A Partisan Nonpartisan Blog: Cutting Through Confusion Since 2012
Link to “Confessions of a Supply-Side Liberal” in Japanese
I am delighted and honored that Makoto Shimizu has translated many of my posts in Japanese. Makoto will be in charge of the Tumblr blog for the Japanese version supplysideliberal.com: supplysideliberaljp.tumblr.com. I will post link posts here to each Japanese translation there.
Earth and the Sun, as viewed by the Space Shuttle Discovery.
In this moment, as in all the moments I have, may the image of the God or Gods Who May Be burn brightly in my heart.
Let faith give me a felt assurance that what must be done to bring the Day of Awakening and the Day of Fulfilment closer can be done in a spirit of joy and contentment.
Let the gathering powers of heaven be at my left hand and my right. Let there be many heroes and saints to blaze the trail in front of me. Let the younger generations who will follow discern the truth and wield it to strengthen good and weaken evil. Let the grandeur of the Universe above inspire noble thoughts that lead to noble plans and noble deeds. Let the Earth beneath be a remembrance of the wisdom of our ancestors and of others who have died before us. And may the light within be an ocean of conscious and unconscious being to sustain me and those who are with me through all the trials we must go through.
In this moment, I am. And I am grateful that I am. May others be, now and for all time.
Having a window of time on a plane ride when I didn’t need to do anything in particular gave me a chance to realize that I was feeling depleted. Sleep was one obvious remedy, but I felt a need for something to feed my soul as well. So I wrote this prayer as something that might help lift my spirits on a daily basis. I wrote it for myself, but thought some of you might like it as well, perhaps as something to riff off of. (Designing one’s own religious rituals is a well-accepted practice in Unitarian-Universalism, the organized religion I belong to, and it is part of the research program I argue for in my sermon “Godless Religion.”)
The basic theological ideas behind this devotional can be found in my sermon “Teleotheism and the Purpose of Life.” There, I define teleotheism this way:
Teleotheism is the view that God comes at the end, not at the beginning, where I am defining “God” as “the greatest of all things that can come true.”
Thus, the “Not-Yet” is the greatest of all things that can come true, which I call God, or more specifically, “the God or Gods Who May Be.” I chose that phrase because it also has an agnostic interpretation, allowing for the possibility that there just might be a god or gods out there already. (If there is a god or gods out there already, I feel pretty confident that God or Gods will not match all the details described in any religion that I know of, since every detailed description of God or Gods I know of has internal contradictions.)
Note that identifying what is the “greatest of all things that can come true” is a job for all of us. As I wrote in “Teleotheism and the Purpose of Life,”
In this view, the quest to discover what are the greatest things that are possible is of the utmost importance. The best of our religious heritage is just such an effort to discover the greatest things that are possible.
One key aspect of my theology is that it is non-supernaturalist. I tried my best to define “supernatural” in my Q&A post “What Do You Mean by “Supernatural”?” There are some phrases that were quite tempting to write into the devotional that I resisted because they were contrary to my non-supernaturalist beliefs.
Three previous prayers I have posted here provide elements for this prayer:
There are some new elements:
The Day of Awakening and the Day of Fulfilment. The final words of “Teleotheism and the Purpose of Life” are
Can there be any greater purpose to life than working toward that day, that fine day, when God and Heaven do exist?“
The "Day of Awakening” and “The Day of Fulfilment” are handy names pointing to that time. It is unlikely that “the greatest of all things that can exist” will come into existence suddenly. “The Day of Awakening” is an early day when it seems that the greatest of all things that can exist is beginning to actually exist. “The Day of Fulfilment” is a later day when the greatest of all things that can exist does exist in full.
The Gathering Powers of Heaven. Because “heaven” can also answer the question “what is the greatest of all things that can exist,” in Teleotheism, the word “heaven” refers to the divine as well. “The gathering powers of heaven” is primarily those people (in the broad sense of intelligent agents) and ideas that are working to build heaven. To my mind, that is the same as those people and ideas that are working to make the world a better place, both in the immediate sense, and in the more roundabout sense of working to discover principles that will help us to make things better in the distant future.
Heroes and Saints. In “Adam Smith as Patron Saint of Supply-Side Liberalism?" I define a "hero” as someone who has done or is doing great good in the world, and a “saint” as a hero who in addition is free from scandal. That is, a “saint” is someone who has not only done or is doing great good in the world, but has done no serious, blameworthy harm, even locally.
On this blog, you will notice that there are many people that I admire. I give a set of links to posts about some of them in my recent post “Saint Clay.” I am sure I have forgotten posts I have written about other heroes. And there are many, many people I admire and think of as heroes whom I have not yet had occasion to write about, or have not yet had occasion to laud.
Younger Generations. The full significance of the phrase “younger generations” is only clear in the light of this passage from my column “That Baby Born in Bethlehem Should Inspire Society to Keep Redeeming Itself”:
… however hard it may seem to change misguided institutions and policies, all it takes to succeed in such an effort is to durably convince the young that there is a better way.
Died. The phrase “our ancestors and the others who have died before us” refers to the fact that in this age, we all still face death. Although I believe death will be conquered (see Cyborgian Immortality), unlike Ray Kurzweil, I don’t believe death will be conquered until it is too late for me to escape death. It is my fond hope that the words of this prayer and this post might survive to a time in the future when death is conquered. But I am very conscious of my own mortality. As I have often said, I am not a fan of death. My favorite poem about death is Edna St. Vincent Millay’s “Dirge Without Music.” I hint at the poignancy of the fact that I and others I love face death near the beginning of the prayer above as well, in the phrase “all the moments I have.”
