Monday, April 4, 2022

The Economics of Immigration in One Lesson

Or perhaps I should say in one equation properly explained . . .

Political thinking: 
    ALL THE STUFF divided by ALL THE WORKERS equals STUFF PER WORKER
The implication of this is more workers means less stuff for workers.

Economic thinking: 
    ALL THE WORKERS multiplied by STUFF PER WORKER equals ALL THE STUFF
The implication of this is more workers or more productivity means more stuff for workers.

Definitions: 
All the stuff = production, the output;
all the workers = resources, the input; 
stuff per worker = productivity, the rate at which we can produce stuff

Allowing more workers (immigration as well as the removal of barriers to entry like licensure laws and minimum wages) is clearly a net good when total output rises. 

The key to consumption is production. The key to mass consumption is mass production.*
(HT: Bryan Caplan)






*Note for minimalists, environmentalists, etc.: Don't get hung up by the term "mass" here. This does not mean "excessive". It means flourishing for the masses. Limitations on production/consumption hit the worst off first and the best off almost never.

Thursday, March 31, 2022

The Meaning of Opposite

Opposite is a loaded term. The meaning of it grows more ambiguous as the dimensions of the object to which it refers grow. 

A no-dimensional object (a point) has no opposite aside from absence (not a point). A one-dimensional object (the line A—B) has its pure reversal (B—A) as its opposite. 

Consider a higher order "object" such as driving in America. What is the opposite? It could be said that driving in England is the opposite of driving in America since Americans drive on the right while the English drive on the left. This would be true in the limited sense from the perspective of the perpendicular plane relative to the driver’s general direction, forward, through time—also forward. 

But one could also say that driving sideways is the opposite of driving as we know it. How about rather than driving through scenery that the car passes through that the car stands still and the scenery moves passing by the car was the opposite? Still another could be driving whereby you leave from your destination and arrive at your departure point. There certainly are more.

What is the point of this thought process? It is a hint at how difficult and convoluted and simply fraught any attempt to draw sharp distinctions can be. This is especially true in the realms of human action. Counterfactuals are not only challenging to find. They are nearly impossible to properly define.

Well At Least We Can Agree On This, Right?...

Here is a partial list of some things people commonly get wrong (by my judgment at least) yet believe in them with strong conviction and desire. Therefore, these are just a few examples of times when I disagree with conventional wisdom. 
  • Veterans are always human, sometimes (but rarely) heroes. I wonder how much mental anguish in veterans is caused by either an imposter syndrome (these people think I did something I did not do) or a guilt complex (these people don't know what ugly things I endured and perhaps contributed to). Veterans deserve reverence and sympathy, but we do a grave disservice to them when we dismissively and robotically admire them.
  • Localized industrial policy is very bad. This includes tax-increment financing (TIF), direct subsidy, government/private partnerships, and other favored-interest actions. The local darling in my neck of the woods is M.A.P.S. Like so many cases of local industrial policy, it suffers from a server case of Bastiat's "what is seen and what is unseen--just look at all the shiny things! There are two crucial and high hurdles for these public (i.e., taxpayer-funded) endeavors to overcome before we can believe in them: 1) there must be a clear market failure preventing entrepreneurs from seeing and acting to realize the positive gains to be had, and 2) the government must be able to identify and execute on these supposed investment opportunities.
  • There should be no government licensure for employment (especially law and medicine--those in particular are too important and nuanced to leave up to central planning). I've got strong economic and principle-based arguments against licensure while those supporting it typically rely on that it feels good and that an idealized government can correct a hypothesized problem (not even a market failure mind you). Yet my view is political poison because it takes the unpopular tactic of addressing people's fear through passive action rather than blatant pandering.
  • Edward Snowden is an American patriot and hero.
  • Almost all acts of state-level aggression (AKA, war) should be met with minimal retaliation if not appeasement and forbearance. This certainly cuts against human nature, but most secondary reactions in response to violent hostility are counterproductive. They make the world a worse place--overall, on net, all things considered. My follow up right there is not my attempt to qualify my view. Rather I am saying I am considering all the supposed benefits people offer as to why vengeance shall be mine! . . . we must stand up to belligerent aggressors. Too often the cost is not worth the cure, and the actions taken in response are just closing the barn door after the horse has bolted. The most I can say in defense of the typical defender of retaliation (too much play on words?) is that if one wants to maintain the world closer to how it is at the cost of how much better it could be, then fight every fire with fire. It is very hard to truly hold territory and control a people. And this difficulty grows more and more as human society advances. Initial victories for would-be rulers become short lived if not pyrrhic. The constant eye-for-an-eye, tooth-for-a-tooth state of the world keeps us in a local maximum, struggling to escape to higher peaks. I think Bryan Caplan says it well.
  • The following should all be legal with minimal to no interference from government: prostitution, recreational drugs, performance enhancing drugs, selling/buying organs, prediction markets, actual gambling (games of chance rather than skill), and basically everything else under the sun of If you can do it for free…. The list is what makes this item fully counter-conventional--very few will defend all of these items.
  • The motto “Safety First!” is basically nonsense. It amounts to trite virtue signaling. If it is your “highest priority”, then you are incompetent. It is simply not possible for this to be a goal. It is a constraint. Fortunately most of the time when used it is just there to help the naïve and fearful to be a bit braver. In this sense it is innocuous as far as a noble lie can be. But for God’s sake can we grow up and stop saying it or accepting it as a substitute for meaningful signal?

