The Race to the Bottom is not inevitable

Jul 19 JDN 2459050

The race to the bottom is a common result of competition, between firms, between states, or even between countries. One firm finds a way to cut corners and reduce costs, then lowers their price to undercut others; then soon every firm is cutting those same corners. Or one country decides to weaken their regulations in order to attraction more business; then soon every other country has to weaken their regulations as well.

Let’s first consider individual firms. Suppose that you run a business, and you are an upstanding, ethical person. You want to treat your employees, your customers, and your community well. You have high labor standards, you exceed the requirements of environmental regulations, and you make a high-quality product at a reasonable price for a moderate profit.

Then, a competitor appears. The owner of this company is not so ethical. They exploit their workers, perhaps even stealing their wages. They flaunt environmental regulations. They make shoddy products. All of this allows them to make their products for a lower price than yours.

Suppose that most customers can’t tell the difference between your product and theirs. What will happen? They will stop buying yours, because it’s more expensive. What do you do then?

You could simply go out of business. But that doesn’t really solve anything. Probably you’ll be forced to lower your standards. You’ll treat your workers worse, pollute more, reduce product quality. You may not do so as much as the other company, but you’ll have to do it some in order to get the price down low enough to still compete. And your profits will be lower than theirs as a result.

Far better would be for the government to step in and punish that other business for breaking the rules—or if what they’re doing is technically legal, change the rules so that it’s not anymore. Then you could continue to produce high-quality products with fair labor standards and good environmental sustainability.

But there are some problems with this. First, consider this from the point of view of a regulator, who is being lobbied by both companies. Your company asks for higher standards to improve product quality while protecting workers and the environment. But theirs claims that these higher standards will push them out of business. Who will they believe?

In fact, it may be worse than that: Suppose we’ve already settled into an equilibrium where all the firms have low standards. In that case, all the lobbyists will be saying that regulations need to be kept weak, lest the whole industry fail.

But in fact there’s no reason to think that stricter regulations would actually destroy the whole industry. Firm owners are used to thinking in terms of fixed competitors: They act in response to what competitors do. And in many cases it’s actually true that if just one firm tried to raise their standards, they would be outcompeted and go out of business. This does not mean that if all firms were forced to raise their standards, the industry would collapse. In fact, it’s much more likely that stricter regulations would only moderately reduce output and profits, if imposed consistently across the whole industry.

To see why, let’s consider a very simple model, a Bertrand competition game. There are two firms, A and B. Each can either use process H, producing a product of high quality with high labor standards and good sustainability, or use process L, producing a product of low quality with low labor standards and poor sustainability. Process H costs $100 per unit, process L costs $50 per unit. Customers can’t tell the difference, so they will buy whichever product is offered at the lowest price. Let’s say you are in charge of firm A. You choose which process to use, and set your price. At the same time, firm B chooses a process and sets their price.

Suppose choose to use process H. The lowest possible price you could charge to still make a profit would be a price of $101 (ignoring cents; let’s say customers also ignore them, which might be true!).

But firm B could choose process L, and then set a price of $100. They can charge just one dollar less than you charge for their product, but their cost is only $50, so now they are making a large profit—and you get nothing.

So you are forced to lower your standards, in order to match their price. You could try to undercut them at a price of $100, but in the long run that’s a bad idea, since eventually you’ll both be driven to charging a price of 51 and making only a very small profit. And there’s a way to stop them from undercutting you, which is to offer a price-matching guarantee; you can tell your customers that if they see a lower price from firm B than what you’re offering, you’ll match it for them. Then firm B has no incentive to try to undercut you, and you can maintain a stable equilibrium at a price of $100. You have been forced to used process L even though you know it is worse, because any attempt to unilaterally deviate from that industry norm would result in your company going bankrupt.

But now suppose the government comes in and mandates that all firms use process H, and they really enforce this rule so that no firm wants to try to break it. Then you’d want to raise the price, but you wouldn’t necessarily have to raise it all that much. Even $101 would be enough to ensure some profit, and you could even maintain your current profits by raising the price up to $150. In reality the result would probably be somewhere in between those two, depending on the elasticity of demand; so perhaps you end up charging $125 and make half the profit you did before.

Even though the new regulation raised costs all the way up to the current price, they did not result in collapsing the industry; because the rule was enforced uniformly, all firms were able to raise their standards and also raise their prices. This is what we should typically expect to happen; so any time someone claims that a new regulation will “destroy the industry” we should be very skeptical of that claim. (It’s not impossible; for instance, a regulation mandating that all fast food workers be paid $200 per hour would surely collapse the fast food industry. But it’s very unlikely that anyone would seriously propose a regulation like that.)

So as long as you have a strong government in place, you can escape the race to the bottom. But then we must consider international competition: What if other countries have weaker regulations, and so firms want to move their production to those other countries?

Well, a small country may actually be forced to lower their standards in order to compete. I’m not sure there’s much that Taiwan or Singapore could do to enforce higher labor standards. If Taiwan decided to tighten all their labor regulations, firms might just move their production to Indonesia or Vietnam. Then again, monthly incomes in Taiwan, once adjusted for currency exchange rates, are considerably higher than those in Vietnam. Indeed, wages in Taiwan aren’t much lower than wages in the US. So apparently Taiwan has some power to control their own labor standards—perhaps due to their highly educated population and strong industrial infrastructure.

However, a large country like the US or China absolutely has more power than that. If the US wants to enforce stricter labor standards, they can simply impose tariffs on countries that don’t. Actually there are many free-trade rules in place precisely to reduce that power, because it can be easily abused in the service of protectionism.

Perhaps these rules go too far; while I agree with the concern about protectionism, I definitely think we should be doing more to enforce penalties for forced labor, for instance. But this is not the result of too little international governance—if anything it is the result of too much. Our free trade agreements are astonishingly binding, even on the most powerful countries (China has successfully sued the United States under WTO rules!). I wish only that our human rights charters were anywhere near as well enforced.