I Am. In “An Agnostic Grace” I make a hat tip to the Mormon religion I grew up in by ending with these words–which still respect my own non-supernaturalist beliefs:
And we remember Jesus Christ, symbol of all that is good in humankind, and thereby clue to the God or Gods Who May Be. Amen.
In the prayer above, the phrase “I am” is the hat tip to the religion I grew up in, since at least the King James Translation renders the God of Abraham, Isaac and Jacob’s explanation of His own name as “I am that I am.” But “I am” also harks back to Renee Descartes rationalist dictum “I think, therefore I am.” (Cogito ergo sum.)
Grateful. I write about the importance of gratitude in “Human Grace: Gratitude is Not Simple Sentiment; It is the Motivation that Can Save the World,” which is also very much an expression of my theological views.
May Others Be, Now and for All Time. In my post about three possible “Armageddons” I wrote
I believe the continued existence of our species is of great value.
By current temperament, I am an optimist, but I don’t take the continuation of our species for granted. Andrew Snyder-Beattie wrote this in his Quartz essay “Finding a new Earth could be a sign we’re on our way to extinction”:
The Great Filter is an argument that attempts to resolve the Fermi Paradox: why have we not found aliens, despite the existence of hundreds of billions of solar systems in our galactic neighborhood in which life might evolve? …
While emergence of intelligent life could be rare, the silence could also be the result of intelligent life emerging frequently but subsequently failing to survive for long. Might every sufficiently advanced civilisation stumble across a suicidal technology or unsustainable trajectory?
I am hopeful that we can make it through the Great Filter. We have already come a long way. Going forward, in addition to avoiding missteps in the short-run, a key to the long-run survival of humanity and our transhuman descendants is for humanity and its offshoots to branch out to the rest of our solar system and beyond. To the stars! (Ad astra.)
Tyler Cowen recommends the pdf linked above in this post.
Matt appears in two other posts on supplysideliberal.com:
The first is one of my most popular posts ever on this blog. The quality of Matt’s arguments there give me very high respect for his acumen.
In this column, Paul Krugman contemplates the economics blogosphere (including online magazines and newspapers).
Here is a link to my 49th column on Quartz, “Cheer Modi On: Why you really want India to join the US and China as a superpower.” I kept my working title as the title of this companion post, since it better reflects the content of the column.
Important Note: Thirumaran makes the case in these storified tweets that Narendra Modi has been given a bad rap for his performance during the Gujarat riots in 2002.What I say in my column about that incident is based entirely on the Wall Street Journal article “Why Narendra Modi Was Banned From the U.S.” I would be glad to hear reactions to Thirumaran’s additional perspective.
Populations of the Most Populous Nations. I found the population figures in Wikipedia’s “World population” for the most populous countries very interesting.
I hadn’t realized that the US was the third most populous nation. All of Europe, including 110,000,000 in the European part of Russia, is only listed at 742,000,000. The reason it makes sense to focus on population figures is that catch-up economic growth up to the cutting-edge level of income per capita is much easier than the economic goal of the US of pushing income per capita to levels the world has never seen before for any large nation.
I was clued into India being headed for beating out China in overall population by Thomas Piketty's Capital in the 21st Century. It is a fat enough book that I am only partway through. And I am glad I am reading it on a Kindle.
“Nonetheless, selective outrage is not necessarily hypocrisy. There are a million good causes in the world, and one cannot be devoted to all of them. People naturally gravitate to those closest to their heart.”
– Charles Krauthammer, in his May 15, 2014 Washington Post op-ed “The sound and the fury–and the tweet” about the #BringBackOurGirls Twitter campaign.
On January 3, 2013, I wrote in Quartz that the US should establish a sovereign wealth fund to aid in macroeconomic and financial stabilization. Since then, I have returned to this theme many times. Here is a list of my posts and columns that talk about using a sovereign wealth fund as an instrument of macroeconomic policy:
How a US Sovereign Wealth Fund Can Alleviate a Scarcity of Safe Assets
How to Stabilize the Financial System and Make Money for US Taxpayers
Four More Years! The US Economy Needs a Third Term of Ben Bernanke
After Crunching Reinhart and Rogoff’s Data, We Found No Evidence High Debt Slows Growth
Roger Farmer and Miles Kimball on the Value of Sovereign Wealth Funds for Economic Stabilization
Answering Adam Ozimek’s Skepticism about a US Sovereign Wealth Fund
In addition, I have three storified Twitter discussions about sovereign wealth funds:
some posts on closely related issues (two of which are guest posts):
and many posts (of which I will only list three right now) on a key scientific issue relevant for sovereign wealth funds–the level of efficacy of quantitative easing:
Trillions and Trillions: Getting Used to Balance Sheet Monetary Policy
Wallace Neutrality Roundup: QE May Work in Practice, But Can It Work in Theory?