Things the major tribes actually do unfortunately agree upon: 

  • There is lots of speech that needs to be censored (e.g., hateful speech, disruptive speech, unpleasant speech).
  • We need to fund the police such that we have a strong and powerful police state
  • Government can and should solve the "problem" of big tech.
  • A safe world and a safe America requires a overwhelmingly strong, uber-engaged, and extensively involved U.S. military.
  • American farmers are a sacred group who need constant support especially to maintain the status quo. They should enjoy private profits and be afforded extensive social insurance against losses. 
  • The welfare and education and indoctrination of the young is a state concern and needs strong state intervention. Parents should only be left up to their own desires when those desires fully correspond to the state's interests (defined separately by the two biggest tribes, of course). 
  • Incumbent firms and industries need and deserve deference if not extra support. It is wrong that they might be challenged by newcomers and new approaches. 


Wednesday, March 30, 2022

The Progression of Air Travel Security Theater

It is as if the powers that be are playing an ever-escalating game of what can we make them do next

When I was a kid it was just speech codes: don’t say “bomb” or “gun” or you might be detained and searched. Maybe not allowed to fly that day. 

After 9/11 it was: “let’s take away their liquids, move the entry barrier back and search them good and hard before entering, not allow anything sharp, and of course let’s profile them until they call foul and then let’s pick on the most obviously innocent to prove we don’t profile.”

“Now what?” I can hear them eagerly ask. Then the shoes came off. “And let’s make them basically get strip-searched (remotely) while holding up their hands in the ‘don’t shoot’ position.” 

And of course with COVID it is: “let’s make them wear masks . . . forever?” 

It will stop when we stop letting the most fearful and the most fanciful fears drive all policy decisions.


Related: The Great Antidote - Gary Leff on Airline Bailouts and Travel. Pay attention to where he describes American air firms as being basically extensions of the federal government. The technical term is fascism.



Wednesday, March 23, 2022

Thinking in Bets for Calmer Debates

Even the best decision doesn't yield the best outcome every time. There's always an element of luck that you can't control, and there is always information that is hidden from view.
That is from the summary of Annie Duke's book Thinking in Bets. The subtitle is "Making Smarter Decisions When You Don't Have All the Facts". 

Her way of looking at the world inspired Arnold Kling to create an entire category for it in his Fantasy Intellectual Teams (FITs) competition. 

People tend to think in terms of did or didn’t and will or won’t rather than the proper probabilistic and adaptive viewpoint. Couple this with Julia Galef's The Scout Mindset, and you have a very sound method for decision making. But a scout's mind thinking in bets is not only a much better way of getting to solutions and making predictions, it is also more socially constructive since it tempers our emotional responses. 

In the political realm we often devolve and retreat to the simplistic concept of binary conclusions. While this human trait is very common in most all people and realms, it is a natural byproduct and significant downside of government action in general. Governments are the ultimate one-size-fits-all. Democracy adds to the problem by lending credibility to the process--we voted; therefore, the outcome is just/reasonable/practical, of course none of which follows. 