This means that the race to the bottom is not the inevitable result of competition between firms or even between countries. When it occurs, it is the result of particular policy regimes nationally or internationally. We can make better rules.

The first step may be to stop listening to the people who say that any change will “destroy the industry” because they are unable (or unwilling?) to understand how uniformly-imposed rules differ from unilateral deviations from industry norms.

“The Patriarchy” is not a thing

Jun 28 JDN 2459030

It’s really mainly a coincidence that I am writing this post on Father’s Day; working at home and almost never going out due to the pandemic, I have become unmoored from the normal passage of time. It’s a wonder I can remember it’s Sunday. But it is at least a bit ironic, since the word “patriarchy” comes from the Latin word pater meaning “father”.

A great deal of feminist discourse references “The Patriarchy”: Examples are included as links in this sentence from a variety of different sources.

This is a problem, because “The Patriarchy” plainly does not exist.

Am I saying that patriarchy doesn’t exist? Of course not. Patriarchy plainly exists. What I’m saying is that there is no one single source “The Patriarchy“.

China and Japan are both extremely patriarchial societies. They have fought wars with one another dozens of times. Saudi Arabia and Iran are both extremely patriarchal. They hate each other and have likewise fought numerous wars.

Indeed, nearly every human society is to some degree patriarchal; and yet, somehow we seem to be in conflict with one another quite frequently. If patriarchy all stemmed from some common source “The Patriarchy”, such a result would be baffling: If we’re all following the same ruler, how can we fight each other so much? Whoever is running this conspiracy is doing a really awful job!

Yes, there are common elements between the various forms of patriarchy in different societies—otherwise, we wouldn’t recognize them all as patriarchy. But there are also substantial differences. Nearly all societies regulate how women must dress, but precisely what women are expected to wear varies a great deal. Nearly all societies put more men in positions of power than women, but the degree to which this is true runs a wide gamut.

Patriarchy is like authoritarianism, or fanaticism, or corruption; yes, obviously authoritarianism, fanaticism, and corruption exist, and are important forces in the world. But there are no such things as “The Authoritarianism”, “The Fanaticism”, or “The Corruption”. There is no single unified source of these things. Indeed, authoritarians are often at each other’s throats, fanatics fight with other fanatics all the time, and those who are corrupt have no qualms about exploiting others who are corrupt.

Is this important? Perhaps it’s just a provocative turn of phrase, and I’m being overly pedantic.

But I do think it’s important, for the following reasons.

Many feminists who use the phrase “The Patriarchy” really do seem to think that all patriarchial ideas, beliefs, norms, attitudes, and behaviors stem from some common root, as the following quotes attest:

Only “patriarchy” seems to capture the peculiar elusiveness of gendered power – the idea that it does not reside in any one site or institution, but seems spread throughout the world. Only “patriarchy” seems to express that it is felt in the way individual examples of gender inequality interact, reinforcing each other to create entire edifices of oppression.

~Charlotte Higgins, The Guardian

I’m not angry because I hate men. I’m not even angry at men. I’m angry at the system that, for the lack of a better term, most people refer to as the patriarchy.

~Anne Theriaut, The Good Men Project

Remember in “Terminator 2” how the bad terminator kept getting smashed and shattered and ripped apart, but it didn’t matter? He just kept re-emerging, rising from the ashes, as an unstoppable force. Now imagine that terminator is a vessel to keep power, wealth and status in the hands of men — that’s the patriarchy. It can feel indestructible, coming back ever stronger despite seemingly endless efforts to smash it.

~Maya Salam, The New York Times

If you imagine that there is such a thing as “The Patriarchy”, it gives you the sense that you have just one enemy to fight. It makes the world simple and comprehensible. There’s a lot of psychological appeal in that kind of worldview. But it also makes you miss a great deal of the real complexity and nuance in the world. You have reified the concept.

Such a simplistic worldview might motivate you to fight harder against patriarchy, which would be a good thing. But then again, it could actually sap your motivation, by making it seem like you have a single implacable enemy that controls the entire world and has throughout history. If there is such a thing as “The Patriarchy”, then its power must be tremendous; perhaps we have weakened its hold upon the world, but could we ever hope to completely defeat it? (I made a similar point in an old post about how acknowledging progress is vital in order to make more progress.)

Moreover, thinking that all patriarchy stems from the same source could cause you to misdiagnose problems and fail to notice solutions that would otherwise be readily available. If you go around thinking that any disparity between how men and women are treated must be the result of some global phenomenon called “The Patriarchy”, you may not think to try simple fixes like blinded auditions or revising or eliminating student evaluations. You may assume that sexism is around ever corner when often the real causes are nepotism and network effects.

Slate Star Codex made a similar point about racism in an excellent post called “Murderism”. If your view of the world is that all bad things (or even all bad things in a broad class like “racism” or “sexism”) must stem from the same source, you will be unable to analyze the real nuances of what causes problems and thus be powerless to fix them.

Yes, of course patriarchy exists; and it’s important. But it comes in many different kinds, and many difference degrees, and policies that amelioriate it in some contexts may be ineffective—or even counterproductive—in others. This is why I say that it’s dangerous to use a phrase like “The Patriarchy”—for patriarchy isn’t a thing, it’s many things.

No, unemployment doesn’t kill people

Jun 14 JDN 2459015

Some people have argued that lockdown measures were unnecessary, or ineffective. The data definitely leans the other direction, but there’s enough uncertainty in all this that I can at least consider that a serious possibility. That doesn’t mean we were wrong to use them; in the presence of high uncertainty, assuming the worst-case scenario is often the best strategy. Far better to overreact than underreact. And indeed, I’d say that right now we still can’t be confident enough that things are safe to really re-open most of the economy. Re-opening too early could make things far worse.

