capitalism

Should White Men Stop Writing?

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863 - Blunt Instrument

That was the question a self-described “white, male poet—a white, male poet who is aware of his privilege and sensitive to inequalities facing women, POC, and LGBTQ individuals in and out of the writing community” asked at The Blunt Instrument (“a monthly advice column for writers”). Well, more specifically, he said:

It feels like a Catch-22. Write what you know and risk denying voices whose stories are more urgent; write to learn what you don’t know and risk colonizing someone else’s story. I genuinely am troubled by this. I want to listen but I also want to write—yet at times these impulses feel at odds with one another. How can I reconcile the two?

The response took a long, convoluted, and circuitous route to get where it was going, but the basic answer was simple: Yes, stop writing. Or, more specifically, you can go ahead and write all you like, but you should stop trying to get your works published.

Don’t be a problem submitter. When I edited a magazine, we got far more submissions from men, and men were far more likely to submit work that was sloppy and/or inappropriate for the magazine; they were also far more likely to submit more work immediately after being rejected. When you submit writing, you’re taking up other people’s time. Be respectful of that. I said in my last column that getting published takes a lot of work, which is true—but most of that work should take the form of writing, and revising, and engaging with people in the writing world, not just constantly sending out new work, which starts to look like boredom and entitlement.

Think of this as something like carbon offsets. You are not going to solve the greater problem this way, on your own, but you might mitigate the damage.

It’s vague enough for plausible deniability, but the logic is clear. The only way to “mitigate the damage” is to submit fewer works. Publish less.

This is the logic behind the social justice movement. It’s not always as clear cut as this, but it’s always there. For a fantastic article documenting just how long this mentality has been around, I recommend Privilege and the working class. I don’t agree with all of it (obviously, as it is printed in The Socialist Worker), but the analysis of nascent social justice warrior ideology (aka “privilege theory”) is spot on:

Third, white workers were blamed for systemic racism because their “privileges” came, purportedly, at the expense of Blacks: white workers got more because Blacks got less, and vice versa. This assumption bought into the liberal capitalist idea that the size of the share of the economic pie available to workers is fixed and highly limited, and that different sub-groups of workers must fight against each other to expand their shares. Privilege theory focused on workers battling each other for the same shares, rather than on their fighting together for a just division of the share appropriated by the bosses–that fight, in the form of shop floor and union struggles for class demands, was explicitly opposed.

The analysis of capitalism is tragically and catastrophically off-base, but the insight that the essentially divisive nature of SJW ideology is itself a statist (and therefore elitist) tool is entirely valid. Once you accept the premise that we are fundamentally divisible into racial, sexual, and other categories, the possibility for cooperation and synergy disappears and all that is left is fighting over scraps.

 

New Study: Inequality and Innovation Trade-Off

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Economist Stan Veuger has an article in U.S. News on the costs of redistribution. “Traditionally more common,” he writes, “but recently under sustained assault from the left, is the view that there are tough trade-offs to be made, and that while there may be a role for redistribution, it comes at a cost: It reduces innovation and growth. A new research paper…provides new theoretical and empirical support for this view.” He explains the theory:

The capitalists receive income from the firms they own that derives from their proprietary cutting-edge technology if they recently innovated or from generally available technology if it’s been a while since they or their parents did. The workers either receive wages or become capitalists themselves by innovating and replacing the incumbents. Mark-ups on products and services based on cutting-edge technology are higher than from generally available technology, so the more innovation there is, the more income goes to the capitalists. Of course, the more productive research and development there is, the more often new entrepreneurs join the capitalist class, and the higher social mobility is – unless barriers to entry keep entrepreneurs out. And if research and development is more productive, the economy grows faster, ultimately benefiting workers as well.

Now, what does the evidence show:

To measure innovation, they look at patents granted per capita, between 1975 and 2010, in all 50 states and D.C. When they relate that measure to year-by-year measures of the income share earned by the top 1 percent, they find what their model predicts: More innovative states are also more unequal. And that’s not just because the wealthy few file more patent applications. They exploit variation in innovation driven by whether states have members of Congress on Appropriations Committees and by innovation in other states that they interact with a lot to show that such quasi-experimental variation in innovativeness, not driven by the mere presence of wealth, also actually causes inequality. But only when we measure equality as the share of income that goes to the 1 percent – broader measures of inequality are not much affected; those appear to be the product solely of some of the other trends I mentioned before, like skill-biased technological change.