On Tuesday, June 10, 2014, Eleanor Warnock reported in the Wall Street Journal reported that Japan is making a substantial step toward my recommendation that rich countries should use sovereign wealth funds for macroeconomic stabilization, even if their governments are, overall, in debt. Here is the beginning of Eleanor’s article “Giant Japanese Fund Set to Invest More in Stocks, Foreign Bonds”:
Japan’s $1.26 trillion public pension fund will likely announce a boost to stock and foreign-bond investments in early autumn, the head of its investment committee said Tuesday, potentially sending tens of billions of dollars into new markets.
“I personally think that we need to complete [the new portfolio] in September or October,” Yasuhiro Yonezawa, head of the Government Pension Investment Fund’s investment committee, said in an interview. “There’s no reason to be slow.”
Mr. Yonezawa outlined a tentative plan for a portfolio shift that would raise the allotments of the fund’s assets to go into domestic stocks, foreign bonds and foreign stocks by five percentage points in each category. The aim is twofold: to boost returns to ensure Japanese retirees get the payouts they expect, and to stimulate risk-taking at home by funneling money into growing Japanese businesses.
That is in tune with the prime minister’s pro-growth “Abenomics” policies.
I don’t mean to claim having had any influence, but I consider what Japan is doing in line with the kind of thing I am recommending, though of course they do not go all the way to the institutional structure that Roger Farmer and I are recommending in the post listed above with Roger’s name in the title.
Update: Roger Farmer now has a book advocating sovereign wealth funds: Prosperity for All: How to Prevent Financial Crises. Also, here is a useful post by Eric Lonergan on this topic: “Tristan Hanson and Eric Lonergan: What Would a UK Sovereign Wealth Fund Look Like?”
Four of the main justifications for public education are
Public education is a particularly attractive form of redistribution, since unlike direct transfers to poor families, (a) education goes directly to the kids and (b) education tends to encourage, rather than discourage hard work.
But public education is seldom optimized as a means of redistribution. Richer school districts often have better facilities and supplies, and typically offer higher salaries to teachers. But even when nominal teacher salaries are equalized across districts by state law, the greater difficulty of teaching the kids who need teaching the most to catch up often means that disadvantaged kids get worse teachers. (And the lower desirability for a teacher of either living near those schools or commuting further also tends to lead to worse teachers for disadvantaged kids.) To even equalize teacher quality would require paying enough of a salary premium for teaching in difficult schools that the typical teacher would be indifferent between taking on the tougher job with that salary premium or taking on an easier job with a lower salary. And an argument can be made that the very best teachers (in terms of being able to motivate kids and teach the most basic and important concepts well) should be teaching the kids who are the furthest behind.
The chickens have now come home to roost. The failure of California to address the problem of teacher sorting led to a remarkable decision yesterday by a Los Angeles Superior Court. As reported in the Wall Street Journal article linked above:
In a closely watched court case that challenged California’s strong teacher employment protections, a group of nine students have prevailed against the state and its two largest teachers unions.
A Superior Court here on Tuesday found that all the state laws challenged in the case were unconstitutional. The verdict could fuel similar lawsuits in other states where legislative efforts have failed to ease rules for the dismissal of teachers considered ineffective.
The student plaintiffs in Vergara v. California argued that the statutes protecting teachers’ jobs serve more often to keep poor instructors in the schools—hurting students’ chances to succeed.
Citing the Supreme Court’s landmark 1954 Brown v. Board of Education “separate but equal” ruling, Superior Court Judge Rolf M. Treu wrote in his decision that the laws in the case “impose a real and appreciable impact on the students’ fundamental right to equality of education.” The decision also agreed with the plaintiffs’ arguments that the poorest teachers tend to end up in economically underprivileged schools and “impose a disproportionate burden on poor and minority students.”
It is easy to get drawn into the debate about the merits of teacher tenure. But I hope people don’t miss the problem of teacher sorting. If many of the worst teachers in a state ended up in the richest school districts, I think it would bring home to wealthy and influential voters the importance of school reform–in many dimensions. Then maybe poor kids would have a chance, as they not only got average rather than below-average teachers, but the average teacher and school performance improved.
Update: I received some great comments on the Facebook version of this post (which was really only a link to the post here):
Robert FloodPublic schools are not allowed to pay a premium in $ or in class size or load to induce teachers to go where their product is highest. So, to keep the best teachers, they bid with school assignments. My wife, in the last 10 or 15 years of her teaching career taught math to the best kids in Montgomery Co MD - maybe the richest country in the US. The kids were great and the parent support was superb - except for the nutsy parental “grade stalkers.” Her biggest problem with teaching was “up county” administration. The admin grew much faster than the # of kids or # of teachers.
My advice - let schools bid for teachers. I also think that when we see diseconomies of scale in administration, i.e., admin growing faster than the administered, , the teachers need to be consulted and help to design administration.
Chris KimballI recently read (in Malcolm Gladwell’s “What the Dog Saw”, although there’s surely a source behind that) that the range for least effective to most effective teachers runs from ½ (year’s worth of material in one year of class) to 1-½ (year’s worth of material in one year of class). Notwithstanding a raft of questions about the data (is it valid, what does the distribution look like, can the extremes be replicated, etc.) the extent of that range was a wake-up for me–making teacher sorting and selection a much more important issue than I had been thinking.
I was delighted to see that Michael Bloomberg gave a Commencement Address at Harvard articulating the same sentiments I expressed in my post “Colleges Should Stand Up For Freedom of Speech!” The text is available in full on his website, and I plugged in the embed code above for the video of his talk.