There’s another argument for re-opening the economy which seems far more seductive: What about the people harmed by the lockdowns? This massive unemployment is terrible too, isn’t it? In fact, what if we’re killing more people by unemployment than we are saving from the virus? The Mises Institute warns: “Unemployment Kills”. Others have speculated that the recession could cause more deaths than the virus.

But in fact, unemployment does not kill. The evidence on this is quite clear. Even in the Great Depression, with massive unemployment, terrible monetary policy, and only the most minimal social welfare measures in place, death rates did not increase. In fact, for all causes except suicide, death rates decrease during recessions—probably because pollution, traffic accidents, and work-related injury and illness go down. And the suicide rate increase isn’t enough to increase the overall death rate.

Of course, dying by suicide is not the same thing as dying from cancer—and indeed, they are most likely different people being affected in each case. So in that sense unemployment can kill people; but it typically saves more people than it kills. Almost any policy choice will cause some deaths and prevent others, so really the best we can do is look at the overall aggregate and see whether our QALY have gone up or down.

This doesn’t mean that we should go out of our way to have recessions in order to save lives; the number of lives saved is small and the loss in quality of life is probably large enough to compensate for it. (That’s why we use quality-adjusted life years after all.) But this recession isn’t arbitrary; it’s the result of trying to stop a global pandemic, so that we don’t have a repeat of what influenza did in 1918.


When the CDC says it’s okay to open back up, by all means, let’s do that. They have issued guidelines for what we need to do in order to make that happen. But until then, let’s trust in the experts—the epidemiologists who say that we still need lockdown measures, and the economists who agree that it’s worth the cost.

Moral disagreement is not bad faith

Jun 7 JDN 2459008

One of the most dangerous moves to make in an argument is to accuse your opponent of bad faith. It’s a powerful, and therefore tempting, maneuver: If they don’t even really believe what they are saying, then you can safely ignore basically whatever comes out of their mouth. And part of why this is so tempting is that it is in fact occasionally true—people do sometimes misrepresent their true beliefs in various ways for various reasons. On the Internet especially, sometimes people are just trolling.

But unless you have really compelling evidence that someone is arguing in bad faith, you should assume good faith. You should assume that whatever they are asserting is what they actually believe. For if you assume bad faith and are wrong, you have just cut off any hope of civil discourse between the two of you. You have made it utterly impossible for either side to learn anything or change their mind in any way. If you assume good faith and are wrong, you may have been overly charitable; but in the end you are the one that is more likely to persuade any bystanders, not the one who was arguing in bad faith.

Furthermore, it is important to really make an effort to understand your opponent’s position as they understand it before attempting to respond to it. Far too many times, I have seen someone accused of bad faith by an opponent who simply did not understand their worldview—and did not even seem willing to try to understand their worldview.

In this post, I’m going to point out some particularly egregious examples of this phenomenon that I’ve found, all statements made by left-wing people in response to right-wing people. Why am I focusing on these? Well, for one thing, it’s as important to challenge bad arguments on your own side as it is to do so on the other side. I also think I’m more likely to be persuasive to a left-wing audience. I could find right-wing examples easily enough, but I think it would be less useful: It would be too tempting to think that this is something only the other side does.

Example 1: “Republicans Have Stopped Pretending to Care About Life”

The phrase “pro-life” means thinking that abortion is wrong. That’s all it means. It’s jargon at this point. The phrase has taken on this meaning independent of its constituent parts, just as a red herring need not be either red or a fish.

Stop accusing people of not being “truly pro-life” because they don’t adopt some other beliefs that are not related to abortion. Even if those would be advancing life in some sense (most people probably think that most things they think are good advance life in some sense!), they aren’t relevant to the concept of being “pro-life”. Moreover, being “pro-life” in the traditional conservative sense isn’t even about minimizing the harm of abortion or the abortion rate. It’s about emphasizing the moral wrongness of abortion itself, and often even criminalizing it.


I don’t think this is really so hard to understand. If someone truly, genuinely believes that abortion is murdering a child, it’s quite clear why they won’t be convinced by attempts at minimizing harm or trying to reduce the abortion rate via contraception or other social policy. Many policies are aimed at “reducing the demand for abortion”; would you want to “reduce the demand for murder”? No, you’d want murderers to be locked up. You wouldn’t care what their reasons were, and you wouldn’t be interested in using social policies to address those reasons. It’s not even hard to understand why this would be such an important issue to them, overriding almost anything else: If you thought that millions of people were murdering children you would consider that an extremely important issue too.

If you want to convince people to support Roe v. Wade, you’re going to have to change their actual belief that abortion is murder. You may even be able to convince them that they don’t really think abortion is murder—many conservatives support the death penalty for murder, but very few do so for abortion. But they clearly do think that abortion is a grave moral wrong, and you can’t simply end-run around that by calling them hypocrites because they don’t care about whatever other issue you think they should care about.

Example 2: “Stop pretending to care about human life if you support wars in the Middle East”

I had some trouble finding the exact wording of the meme I originally saw with this sentiment, but the gist of it was basically that if you support bombing Afghanistan, Libya, Iraq, and/or Syria, you have lost all legitimacy to claiming that you care about human life.

Say what you will about these wars (though to be honest I think what the US has done in Libya and Syria has done more good than harm), but simply supporting a war does not automatically undermine all your moral legitimacy. The kind of radical pacifism that requires us to never kill anyone ever is utterly unrealistic; the question is and has always been “Which people is it okay to kill, when and how and why?” Some wars are justified; we have to accept that.

