Catallaxy Files

polymathic pontification, bleeding heart economic rationalism and liberal secularist contrarianism

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    Saturday, May 03, 2003
    The US left is salivating over the revelations that arch-conservative William Bennett is a high stakes gambler. As someone who carries no brief for traditional religion and traditional virtues on anything other than pragmatic grounds (and even then selectively) I don't particularly care about Bennett's fate - if the guy earns enough money from his books to spend $8 million on gambling, then he can take care of himself. However I find this clutching of straws on the part of the US left a little pathetic. Don't they have anything better to go on? As this piece in the Washington Post points out, while conservatives who are fundamentalist Protestants may get their knickers in a twist over gambling, Bennett is in fact a Catholic so we can surmise that his social conservatism comes from his Catholicism rather than sharing exactly the same values as his Protestant friends in the conservative right. And Catholics, God bless their souls, have a much saner attitude on alcohol and gambling than their killjoy brothers in the Protestant fundamentalist churches - not bad per se as long as you don't do it to excess that it ruins your life. Until the press can produce evidence that Bennett is leaving his family in destitution because of his gambling, this hypocrisy charge is going nowhere. As one of the people interviewed in the Washington Post article notes:

    "I wouldn't personally look at the $8 million figure and say, 'My God, he's got a gambling problem,' " Scoblete concluded. "Instead of buying yachts, this is what he's doing."
    Friedrich Nietzsche on Richard Layard?
    Though this goes against all my utilitarian sympathies and the very foundations of my chosen profession I couldn't resist reproducing this quote in light of the discussions going on regarding Richard Layard's happiness research. It certainly puts things in historical perspective and reminds us of the important role played by a tiny set of islands in developing and refining a particular concept of human good which today seems to have prevailed universally and appeals to most humans.

    If we have our own why of life, we shall get along with almost any how. Man does not strive for pleasure; only the Englishman does.
    -Friedrich Nietzsche

    (on the other hand do you really want to be taking advice from this guy? He was not a happy little camper for most of his life)

    Friday, May 02, 2003
    Ronald McDonald a threat to the world
    While Australian streets were free of violent May Day protests, foreign capitals were not so lucky. An enterprising English pollster, however, took advantage of the London demonstration to do a very rare – if not unprecedented – poll of the protestors.

    While I can’t say any of the results were very surprising, it is useful to have impressions confirmed. On average, the May Day demonstrators attended 7.7 other demonstrations a year in the UK, and 45% had attended a demonstration overseas. The UK like Australia has a protestor sub-culture.

    The demonstrators were also asked to rate various threats on a range of 1 (no threat) to 10 (biggest threat). Ronald McDonald at 6.4 and Starbucks at 5.7 were all rated as larger threats than Osama bin Laden at 5.1. It would be nice to think they were having some fun at the pollster’s expense, but with ‘global business’ being seen as most responsible for the globe’s problems these were probably serious responses.

    Thursday, May 01, 2003
    Bring back the Old Left!
    As I've opined before on this blog, I perceive a great distinction between the Old Left and the weepy-lentil burgers-anti-modernist New Left:

    Gone are the days when the Left would have agreed with Denis Diderot's rousing statement that 'man will never be free until the last king is strangled with the entrails of the last priest' as the ideologies of radical multiculturalism have infiltrated into what used to be clear thinking among the Left on the desirability of seeing away traditionalist and superstitious oppression ...

    Marx himself was very clear on where he stood on such matters, preferring industrial capitalism to feudalism and 'rural idiocy'. Furthermore it actually takes some intelligence and analytical ability to read Marx as opposed to, say, the latest tome by Hugh Mackay or Naomi Klein.