Here are some key passages. I am in full agreement:
1. Great universities are places where people of all backgrounds, holding all beliefs, pursuing all questions, can come to study and debate their ideas – freely and openly.
Today, I’d like to talk with you about how important it is for that freedom to exist for everyone, no matter how strongly we may disagree with another’s viewpoint.
Tolerance for other people’s ideas, and the freedom to express your own, are inseparable values at great universities. Joined together, they form a sacred trust that holds the basis of our democratic society.
2. Repressing free expression is a natural human weakness, and it is up to us to fight it at every turn. Intolerance of ideas – whether liberal or conservative – is antithetical to individual rights and free societies, and it is no less antithetical to great universities and first-rate scholarship.
There is an idea floating around college campuses – including here at Harvard – that scholars should be funded only if their work conforms to a particular view of justice. There’s a word for that idea: censorship. And it is just a modern-day form of McCarthyism.
Think about the irony: In the 1950s, the right wing was attempting to repress left wing ideas. Today, on many college campuses, it is liberals trying to repress conservative ideas, even as conservative faculty members are at risk of becoming an endangered species. And perhaps nowhere is that more true than here in the Ivy League.
3. In the 2012 presidential race, according to Federal Election Commission data, 96 percent of all campaign contributions from Ivy League faculty and employees went to Barack Obama.
Ninety-six percent. There was more disagreement among the old Soviet Politburo than there is among Ivy League donors.
That statistic should give us pause – and I say that as someone who endorsed President Obama for reelection – because let me tell you, neither party has a monopoly on truth or God on its side.
When 96 percent of Ivy League donors prefer one candidate to another, you have to wonder whether students are being exposed to the diversity of views that a great university should offer.
Diversity of gender, ethnicity, and orientation is important. But a university cannot be great if its faculty is politically homogenous. In fact, the whole purpose of granting tenure to professors is to ensure that they feel free to conduct research on ideas that run afoul of university politics and societal norms.
When tenure was created, it mostly protected liberals whose ideas ran up against conservative norms.
Today, if tenure is going to continue to exist, it must also protect conservatives whose ideas run up against liberal norms. Otherwise, university research – and the professors who conduct it – will lose credibility.
Great universities must not become predictably partisan. And a liberal arts education must not be an education in the art of liberalism.
The role of universities is not to promote an ideology. It is to provide scholars and students with a neutral forum for researching and debating issues – without tipping the scales in one direction, or repressing unpopular views.
4. … a university’s obligation is not to teach students what to think but to teach students how to think. And that requires listening to the other side, weighing arguments without prejudging them, and determining whether the other side might actually make some fair points.
5. if students graduate with ears and minds closed, the university has failed both the student and society.
And if you want to know where that leads, look no further than Washington, D.C.
Down in Washington, every major question facing our country – involving our security, our economy, our environment, and our health – is decided.
Yet the two parties decide these questions not by engaging with one another, but by trying to shout each other down, and by trying to repress and undermine research that runs counter to their ideology. The more our universities emulate that model, the worse off we will be as a society.
And let me give you an example: For decades, Congress has barred the Centers for Disease Control from conducting studies of gun violence, and recently Congress also placed that prohibition on the National Institute of Health. You have to ask yourself: What are they afraid of?
6. We must not become a country that turns our back on science, or on each other. And you graduates must help lead the way.
On every issue, we must follow the evidence where it leads and listen to people where they are. If we do that, there is no problem we cannot solve. No gridlock we cannot break. No compromise we cannot broker.
The more we embrace a free exchange of ideas, and the more we accept that political diversity is healthy, the stronger our society will be.
7. Standing up for the rights of others is in some ways even more important than standing up for your own rights. Because when people seek to repress freedom for some, and you remain silent, you are complicit in that repression and you may well become its victim.
Do not be complicit, and do not follow the crowd. Speak up, and fight back.
You will take your lumps, I can assure you of that. You will lose some friends and make some enemies. But the arc of history will be on your side, and our nation will be stronger for it.
It is worth comparing the arguments Michael gives to those you can see in the links in “John Stuart Mill’s Brief for Freedom of Speech.” Michael quotes John Stuart Mill in one place, but articulates the fundamental logic of John’s argument in many other places in new words.
When I was in high school and college, I took for granted the stereotype of the “dumb jock.” It never occurred to me that this stereotype might be partly racist in origin, until I read The Sports Gene by David Epstein. Here from pages 180 and 184-185 is the key passage, which also hints at just how touchy it is to talk about the possibility of racial differences in physical attributes relevant to sports:
In his 2003 book, Black Superman: A Cultural and Biological History of the People Who Became the World’s Greatest Athletes, and then in his 2006 paper with [Errol] Morrison, [Patrick] Cooper first made the argument that West Africans evolved characteristics like a high prevalence of the sickle-cell gene mutation and other gene mutations that cause low hemoglobin for protection from malaria, and that an increase in fast-twitch muscle fibers followed from that, providing more energy production from a pathway that does not rely primarily on oxygen, for people who have reduced capacity to produce energy with oxygen. The former part of Cooper’s hypothesis–that sickle-cell trait and low hemoglobin are evolutionary adaptations to malaria–now seems undeniable. …
As for whether low hemoglobin in itself might prompt a switch to more fast-twitch fibers, there is evidence that it can in rodents. …
… No scientist has attempted to test Cooper and Morrison’s idea in humans, so there are simply no human studies at all.