It would be different if these were wars of genocidal extermination; I can see a case for saying that anyone who supported the Holocaust or the Rwandan Genocide has lost all moral legitimacy. But even then it isn’t really accurate to say that those people don’t care about human life; it’s much more accurate to say that they have assigned the group of people they want to kill to a subhuman status. Maybe you would actually get more traction by saying “They are human beings too!” rather than by accusing people of not believing in the value of human life.

And clearly these are not wars of extermination—if the US military wanted to exterminate an entire nation of people, they could do so much more efficiently than by using targeted airstrikes and conventional warfare. Remember: They have nuclear weapons. Even if you think that they wouldn’t use nukes because of fear of retaliation (Would Russia or China really retaliate using their own nukes if the US nuked Afghanistan or Iran?), it’s clear that they could have done a lot more to kill a lot more innocent people if that were actually their goal. It’s one thing to say they don’t take enough care not to kill innocent civilians—I agree with that. It’s quite another to say that they actively try to kill innocent civilians—that’s clearly not what is happening.

Example 3: “Stop pretending to be Christian if you won’t help the poor.”

This one I find a good deal more tempting: In the Bible, Jesus does spend an awful lot more words on helping the poor than he does on, well, almost anything else; and he doesn’t even once mention abortion or homosexuality. (The rest of the Bible does at least mention homosexuality, but it really doesn’t have any clear mentions of abortion.) So it really is tempting to say that anyone who doesn’t make helping the poor their number one priority can’t really be a Christian.

But the world is more complicated than that. People can truly and deeply believe some aspects of a religion while utterly rejecting others. They can do this more or less arbitrarily, in a way that may not even be logically coherent. They may even honestly believe that every single word of the Bible to be the absolute perfect truth of an absolute perfect God, and yet there are still passages you could point them to that they would have to admit they don’t believe in. (There are literally hundreds of explicit contradictions in the Bible. Many are minor—though still undermine any claim to absolute perfect truth—but some are really quite substantial. Does God forgive and forget, or does he visit revenge upon generations to come? That’s kind of a big deal! And should we be answering fools or not?) In some sense they don’t really believe that every word is true, then; but they do seem to believe in believing it.

Yes, it’s true; people can worship a penniless son of a carpenter who preached peace and charity and at the same time support cutting social welfare programs and bombing the Middle East. Such a worldview may not be entirely self-consistent; it’s certainly not the worldview that Jesus himself espoused. But it nevertheless is quite sincerely believed by many millions of people.

It may still be useful to understand the Bible in order to persuade Christians to help the poor more. There are certainly plenty of passages you can point them to where Jesus talks about how important it is to help the poor. Likewise, Jesus doesn’t seem to much like the rich, so it is fair to ask: How Christian is it for Republicans to keep cutting taxes on the rich? (I literally laughed out loud when I first saw this meme: “Celebrate Holy Week By Flogging a Banker: It’s What Jesus Would Have Done!“) But you should not accuse people of “pretending to be Christian”. They really do strongly identify themselves as Christian, and would sooner give up almost anything else about their identity. If you accuse them of pretending, all that will do is shut down the conversation.

Now, after all that, let me give one last example that doesn’t fit the trend, one example where I really do think the other side is acting in bad faith.


Example 4: “#AllLivesMatter is a lie. You don’t actually think all lives matter.”

I think this one is actually true. If you truly believed that all lives matter, you wouldn’t post the hashtag #AllLivesMatter in response to #BlackLivesMatter protests against police brutality.

First of all, you’d probably be supporting those protests. But even if you didn’t for some reason, that isn’t how you would use the hashtag. As a genuine expression of caring, the hashtag #AllLivesMatter would only really make sense for something like Oxfam or UNICEF: Here are these human lives that are in danger and we haven’t been paying enough attention to them, and here, you can follow my hashtag and give some money to help them because all lives matter. If it were really about all lives mattering, then you’d see the hashtag pop up after a tsunami in Southeast Asia or a famine in central Africa. (For awhile I tried actually using it that way; I quickly found that it was overwhelmed by the bad faith usage and decided to give up.)

No, this hashtag really seems to be trying to use a genuinely reasonable moral norm—all lives matter—as a weapon against a political movement. We don’t see #AllLivesMatter popping up asking people to help save some lives—it’s always as a way of shouting down other people who want to save some lives. It’s a glib response that lets you turn away and ignore their pleas, without ever actually addressing the substance of what they are saying. If you really believed that all lives matter, you would not be so glib; you would want to understand how so many people are suffering and want to do something to help them. Even if you ultimately disagreed with what they were saying, you would respect them enough to listen.

The counterpart #BlueLivesMatter isn’t in bad faith, but it is disturbing in a different way: What are ‘blue lives’? People aren’t born police officers. They volunteer for that job. They can quit if want. No one can quit being Black. Working as a police officer isn’t even especially dangerous! But it’s not a bad faith argument: These people really do believe that the lives of police officers are worth more—apparently much more—than the lives of Black civilians.

I do admit, the phrasing “#BlackLivesMatter” is a bit awkward, and could be read to suggest that other lives don’t matter, but it takes about 2 minutes of talking to someone (or reading a blog by someone) who supports those protests to gather that this is not their actual view. Perhaps they should have used #BlackLivesMatterToo, but when your misconception is that easily rectified the responsibility to avoid it falls on you. (Then again, some people do seem to stoke this misconception: I was quite annoyed when a question was asked at a Democratic debate: “Do Black Lives Matter, or Do All Lives Matter?” The correct answer of course is “All lives matter, which is why I support the Black Lives Matter movement.”)

So, yes, bad faith arguments do exist, and sometimes we need to point them out. But I implore you, consider that a last resort, a nuclear option you’ll only deploy when all other avenues have been exhausted. Once you accuse someone of bad faith, you have shut down the conversation completely—preventing you, them, and anyone else who was listening from having any chance of learning or changing their mind.