    Well, anarcho-Stalinist Albert Langer's recent piece in the Australian merely confirms my prejudices and even expresses many ideas similar to my own about the differences between the two Lefts. He's clearly of Old Left vintage (incidentally I think this distinction has older roots than the 20th century - it probably goes back to the sentimentalist Left of Rousseau versus the rationalist/materialist Left of Marx).
    Link courtesy of Stephen Kirchner.
    Another silly online test: I'm evil
    The Dante's Inferno Test has banished you to the Sixth Level of Hell - The City of Dis!
    Here is how you matched up against all the levels:
    Purgatory (Repenting Believers)Very Low
    Level 1 - Limbo (Virtuous Non-Believers)Low
    Level 2 (Lustful)High
    Level 3 (Gluttonous)High
    Level 4 (Prodigal and Avaricious)Very High
    Level 5 (Wrathful and Gloomy)Moderate
    Level 6 - The City of Dis (Heretics)Extreme
    Level 7 (Violent)High
    Level 8- the Malebolge (Fraudulent, Malicious, Panderers)Moderate
    Level 9 - Cocytus (Treacherous)Moderate

    Take the Dante's Inferno Hell Test
    More than just Saddam in hiding?
    Having observed the lunatic left since I arrived at Monash University in 1984, I've seen their involvement in criminal and other anti-social activity fluctuate over the years. This was the first May Day in several in which the only people making any effort were a few thousand unionists. There wasn't a smashed up McDonalds or Nike store in sight. After their defeat in Iraq, when they again backed a totalitarian regime and lost, have they at last acquired some shame and gone into hiding? Wishful thinking, perhaps. Such is their psychological need to protest they will take a little while to find a new source of outrage, and then be back on the streets.
    Does higher tax make you happy?
    I’m glad Jason has raised the issue of happiness (or ‘subjective well-being’, to use the jargon) research. This is my next major CIS project, after a current one on economic reform and public opinion. One reason for picking this subject is that it is being used, as his post suggests, to give new life to old leftist agendas.

    For example, in his second lecture (you'll need to scroll down a bit) Lord Layard endorsed more progressive taxation, in part to reduce counter-productive ‘rivalry’. Though more progressive tax is usually proposed by Layard and others as a novel idea, the reality is that most Western countries have had higher marginal rates of tax in the past than now, so in principle at least we should be able to see if that produced any positive effects. If we compare the table on happiness in Lord Layard’s first lecture with this history of US marginal tax rates it would seem people were happier when marginal tax rates were lower.

    This doesn’t actually disprove Layard’s thesis, since the fact that there were relatively few very affluent people in the past may mean that they had less influence on the behaviour of others. But this is an empirical question that should be settled by the best empirical evidence available, and Layard and co. need to convincingly explain why lower marginal tax rates at earlier times correlate with higher happiness.

    My hunch is that higher marginal tax rates would have no positive happiness benefits at all, partly because rivalrous behaviour will simply be displaced into other realms, such as zero-sum lobbying for vastly increased government revenues.

    Wednesday, April 30, 2003
    De Jasay on Layard
    Anthony de Jasay criticises Richard Layard's recently publicised lectures on the implications of happiness research for economics and links this to a wider critique of utilitarianism. I'm afraid in this case I don't completely agree with de Jasay. I hope to post at greater length on this later but essentially de Jasay's broad brush attack really extends beyond Layard's arguments and policy implications to an attack op almost any form of utilitarianism or more generically consequentialism. But I think there really is no alternative to evaluating policy except on such terms.

    De Jasay has a bee in his bonnett about utlitarianism because he is basically a dogmatic libertarian and he thinks that utilitarianism opens the door to government intervention and his thesis has always been there's a slippery slope from there. Well, of course it opens the door - but I think the best thing is to be intellectually honest about this and try to add sense into the debate. For instance point out that the sorts of policy implications Layard wants to draw (e.g., about relative deprivation, positional externalities and the justification for taxes that involve a massive redistribution of outcomes) have their own set of problems given the limitation of the political apparatus, the costs of attempting to solve every problem irrespective of threshold of harm, perverse effects, problems created by evasion and so on. Another obvious area of sound economics which can be brought in to ensure that people don't use happiness research to overreach the capabilities of government lies in more general comparative institutional analysis, looking at the economics of per se rules and rule-utilitarianism.

