In January 2019, I started my MA program in Government at John Hopkins University. With homework taking up a more significant amount of my time, my blog-related research is certainly going to suffer. Instead of admitting defeat, I’ve decided to share excerpts from various assignments in this series. I was inspired by the Twitter feed “Sh*t My Dad Says.” While “Sh*t I Say at School” is a funnier title, I’ll go the less vulgar route and name it “Stuff I Say at School.” Some of this material will be familiar to DR readers, but presenting it in a new context will hopefully keep it fresh.
Below you’ll find links to all posts in the series.
I’m going to bring in some resources that push back against Rodrik.
A 2008 paper finds that Rodrik’s “analysis does not adequately address a significant factor that is important in accounting for China’s superior export performance. This factor is the regional trade and production integration mediated by foreign direct investment (FDI) in East and Southeast Asian economies. A close look at the role of FDI in connecting China with other Asian countries to form a regional trading network would improve the understanding of the characteristics of China’s trade structure and the challenges China faces in international trade” (pg. 100). In my view, Liang’s paper actually highlights the importance of trade and integration contra Rodrik’s somewhat dismissive attitude toward it. Yet, this may still be overestimating the “specialness” of China’s exports. A 2010 paper also points out that Rodrik relies on China’s average per capita GDP (PCGDP) to determine the “specialness” of its exports, yet “China’s coastal provinces, which account for over 90% of China’s exports, have an average PCGDP level 1.5 to 2 times that of China’s overall PCGDP. Without taking this into account, one would underestimate the export capability against which the relative export sophistication is evaluated.” What’s more, “although many of China’s exported goods belong to sophisticated categories, they may well be the low-quality varieties” (pg. 483). When these factors are controlled for, the “specialness” of China’s exports declines.
Rodrik is right to point out that China’s growth has largely been under what many call “state capitalism.” Yuen Yuen Ang’s work has traced the co-evolutionary development between markets and institutions within China. But as one of her book’s reviewers notes, the bureaucratic corruption that played a role in spurring market-oriented growth may end up holding it back. (The good thing is that recent evidence suggests that market reforms and anti-corruption reforms create a virtuous cycle.) However, what I find so odd about Dani Rodrik’s somewhat heterodox position on globalization is that he seems to think that because China has experience incredible growth in the midst of its government’s heavy-handedness, the answer for development is state intervention. He basically watches communist China grow once it begins to liberalize its markets and his response is, “Developing countries need more state intervention.”
Economists like Acemoglu and Robinson don’t deny that economic growth can occur under extractive institutions. It’s just that it can’t last in the long run. This is why openness is so important. As David Weil demonstrates,
Our first approach is to see how growth rates compare in open and closed countries…First, the average growth rate of income in the closed group, 1.5% per year, was significantly lower than in the open group, 3.1% per year. Second, among the economies that were closed some or all of the time, there is no observable relationship between the initial level of a country’s GDP and its subsequent rate of growth. Among the countries open to trade, by contrast, we find strong evidence of convergence:Poorer countries that are open tend to grow faster than richer countries. Putting the results in the two figures together, we can see that poor countries that are open to trade grow faster than rich countries, and poor countries that are closed to trade grow more slowly than rich countries. Our second approach to exploring the effect of openness on growth is to consider how changes in a country’s degree of openness affect growth rates. If within a particular country, a change in trade policy (a trade liberalization or the imposition of new trade restrictions) is followed by a change in the growth rate of output, this pattern can supply us with evidence about the way trade affects income.One of the most sweeping examples of trade liberalization comes from 19th-century Japan. In the 12 years after Japan ended its self-imposed economic isolation in 1858, the value of Japanese trade with the rest of the world rose by a factor of 70. The opening to trade is estimated to have raised Japanese real income by 65% over two decades, and put the country on a path of growth that would eventually cause it to catch up to European levels of income…This same effect of trade liberalization has occurred in the 20th century as well. In South Korea, following a sweeping liberalization of trade in 1964–1965, income grew rapidly, doubling in the next 11 years. Similarly, Uganda and Vietnam experienced rapid growth in the 1990s, following their integration into the world economy.In all these examples, increased openness led to higher growth. Conversely,when we look at cases in which openness decreased, we see evidence that lower growth followed. For example, the trade embargo instituted by President Thomas Jefferson in 1807–1809 spawned widespread unemployment and bankruptcy in the United States. Similarly, the wave of tariff increases throughout the world in 1930, including the U.S. Smoot-Hawley tariff, contributed to the severity of the Great Depression of the 1930s (pg. 327-329).
Weil, 2013, pg. 307.
Given the evidence above, I think China and other developing countries would do well to open their economies more.
After listening to [Benjamin] Ginsberg‘s lecture, do you agree with his assessment that politics is all about interests and power?
The Stuff I Said
Kevin Simler and Robin Hanson’s recent book The Elephant in the Brain demonstrates that these underlying desires for power and status inform many of our decisions and behaviors in everyday life. Politicians certainly do not transcend these selfish motives by virtue of their office. I would actually add a subcategory to “status”: moral grandstanding. We want to paint ourselves as “good people” by signaling to others our superior moral quality. This allows us to enjoy the social capital that comes along with the improved reputation. We not only gain status, but we can also think of ourselves as do-gooders; crusaders who fight the good fight. Unsurprisingly, evidence suggests that we have inflatedviews of our own moral character and that acts of moral outrage are largely self-serving. What’s unfortunate is that social media may be exacerbating moral outrage by making signaling both easier and less costly to the individual.