The fable of the billionaires

May 31 JDN 2458999

There are great many distortions in real-world markets that cause them to deviate from the ideal of perfectly competitive free markets, and economists rightfully spend much of their time locating, analyzing, and mitigating such distortions.

But I think there is a general perception among economists, and perhaps among others as well, that if we could somehow make markets perfectly competitive and efficient, we’d be done; the world, or at least the market, would be just and fair and all would be good. And this perception is gravely mistaken. To make that clear to you, I offer a little fable.

Once upon a time, widgets were made by hand. One person, working for one eight-hour day, could make 100 widgets. Most people were employed making widgets full-time. The wage for making widgets was $1 per widget.

Then, an inventor came up with a way to automate the production of widgets. For $100 per day, the same cost to hire a worker to make 100 widgets, the machine could instead make 101 widgets.

Because it was 1% more efficient, businesses began adopting the new machine, and now made slightly more widgets than before. But some workers who had previously made widgets were laid off, while others saw their wages fall to only $0.99 per widget.


If there were more widgets, but fewer people were getting paid less to make them, where did the extra wealth go? To the inventor, of course, who now owns 10% of all widget production and has billions of dollars.

Later, another inventor came up with an even better machine, which could make 102 widgets in a day. And that inventor became a billionare too, while more became unemployed and wages fell to $0.98 per widget.

And then there was another inventor, and another, and another; and today the machines can make 200 widgets in a day and wages are only $0.50 per widget. We now have twice as many widgets as we used to have, and hundreds of billionaires; yet only half as many people now work making widgets as once did, and those who remain make only half of what they once did.

Was this market inefficient or uncompetitive? Not at all! In fact it was quite efficient: It delivered the most widgets for the least cost every step of the way. And the first round of billionaires didn’t get enough power to keep the next round from innovating even better and also becoming billionaires. No one stole or cheated to get where they are; the billionaires really made it to the top by being brilliant innovators who made the world more efficient.

Indeed, by the standard measures of economic surplus, the world has gotten better with each new machine. GDP has gone up, wealth has gone up. Yet millions of people are out of work, and millions more are making pitifully low wages. Overall the nation seems to be worse off, even though all the numbers keep saying things are getting better.

There are some relatively simple solutions to this problem: We could tax those billionaires, and use the money to provide public goods to everyone else; and then the added wealth from doubling our quantity of widgets would benefit everyone and not just the inventors who made it happen. Would that reduce the incentives to innovate? A little, perhaps; but it’s hard to believe that most people who would be willing to invent something for $1 billion wouldn’t be willing to do so for $500 million or even for $50 million. At some point that extra money really isn’t benefiting you all that much. And what’s the point of incentivizing innovation if it makes life worse for most of our population?

In the real world there are lots of other problems, of course. Corruption, regulatory capture, rent-seeking, collusion, and so on all make our markets less efficient than they could have been. But even if markets were efficient, it’s not clear that they would be fair or just, or that they would be making most people’s lives better.

Indeed, I’m not convinced that most billionaires really got where they are by being particularly innovative. I can appreciate the innovations made by Cisco and Microsoft, but what brilliant innovation underlies Facebook or Amazon? The Internet itself is a great innovation (largely created by DARPA and universities), but is using it to talk to people or sell things really such a great leap? Tesla and SpaceX are innovative, but they have largely been money pits for Elon Musk, who inherited a good chunk of his wealth and made most of the rest by owning shares in PayPal. Yet even if we suppose that all the billionaires got where they are by inventing things that made the economy more efficient, it’s still not clear that they deserve to keep that staggering wealth.

I think the fundamental problem is that we have mentally equated ‘value of marginal product’ with ‘what you rightfully earn’. But the former is dependent upon the rest of the market: Who you are competing with, what your customers want. You can work very hard and be very talented, but if you’re making something that people aren’t willing to pay for, you won’t make any money. And the fact that people won’t pay for something doesn’t mean it isn’t valuable: If you produce public goods, they could benefit many people a great deal but still not draw in profits. Conversely, the fact that something is profitable doesn’t necessarily make it valuable: It could just be a very effective method of rent-seeking.

I’m not saying we should do away with markets; they’re very useful, and they do have a lot of benefits. But we should acknowledge their limitations. We should be aware not only that real-world markets are not perfectly efficient, but also that even a perfectly efficient market wouldn’t make for the best possible world.

Failures of democracy or capitalism?

May 24 JDN 2458992

Blaming capitalism for the world’s woes is a common habit of the left wing in general, but it seems to have greatly increased in frequency and volume in the era of Trump. I don’t want to say that this is always entirely wrong; capitalism in its purest form certainly does have genuine flaws that need to be addressed (and that’s why we have taxes, regulations, the welfare state, etc.).

But I’ve noticed that a lot of the things people complain about most really don’t seem to have a lot to do with capitalism.

For instance: Forced labor in Third World countries? First of all, that’s been around for as long as civilization has existed, and quite probably longer. It’s certainly not new to capitalism. Second, the freedom to choose who you transact with—including who employs you—is a fundamental principle of capitalism. In that sense, forced labor is the very opposite of capitalism; it spits upon everything capitalism stands for.

It’s certainly the case that many multinational corporations are implicated in slavery, even today—usually through complex networks of subsidiaries and supply chains. But it’s not clear to me that socialism is any kind of solution to this problem; nationalized industries are perfectly capable of enslaving people. (You may have heard of a place called the Gulag?)

Or what about corporate welfare, the trillions of dollars in subsidies we give to the oil and coal industries? Well, that’s not very capitalist either; capitalism is supposed to be equal competition in a free market, not the government supporting particular businesses or industries at the expense of others. And it’s not like socialist Venezuela has any lack of oil subsidies—indeed it’s not quite clear to me where the government ends and PDVSA begins. We need a word for such policies that are neither capitalist nor socialist; perhaps “corporatist”?

