Congratulations, America.

2016-11-132016-11-12 PNRJ core principles, current events, ethics, public policy bigotry, Donald Trump, election, Electoral College, George W. Bush, Hillary Clinton, Kim Jong-un, racism, sexism, Vladimir Putin, voting

Nov 13, JDN 2457676

Congratulations, you elected Donald Trump.

Instead of the candidate with decades of experience as Secretary of State, US Senator, and an internationally renowned philanthropist, you chose the first President in history to not have any experience whatsoever in government or the military.

Instead of the candidate with the most comprehensive, evidence-based plan for action against climate change (that is, the only candidate who supports nuclear energy), you elected the one who is planning to appoint a climate-change denier head of the EPA.

Perhaps to punish the candidate who carried out a longstanding custom of using private email servers because the public servers were so defective, you accepted the candidate who is being charged with not only mass fraud but also multiple counts of sexual assault.

Perhaps based on the Russian propaganda—not kidding, read the URL—saying that one candidate could trigger a Third World War, you chose the candidate who has no idea how international diplomacy works and wants to convert NATO into a mercantilist empire (and by the way has no apparent qualms about deploying nuclear weapons).

Because one candidate was “too close to Wall Street” in some vague ill-defined sense (oh my god, she gave speeches! And accepted donations!), you elected the other one who has already vowed to turn back the financial regulations that are currently protecting us from a repeat of the Great Recession.

Because you didn’t trust the candidate with one of the highest honest ratings ever recorded, you elected the one who is surrounded by hundreds of scandals and never even released his tax returns.
Even if you didn’t outright agree with it, you were willing to look past his promise to deport 11 million people and his long history of bigotry toward a wide variety of ethnic groups.
Even his Vice President, who seems like a great statesman simply by comparison, is one of the most fanatical right-wing Vice Presidents we’ve had in decades. He opposes not just abortion, but birth control. He supports—and has signed as governor—“religious freedom” bills designed to legalize discrimination against LGBT people.

Congratulations, America. You literally elected the candidate that was supported by Vladimir Putin, Kim Jong-un, the American Nazi Party, and the Klu Klux Klan. Now, reversed stupidity is not intelligence; being endorsed by someone horrible doesn’t necessarily mean you are horrible. But when this many horrible people endorse you, and start giving the same reasons, and those reasons are based on things you particularly have in common with those horrible people like bigotry and authoritarianism… yeah, I think it does say something about you.

Now, to be fair, much of the blame here goes to the Electoral College.

By current counts, Hillary Clinton won the popular vote by at least 500,000 votes. It is projected that she may even win by as much as 2 million. This will be the fourth time in US history that the Electoral College winner was definitely not the popular vote winner.

But even that is only possible because Hillary Clinton did not win the overwhelming landslide she deserved. The Electoral College should have been irrelevant, because she should have won at least 60% of every demographic in every state. Our whole nation should have declared together in one voice that we will not tolerate bigotry and authoritarianism. The fact that that didn’t happen is reason enough to be ashamed; even if Clinton will slightly win the popular vote that still says something truly terrible about our country.

Indeed, this is what it says:

We slightly preferred democracy over fascism.

We slightly preferred liberty over tyranny.

We slightly preferred justice over oppression.

We slightly preferred feminism over misogyny.

We slightly preferred equality over racism.

We slightly preferred reason over instinct.

We slightly preferred honesty over fraud.

We slightly preferred sustainability over ecological devastation.

We slightly preferred competence over incompetence.

We slightly preferred diplomacy over impulsiveness.

We slightly preferred humility over narcissism.

We were faced with the easiest choice ever given to us in any election, and just a narrow majority got the answer right—and then under the way our system works that wasn’t even enough.

I sincerely hope that Donald Trump is not as bad as I believe he is. The feeling of vindication at being able to tell so many right-wing family members “I told you so” pales in comparison to the fear and despair for the millions of people who will die from his belligerent war policy, his incompetent economic policy, and his insane (anti-)environmental policy. Even the working-class White people who voted for him will surely suffer greatly under his regime.