However, the trade-off is more social mobility:

Remember the social mobility stuff? Well that shows up in the data as well. Areas that innovate a lot show precisely the kind of Schumpeterian dynamics that make income inequality a lot more palatable to most observers who are not of the bitterly envious variety: There may be big gaps between rich and poor, but the poor today still have a reasonable shot at becoming rich tomorrow. And do you know what areas get a lot less of both innovation and mobility? Places with tons of lobbying activity, where the incumbents keep the innovators out. All in all this research suggests that some 20 percent of the increase in the share of income going to the top 1 percent since the mid-70s was caused by innovation alone. That may not sound like that much – but of course, we can’t just eliminate only the inequality we don’t like and keep the inequality that incentivized people to innovate.

This seems to fit with the Thomas Sowell quote above: there are no solutions, only trade-offs. This new study also fits with past research on cut-throat US capitalism vs. cuddly Nordic capitalism, top earners and skill-biased technological change, and Schumpeterian profits.

Forthcoming ‘Markets Without Limits’: An Excerpt

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Presidential candidate Bernie Sanders recently made headlines when he stated in an interview, “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.” Many have criticized the comment, while others have labeled it “one of the most substantive of the campaign so far.” Over at Bleeding-Heart Libertarians, philosopher Jason Brennan of Georgetown University responded to Sanders with an excerpt from the forthcoming book Markets Without Limits: Moral Virtues and Commercial Interests. I’m quite excited for this volume and those interested in economics and the morality of markets should be too. Here is a snippet:

Philosophers advocate that we do what economists say doesn’t work and avoid doing what economists say does work. On this point, [philosopher] Bas van der Vossen rebukes his colleagues:

As a profession, we are in an odd but unfortunate situation. Our best philosophers and theorists develop accounts of global justice that are disconnected from the best empirical insights about poverty and prosperity. Reading these theories, one might think that our best prospects for alleviating poverty around the world lie in policies of redistribution, foreign aid, reforms to the international system, new global institutions, and so on. And one might think that markets, property rights, and economic freedom are at best incidental, and more likely inimical, to the eradication of global poverty. Such ignorance, if not denial, of the empirical findings about development and growth is irresponsible.

We share van der Vossen’s concerns.

Mainstream development economics, in a nutshell, holds that the poverty is an institutional problem. More precisely, poverty is human being’s natural state. Poverty is normal and does not need to be explained, but wealth does. The main reason some nations are rich and others poor is not because some nations have better geography, better natural resources, or better genes. Rather, rich countries are rich because they have better institutions. Rich countries have institutions that incentivize growth and development. These institutions include strong private property rights, inclusive and honest governments, stable political regimes, a dependable and inclusive legal system characterized by the rule of law, open and competitive markets, and free international trade. Poor countries have institutions that fail to incentive growth and development, and often instead have institutions that encourage predation. These countries have weak recognition or active disregard of property rights, exclusive and dishonest governments, instable political regimes, undependable legal systems characterized by the capricious rule of men rather than the rule of law, and closed, rent seeking, crony capitalist markets, or few markets at all, and little international trade.

Check out the full excerpt and be sure to pre-order Brennan’s book. You can watch an interview with Brennan on his Why Not Capitalism? below:

The Capitalist Cure for Terrorism

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As the U.S. moves into a new theater of the war on terror, it will miss its best chance to beat back Islamic State and other radical groups in the Middle East if it doesn’t deploy a crucial but little-used weapon: an aggressive agenda for economic empowerment. Right now, all we hear about are airstrikes and military maneuvers—which is to be expected when facing down thugs bent on mayhem and destruction.

But if the goal is not only to degrade what President Barack Obama rightly calls Islamic State’s “network of death” but to make it impossible for radical leaders to recruit terrorists in the first place, the West must learn a simple lesson: Economic hope is the only way to win the battle for the constituencies on which terrorist groups feed.