    And via the clash between libertarian scepticism of regulation and etatist scepticism of the markets lies the road towards more rigorous social science and policy analysis - though it involves doing the hard work and doesn't lead to any simplistic ideological prescriptions so be it.
    Politically incorrect economics
    Economist Steve Levitt has won the prestiguous John Bates Clark medal in economics. Levitt's most famous co-written paper is The impact of legalised abortion on crime:

    We offer evidence that legalized abortion has contributed significantly to recent crime reductions. Crime began to fall roughly 18 years after abortion legalization. The 5 states that allowed abortion in 1970 experienced declines earlier than the rest of the nation, which legalized in 1973 with Roe v. Wade. States with high abortion rates in the 1970s and 1980s experienced greater crime reductions in the 1990s. In high abortion states, only arrests of those born after abortion legalization fall relative to low abortion states. Legalized abortion appears to account for as much as 50 percent of the recent drop in crime.

    Let me state the bleeding obvious. There are more than enough good reasons to be in favour of legalised abortion - so the case for legalised abortion isn't dependent on the findings he reports here. Nonetheless, on the issue of whether the findings seem plausible - well, it wouldn't surprise me at all. It's an interesting issue and that's all that counts, not whether one needs to bolster the case for legalised abortion. I suppose if you want to be cold about it, you can think of it as a fringe benefit.

    Another one of his greatest hits is An economic analysis of a drug selling gang's finances:

    We analyze a unique data set detailing the financial activities of a drug-selling street gang on a monthly basis over a four-year period in the recent past. The data, originally compiled by the gang leader to aid in managing the organization, contain detailed information on both the sources of revenues (e.g. drug sales, extortion) and expenditrues (e.g. costs of drugs sold, weapons, tribute to the central gang organization, wages paid to various levels of the gang). Street-level drug dealing appears to be less lucrative than is generally though. We estimate the average wage in the organization to rise from roughly $6 per hour to $11 per hour over the time period studied. The distribution of wages, however, is extremely skewed. Gang leaders earn far more than they could in the legitimate sector, but the actual street-level dealers appear to earn less than the minimum wage throughout most of our sample, in spite of the substantial risks associated with such activities (the annual violent death rate in our sample is 0.07), There is some evidence consistent both with compensating differentials and efficiency wages. The markup on drugs suggests that the gang has substantial local market power. Gang wars appear to have an important strategic component: violence on another gang's turf shifts demand away from that area. The gang we observe responds to such attacks by pricing below marginal cost, suggesting either economic punishment for the rival gang or the presence of switching for users that makes market share maintenance valuable. We investigate a range of alternative methods for estimating the willingness of gang members to accept risks of death, all of which suggest that the implicit value that gang members place on their own lives is very low.

    A well deserved award given the pioneering subject matter covered by Levitt!

    Sunday, April 27, 2003
    Medals for all
    I am pleased that among the 15,464 Centenary Medals space was found for everyone I have worked under since 1991: my PhD supervisor Chandran Kukathas (no link sorry, ADFA’s website is not responding), Greg Lindsay of the CIS, David Kemp, now Minister for the Environment, and Alan Gilbert, Vice-Chancellor of the University of Melbourne. In future job interviews when I am asked if I have any questions for them I will say ‘Do you have a Centenary Medal?’
    Coherence at last?
    I am intrigued by Allen & Unwin's blurb for Clive Hamilton's Growth Fetish. They announce it as at last a coherent new set of ideas for critics of economic rationalism and globalisation. We might have hoped that coherence would be a taken for granted quality of any book on economic rationalism or globalisation. Sadly, it is not, and Allen & Unwin is now trying to capitalise on the widespread realisation that many of these critiques are just plain confused.
    Spam and identity theft
    I received some Viagra spam recently from an email address of jasonsoon2@msn. com. And some guy who claims to be a CPA keeps sending me personalised spam asking why I haven't replied to his spam. And both Heath and I have been receiving email bounces which suggest that some spammers are using our addresses to send more spam. So bloggers, beware.
    The things people do at 1 in the morning
    No comment, James, except to say you wouldn't figure in my typical lesbian fantasies.




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