I think the rise of populism in both America and Europe is a timely example of interests at play. While various elements contribute to the populist mindset, economic insecurity is the water it swims in. And this insecurity has been exploited by politicians of more extreme ideologies across multiple countries. For example, the Great Recession eroded European trust in mainstream political parties: a one percentage point increase in unemployment was associated with a 2 to 4 percentage point increase in the populist vote. A 2016 study looked at the political results of financial crises in Europe from 1870 to 2014 and found that far-right parties were the typical outcome. In America, President Trump made “Make America Great Again” his rallying cry, feeding off the public’s distrust of “the Establishment” during the post-crisis years. In doing so, he advocated protectionism and tighter borders. Oddly enough, you find comparable populist sentiments on the Left: Bernie Sanders has been very anti-trade and iffy on liberalized immigration (open borders is “a Koch Brothers proposal“), all in the name of helping the American worker. One of his former campaign organizers–the newly-elected Congresswoman Ocasio-Cortez–has also expressed similar concerns over trade deals (especially NAFTA). This is why The Economist sees less of a left/right divide today and more of an open/close divide. Skepticism of trade and immigration wrapped in “power to the people” sentiments may be invigorating in rhetoric, but it’s asinine in practice. And it’s doing nothing more than riding the wave of voter anxiety. What’s worse, it’s hiding these politicians’ accumulation of power, attainment of status, and moral self-aggrandizement behind what Ginsberg so aptly calls “the veneer of public spiritedness.”
More Stuff
A classmate asked if I believed that politicians always acted in self-interest or if there were moral lines that some would not cross. In response, I pointed out that Simler and Hanson are largely arguing against what they see as the tendency for people to tiptoe around hidden motives and self-deception. It’s not that we’re only motivated by selfish motives. We just tend to gloss over them. But they are deeply embedded. Failing to acknowledge them not only has personal consequences, but public ones as well (their chapter on medicine is especially on point). I think we should consider moral motivations through all possible means available, including life experience and behavior. However, I think a healthy dose of skepticism is necessary. It can certainly help protect us against intentional deception. But perhaps more importantly, it helps protect us against unintentional deception. It’s easy to give more weight to life experience, moral principles, and the like when it’s a politician on “our side,” all while harshly judging those on “the other side” as unscrupulous. Political skepticism or cynicism can aid in keeping our own selfish motives and emotional highs in check. And it can lead us to seek out more information, improve our understanding, and refine our beliefs. Otherwise, we end up being consumed by our own good intentions and moral principles without actually learning how to implement these principles.
My classmate also put forth a hypothetical to get a feel for my position: if legislative districts were redrawn so that legislators now represented districts with a different ideological makeup, how many would change their positions on issues just to stay in power? Personally, I think we would see a fair number of politicians shift their position because it is more advantageous. However, there is considerable evidence that political deliberation with ideological opposites actually backfires. Political philosopher Jason Brennan reviews the evidence in chapter 3 of his book Against Democracyand finds that political deliberation:
Undermines cooperation
Exacerbates conflict when groups are different sizes
Avoids debates about facts and is instead driven by status-seeking and positions of influence
Uses language in biased and manipulative ways, usually by painting the opposition as intrinsically bad
Avoids controversial topics and sticks to safe subjects
Amplifies intellectual biases
There’s more, but that should make my point. So even if some politicians did not flip flop in their newly-drawn districts, the above list should give us pause before we conclude that their doubling down is proof of disinterest in status or moral grandstanding.
I certainly believe that people have moral limits and lines they will not cross. My skepticism (which I prefer to the word cynicism, but I’m fine with interchanging them) is largely about honest self-examination and the examination of others. For example, consider something that is generally of no consequence: Facebook status updates. My Facebook feed is often full of political rants, social commentaries, and cultural critiques. Why do we do that? Why post a political tract as a status? It can’t be because of utility. A single Facebook status isn’t going to fix Washington or shift the course of society. It’s unlikely to persuade the unsaved among your Facebook friends. In fact, it’s probably counterproductive given our tendency for motivated reasoning. When we finally rid ourselves of the high-minded rationales that make next to zero sense, we find that it boils down to signaling: we are signaling our tribe. And that feels good. We get “Likes.” We get our worldview confirmed by others. We gain more social capital as a member of the group. We even get to moral grandstand in the face of that friend or two who hold (obviously) wrong, immoral beliefs. Sure, some of it may be about moral conviction and taking a stand. That certainly sounds and feels better. But I think we will all be better off if we realize that’s really what those behaviors are about: sounding and feeling good. And I think our politics will be better off if we apply a similar lens to it.
And More Stuff
A classmate drew on Dan Ariely’s work to argue that people–including politicians–have a “personal fudge factor“: most people will cheat a little bit without feeling they’ve compromised their sense that they are a “good person.” When people are reminded of moral values (in the case of the experiments, the honor code or 10 commandments), they don’t cheat, including atheists. So while politicians may compromise their values here and there, they still have a moral sense of self that they are unlikely to violate.