Several scientists I spoke with about the theory in insisted that they would have no interest in investigating it because of the inevitably thorny issue of race involved. One of them told me that he actually has data on ethnic differences with respect to a particular physiological trait, but that he would never publish the data because of the potential controversy. Another told me he would worry about following Cooper and Morrison’s line of inquiry because any suggestion of physical advantage among a group of people could be equated to a corresponding lack of intellect, as if athleticism and intelligence were on some kind of biological teeter-totter. With that stigma in mind, perhaps the most important writing Cooper did in Black Superman was his methodical evisceration of any supposed inverse link between physical and mental prowess. “The concept that physical superiority could somehow be a symptom of intellectual inferiority only developed when physical superiority became associated with African Americans,” Cooper wrote. “That association did not begin until about 1936.” The idea that athleticism was suddenly inversely proportional to intellect was never a cause of bigotry, but rather a result of it. And Cooper implied that more serious scientific inquiry into difficulty issues, not less, is the appropriate path.
The idea of prejudice against African Americans begetting prejudice against jocks reminds me of a similar phenomenon I heard about in a Unitarian-Universalist sermon: apparently, some of the prejudice against male homosexuals originally came from the idea that they were like women. (Along those lines, I remember in middle school hearing some of my age-mates use “fem” as an anti-male-homosexual insult.) Thus, prejudice against women generated part of the prejudice against gay men.
The teacher of a class on Plato I audited when I was a grad student at Harvard maintained that for the ancient Athenians, prejudice against women generated a more pro-homosexual attitude for men, since they focused on the higher status of a male as an object of sexual desire rather than any supposed similarity of a gay man to a woman. The common element between ancient Athenian pro-homosexual attitudes and modern American anti-homosexual attitudes would then be prejudice against women. (The Wikipedia article on “Homosexuality in ancient Greece” emphasizes yet other aspects of how prejudice against women affected attitudes toward homosexuality.)
The bottom line is that prejudice affects everything it touches.
I have always thought that the great weakness of Obamacare is that its basic philosophy is to mandate that things be done the same way throughout the United States. John Stuart Mill is eloquent in laying out what is lost when top-down control pushes things toward a single approach instead of a diversity of approaches. On this theme for health care, see my posts
Of course, the message of On Liberty, Chapter III: “Of Individuality, as One of the Elements of Well-Being,” paragraph 17 and 18 has a much broader application than to health care policy. It points to the benefits of the diversity fostered by liberty in a wide variety of contexts:
We have a warning example in China—a nation of much talent, and, in some respects, even wisdom, owing to the rare good fortune of having been provided at an early period with a particularly good set of customs, the work, in some measure, of men to whom even the most enlightened European must accord, under certain limitations, the title of sages and philosophers. They are remarkable, too, in the excellence of their apparatus for impressing, as far as possible, the best wisdom they possess upon every mind in the community, and securing that those who have appropriated most of it shall occupy the posts of honour and power. Surely the people who did this have discovered the secret of human progressiveness, and must have kept themselves steadily at the head of the movement of the world. On the contrary, they have become stationary—have remained so for thousands of years; and if they are ever to be farther improved, it must be by foreigners. They have succeeded beyond all hope in what English philanthropists are so industriously working at—in making a people all alike, all governing their thoughts and conduct by the same maxims and rules; and these are the fruits. The modern régime of public opinion is, in an unorganized form, what the Chinese educational and political systems are in an organized; and unless individuality shall be able successfully to assert itself against this yoke, Europe, notwithstanding its noble antecedents and its professed Christianity, will tend to become another China.
What is it that has hitherto preserved Europe from this lot? What has made the European family of nations an improving, instead of a stationary portion of mankind? Not any superior excellence in them, which, when it exists, exists as the effect, not as the cause; but their remarkable diversity of character and culture. Individuals, classes, nations, have been extremely unlike one another: they have struck out a great variety of paths, each leading to something valuable; and although at every period those who travelled in different paths have been intolerant of one another, and each would have thought it an excellent thing if all the rest could have been compelled to travel his road, their attempts to thwart each other’s development have rarely had any permanent success, and each has in time endured to receive the good which the others have offered. Europe is, in my judgment, wholly indebted to this plurality of paths for its progressive and many-sided development.
In this passage, I am impressed to see John articulate so early on a theory for why China fell behind that is still taken very seriously by economists: the idea that the top-down nature of the Chinese system under the 1644-1912 Qing dynasty hindered progress. It is worth considering how the end of the 21st century could see a reversal of roles, if the people of China embrace political, intellectual and economic freedom, but top-down control wins out in Europe and its offshoots.
Here is a key passage from Tyler Cowen’s 2011 piece on driverless cars that applies to a lot more than driverless cars:
The point is not that such cars could be on the road in large numbers tomorrow, but that we ought to give the cars — and other potential innovations — a fair shot so that a prototype can become a commercial product someday. Michael Mandel, an economist with the Progressive Policy Institute, compares government regulation of innovation to the accumulation of pebbles in a stream. At some point too many pebbles block off the water flow, yet no single pebble is to blame for the slowdown. Right now the pebbles are limiting investment in future innovation.