Yes, I sincerely hope that he is not as bad as we think he is, though I remember saying that George W. Bush was not as bad as we thought when he was elected—and he was. He was. His Iraq War killed hundreds of thousands of people based on lies. His economy policy triggered the worst economic collapse since the Great Depression. So now I have to ask: What if he is as bad as we think?

Fortunately, I do not believe that Trump will literally trigger a global nuclear war.

Then again, I didn’t believe he would win, either.

Sometimes people have to lose their jobs. This isn’t a bad thing.

2016-10-082017-10-08 PNRJ ethics, inequality, macroeconomics, public policy active labor market policy, capital, Denmark, education, Eleizer Yudkowsky, employment, employment protection legislation, hires, income, jobs, labor, Less Wrong, Miles Kimball, Parade magazine, productivity, race, rent, robots, separations, technology, unemployment, wealth

Oct 8, JDN 2457670

Eleizer Yudkowsky (founder of the excellent blog forum Less Wrong) has a term he likes to use to distinguish his economic policy views from either liberal, conservative, or even libertarian: “econoliterate”, meaning the sort of economic policy ideas one comes up with when one actually knows a good deal about economics.

In general I think Yudkowsky overestimates this effect; I’ve known some very knowledgeable economists who disagree quite strongly over economic policy, and often following the conventional political lines of liberal versus conservative: Liberal economists want more progressive taxation and more Keynesian monetary and fiscal policy, while conservative economists want to reduce taxes on capital and remove regulations. Theoretically you can want all these things—as Miles Kimball does—but it’s rare. Conservative economists hate minimum wage, and lean on the theory that says it should be harmful to employment; liberal economists are ambivalent about minimum wage, and lean on the empirical data that shows it has almost no effect on employment. Which is more reliable? The empirical data, obviously—and until more economists start thinking that way, economics is never truly going to be a science as it should be.

But there are a few issues where Yudkowsky’s “econoliterate” concept really does seem to make sense, where there is one view held by most people, and another held by economists, regardless of who is liberal or conservative. One such example is free trade, which almost all economists believe in. A recent poll of prominent economists by the University of Chicago found literally zero who agreed with protectionist tariffs.

Another example is my topic for today: People losing their jobs.

Not unemployment, which both economists and almost everyone else agree is bad; but people losing their jobs. The general consensus among the public seems to be that people losing jobs is always bad, while economists generally consider it a sign of an economy that is run smoothly and efficiently.

To be clear, of course losing your job is bad for you; I don’t mean to imply that if you lose your job you shouldn’t be sad or frustrated or anxious about that, particularly not in our current system. Rather, I mean to say that policy which tries to keep people in their jobs is almost always a bad idea.

I think the problem is that most people don’t quite grasp that losing your job and not having a job are not the same thing. People not having jobs who want to have jobs—unemployment—is a bad thing. But losing your job doesn’t mean you have to stay unemployed; it could simply mean you get a new job. And indeed, that is what it should mean, if the economy is running properly.

Check out this graph, from FRED:

The red line shows hires—people getting jobs. The blue line shows separations—people losing jobs or leaving jobs. During a recession (the most recent two are shown on this graph), people don’t actually leave their jobs faster than usual; if anything, slightly less. Instead what happens is that hiring rates drop dramatically. When the economy is doing well (as it is right now, more or less), both hires and separations are at very high rates.

Why is this? Well, think about what a job is, really: It’s something that needs done, that no one wants to do for free, so someone pays someone else to do it. Once that thing gets done, what should happen? The job should end. It’s done. The purpose of the job was not to provide for your standard of living; it was to achieve the task at hand. Once it doesn’t need done, why keep doing it?

We tend to lose sight of this, for a couple of reasons. First, we don’t have a basic income, and our social welfare system is very minimal; so a job usually is the only way people have to provide for their standard of living, and they come to think of this as the purpose of the job. Second, many jobs don’t really “get done” in any clear sense; individual tasks are completed, but new ones always arise. After every email sent is another received; after every patient treated is another who falls ill.