In response, I pointed out that a registered replication report last year was unable to reproduce Ariely’s results. That doesn’t mean his results were wrong, just that we need to be cautious in drawing any strong conclusions from them.
When discussing his priming with the 10 Commandments on pg. 635, Ariely references Shariff and Norenzayan’s well-known 2007 study. This found that people behave more prosocially (in this case, generosity in experimental economic games) when primed with religious concepts. They offered a couple explanations for this. One hypothesis suggested that “the religious prime aroused an imagined presence of supernatural watchers…Generosity in cooperative games has been shown to be sensitive to even minor changes that compromise anonymity and activate reputational concerns” (pg. 807). They then cite studies (which later studies confirm) that found people behaving more prosocially in the presence of eye images. “In sum,” the authors write, “we are suggesting that activation of God concepts, even outside of reflective awareness, matches the input conditions of an agency detector and, as a result, triggers this hyperactive tendency to infer the presence of an intentional watcher. This sense of being watched then activates reputational concerns, undermines the anonymity of the situation, and, as a result, curbs selfish behavior” (pg. 807-808). In short, religious priming makes us think someone upstairs is watching us. This has more to do with being seen as good.
However, religious priming obviously doesn’t work for the honor code portion. Yet, Shariff and Norenzayan’s other explanation is actually quite helpful in this regard: “the activation of perceptual conceptual representations increases the likelihood of goals, plans, and motor behavior consistent with those representations…Irrespective of any attempt to manage their reputations, subjects may have automatically behaved more generously when these concepts were activated, much as subjects are more likely to interrupt a conversation when the trait construct ‘‘rude’’ is primed, or much as university students walk more slowly when the ‘‘elderly’’ stereotype is activated (Bargh et al., 1996)” (pg. 807). Being primed with the “honorable student” stereotype, students were more likely to behave honorably (or honestly).
In short, Ariely’s study I think shows a mix of motivations when it comes to behaving morally: (1) maintaining our self-concept as a good person, (2) fear of being caught and having our reputation (and the benefits that come with along with it) damaged, and (3) our susceptibility to outside influence.
My point about moral grandstanding is not that we should interpret all behaviors by politicians through the lens of self-delusion and status seeking. But being aware of it can help us cut through a lot of nonsense and avoid being swept up in a collective self-congratulation. To quote Tosi and Warmke, “thinking about grandstanding is a cause for self-reflection, not a call to arms. An argument against grandstanding shouldn’t be used as a cudgel to attack people who say things we dislike. Rather, it’s an encouragement to reassess why and how we speak to one another about moral and political issues. Are we doing good with our moral talk? Or are we trying to convince others that we are good?” And as philosopher David Schmidtz is said to have quipped, if your main goal is to show that your heart is in the right place, then your heart is not in the right place.
I started my MA program in Government at John Hopkins University this past month. Homework is therefore going to take up a lot of my time and cut into my blogging. Instead of admitting defeat, I’ve decided to share excerpts from various assignments in a kind of series. I was inspired by the Twitter feed “Sh*t My Dad Says.” While “Sh*t I Say at School” is a funnier title, I’ll go the less vulgar route and name it “Stuff I Say at School.” Some of this material will be familiar to DR readers, but presenting it in a new context will hopefully keep it fresh. So without further ado, let’s dive in.
The Assignment
A recent Pew study showed that millennials are less religiously affiliated than any other previous cohort of Americans (sometimes called the rise of the “nones”). Given the emphasis Tocqueville places on the role religion plays in creating a culture that helps to keep democracy in America anchored, analyze these developments through Tocqueville’s viewpoint[.]
The Stuff I Said
Tocqueville would likely have a strong affinity for Baylor sociologist Rodney Stark’s research on religion. Stark’s sociological analysis of religion takes a similar approach to Tocqueville, acknowledging that the religious competition and pluralism (i.e., religious free market) that resulted from religion’s uncoupling from the state produces a robust, dynamic religious environment. He puts it bluntly in his book The Triumph of Faith: “the more religious competition there is within a society, the higher the overall level of individual participation” (pg. 56). It is the state sponsorship of churches, he claims, that has contributed to Europe’s religious decline.
I was struck by the claim in the lecture that 95% of Americans attended church weekly in the mid 19th-century because it contradicts the data collected by Stark and Finke:
On the eve of the Revolution only about 17 percent of Americans were churched. By the start of the Civil War this proportion had risen dramatically, to 37 percent. The immense dislocations of the war caused a serious decline in adherence in the South, which is reflected in the overall decline to 35 percent in the 1870 census. The rate then began to rise once more, and by 1906 slightly more than half of the U.S. population was churched. Adherence rates reached 56 percent by 1926. Since then the rate has been rather stable although inching upwards. By 1980 church adherence was about 62 percent (pg. 22).
Tocqueville might also be more optimistic about the state of America’s religious pulse. For example, Stark has criticized the narrative that often accompanies the “rise of the nones”:
The [Pew] findings would seem to be clear: the number of Americans who say their religious affiliation is “none” has increased from about 8 percent in 1990 to about 22 percent in 2014. But what this means is not so obvious, for, during this same period, church attendance did not decline and the number of atheists did not increase. Indeed, the percentage of atheists in America has stayed steady at about 4 percent since a question about belief in God was first asked in 1944. In addition, except for atheists, most of the other “nones” are religious in the sense that they pray (some pray very often) and believe in angels, in heaven, and even in ghosts. Some are also rather deeply involved in “New Age” mysticisms.