When it is all or nothing, we have too much at stake to compromise much less admit we don't know. This leads us to reject ideas we don’t want to be true along with resisting ideas we believe likely not to be true

Consider climate change/global warming and anthropogenic causation or contribution. Do we really want to place all of our bets on the idea we cannot affect the climate? Conversely do we really want to place all our bets that we absolutely can change what is happening to the climate? Do we really want to assume that we know exactly what the solution to the problem(s) will be such as subsidizing solar or wind, outlawing oil and gas, etc.? Wouldn’t the consideration of a carbon tax be a more appropriate response? And shouldn’t we consider the downside and extremities of what introducing a carbon tax might lead to? 

A framework of thinking in bets can help a lot in areas like this. Instead of tribally aligning with one absolute or another, we could take a more measured, agnostic view that allows for experimentation as well as revising. Instead we battle it out on the front end (the public and political stakes placed in the ground) having captured interests and biased reasoners (bootleggers and Baptists) and their lobbyist soldiers actually do the brute-force compromising for us on the back end with all the predictable shortcomings.

The thinking-in-bets perspective allows nuance and graceful position changes. Instead of having to be pro renewables/anti fossil fuels or vice versa we can adopt a mindset that skips past labels to force deeper thinking. Sure a person could always claim 100% confidence that THIS is the problem and THIS is the solution, but then at the very least we know not to waste our time in that discussion. Also, the more we make them be precise with predictions, the more likely they will step back from the barricade. 

Betting is a tax on bullshit, and forcing a bet can be a great method of separating our hearts from our minds. I am after a different benefit in this case, though. I don't necessarily want to call anyone out for bloviation. Rather I want to get a more open-minded and charitable disposition for all sides in a debate--allowing us to consider how little we actually know for sure.





P.S. I thought of this while listening to the recent excellent interview of Mike Munger on The Curious Task Ep. 131: Mike Munger - What’s Wrong With Anti-Trust and Industrial Policy?

Saturday, March 19, 2022

Who You Gonna Call? Trustbusters!

David Henderson has written two very good pieces recently at the Hoover Institution's Defining Ideas. They are a two-part discussion on antitrust: Let Freedom Rein In Big Tech and A Populist Attack on Big Tech. I particularly like his conclusion:
The more regulations there are to enforce a government official’s idea of competition, the more likely it is that those regulations will hamper actual competition. Companies that give their own products and services an advantage in the marketplace are simply harvesting the value of an asset that they took big risks to create. Competition is dynamic, not static. But heavy regulation will make markets more static. Let’s keep competition dynamic by not penalizing successful competitors but by leaving the market open to alternative business models.
Do read the whole thing in both cases. 

He makes many excellent points--ones that I myself had in some notes for a future piece on antitrust. (Of course, he makes them much better and more fully than I could.)

Sometimes one must be patient for competition to work it’s magic. Just because a monopoly, oligopoly, or other sinister market-dominant firm seems entrenched today, does not mean it will always be or that the cost of immediate correction is worth bearing. Forced correction may not even be feasible. 

At any one point in time there are a lot of reasons the world is the way it is. The challenge for the trustbuster is to know with very-high certainty that the current state of the market is suboptimal ("inefficient" is the eye-of-the-beholder term of choice) and that a better world can and should be achieved through government action. 

It is easy to conjure up a hypothetical better world because only in the wild through real-world experience, the so-called market test, do we truly discover all the constraints and tradeoffs. Comparing the unicorn to the horse is always subject to bias--imagined reality almost definitionally engages in willful blindness. But the trustbuster's Dunning-Kruger problem does not end there. The "can be achieved" is naively assumed through hand-waving theory. The "should be achieved" is generally ignored altogether.

In the realm of current worry, Big Tech (dunt, dunt, duh!), see MySpace, Yahoo!, and AOL along with InternetExplorer, Mapquest, Garmin, Blackberry, et al. Then consider Twitter, Facebook, and TikToc, along with Google, Apple, et al.

