention back to financial matters. But they “did not build up their tools in order to understand the material world,” says Rhode. “And they carry along certain ideological positions which they hold fervently and are not willing to test.” Historians, he says, “can’t be making stuff up.”

Historians, however, see economic history as too reductive:

“The problem is the economists left history for statistical model building,” says Eric Foner, a historian of 19th-century America at Columbia University. “History for them is just a source of numbers, a source of data to throw into their equations.” Foner considers counterfactuals absurd. A historian’s job is not to speculate about alternative universes, he says. It’s to figure out what happened and why. And, in the history that actually took place, cotton was extremely important in the Industrial Revolution.

Some economists who attack the new slavery studies are “champion nitpickers,” adds Foner…”They’re barking up the wrong tree. They’re so obsessed with detail that they don’t really confront the broader dynamics of the interpretations. Yes, I’m sure there are good, legitimate criticisms of the handling of economic data. But in some ways I think it’s almost irrelevant to the fundamental thrust of these works.”

The article is an excellent introduction to an important controversy in historical scholarship. Check it out.