So who are these “nones,” and why is their number increasing–if it is? Back in 1990 most Americans who seldom or never attended church still claimed a religious affiliation when asked to do so. Today, when asked their religious preference, instead of saying Methodist or Catholic, now a larger proportion of nonattenders say “none,” by which most seem to mean “no actual membership.” The entire change has taken place within the nonattending group, and the nonattending group has not grown.
In other words, this change marks a decrease only in nominal affiliation, not an increase in irreligion. So whatever else it may reflect, the change does not support claims for increased secularization, let alone a decrease in the number of Christians. It may not even reflect an increase in those who say they are “nones.” The reason has to do with response rates and the accuracy of surveys (pg. 190).
Finally, Tocqueville was right to recognize the benefits of religion to society. As laid out by Stark in his America’s Blessings (pg. 4-5),the religious compared to irreligious Americans are:
Less likely to commit crimes.
More likely to contribute to contribute to charities, volunteer their time, and be active in civic affairs (a recent Pew study provides support for this last one).
Happier, less neurotic, less likely to commit suicide.
Living longer.
More likely to marry, stay married, have children, and be more satisfied in their marriage.
Less likely to abuse their spouse or children.
Less likely to cheat on their spouse.
Performing better on standardized tests.
More successful in their careers.
Less likely to drop out of school.
More likely to consume “high culture.”
Less likely to believe in occult and paranormal phenomena (e.g., Bigfoot, UFOs).
Overall, I think Tocqueville would be pleased to see data back up his observations.
More Stuff
A classmate pointed to a recent study claiming that when one controls for social desirability, the amount of atheists in America possibly rises to over a quarter of the population. The study is certainly interesting, though I wonder if this would hold up in other countries. Based on Stark’s The Triumph of Faith, these are the following average percentages of atheists across the world:
Latin America: 2.5%
Western Europe: 6.7%
Eastern Europe: 4.6%
Islamic Nations: 1.1%
Sub-Saharan Africa: 0.7%
Asia: 11.3%
Other (Australia, Canada, Iceland, New Zealand): 8.4%
As for the unaffiliated Millennials, unchurched and irreligious are two different things. A Pew study from last year found that 72% of the “nones” believe in some kind of higher power, with 17% believing in the “God of the Bible.” Even 67% of self-identified agnostics believe in a higher power, with 3% believing in the “God of the Bible.” But unchurching can lead to other forms of spirituality. The Baylor Religion Survey has found, perhaps surprisingly to some, that traditional forms of religion and high church attendance have strong negative effects on belief in the occult and paranormal. In other words, a regular church-goer is less likely than a non-attendee to believe things like Atlantis, haunted houses, UFOs, mediums, New Age movements, alternative medicine, etc. This is probably why Millennials are turning to things like astrology, alternative medicine, healing crystals, and the like.
Based on a new analysis of a 2001 Swedish reform, it appears so:
The effect of employment protection legislation (EPL) on employment is theoretically ambiguous. Increased firing costs make employers both less prone to dismiss workers and less inclined to hire them, as employers anticipate these potential costs already in their hiring decisions (Bertola, 1999). In accordance with the theoretical prediction, empirical evidence on the overall employment effect is mixed (see, e.g., OECD, 2013, and Skedinger, 2010, for surveys).
…There is ample evidence, based on various types of data and identification strategies, suggesting that stricter EPL indeed hurts the employment prospects of vulnerable groups, like women, youth, immigrants, the low-skilled, and the disabled…Unlike previous work in this field, we focus on the employment prospects of the unemployed and participants in active labor market programs (ALMPs). We examine a reform of seniority rules in Sweden in 2001 that affected small firms only. Seniority rules – or last-in first-out – imply that dismissals should occur in reverse order of seniority…We investigate whether the liberalization of EPL made employers in small firms more willing to hire “wild cards”, with little previous experience. Seniority rules are also likely to increase the average productivity of dismissed workers, thus making unemployment less of a stigma and increasing the hiring rate of unemployed workers, as argued by, e.g., Baumann (2010) and Kugler and Saint-Paul (2004).
…Our results indicate that the reform increased the share of workers hired from unemployment by 5-10 percent, depending on specification. We obtain mixed results concerning transitions from ALMPs to employment following the reform. The findings suggest an increase in transitions for programs focusing on preparatory training by 5-11 percent. The reform appears to have decreased the share of workers hired from subsidized employment, albeit only for certain firm size categories. No effect is found on transitions from longer unemployment spells to employment. Finally, we note that the increase in the share of workers hired from unemployment and ALMPs seems to be driven primarily by those with some college education (pg. 1-3).
In short, “a less stringent EPL made it easier for employers to allow for more uncertainty regarding the productivity of workers in their hiring decisions” (pg. 14). They note that “the [Swedish] reform may not have been far-reaching enough to have any favorable effect on the employment of the long-term unemployed and those in subsidized jobs, for whom the stigma is arguably more severe. The increase in workers hired from short-term unemployment and preparatory labor market programs may have adversely affected the remainder of the labor market, crowding out the employment of some of the most marginal groups” (pg. 15).