So begins Hernando de Soto’s WSJ piece on economic freedom as a way to combat terrorism. He tells the fascinating story of his home country Peru and how it defeated the terrorist group Shining Path through a “new, more accessible legal framework in which to run businesses, make contracts and borrow—spurring an unprecedented rise in living standards.”

Worth the read.

Catholics Against Capitalism

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Kevin Williamson has an article over at National Review that expresses many of the feelings I’ve had regarding some of the more hostile, self-righteous religious critics of capitalism. The article discusses the recent “panel of Catholic intellectuals and clergy, led by His Eminence Oscar Andrés Maradiaga,” that was “convened to denounce a political philosophy under the headline “Erroneous Autonomy: The Catholic Case against Libertarianism.” The conference was mainly about free-market economics rather than libertarianism per se…” But as Williamson notes, “There is something about the intellectually cloistered lives of religious professionals that prevents them from engaging in anything but the most superficial way with the 21st-century economy.” But then he just lays it out:

The implicit economic hypothesis [of the panel] is that producing a certain amount of goods more efficiently — in this case, with less labor — makes the world worse off. (“Why not use spoons?”) The reality is the opposite, and that is not a matter of opinion, perspective, or ideology — it is a material reality, the denial of which is the intellectual equivalent of insisting on a geocentric or turtles-all-the-way-down model of the universe.

The increasingly global and specialized division of labor and the resulting chains of production — i.e., modern capitalism, the unprecedented worldwide project of voluntary human cooperation that is the unique defining feature of our time — is what cut the global poverty rate in half in 20 years. It was not Buddhist mindfulness or Catholic homilies that did that. In the 200,000-year history of Homo sapiens, neither of those great religious traditions, nor anything else that human beings ever came up with, made a dent in the poverty rate. Capitalism did.

Production and resources are important. “If the Good Samaritan had been the Poor Samaritan,” explains Williamson, “with no resources to dedicate to the stranger’s care, then the poor waylaid traveler would have been out of luck. All the good intentions that we may muster are not half so useful to a hungry person as a loaf of bread.” The fact that “men of the cloth, of all people, should be blind to what is really happening right now on the global economic scale is remarkable, ironic, and sad. Cure one or two people of blindness and you’re a saint; prevent blindness in millions and you’re Monsanto.” What is really happening is this: “there is no poverty in the capitalist world comparable to poverty in the early 18th century, much less to the poverty that was nearly universal in Jesus’ time. Our people are clothed, fed, and housed, and the few shocking exceptions, as with the case of the neglected mentally ill, are shocking because they are exceptions.”

It boils down to “how you intend to fulfill the Lord’s command to feed His sheep — with rhetoric or with bread…”

Dropping CO2 Emissions

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Hank Campbell at Science 2.0 has a great post on natural gas and climate change. After noting that the IPCC reported that methane has 23x the global warming effect as CO2 (though CO2 lasts longer), Campbell mentions a couple recent studies “that methane will cause global warming regardless of CO2″:[ref]Funny that few actually analyze the pros and cons of climate change, let alone the pros and cons of climate change policies.[/ref]

What changed? Well, CO2 emissions went down, and it wasn’t due to the $72 billion in taxpayer money which included solar panel subsidies or the afterthought of wind power or the other get-rich-quick schemes in alternative energy we have tried since 2009 – it even happened without nuclear power, the best and most viable zero-emissions energy of them all.  It also happened without banning existing energy. The big change instead came because America switched to natural gas, and that was thanks to science and the free market. Due to that switch, energy emissions haven’t looked this good in 20 years.  Coal emissions haven’t looked this good in 30 years.

Believe it or not, to environmental fundraisers, that is a really bad thing.

With CO2 emissions dropping, activists have started to wind up the machine against methane and they note it is worse than CO2 – without mentioning that it is short-lived or that it is the primary component in cleaner natural gas. Instead, ‘natural’ is being removed from the term completely and replaced with ‘shale’.

The answer to climate change according to many environmentalists is to just throw money at it:

Environmentalists…who know nothing at all about how real innovation works think they can just throw money at one thing and penalize another and capitalism magic happens. The real world, outside of academia and fundraising brochures, is a lot messier. Like evolution, innovation has starts and stops, sometimes it tries a few times and fails. What has never worked is assuming that if we spend 100X as much money, the process will go 100X as fast.