But even that is really only true in the short run. In the long run, almost all jobs do actually get done, in the sense that no one has to do them anymore. The job of cleaning up after horses is done (with rare exceptions). The job of manufacturing vacuum tubes for computers is done. Indeed, the job of being a computer—that used to be a profession, young women toiling away with slide rules—is very much done. There are no court jesters anymore, no town criers, and very few artisans (and even then, they’re really more like hobbyists). There are more writers now than ever, and occasional stenographers, but there are no scribes—no one powerful but illiterate pays others just to write things down, because no one powerful is illiterate (and even few who are not powerful, and fewer all the time).

When a job “gets done” in this long-run sense, we usually say that it is obsolete, and again think of this as somehow a bad thing, like we are somehow losing the ability to do something. No, we are gaining the ability to do something better. Jobs don’t become obsolete because we can’t do them anymore; they become obsolete because we don’t need to do them anymore. Instead of computers being a profession that toils with slide rules, they are thinking machines that fit in our pockets; and there are plenty of jobs now for software engineers, web developers, network administrators, hardware designers, and so on as a result.

Soon, there will be no coal miners, and very few oil drillers—or at least I hope so, for the sake of our planet’s climate. There will be far fewer auto workers (robots have already done most of that already), but far more construction workers who install rail lines. There will be more nuclear engineers, more photovoltaic researchers, even more miners and roofers, because we need to mine uranium and install solar panels on rooftops.

Yet even by saying that I am falling into the trap: I am making it sound like the benefit of new technology is that it opens up more new jobs. Typically it does do that, but that isn’t what it’s for. The purpose of technology is to get things done.

Remember my parable of the dishwasher. The goal of our economy is not to make people work; it is to provide people with goods and services. If we could invent a machine today that would do the job of everyone in the world and thereby put us all out of work, most people think that would be terrible—but in fact it would be wonderful.

Or at least it could be, if we did it right. See, the problem right now is that while poor people think that the purpose of a job is to provide for their needs, rich people think that the purpose of poor people is to do jobs. If there are no jobs to be done, why bother with them? At that point, they’re just in the way! (Think I’m exaggerating? Why else would anyone put a work requirement on TANF and SNAP? To do that, you must literally think that poor people do not deserve to eat or have homes if they aren’t, right now, working for an employer. You can couch that in cold economic jargon as “maximizing work incentives”, but that’s what you’re doing—you’re threatening people with starvation if they can’t or won’t find jobs.)

What would happen if we tried to stop people from losing their jobs? Typically, inefficiency. When you aren’t allowed to lay people off when they are no longer doing useful work, we end up in a situation where a large segment of the population is being paid but isn’t doing useful work—and unlike the situation with a basic income, those people would lose their income, at least temporarily, if they quit and tried to do something more useful. There is still considerable uncertainty within the empirical literature on just how much “employment protection” (laws that make it hard to lay people off) actually creates inefficiency and reduces productivity and employment, so it could be that this effect is small—but even so, likewise it does not seem to have the desired effect of reducing unemployment either. It may be like minimum wage, where the effect just isn’t all that large. But it’s probably not saving people from being unemployed; it may simply be shifting the distribution of unemployment so that people with protected jobs are almost never unemployed and people without it are unemployed much more frequently. (This doesn’t have to be based in law, either; while it is made by custom rather than law, it’s quite clear that tenure for university professors makes tenured professors vastly more secure, but at the cost of making employment tenuous and underpaid for adjuncts.)

There are other policies we could make that are better than employment protection, active labor market policies like those in Denmark that would make it easier to find a good job. Yet even then, we’re assuming that everyone needs jobs–and increasingly, that just isn’t true.

So, when we invent a new technology that replaces workers, workers are laid off from their jobs—and that is as it should be. What happens next is what we do wrong, and it’s not even anybody in particular; this is something our whole society does wrong: All those displaced workers get nothing. The extra profit from the more efficient production goes entirely to the shareholders of the corporation—and those shareholders are almost entirely members of the top 0.01%. So the poor get poorer and the rich get richer.

The real problem here is not that people lose their jobs; it’s that capital ownership is distributed so unequally. And boy, is it ever! Here are some graphs I made of the distribution of net wealth in the US, using from the US Census.

Here are the quintiles of the population as a whole:

And here are the medians by race:

Medians by age:

Medians by education:

And, perhaps most instructively, here are the quintiles of people who own their homes versus renting (The rent is too damn high!)