You find similar results with minimum wage hikes. You can protect the (slightly) higher-paying jobs of the already employed at the expense of the lower-skilled, lower-educated unemployed or you can make lower-paying jobs more accessible to the most vulnerable.
With yet another Oxfam report out, Swedish author Johan Norberg felt the obligation to point out its deficiencies:[ref]The following is based on a Bing translation.[/ref]
There are two rules to stick to when someone reports that the rich are getting richer and the poor poorer. The first is to check the source. The second is that if the track shows that the information comes from OXFAM, you can throw it in the trash. Few organizations have such a consistent habit of misleading about the world’s prosperity.
The fact is that poverty is decreasing dramatically regardless of the degree of poverty that is used. According to the UN and World Bank’s measures of extreme poverty, it has fallen from 18.1 to 8.6% between 2008 and 2018. It is the biggest economic lift in history.
So how can Oxfam get it to the poor become poorer? Firstly, they ignore the income and consumption, and count only financial assets, which the poor rarely have – often they do not even have a bank account. And although some have it, there will not be much left in total when you deduct all the debts they have from this amount.
It enables OXFAM every year to shock journalists by saying that a single billionaire owns more than two billion people together. The problem with the reasoning is just that my daughter – who owns about 500 kronor – owns more than two billion people together, because these two billions do not have any net financial assets at all.[ref]Others have had similar criticisms over the years.[/ref]
Or, as he said on Twitter a couple years ago:
Norberg then cites some recent research on global earnings inequality. The researchers explain,
We focus exclusively on labour earnings, which is the main income source for the vast majority of the world’s population (Hammar and Waldenström 2017). We create the first estimates of global earnings inequality, its trend between 1970 and 2015, and some evidence on its main drivers.
The estimation of the global earnings inequality rests on a unique earnings survey database run by UBS, a Swiss bank. It contains data on earnings, taxes, working hours, and local prices for workers in 15 representative occupations. The data have been collected in the same way every third year since 1970, in up to 85 cities in 66 countries, in all the world’s continents. We match it with occupational and country population data from the ILO and the World Bank. Our balanced sample covers more than 80% of the global population, and correlates well with statistics from other sources. It should be noted that the tails of the distribution are not well covered in our data, but imputations from other sources (top incomes from the World Wealth and Income Database, for example) suggest only a modest impact on the global earnings inequality trend.
Figure 1 [below] shows the main result – that global earnings inequality was very high in 1970 (with a Gini coefficient of around 70), but has fallen to a lower level today (around 60). The main equalisation occurred in the late 1990s and 2000s. Global pre-tax inequality is higher than global post-tax inequality (approximately 3 Gini points), and inequality is higher for hourly wages than for yearly earnings (approximately 1 percentage point). The latter suggests a negative relationship between earnings and hours worked at the global level. Compared with earlier studies on global inequality in income or consumption, we find that inequality in earnings and wages is slightly lower, but follows a similar trend.
Figure 1
They continue,
Decomposing the global earnings inequality trend within and between countries, we find that within-country inequality rose over this period (by 5 Gini points), while between-country inequality fell (by 15 points), leading to the combined effect of a 10-point fall in total earnings inequality. In Figure 3, we can also see that the main shift in both of these trends took place at almost the same time, during the early years of the 21st century. We also find that inequality within occupations has fallen, especially within the traded, industrial sector. This suggests that globalisation could be a potential driver of this earnings convergence trend.
They conclude,
Our new evidence on global earnings and wage inequality shows a falling trend over the past half-century. Similar to previous findings for global household income inequality, the main equalisation period was the late 1990s and 2000s. At this time several large, developing economies experienced high growth rates. Higher earnings in the agricultural sector, but also some low-skill urban professions, contributed specifically to this trend.
Another objection [to increased immigration] is what is known as the “epidemiological case,” which argues that immigrants may bring with them foreign values that undermine the culture and institutions of the host country. In essence, immigrants transmit to rich countries those elements that make their source countries poor. What makes this rather prejudiced argument all the more jarring is the fact that it has virtually no supporting evidence. Unfortunately, very little empirical research has been conducted exploring the impact of immigrants on cultural, political, and economic institutions at all. However, the research that is available should calm fears and actually provide reasons for optimism. For example, there is no association between growth of total-factor productivity (TFP) in rich countries and the ratio of migrants from low-income countries, indicating that migrants do not “contaminate” their new homes with the low productivity of their source countries.
The Canada-based Fraser Institute publishes its oft-cited Economic Freedom of the World report annually. Its indicator—known as the Economic Freedom of the World (EFW) Index—defines economic freedom based on five major areas: (1) size of the government, (2) legal system and the security of property rights, (3) stability of the currency, (4) freedom to trade internationally, and (5) regulation of labor, credit, and business. According to the institute’s most recent report (which looks at data from 2015), countries with more economic freedom had considerably higher per-capita incomes and economic growth. Relying on this index, a 2015 study found that a larger immigration population marginally increases the economic freedom of the host country’s institutions. No negative impacts on economic freedom were found. Several authors from this study looked at Israel during the 1990s as a natural experiment in mass migration. During the 1990s, Israel’s population grew by 20 percent due to immigrants from the former Soviet Union. Yet, instead of experiencing decline, Israel shot up “from 15% below the global average [in economic freedom] to 12% above it and improv[ed] its ranking among countries by 47 places.” Similarly, a 2017 study found that higher diversity—measured by levels of ethnolinguistic and cultural fractionalization—predicts higher levels of economic freedom. While this particular study mainly discusses development economics, the correlation between high diversity and high economic freedom is an important aspect of the immigration debate. Barring members of different ethnolinguistic groups from entering the country may actually be holding back economic development (pg. 95-97).