And really, the things that worry me about America today are not flaws in our markets; they are flaws in our government. We are not witnessing a catastrophic failure of capitalism; we are witnessing a catastrophic failure of democracy.

As if the Electoral College weren’t bad enough (both Al Gore and Hillary Clinton should have won the Presidency, by any sensible notion of democratic voting!), we are now seeing extreme levels of voter suppression, including refusing to accept mail-in ballots in the middle of a historic pandemic. This looks disturbingly like how democracy has collapsed in other countries, such as Turkey and Hungary.

The first-past-the-post plurality vote is already basically the worst possible voting system that can still technically be considered democratic. But it is rendered far worse by a defective primary system, which was even more of a shambles this year than usual. The number of errors in the Iowa caucus was ridiculous, and the primaries as a whole suffered from so many flaws that many voters now consider them illegitimate.

And of course there’s Donald Trump himself. He is certainly a capitalist (though he’s not exactly a free-trade neoliberal; he’s honestly more like a mercantilist). But what really makes him dangerous is not his free-market ideology, which is basically consistent with the US right wing going back at least 30 years; it’s his willingness to flaunt basic norms of democracy and surround himself with corrupt, incompetent sycophants. Republicans have been cutting the upper tax brackets and subsidizing oil companies for quite some time now; but it’s only recently that they have so blatantly disregarded the guardrails of democracy.

I’m not saying it’s wrong to criticize capitalism. There certainly are things worth criticizing, particularly about the most extreme free-market ideology. But it’s important to be clear about where exactly problems lie if you want to fix them—and right now we desperately need to fix them. America is in a crisis right now, something much bigger than just this pandemic. We are not in this crisis because of an excessive amount of deregulation or tax-cutting; we are in this crisis because of an excessive amount of corruption, incompetence, and authoritarianism. We wouldn’t fix this by nationalizing industries or establishing worker co-ops. We need to fix it first by voting out those responsible, and second by reforming our system so that they won’t get back in.

We still don’t know the fatality rate of COVID-19

May 10 JDN2458978

You’d think after being in this pandemic for several weeks we would now have a clear idea of the fatality rate of the virus. Unfortunately, this is not the case.

The problem is that what we can track really doesn’t tell us what we need to know.

What we can track is how many people have tested positive versus how many people have died. As of this writing, 247,000 people have died and 3,504,000 have tested positive. If this were the true fatality rate, it would be horrifying: A death rate of 7% is clearly in excess of even the 1918 influenza pandemic.

Fortunately, this is almost certainly an overestimate. But it’s actually possible for it to be an underestimate, and here’s why: A lot of those people who currently have the virus could still die.

We really shouldn’t be dividing (total deaths)/(total confirmed infections). We should be dividing (total deaths)/(total deaths + total recoveries). If people haven’t recovered yet, it’s too soon to say whether they will live.

On that basis, this begins to look more like an ancient plague: The number of recoveries is only about four times the number of deaths, which would be a staggering fatality rate of 20%.

But as I said, it’s far more likely that this is an overestimate, because we don’t actually know how many people have been infected. We only know how many people have been infected and gotten tested. A large proportion have never been tested; many of these were simply asymptomatic.
We know this because of the few cases we have of rigorous testing of a whole population, such as the passengers on this cruise liner bound for Antarctica. On that cruise liner, 6 were hospitalized, but 128 tested positive for the virus. This means that the number of asymptomatic infections was twenty times that of the number of symptomatic infections.

There have been several studies attempting to determine what proportion of infections are asymptomatic, because this knowledge is so vital. Unfortunately the results are wildly inconsistent. They seem to range from 5% asymptomatic and 95% symptomatic to 95% asymptomatic and 5% symptomatic. The figure I find most plausible is about 80%: This means that the number of asymptomatic infected is about four times that of the number of symptomatic infected.

This means that the true calculation we should be doing actually looks like this: (total deaths)/(total deaths + total recoveries + total asymptomatic).

The number of deaths seems to be about one fourth the number of recoveries. But when you add the fact that four times as many who get infected are asymptomatic, things don’t look quite so bad. This yields an overall fatality rate of about 4%. This is still very high, and absolutely comparable to the 1918 influenza pandemic.

But the truth is, we just don’t know. South Korea’s fatality rate was only 0.7%, which would be a really bad flu season but nothing catastrophic. (A typical flu has a fatality rate of about 0.1%.) On the (deaths)/(deaths + recoveries) basis, it looks almost as bad as the Black Death.

With so much uncertainty, there’s really only one option: Prepare for the worst-case scenario. Assume that the real death rate is massive, and implement lockdown measures until you can confirm that it isn’t.

Authoritarianism and Masculinity

Apr 19 JDN 2458957

There has always been a significant difference between men and women voters, at least as long as we have been gathering data—and probably as long as women have been voting, which is just about to hit its centennial in the United States.

But the 2016 and 2018 elections saw the largest gender gaps we’ve ever recorded. Dividing by Presidential administrations, Bush would be from 2000 to 2006, when the gender gap never exceeded 18 percentage points, and averaged less than 10 points. Obama would be from 2008 to 2014, when the gender gap never exceeded 20 points and averaged about 15 points. In 2018, the gap stood at 23 percentage points.

Indeed, it is quite clear at this point that Trump’s support base comes mainly from White men.

This is far from the only explanatory factor here: Younger voters are much more liberal than older voters, more educated voters are more liberal than less educated voters, and urban voters are much more liberal than rural voters.

But the gender and race gaps are large enough that even if only White men with a college degree had voted, Trump would have still won, and even if only women without a college degree had voted, Trump would have lost. Trumpism is a white male identity movement.

And indeed it seems significant that Trump’s opponent was the first woman to be a US Presidential nominee from a major party.