The lesson here is the one I emphasized in my post yesterday, “Clay Christensen, Jerome Grossman and Jason Hwang on the Agenda for the Transformation of Health Care”: allowing experimentation with innovations that at first seem like lower quality ways to do things (except for their cost and convenience) is crucial to many of the economic transformations that will do the most to improve overall standards of living. Needing a path through what seems at first like lower quality is exactly what Clay Christensen means when he says that an innovation is “disruptive.” Driverless cars provide a wonderful example. Ultimately, driverless cars will be much safer than human-driven cars, since it is unlikely that the overall skill and care of human drivers will dramatically improve from where it is now, while computers and sensors for cars can continue to get better and better and better. But we will get to those driverless cars that dominate human-driven cars in all respects (except for those who find driving recreational) if right now we allow driverless cars on the road that are better than human-driven cars in some respects and worse (within reason) in other respects.
I am saying that, because they are likely to ultimately be much safer that driverless cars should be allowed even if at first they are somewhat less safe, but in fact the relevant situation is more like this. At some point driverless cars will have a good safety performance in small-scale tests, but there will be some uncertainty about how they will do in substantial numbers in real world situations on the road. Even if at that point they would in fact have a better safety record if allowed on the road, opponents will argue that the uncertainty about how they will do means they should be banned. Such a ban–and its counterparts in other domains–are a very effective method to slow down technological progress.
As I said in my post “Saint Clay," I plan to feature the work of Clay Christensen and his coauthors in a slow, thoroughgoing, methodical way, much as I have featured John Stuart Mill's On Liberty. Because of its urgency in the policy debate, I will start with Clay Christensen, Jerome Grossman and Jason Hwang’s book, "The Innovator’s Prescription.” Here is how they lay out their agenda in the introduction to the book:
The growth in health-care spending in the United States regularly outpaces the growth of the overall economy. Over the last 35 years, while the nation’s spending on all goods and services has risen at an average annual rate of 7.2 percent, the amount spent on health care has grown at a rate of 9.8 percent.1 As a consequence, an increasing proportion of Americans simply cannot afford adequate care. Many efforts to contain overall costs have the effect of making care inaccessible on a convenient and timely basis for all of us—even for those who can pay for it.
Second, if federal government spending remains a relatively constant percentage of GDP, the rising cost of Medicare within that budget will crowd out all other spending except defense within 20 years.
The third factor that engenders fear is that the burden of covering the costs of health care for employees, retirees, and their families is forcing some of America’s most economically important companies to become uncompetitive in world markets. Health-care costs add over $1,500 to the cost of every car our automakers sell, for example.
The fourth frightening factor, about which few people are aware, is that if governments were forced to report on their financial statements the liabilities they face resulting from contractual commitments to provide health care for retired employees, nearly every city and town in the United States would be bankrupt. There is no way for them to pay for what they are obligated to pay, except by denying funding for schools, roads, and public safety, or by raising taxes to extreme levels.
What can be done? It isn’t easy:
Those fighting for reform have few weapons for systemic change. Most can only work on improving the cost and efficacy of their piece of the system. There are very few system architects among these forces that have the scope and power of a commanding general to reconfigure the elements of the system.
Perhaps most discouraging of all, however, is that there is no credible map of the terrain ahead that reformers agree upon and trust. They are armed with data about the past, and they have become accustomed to reaching consensus for action when the data are conclusive. But because there are no data about the future, there is no map available to convincingly show these reformers which of the pathways ahead of them lead to a dead end and which constitute a promising road to reform. And few have a sense for the interconnectedness of these pathways. As the prophet of Proverbs said, “Where there is no vision, the people perish.”
So why this book? There is little dispute that we need a system that is competitive, responsive, and consumer-driven, with clear metrics of value per dollar being spent.9 Our hope is that The Innovator’s Prescription can provide a road map for those seeking innovation and reform—an accurate description of the terrain ahead, about which data are not yet available. Much of today’s political dialogue on health-care reform centers on how to pay for the cost of health care in the future. This book offers the other half of the equation: how to innovate to reduce costs and improve the quality and accessibility of care. We don’t simply ask how we can afford health care. We show how to make it affordable—less costly and of better quality.
To preview the main message, the number one policy in order to foster progress in most any area is to make sure that new entrants, who may initially do things worse in some dimensions, but more cheaply or more conveniently than the established incumbents, have a chance to gain a foothold in the market. Then what the new entrants do has a chance to improve in quality until in the end they bring down prices even at high quality, just as personal computers, which initially were not very good, became more powerful–as well as less expensive and more convenient–than the mainframes of old (only to be challenged in turn by smartphones and tablets).
One possible reaction to this would be to object to the idea of having anyone get medical care that is cheaper and more convenient, but is otherwise of somewhat worse quality. But the result of acting as if cost does not matter is the startling fact discussed in "Another Quality Control Failure on the Wall Street Journal Editorial Page?“ that real after-tax, after-transfer income for the poorest 20% of the population has increased by 49% since 1979. As the title of my post suggests, I thought this was a mistake. But it is not. What the Congressional Budget Office did to come up with this number was to count as part of after-tax, after-transfer income the full cost of both medical care paid for by employers and medical care paid for by the government (much of it through Medicaid). If you don’t feel that the poorest 20% of the population is as much better off since 1979 as a 49% increase in income would suggest, it is an indication that all of that money spent on medical care has not gotten the value that one would think it should have been able to purchase.