Research on Jordan provides further evidence for the position above. Another 2018 study piles on. Overall, the authors’
results don’t show any strong relationship between increases in immigration and less economic freedom, nor do they show any strong relationship between an increase in the share of naturalized US citizens and less economic freedom. Therefore, our results indicate that, so far, Borjas’s concerns about a deterioration in the quality of institutions following an increase in immigration are not supported by the empirical results as they apply to the US states (pg. 394).
There were mixed results when it came to minimum wage legislation and union density. In the cases where the effects are slightly negative, the authors explain,
In states with larger immigrant population shares, are the increases in minimum wages and union densities the result of immigrants pushing for higher minimum wages and joining unions at higher rates than native-born individuals (because immigrants’ wages tend to be lower than natives’ wages)? Or are they the result of native-born individuals unionizing and pushing for higher minimum wages as a way of pricing out and restricting immigrant labor market supply?[ref]There’s certainly evidence that this occurs.[/ref] It could be explained either way and both explanations probably operate. However, our results don’t necessarily indicate whether the negative impact on labor market freedom is coming more from immigrants or more from native-born citizens. Therefore, when we study the relationship between immigration and economic freedom, the results don’t tell us much about the direct impact immigrants may have (pg. 376).
If you think the only way to “Make America Great Again” is by keeping out foreigners in the name of protecting our institutions, you need to chillax.
I just finished reading A River in Darkness, the autobiography of a Korean-Japanese man who escaped from North Korea. It’s a tragic and engrossing read, but one detail that stuck out was the way that North Korean bureaucrats forced North Korean farmers to grow rice in ways that even a kid from urban Japan who had never studied agriculture knew were incorrect. (Basically, they planted the rice much too close together.)
It reminded me of another book, The Three-Body Problem, which depicted some of the real-life events of the Cultural Revolution in China, in particular “struggle sessions” in which Chinese professors were publicly humiliated and tortured by a mob in part for refusing to recant scientific principles that had been deemed incompatible with political doctrine.
Panchen Lama during the struggle session in 1964 (Wikipedia)
The communists in North Korea and China were in good company. Matt Ridley, in The Origins of Virtue, recounts the Soviet Union’s own peculiar war on science:
Trofim Lysenko argued, and those who gainsaid him were shot, that wheat could be made more frost-hardy not by selection but by experience. Millions died hungry to prove him wrong. The inheritance of acquired characteristics remained in official doctrine of Soviet biology until 1964.
So in North Korea they insisted on disregarding ancient agricultural knowledge because the Party knew best, up to and including triggering massive starvation. In China they executed, exiled, and fired an entire generation of trained scientists because the Party knew best. And in the Soviet Union they insisted on trying to create frost-resistant wheat by freezing the seeds first and created even more massive starvation. Genetics, quantum mechanics, and common sense: why did the Party think they knew so much?
Let me tell you what got me thinking about this. A friend of mine posted a link to this article from Duke University’s The Chronicle detailing that a graduate program director who urged foreign students studying at Duke to speak English has been forced to step down as a result of her advice. Now, I don’t have enough information about the outrage du jour to have a strong opinion about it. As a matter of basic ethics and common sense, it’s rude and counterproductive to go to a foreign country to study and work and then hang around other people speaking your own language instead of adopting the language of the country you’ve moved to. Of course there are exceptions and I don’t generally think it’s a good idea to enforce every aspect of etiquette and common sense with formal policies, but that’s not really the point. I don’t want to take a strong position on the Duke case because I don’t know or care that much about it.
On the other hand, my friend who posted the article knew everything there is to know about it. I will not quote from the post (it was not shared publicly), but she interpreted everything through the standard lens or racism / colonialism / privilege / etc. and as a result she had zero doubts about anything. She spoke with absolute confidence and black-and-white judgment. Then all of her like-minded friends piled on, congratulating her. She knew and they knew that there was one and only explanation, one and only one answer, and that it was obvious.
I tried to engage in some discussion, leading with a simple question: have you ever lived in a foreign country and did you insist on speaking your language there? Do you even speak a foreign language? She hasn’t, so she couldn’t, and she doesn’t. (I have, I could but I did not, and I do.) Instead of considering that her view might be wrong, however, she just called for another friend to come in because they were a specialist in linguistic imperialism. So, as far as I know, this friend also has zero relevant experience but has a bigger ideological toolbox to whack people over the head with. Other commenters–even when they were polite–were just as clueless, sharing stories about growing up in bilingual homes or teaching English as a second language at the elementary school level. What do either of these things–interesting as they may be in themselves–have to do with speaking English in a graduate program? Not a single thing.
There are two things going on.