Environmentalists should be happy. Unfortunately, many are too busy worried about their pet agendas.

Manhattan Institute: New Volume on Income Inequality

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A brand new volume of essays on income inequality was recently published by the Manhattan Institute and is available for free online. Economist Diana Furchtgott-Roth introduces the volume with the following:

Claims of ever-increasing shares of wealth going to top earners are a perennial complaint. This year, partly due to the publication of Thomas Piketty’s Capital in the Twenty-First Century, discussions of inequality are preoccupying policymakers and political pundits.

Today Economics21.org is releasing Income Inequality in America: Fact and Fiction, a series of essays from leading experts on different aspects of measuring inequality. For Winston Churchill, inequality was an unavoidable part of economic life in capitalist societies. “The main vice of capitalism,” said the British Prime Minister, whose youngest daughter, Lady Mary Soames, died last weekend at the age of 91, “is the uneven distribution of prosperity. The main vice of socialism is the even distribution of misery.”

In conclusion, she states, “Empirical analysis shows that many commonly accepted ideas about income inequality are false or overstated. If policy recommendations are to be effective, they must be informed by an accurate picture of the current situation. Income Inequality in America: Fact and Fiction offers the empirical tools for such an analysis.”

Check it out.

The Inequality Illusion?

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Economists Wojciech Kopczuk and Allison Schrager have a Foreign Affairs article with the eye-catching title “The Inequality Illusion.” The two argue that “imposing a tax on wealth is a terrible way to promote equality. It actually benefits the super wealthy the most.” They continue:

What is not widely understood is that the growth in income inequality [in the U.S.] has been driven almost entirely by earned income, that is, what people are paid for their work rather than what they earn on their investments. 

Wealth inequality refers to the stock of people’s assets. It represents the accumulation of saved income and returns on investments over the years. Some wealth inequality is inevitable, even desirable, because wealth represents a lifetime of saving and not just luck or opportunity. Extreme income inequality can beget extreme wealth inequality because people with a lot of income, if they save, can amass large fortunes and pass them on to their children. But over time, such wealth can also dissipate as people leave it to multiple children, get married and divorced, develop expensive lifestyles, contribute to charities, or make poor investment decisions. Whereas income inequality has clearly worsened, the recent evidence about wealth inequality is much less convincing.

After reviewing a number of sources, they declare, “Taken together, then, the economic evidence points to increased earnings inequality but to a much more benign picture of changes in wealth inequality. Increasing inequality has been driven by income earners not necessarily by the entrenched wealth holders.”

Given the recent controversy over errors in Thomas Piketty’s data (errors that may or may not undermine his argument),[ref]The FT analysis is likely the most famous (update: Financial Times has a follow-up post), but others have found some major errors as well. For example, former chief economist for the U.S. Department of Labor Diana Furchtgott-Roth has pointed out Piketty’s errors in the history of the U.S. minimum wage. Economist Randall Holcombe has written on the “fundamental problems with the way [Piketty] depicts capital.” Inequality expert Scott Winship has two articles in Forbes that are also quite critical of Piketty. Economist Robert Murphy disputes Piketty’s tax history. In response to a recent Spectator article contrasting Deirdre McCloskey and Piketty, GMU economist Don Boudreaux writes, “[I]ndispensable to our modern prosperity is not only the innovative creation of capital but also the continual destruction of capital that such successful innovation entails…What is destroyed is not only some jobs (e.g., t.v. repairman) and the value of some consumer goods (e.g., crutches for polio victims) and services (e.g., postal delivery), but also the value of capital. Capitalism’s nature is not, contrary to Piketty’s claim, to forever protect and augment existing capital.  Central to capitalism’s nature is what McCloskey calls “market-tested innovation.”  And this innovation inevitably destroys the value of older, less-productive capital that is in competition with with it – in competition with the new capital, the new goods, the new production and consumption processes, and the new knowledge that innovative entrepreneurs create.” Update: A brand new paper out of Yale disputes Piketty’s “second law of capitalism.”[/ref] the above article is quite timely.