Our current medical system has too few good paths for finding ways to do things more cheaply and conveniently. If we block all paths that lead even temporarily through a region of lower cost at lower quality and greater convenience, the next 35 years may see another 49% increase in the after-tax, after-transfer income of the bottom 20% of the population that hardly feels like an improvement in living standards at all, as we head toward more and more expensive medicine that is only marginally better in quality. Alternatively, we can allow disruptive innovation that will get much better quality, much lower cost and much greater convenience 35 years from now if we avoid crushing in their infancy ways of doing things that right now are much cheaper and more convenient, but slightly lower in other dimensions of quality.
Right now, many people would gladly choose lower expense and greater convenience for some types of medical care even at slightly lower quality in other dimensions, if they were allowed (by any of half of dozen different possible mechanisms) to get a true signal about the actual tradeoffs that society faces in this regard. Too often, discussion about these tradeoffs only points out the static welfare gains from helping people to incorporate the cost of various types of health care into their decisions. I am persuaded by Clay, Jerome and Jason’s arguments that the dynamic gains are much more important.
This is of special interest to me because I am giving to the European Central Bank on July 7 to explain how to eliminate the zero lower bound. If the ECB has decided to go to negative interest rates, it has already crossed the political rubicon. I will argue that eliminating the ZLB is therefore politically manageable.
Note: I have organized what I have written about facilitating negative interest rates in “How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide” and wrote about it recently in “Ken Rogoff: Paper Money is Unfit for a World of High Crime and Low Inflation.”
It has been a year and fifty days since the Boston Marathon Bombings on April 15, 2013. The day after those events, I posted this wish:
May the best in the human spirit vanquish the worst in the human spirit.
That wish is also appropriate to the the massacre of protestors in Tiananmen Square in 1989, which–still unrepented of by the leaders of China–casts a dark shadow over China 25 years later today. (In Chinese, this is called “The June Fourth Incident,” although the crackdown began on June 3, 1989.)
As I noted in the Quartz column I published yesterday, “The Man in the Tank: It’s time to honor the unsung hero of Tiananmen Square,” the best in the human spirit is evident not only in the courage of “Tank Man,” but also in those in the tanks, who showed unwillingness to drive over the top of him.
Thanks to Josiah Neeley for reminding me of this photo in this tweet. I have usually seen the cropped photograph. Above is the uncropped version.
Here is a link to my 48th column on Quartz “The Man in the Tank: It’s Time to Honor the Unsung Hero of Tiananmen Square.” In addition to my editor, Mitra Kalita, I want to thank my father, Edward Kimball, for excellent editorial suggestions in putting together this column.
The Tiananmen Square Massacre is an event well-deserving in its infamy of a two-day memorial. Tomorrow’s post will also remember.
This was a very interesting natural experiment. I will copy out some key passages below, but I think you will want to read the whole thing at the link above.
When the casino opened, Professor Costello had already been following 1,420 rural children in the area, a quarter of whom were Cherokee, for four years. That gave her a solid baseline measure. Roughly one-fifth of the rural non-Indians in her study lived in poverty, compared with more than half of the Cherokee. By 2001, when casino profits amounted to $6,000 per person yearly, the number of Cherokee living below the poverty line had declined by half.
She’d started her study with three cohorts, ages 9, 11 and 13. When she caught up with them as 19- and 21-year-olds living on their own, she found that those who were youngest when the supplements began had benefited most. They were roughly one-third less likely to develop substance abuse and psychiatric problems in adulthood, compared with the oldest group of Cherokee children and with neighboring rural whites of the same age.
The money, which amounted to between one-third and one-quarter of poor families’ income at one point, seemed to improve parenting quality. …
Many Cherokee worked “hard and long” during the summer, she told me, and then hunkered down when jobs disappeared in the winter. The supplements eased the strain of that feast-or-famine existence, she said. …
Mostly, though, the energy once spent fretting over such things was freed up. That “helps parents be better parents,” she said.
Maternal warmth can seemingly protect children from environmental stresses, however; at least in these communities, parenting quality seems to matter more to a child than material circumstances. On the other hand, few parents managed high levels of nurturing while also experiencing great strain. All of which highlights an emerging theme in this science: Early-life poverty may harm, in part, by warping and eroding the bonds between children and caregivers that are important for healthy development.
Cardinal Timothy Dolan with Pope Francis. Image from a book review for Life Lessons from Life with My Brother, Timothy Cardinal Dolan in the Catholic Sun
Cardinal Timothy Dolan is the Catholic Archbishop of New York, and was President of the United States Conference of Catholic Bishops from 2010–2013. So Timothy’s interpretation in his May 22, 2014 Wall Street Journal op-ed, The Pope’s Case for Virtuous Capitalism of what Pope Francis has said about capitalism is of some interest.
Defending Capitalism. In his op-ed, Timothy make this strong statement in capitalism’s defense:
… the answer to problems with the free market is not to reject economic liberty in favor of government control. The church has consistently rejected coercive systems of socialism and collectivism, because they violate inherent human rights to economic freedom and private property. When properly regulated, a free market can certainly foster greater productivity and prosperity.
And he writes that “The spread of the free market has undoubtedly led to a tremendous increase in overall wealth and well-being around the world.” Further, “One does not have to subscribe uncritically to the notion that ‘a rising tide lifts all boats’ to acknowledge that all people, including the poor, benefit from a general increase in the overall wealth of society.”