First, radical ideologies are incredibly dangerous things because they enable stupidity on a massive scale. People embrace radical ideologies because they are powerful explanation-machines. Life confronts all of us with ambiguity, complexity, and uncertainty. Also, disappointment and difficulty. Radical ideologies are a perfect antidote to the ambiguity, complexity, and uncertainty. They are, functionally speaking, fulfilling the same role that conspiracy theories do. They don’t improve your life, they aren’t meaningfully accurate, but they make your life explicable. They turn all of the randomness into order. This doesn’t actually make your situation objectively better, but it makes it feel better.
This can be relatively harmless. Radical ideology, conspiracy theories, and superstition have harmless manifestations where they don’t really do anything except waste time in exchange for a false feeling of control. Sure, you might be throwing away money to get your palm read, but it’s not really hurting anyone, right?
Sure, but things get dicier when your kooky explanation-machine happens to target, say, vaccines. Or all of modern psychiatry. Or, heck, modern medicine from start to finish. Even in these cases, the damage is limited to mostly yourself and, in particularly tragic cases, maybe your kids.
But when the explanation-machine that you’ve adopted is a political ideology, we go through a kind of phase-change and things get much, much worse.
Unlike micro explanation machines–superstition and conspiracy theories, for example–political ideologies are macro explanation machines. They have two functions. The first is the same as micro explanation machines: to quickly and easily make your life experiences intelligible. But they don’t stop there. They have a second function, and that function is to accumulate power. And that’s where things go off the rails and we get industrial-scale stupidity enabling.
To illustrate this, we have to understand why it was that Marxists in North Korea planted rice too close together, or Marxists in China executed physicists, or Marxists in the USSR kept using psuedo-science to try and grow frost-resistant wheat. You see, it wasn’t just some kind of weird accident that happened to be harmful, in the way that some people cling to harmless conspiracy theories like Bigfoot and others cling to harmful ones like the anti-vax crowd. Nope, the Marxists in North Korea, China, and the USSR were following a script laid down intentionally and inevitably by Lenin and Stalin.
Here’s philosopher Steven L. Goldman’s recounting:
This imperialism of the scientific world view—that there is such an imperialism—has a kind of, let’s call it, acute support that one doesn’t ordinarily encounter from an odd quarter, and that is from V.I. Lenin and Joseph Stalin. Before he was preoccupied with becoming the head of the government of the Union of Soviet Socialist Republics, Lenin wrote a book called Materialism and Imperio-Criticism in which he harshly criticized Ernst Mach’s philosophy of science, and other philosophies of science influenced by Mach, that denied that the object of scientific knowledge was reality—that denied that scientific knowledge was knowledge of what is real and what is true.
Lenin strongly defended a traditional—not a revolutionary—but a traditional conception of scientific knowledge, because otherwise Marxism itself becomes merely convention. In order to protect the truth of Marxist philosophy of history and of society—in order to protect to the idea that Marxist scientific materialism is “True” with a capital “T,” Lenin attacked these phenomenalistic theories, these conventionalistic theories—that we have seen defended by not just Mach, but also by Pierre Duhem, Heinrich Hertz, Henri Poincare, at about the same time that Lenin was writing Materialism and Imperio-Criticism.
Stalin in the 1930s made it clear that the theory of relativity and quantum theory, with its probability distributions as descriptions of nature—”merely” probabilistic descriptions of nature—”merely” I always say in quotation marks—that these were unacceptable in a Communist environment. Again, this is for the same reasons, because Marxist scientific materialism must be true. So, scientific theories that settle for probabilities and that are relative, are misunderstanding that special and general theories of relativity are in fact absolute and deterministic theories.
The willful stupidity of Marxist-Leninist ideology is not an accidental byproduct. It is a direct consequence of the fact that radical political ideologies are not content to be one explanation-machine among many but–as organized political movements in a battle for power–have to fight to be the explanation machine. This leads directly towards conflict between Marxist-Leninist ideology and any other contender, including both science and religion.
When these macro explanation machines aren’t killing millions of people, the absurdity can be hilarious. Here’s Goldman again:
A curious thing happened, namely that Russian physicists of the 1930s, 1940s and even into the 1950s, in books that they published on relativity and quantum theory, had to have a preface in which they made it clear that this book was not about reality—that these theories were not true, but they were very interesting and useful. It was okay to explore, but of course they’re not true because if they were, they would contradict Marxist scientific materialism.
This is quite funny because back in the 16th century, when Copernicus’ On the Revolution of the Heavenly Spheres was published in 1543, it was accompanied—unbeknownst to Copernicus, who was dying at the time—that the man who saw it through publication was a Protestant named Andreas Osiander—who stuck in a preface in order to protect Copernicus, because he knew that the Church would be upset if this theory of the heavens were taken literally. We know Galileo was in trouble for that. We talked a lot about that. So Osiander stuck in a preface saying, “You know, I don’t mean that the Earth really moves, but if you assume that it does, then look how nice and less complicated astronomy is.”
Now, I’m a religious person. I don’t think there’s any unavoidable conflict between religion and science. But when religion becomes a political ideology–as it was in the days of Copernicus and Galileo–then it is functionally equivalent to any other macro explanation machine (like Marxist-Leninism) and you will get the same absurd results (and, more often than not, the same horrific death tolls).