Also, remember when the government broke up IBM? Yeah, I don’t either. Apologists for activist government regulation will tell you the threat posed by the 13-year case that went nowhere is what reined in the highly-successful company, but this theory only works by willfully ignoring the fabulous work performed by IBM’s various marketplace competitors. Those quick to point out “you didn’t build it” rely on their own wishful agency when the real work is being done by those actually in the field. 

Why in antitrust do we grant so much benefit of the doubt to regulators and so little deference to the world as it is? Are we just that willing and hopeful that a white knight can remake that which we suppose is in error? Is it just because we don't listen to master Yoda?




Sports Handicapping - The Next Iteration

For over 100 years we have created divisions and categories for athletic competition. The original segregation for purposes of ability matching was by sex. Obviously there were other ones based on prejudices like racial divisions and socioeconomic status. While there were likely strong confounders like desire to keep out of competition from superior athletes who happened to be of a different race, etc., this was not a purely ability-based separation. 

Beyond sex-based categories, there have been many more separations to better group like-to-like competitors. For example, there are designations with the most distinct being professional versus amateur. High schools and colleges normally compete in certain divisions. Within sports there are weight classes (boxing, wrestling, etc.) and tours and qualifiers (golf, tennis, etc.).

It seems to me the next step in this process is to fully segregate sports by proven and expected talent regardless of sex. 

The recent case of swimmer Lia Thomas brings this to the forefront, but it is something that has been around for a long time. It would come as no surprise that many historic female athletes we know of were somewhere on a spectrum of male-female that did not cut neatly between the traditional sex categories. It would further come as no surprise that there are a much larger number we never were given a chance to know of because they were not allowed/encouraged to compete. 

Two recent pieces on the topic of Lia Thomas are instructive: The first by Megan McArdle asks the question whether women’s sports should exist at all. The second by Suzy Weiss prods the awkward juxtaposition that this situation has created whereby those who would/"should" be expected to support a trans athlete are now those arguably harmed by it.

These are undoubtedly rare cases, but we cannot dismiss them unless we are willing to blatantly exclude a meaningful group of potential competitors from participation for sake of forcing clear, hard lines where shades of grey actually prevail. Keep in mind that these edge cases are critical because those in question are generally vying for first place in the female category. If we want a world where we have two definitions of greatness, the actual fastest, strongest, best (almost always males) and the next group excluding the first, then we need to figure out where and how to draw that line between the two. 

Trying to draw the line on the basis of a single metric like testosterone won't get us there as this is multi-causal--there is no more a single athlete gene as there is an intelligence gene. Hence, sex phenotype works almost always until it doesn't either because of genetic edge cases or the more controversial transition cases. The latter is the news of the day and the very interesting dilemma we now face where reconciling two forms of inclusionary fairness have come into conflict. The former is how we know this isn't so easy as to say you can be a member of the club if you have always been a member of the club.

So I propose the thought experiment of self determination (set and test and rethink rules and norms at the most local level practicable) and separation by capability regardless of sex/gender (consider eligibility based purely on ability in the specific sport or event). 

Obviously this is change, which to sports fans specifically like humans in general is bad, very, very bad. But before you reject the proposal out of hand consider two points: For one, are we sure we want to have female-only competitions? Keep in mind this excludes a lot of males from enjoying a competitive forum with status. For another, are we sure males will want to compete with females? The stronger you think the answer to the first question is or should be "yes", the weaker is the concern implied by the second.  

Would there be complications as well as manipulations including out-right fraud? In sports?!? Of course there will be. This is nothing new. But while it creates an opportunity for scheming, it forces a harder look at the processes we use to sort and match competitions. This should result in better outcomes in the long term. Letting a hundred flowers bloom via open-minded exploration is the key to figuring out a new, stable equilibrium. If you doubt we can be open-minded about this exploration, you are totally ignoring why this is now an issue in the first place.

Beyond the risk of bad actors poisoning the pool of competition, the much bigger potential downside is that the disruptions will end women’s sports and perhaps even some men's divisions as we know them. This could be an outcome that means many kids and even adults don’t have a forum in which to play the sport they love and otherwise excel at even as it grants new opportunities to others in those forums (a point raised above). 

Yet again we are faced with the tough reality of tradeoffs.