Why would men be so much more likely to support Trump than women? Well, there’s the fact that Trump has been accused of sexual harassment dozens of times and sexual assault several times. Women are more likely to be victims of such behavior, and men are more likely to be perpetrators of it.

But I think that’s really a symptom of a broader cause, which is that authoritarianism is masculine.

Think about it: Can you even name a woman who was an authoritarian dictator? There have been a few queen tyrants historically, but not many; tyrants are almost always kings. And for all her faults, Margaret Thatcher was assuredly no Joseph Stalin.

Masculinity is tied to power, authority, strength, dominance: All things that authoritarians promise. It doesn’t even seem to matter that it’s always the dictator asserting power and dominance upon us, taking away the power and authority we previously had; the mere fact that some man is exerting power and dominance on someone seems to satisfy this impulse. And of course those who support authoritarians always seem to imagine that the dictator will oppress someone else—never me. (“I never thought leopards would eat my face!”)

Conversely, the virtues of democracy, such as equality, fairness, cooperation, and compromise, are coded feminine. This is how toxic masculinity sustains itself: Even being willing to talk about disagreements rather than fighting over them constitutes surrender to the feminine. So the mere fact that I am trying to talk them out of their insanely (both self- and other-) destructive norms proves that I serve the enemy.

I don’t often interact with Trump supporters, because doing so is a highly unpleasant experience. But when I have, certain themes kept reoccurring: “Trump is a real man”; “Democrats are pussies”; “they [people of color] are taking over our [White people’s] country”; “you’re a snowflake libtard beta cuck”.

Almost all of the content was about identity, particularly masculine and White identity. Virtually none of their defenses of Trump involved any substantive claims about policy, though some did at least reference the relatively good performance of the economy (up until recently—and that they all seem to blame on the “unforeseeable” pandemic, a “Black Swan”; nevermind that people actually did foresee it and were ignored). Ironically they are always the ones complaining about “identity politics”.

And while they would be the last to admit it, I noticed something else as well: Most of these men were deeply insecure about their own masculinity. They kept constantly trying to project masculine dominance, and getting increasingly aggravated when I simply ignored it rather than either submitting or responding with my own displays of dominance. Indeed, they probably perceived me as displaying a kind of masculine dominance: I was just countersignaling instead of signaling, and that’s what made them so angry. They clearly felt deeply envious of the fact that I could simply be secure in my own identity without feeling a need to constantly defend it.

But of course I wasn’t born that way. Indeed, the security I now feel in my own identity was very hard-won through years of agony and despair—necessitated by being a bisexual man in a world that even today isn’t very accepting of us. Even now I’m far from immune to the pressures of masculinity; I’ve simply learned to channel them better and resist their worst effects.

They call us “snowflakes” because they feel fragile, and fear their own fragility. And in truth, they are fragile. Indeed, fragile masculinity is one of the strongest predictors of support for Trump. But it is in the nature of fragile masculinity that pointing it out only aggravates it and provokes an even angrier response. Toxic masculinity is a very well-adapted meme; its capacity to defend itself is morbidly impressive, like the way that deadly viruses spread themselves is morbidly impressive.

This is why I think it is extremely dangerous to mock the size of Trump’s penis (or his hands, metonymously—though empirically, digit ratio slightly correlates with penis size, but overall hand size does not), or accuse his supporters of likewise having smaller penises. In doing so, you are reinforcing the very same toxic masculinity norms that underlie so much of Trump’s support. And this is even worse if the claim is true: In that case you’re also reinforcing that man’s own crisis of masculine identity.

Indeed, perhaps the easiest way to anger a man who is insecure about his masculinity is to accuse him of being insecure about his masculinity. It’s a bit of a paradox. I have even hesitated to write this post, for fear of triggering the same effect; but I realized that it’s more likely that you, my readers, would trigger it inadvertently, and by warning you I might reduce the overall rate at which it is triggered.

I do not use the word “triggered” lightly; I am talking about a traumatic trigger response. These men have been beaten down their whole lives for not being “manly enough”, however defined, and they lash out by attacking the masculinity of every other man they encounter—thereby perpetuating the cycle of trauma. And stricter norms of masculinity also make coping with trauma more difficult, which is why men who exhibit stricter masculinity also are more likely to suffer PTSD in war. There are years of unprocessed traumatic memories in these men’s brains, and the only way they know to cope with them is to try to inflict them on someone else.

The ubiquity of “cuck” as an insult in the alt-right is also quite notable in this context. It’s honestly a pretty weird insult to throw around casually; it implies knowing all sorts of things about a person’s sexual relationships that you can’t possibly know. (For someone in an openly polyamorous relationship, it’s probably quite amusing.) But it’s a way of attacking masculine identity: If you were a “real man”, your wife wouldn’t be sleeping around. We accuse her of infidelity in order to accuse you of inferiority. (And if your spouse is male? Well then obviously you’re even worse than a “cuck”—you’re a “fag”.) There also seems to be some sort of association that the alt-right made between cuckoldry and politics, as though the election of Obama constitutes America “cheating” on them. I’m not sure whether it bothers them more that Obama is liberal, or that he is Black. Both definitely bother them a great deal.

How do we deal with these men? If we shouldn’t attack their masculinity for fear of retrenchment, and we can’t directly engage them on questions of policy because it means nothing to them, what then should we do? I’m honestly not sure. What these men actually need is years of psychotherapy to cope with their deep-seated traumas; but they would never seek it out, because that, too, is considered unmasculine. Of course you can’t be expected to provide the effect of years of psychotherapy in a single conversation with a stranger. Even a trained therapist wouldn’t be able to do that, nor would they be likely to give actual therapy sessions to angry strangers for free.