So here’s what I’ve learned. Human evil is never dangerous when it’s obvious. All of the great evils that we recognize today–fascism, slavery, Marxist-Leninism–were attractive in their day. And not to cackling, sinister villains rubbing their hands together with glee at the thought of inflicting evil misery on the world. Ordinary people thought that each of these monstrous evils was reasonable and, in many cases, even preferable.
If you roll that logic forward, it implies that the greatest evils of our time will be non-obvious. The movement that in 40 or 50 years from now we will revile and disavow is a movement that seems respectable and even attractive to many decent and intelligent people today. It is a macro explanation engine that appeals to people individually because it brings order to their personal narratives and–because it is functioning in the political realm–it is a macro explanation engine that will seek to crowd out all competitors and will therefore be hostile not only to alternative political ideologies but also to micro explanation engines that function in totally disparate realms like religion in science.
And, precisely because it seeks to undermine all other explanation engines even when operating in domains where it has zero utility or applicability, it will be most easily recognized in one way: as a massive enabler of stupidity.
Because that’s what happens when you have a mighty hammer. You start to see nothing but nails.
I just started my first semester at John Hopkins this week and one of my classes is “Economic Growth: The Politics of Development in Asia, Africa and Beyond.” I was happy to see that I owned a few of the books on the “Recommended Reading” list and that virtually all of the authors I had read quite a bit from. As I reviewed the list of authors and resource, I was reminded of this blog post by economist Alex Tabbarok on Jeff Sachs’ plans for African development. Sachs believed that Africa needed a “big push” in public investment to escape the “poverty trap” and spur growth. This led to the Millennium Village Project in 2005. Tabarrok explains,
The initial MVP evaluation claimed great success but simply compared some development indicators before and after in the treated villages without comparing to trends elsewhere. In 2010 such a study was completely out of step with contemporary practices in impact evaluation. Red flag! Clemens and Demombynes showed that comparing to trends elsewhere significantly moderated the impact. A second MVP paper was published in the Lancet but then was quickly retracted when Bump, Clemens, Demombynes and Haddaddemonstrated that it had significant errors. Clemens and Demombynes wrote a summary piece on the controversy then in an astounding and under-reported scandal the MVP tried to stifle Clemens and Demombynes. The MVP, with Jeff Sachs at the head, also sicced their lawyers on Nina Munk and her book, The Idealist: Jeffrey Sachs and the Quest to End Poverty. More red flags.
Yet, despite all of this controversy and bad behavior, the MVP project continued to move ahead and in 2012, the UK Department for International Development (DFID) funded US $11 million into an MVP in Northern Ghana that ran until December 2016. Under the auspices of the DFID, we now finally have the first in-depth, independent evaluation of one MVP project and it doesn’t look great.
Overall, the MVP in northern Ghana did not achieve the overall MDG target to reduce extreme poverty and hunger at the local level. Where there are attributable changes to the MDG targets, these tended to be the more limited changes than those that will fundamentally improve people’s health, educational and other outcomes. For instance, the project did increase attendance at primary school (Goal 2) but did not go beyond this MDG and improve the learning outcomes of children; the project did increase the proportion of births attended by professionals and women said to be using contraceptive methods (MDG indicators), but it is not possible to assess the effect on maternal health (Goal 5); and the project did increase the number of toilets (a target under Goal 7), but not beyond this MDG in terms of hygiene and sanitation practices. There are, however, exceptions. The project had a remarkable impact on stunting, which is a long-term health indicator and a predictor of socioeconomic outcomes in adulthood (pg. 162).
Projects like these may have some positive results, but they ultimately look like more Western hubris.
The World Bank’s latest Doing Business report is out (check out the last coupleyears). The report “measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures labor market regulation, which is not included in this year’s ranking.”
It’s key findings are as follows:
Doing Business captured a record 314 regulatory reforms between June 2, 2017, and May 1, 2018. Worldwide, 128 economies introduced substantial regulatory improvements making it easier to do business in all areas measured by Doing Business.
The economies with the most notable improvement in Doing Business 2019 are Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Côte d’Ivoire, Turkey and Rwanda.
One-third of all business regulatory reforms recorded by Doing Business 2019 were in the economies of Sub-Saharan Africa. With a total of 107 reforms, Sub-Saharan Africa once again has a record number this year.
The BRIC economies—Brazil, the Russian Federation, India and China—introduced a total of 21 reforms, with getting electricity and trading across borders the most common areas of improvement.
The 10 top economies in the ease of doing business ranking share common features of regulatory efficiency and quality, including mandatory inspections during construction, automated tools used by distribution utilities to restore service during power outages, strong safeguards available to creditors in insolvency proceedings and automated specialized commercial courts.
Training opportunities for service providers and users are positively associated with the ease of doing business score. Similarly, increased public-private communication on legislative changes and processes affecting SMEs are associated with more reforms and better performance on the Doing Business indicators.
The World Bank notes, “The most popular reform is making it easier to start a business. More than a quarter of economies did just that in 2017/18. It now takes an average of 20 days and costs 23% of income per capita to start a business, compared to 47 days and 76% of income per capita in 2006. Thirteen of the top 20 economies have at least one procedure that can be completed online in half a day.”