All that is just within the US, and already they are ranging from the mean net wealth of the lowest quintile of people under 35 (-$45,000, yes negative—student loans) to the mean net wealth of the highest quintile of people with graduate degrees ($3.8 million). All but the top quintile of renters are poorer than all but the bottom quintile of homeowners. And the median Black or Hispanic person has less than one-tenth the wealth of the median White or Asian person.

If we look worldwide, wealth inequality is even starker. Based on UN University figures, 40% of world wealth is owned by the top 1%; 70% by the top 5%; and 80% by the top 10%. There is less total wealth in the bottom 80% than in the 80-90% decile alone. According to Oxfam, the richest 85 individuals own as much net wealth as the poorest 3.7 billion. They are the 0.000,001%.

If we had an equal distribution of capital ownership, people would be happy when their jobs became obsolete, because it would free them up to do other things (either new jobs, or simply leisure time), while not decreasing their income—because they would be the shareholders receiving those extra profits from higher efficiency. People would be excited to hear about new technologies that might displace their work, especially if those technologies would displace the tedious and difficult parts and leave the creative and fun parts. Losing your job could be the best thing that ever happened to you.

The business cycle would still be a problem; we have good reason not to let recessions happen. But stopping the churn of hiring and firing wouldn’t actually make our society better off; it would keep people in jobs where they don’t belong and prevent us from using our time and labor for its best use.

Perhaps the reason most people don’t even think of this solution is precisely because of the extreme inequality of capital distribution—and the fact that it has more or less always been this way since the dawn of civilization. It doesn’t seem to even occur to most people that capital income is a thing that exists, because they are so far removed from actually having any amount of capital sufficient to generate meaningful income. Perhaps when a robot takes their job, on some level they imagine that the robot is getting paid, when of course it’s the shareholders of the corporations that made the robot and the corporations that are using the robot in place of workers. Or perhaps they imagine that those shareholders actually did so much hard work they deserve to get paid that money for all the hours they spent.

Because pay is for work, isn’t it? The reason you get money is because you’ve earned it by your hard work?

No. This is a lie, told to you by the rich and powerful in order to control you. They know full well that income doesn’t just come from wages—most of their income doesn’t come from wages! Yet this is even built into our language; we say “net worth” and “earnings” rather than “net wealth” and “income”. (Parade magazine has a regular segment called “What People Earn”; it should be called “What People Receive”.) Money is not your just reward for your hard work—at least, not always.

The reason you get money is that this is a useful means of allocating resources in our society. (Remember, money was created by governments for the purpose of facilitating economic transactions. It is not something that occurs in nature.) Wages are one way to do that, but they are far from the only way; they are not even the only way currently in use. As technology advances, we should expect a larger proportion of our income to go to capital—but what we’ve been doing wrong is setting it up so that only a handful of people actually own any capital.

Fix that, and maybe people will finally be able to see that losing your job isn’t such a bad thing; it could even be satisfying, the fulfillment of finally getting something done.

No, Scandinavian countries aren’t parasites. They’re just… better.

2016-10-012016-09-24 PNRJ core principles, public policy Denmark, diabetes, ethnic homogeneity, heart disease, immigration, income, inequality, Luxembourg, Miles Kimball, Norway, poverty, PRISM, redistribution, religion, Saudi Arabia, Scandinavia, Scandinaviaisbetter, Singapore, social democracy, socialism, Sweden, taxation, trust

Oct 1, JDN 2457663

If you’ve been reading my blogs for awhile, you likely have noticed me occasionally drop the hashtag #ScandinaviaIsBetter; I am in fact quite enamored of the Scandinavian (or Nordic more generally) model of economic and social policy.

But this is not a consensus view (except perhaps within Scandinavia itself), and I haven’t actually gotten around to presenting a detailed argument for just what it is that makes these countries so great.

I was inspired to do this by discussion with a classmate of mine (who shall remain nameless) who emphatically disagreed; he actually seems to think that American economic policy is somewhere near optimal (and to be fair, it might actually be near optimal, in the broad space of all possible economic policies—we are not Maoist China, we are not Somalia, we are not a nuclear wasteland). He couldn’t disagree with the statistics on how wealthy and secure and happy Scandinavian countries are, so instead he came up with this: “They are parasites.”