What I think we can do, however, is to at least try to refrain from making their condition worse. We can rigorously resist the temptation to throw the same insults back at them, accusing them of having small penises, or being cuckolds, or whatever. We should think of this the way we think of using “gay” as an insult (something I all too well remember from middle school): You’re not merely insulting the person you’re aiming it at, you’re also insulting an entire community of innocent people.

We should even be very careful about directly addressing their masculine insecurity; it may sometimes be necessary, but it, too, is sure to provoke a defensive response. And as I mentioned earlier, if you are a man and you are not constantly defending your own masculinity, they can read that as countersignaling your own superiority. This is not an easy game to win.

But the stakes are far too high for us to simply give up. The fate of America and perhaps even the world hinges upon finding a solution.

Is this another Great Depression?

Apr 12 JDN 2458952

In the week from March 15 to March 21, over 3.3 million Americans filed for unemployment. In the following week, this staggering record was broken, when over 6.6 million filed for unemployment. This is an utterly unprecedented number of unemployment filings in a single week; while the data is not as reliable further back, we think this didn’t even happen in the Great Depression.

The Dow Jones Industrial Average is down over 26% in the past quarter. The S&P 500 is down over 23% over the same period. The only comparable stock market crashes are Black Monday and the 1929 market crash.

Does this mean we are on track for another Great Depression? Fortunately, it does not.

This is all happening very fast, because of the rapid shutdowns of businesses during the pandemic. So when we look at short time horizons, things look very scary. But currently unemployment is still only 4.4%, and it is forecasted to rise to about 10% or 11%. This will certainly be a recession—indeed comparable to the Great Recession in 2009—but it will still pale in comparison to the Great Depression, when unemployment hit nearly 25%.

Also, we have a good reason for all this unemployment: We’re making people stay home to stop the spread of the virus. And it seems to be working: California and Washington took some of the most drastic measures, and have shown the fastest reductions in the spread of the virus.

This isn’t a normal recession. We are causing this unemployment on purpose. Paul Krugman makes the analogy to a medically-induced coma: We are shutting some functions down intentionally in order to make it easier to heal.

There is a significant chance, however, that this recession will end up being worse than it’s supposed to be, if our policymakers fail to provide adequate and timely relief to those who become unemployed.

As Donald Marron of the Urban Institute explained quite succinctly in a Twitter thread, there are three types of economic losses we need to consider here: Losses necessary to protect health, losses caused by insufficient demand, and losses caused by lost productive capacity. The first kind of loss is what we are doing on purpose; the other two are losses we should be trying to avoid. Insufficient demand is fairly easy to fix: Hand out cash. But sustaining productive capacity can be trickier.

Given the track record of the Trump administration so far, I am not optimistic. First Trump denied the virus was even a threat. Then he blamed China (which, even if partly true, doesn’t solve anything). Then his response was delayed and inadequate. And now the relief money is taking weeks to get to people—while clearly being less than many people need.

When Trump was first elected, I had several scenarios in my head of what might happen. The best-case scenario was that he’d turn out to be a typical Republican, or be kept on a tight leash by other Republicans. Obviously that didn’t happen. The worst-case scenario was a nuclear war with China; we are all very fortunate that this didn’t happen either. But this is honestly much worse than my median-case scenario, which was that Trump would be like another Reagan or another Nixon. Somehow he turned out to be another Reagan, another Nixon, another Harding, and another Hoover all rolled into one. He somehow combines the worst aspects of every President we’ve ever had, and while facing a historic global crisis his primary concern is his TV ratings.

I can’t tell you how long this is going to last. I can’t tell you just how bad it’s going to get. But I am confident of a few things:

It’ll be worse than it had to be, but not as bad as it could have been. Trump will continue making everything worse, but other, better leaders will make things better. Above all, we’ll make it through this, together.

Fear not to “overreact”

Mar 29 JDN 2458938

It could be given as a story problem in an algebra class, if you didn’t mind terrifying your students:

A virus spreads exponentially, so that the population infected doubles every two days. Currently 10,000 people are infected. How long will it be until 300,000 are infected? Until 10,000,000 are infected? Until 600,000,000 are infected?

The answers:

300,000/10,000 is about 32 = 2^5, so it will take 5 doublings, or 10 days.

10,000,000/10,000 is about 1024=2^10, so it will take 10 doublings, or 20 days.

600,000,000/10,000 is about 64*1024=2^6*2^10, so it will take 16 doublings, or 32 days.

This is the approximate rate at which COVID-19 spreads if uncontrolled.

Fortunately it is not completely uncontrolled; there were about 10,000 confirmed infections on January 30, and there are now about 300,000 as of March 22. This is about 50 days, so the daily growth rate has averaged about 7%. On the other hand, this is probably a substantial underestimate, because testing remains very poor, particularly here in the US.

Yet the truth is, we don’t know how bad COVID-19 is going to get. Some estimates suggest it may be nearly as bad as the 1918 flu pandemic; others say it may not be much worse than H1N1. Perhaps all this social distancing and quarantine is an overreaction? Perhaps the damage from closing all the schools and restaurants will actually be worse than the damage from the virus itself?

Yes, it’s possible we are overreacting. But we really shouldn’t be too worried about this possibility.

This is because the costs here are highly asymmetric. Overreaction has a moderate, fairly predictable cost. Underreaction could be utterly catastrophic. If we overreact, we waste a quarter or two of productivity, and then everything returns to normal. If we underreact, millions of people die.

This is what it means to err on the side of caution: If we are not 90% sure that we are overreacting, then we should be doing more. We should be fed up with the quarantine procedures and nearly certain that they are not all necessary. That means we are doing the right thing.

Indeed, the really terrifying thing is that we may already have underreacted. These graphs of what will happen under various scenarios really don’t look good:

pandemic_graph

But there may still be a chance to react adequately. The advice for most of us seems almost too simple: Stay home. Wash your hands.