Why then does capitalism often have a bad name, and why does Pope Francis sometimes sound as if he is speaking against Capitalism? Timothy writes:
… what many people around the world experience as “capitalism” isn’t recognizable to Americans. For many in developing or newly industrialized countries, what passes as capitalism is an exploitative racket for the benefit of the few powerful and wealthy. Americans must remember that the holy father is speaking to this world-wide audience.
In other words, it isn’t American capitalism that is the problem, it is what passes for “capitalism” in countries that have not yet fully passed the acid test of true capitalism: making the people of a country rich, at least on average.
In this passage, Timothy even sounds like an economic libertarian:
The church believes that prosperity and earthly blessings can be a good thing, gifts from God for our well-being and the common good. It is part of human nature to work and produce, and everyone has the natural right to economic initiative and to enjoy the fruits of their labors.
But this should not be overinterpreted, since he also writes “abundance is for the benefit of all people” and
Fortunately, few people subscribe to an inhumane philosophy of radical economic individualism, and even fewer consider the “Wolf of Wall Street” to be a good role model.
The Duty to Take Care of the Poor. Timothy condemns fraud, which I hope even the most ardent apologist for unfettered capitalism would not try to justify. Beyond that, to the extent capitalism needs to be tempered, it is in order to take care of the poor and downtrodden, something that is also a central Supply-Side Liberal imperative, as I recently wrote in my second anniversary post “Three Revolutions." Timothy states the imperative of taking care of the poor and downtrodden in these three passages:
1. … Pope Francis is certainly correct that "an important part of humanity does not share in the benefits of progress.” Far too many people live in poverty and have few opportunities to achieve prosperity. And so the pope, and many others, are deeply concerned about the development of a “throwaway culture,” an “economy of exclusion” and a “culture of death” that corrode human dignity and marginalize the poor.
It is in this context that the holy father’s earlier criticism of “trickle-down economics” can be properly understood.
2. But the church certainly disapproves of any system of unregulated economic amorality, which leaves people at the mercy of impersonal market forces, where they have no choice but to sink, swim or be left with the scraps that fall from the table. That kind of environment produces the evils of greed, envy, fraud, misuse of riches, gross luxury and exploitation of the poor and the laborer.
3. The great Renaissance humanist Erasmus once said, “He does not sail badly who steers a middle course.” This advice would be well worth keeping in mind. By maintaining a sound middle course on economic issues, Pope Francis is able to remind us that free economic activity should indeed be pursued, but the human dignity of our needy brothers and sisters must always be at the center of our attention.
Minimizing the Need for Government Control by Realizing that Most People Do Care, and Can Be Encouraged to Care More. If government control is not the answer, then how will the poor be taken care of? Timothy emphasizes the kind of altruism that motivates voluntary efforts to help the poor. He is not clear about when a failure of individual altruism to take care of the poor would justify government intervention. My answer is a public contribution system that insists that those who are well off do in fact contribute to public goods, including especially taking care of the poor, but allows individuals to choose within broad parameters exactly how they will contribute to public goods. (Ordinarily, those contributions would be made through the nonprofit sector. A few might choose to give to particular arms of the government. This is not a libertarian solution, since if someone in the relevant income range refused to make contributions–which few would–they would be taxed the equivalent amount.) I believe such a system would be much less distortionary than the equivalent in taxes because most people really do care about others. In addition to creating less distortion, and allowing for creativity (and therefore technological progress) in providing public goods, one of the great advantages of a public contribution system is that, over time, it will encourage people to strengthen their altruism and public-spiritedness. They may grumble at the requirement to contribute, but then their minds will soon turn to the choice of exactly which cause to contribute to, and many will come to love the causes they have chosen and the people they are able to help with their contributions.
Although I am much too small a fish for Timothy to be likely to take any notice of my proposal without support from heavier hitters, I hope that if he did become aware of it, that he would favor the kind of public contribution system I am advocating. Although direct contributions to churches would not be part of this system, associated humanitarian organizations, such as Catholic Relief Services, would be included (with the usual fights about whether church-associated humanitarian organizations are pushing religion too much in the course of their humanitarian activities). I believe that a public contribution system would do a lot to foster exactly the kind of virtues that Timothy calls for. I want you to consider that as you read these passages:
1. From media reports, one might think that the only thing on the pope’s mind was government redistribution of property, as if he were denouncing capitalism and endorsing some form of socialism. This is unfortunate, because it overlooks the principal focus of Pope Francis’ economic teaching—that economic and social activity must be based on the virtues of compassion and generosity.
2. … as the pope continually emphasizes, the essential element is genuine human virtue.
3. The church has long taught that the value of any economic system rests on the personal virtue of the individuals who take part in it, and on the morality of their day-to-day decisions. Business can be a noble vocation, so long as those engaged in it also serve the common good, acting with a sense of generosity in addition to self-interest.
4. … Pope Francis recalled the story of Zacchaeus, in which Jesus inspires the repentant tax collector to make a radical decision to put his economic wealth at the service of others. This reminds us that a spirit of sharing and solidarity with others, in the words of Francis, “should be at the beginning and end of all political and economic activity."
In his final paragraph, which I will not quote here, Timothy loses focus. To summarize the message I want to get across, I instead like Timothy’s third-to-last paragraph:
In other words, virtuous people, acting justly, compassionately and honestly, are the foundation of good economic or business activity that can produce prosperity for all, and not just for a few.