Check it out.

The Humanity of Markets

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This is an older Wall Street Journal article (from October 2010), but it’s one of those great articles that is at once intrinsically interesting and also really offers a glimpse into how us anti-social free-marketeers see the world: Why Some Islanders Build Better Crab Traps. The research is pretty simple: scientists found a way to quantify the complexity of crab traps made by various Pacific tribes, and then they compared complexity of traps to population size.

What they found was that the bigger the population, the more varied and more complex the tool kit was. Hawaii, with 275,000 people at the time of Western contact, had seven times the number and twice the complexity of fishing tools as tiny Malekula, with 1,100 people.

But it’s not just the size of the population on the island group that matters, but the size of the population it was in contact with. Some small populations with lots of long-distance trading contacts had disproportionately sophisticated tool kits, whereas some large but isolated populations had simple tool kits. The well-connected Micronesian island group of Yap had 43 tools, with a mean of five techno-units per tool, while the remote Santa Cruz group in the Solomon Islands, despite having almost as large a population, had just 24 tools and four techno-units.

This is what makes markets great: it’s a way of pulling together more people to cooperate, exchange information, and have a better life for everyone. Markets are, by their nature, impersonal but by that token so are penicillin and electricity. What matters in all three cases is the good they do for all of us.

Couple of minor corollaries: every now and then I’ll hear a serious academic talk about how things aren’t really better in the modern world. Like Jared Diamond who, apparently in all seriousness, decried agriculture as The Worst Mistake in the History of the Human Race. These people are idiots. I suppose if an academic sang the praises of subsistence living and then actually left the modern world to adopt that lifestyle I might take them seriously. Or at least think that they weren’t a raving hypocrite. Until such time: the fact that rich and famous academics aren’t willing to trade medicine, literacy, and travel for the pleasures of 20-hour work week with the Hadza nomads in Tanznia suggests that they are either trolling or insane when they write such articles.

Which might sound like some kind of cultural smugness (aren’t we so much better than “primitive” tribes) if it weren’t for the second corollary:

Archeologists suggest that the ephemeral appearances of fancy tool kits in parts of southern Africa as far back as 80,000 years ago does not indicate sudden outbreaks of intelligence, forethought, language, imagination or anything else within the skull, but simply has a demographic cause: more people, more skills.

In other words: I have no basis whatsoever for feeling that I am in any way personally superior to a human who lived 80,000 years go or to someone from a less-technologically sophisticated civilization today. People are just people. The difference isn’t who we are, it’s where we live. The convenience of modern society doesn’t reflect any superior intellectual or moral sophistication on our part, but is just a natural result of having so many people all contribute to a shared social project.

The proper attitude is not arrogance for what we have, but rather humility for what we’ve been given.

More Cronyism, or: How America Won’t Get Broadband

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2014-03-15 No Service

From Newsweek:

After making a big, bold promise to wire every corner of America, the telecom giants are running away from their vow to provide nationwide broadband service by 2020. For almost 20 years, AT&T, Verizon and the other big players have collected hundreds of billions of dollars through rate increases and surcharges to finance that ambitious plan, but after wiring the high-density big cities, they now say it’s too expensive to connect the rest of the country. But they’d like to keep all that money they banked for the project.

Of course they would.

I picked this article because it’s another example of the split between the interests of big business (read: cronyism) and the interests of folks on the right. As we all know, one (slightly oversimplified) way of looking at the political spectrum in American is urban vs. rural, with rural folks being on the conservative end of the spectrum. So it’s these guys who stand to lose the most when big telecoms lobby to get laws rewritten so they won’t have to run high-speed broadband out to smaller, less-dense areas of the country.

Oh, and Chris Christie shows up again:

And this isn’t bad news for just Montana and North Dakota. The Eastern Seaboard is getting smacked as well. Verizon has made a tentative deal with New Jersey Governor Chris Christie’s administration to stop expanding its FiOS Internet service in that state. The terms would deny access forever to many small businesses and residences. Verizon declined to make anyone available for an interview.

Thanks, Christie, for once again illustrating the difference between cronyism and capitalism. (We covered the Tesla shut-down earlier.)