What he seemed to mean by this is that somehow Scandinavian countries achieve their success by sapping wealth from other countries, perhaps the rest of Europe, perhaps the world more generally. On this view, it’s not that Norway and Denmark aren’t rich because they economic policy basically figured out; no, they are somehow draining those riches from elsewhere.

This could scarcely be further from the truth.

But first, consider a couple of countries that are parasites, at least partially: Luxembourg and Singapore.

Singapore has an enormous trade surplus: 5.5 billion SGD per month, which is $4 billion per month, so almost $50 billion per year. They also have a positive balance of payments of $61 billion per year. Singapore’s total GDP is about $310 billion, so these are not small amounts. What does this mean? It means that Singapore is taking in a lot more money than they are spending out. They are effectively acting as mercantilists, or if you like as a profit-seeking corporation.

Moreover, Singapore is totally dependent on trade: their exports are over $330 billion per year, and their imports are over $280 billion. You may recognize each of these figures as comparable to the entire GDP of the country. Yes, their total trade is 200% of GDP. They aren’t really so much a country as a gigantic trading company.

What about Luxembourg? Well, they have a trade deficit of 420 million Euros per month, which is about $560 million per year. Their imports total about $2 billion per year, and their exports about $1.5 billion. Since Luxembourg’s total GDP is $56 billion, these aren’t unreasonably huge figures (total trade is about 6% of GDP); so Luxembourg isn’t a parasite in the sense that Singapore is.

No, what makes Luxembourg a parasite is the fact that 36% of their GDP is due to finance. Compare the US, where 12% of our GDP is finance—and we are clearly overfinancialized. Over a third of Luxembourg’s income doesn’t involve actually… doing anything. They hold onto other people’s money and place bets with it. Even insofar as finance can be useful, it should be only very slightly profitable, and definitely not more than 10% of GDP. As Stiglitz and Krugman agree (and both are Nobel Laureate economists), banking should be boring.

Do either of these arguments apply to Scandinavia? Let’s look at trade first. Denmark’s imports total about 42 billion DKK per month, which is about $70 billion per year. Their exports total about $90 billion per year. Denmark’s total GDP is $330 billion, so these numbers are quite reasonable. What are their main sectors? Manufacturing, farming, and fuel production. Notably, not finance.

Similar arguments hold for Sweden and Norway. They may be small countries, but they have diversified economies and strong production of real economic goods. Norway is probably overly dependent on oil exports, but they are specifically trying to move away from that right now. Even as it is, only about $90 billion of their $150 billion exports are related to oil, and exports in general are only about 35% of GDP, so oil is about 20% of Norway’s GDP. Compare that to Saudi Arabia, of which has 90% of its exports related to oil, accounting for 45% of GDP. If oil were to suddenly disappear, Norway would lose 20% of their GDP, dropping their per-capita GDP… all the way to the same as the US. (Terrifying!) But Saudi Arabia would suffer a total economic collapse, and their per capita-GDP would fall from where it is now at about the same as the US to about the same as Greece.

And at least oil actually does things. Oil exporting countries aren’t parasites so much as they are drug dealers. The world is “rolling drunk on petroleum”, and until we manage to get sober we’re going to continue to need that sweet black crude. Better we buy it from Norway than Saudi Arabia.

So, what is it that makes Scandinavia so great? Why do they have the highest happiness ratings, the lowest poverty rates, the best education systems, the lowest unemployment rates, the best social mobility and the highest incomes? To be fair, in most of these not literally every top spot is held by a Scandinavian country; Canada does well, Germany does well, the UK does well, even the US does well. Unemployment rates in particular deserve further explanation, because a lot of very poor countries report surprisingly low unemployment rates, such as Cambodia and Laos.

It’s also important to recognize that even great countries can have serious flaws, and the remnants of the feudal system in Scandinavia—especially in Sweden—still contribute to substantial inequality of wealth and power.

But in general, I think if you assembled a general index of overall prosperity of a country (or simply used one that already exists like the Human Development Index), you would find that Scandinavian countries are disproportionately represented at the very highest rankings. This calls out for some sort of explanation.

Is it simply that they are so small? They are certainly quite small; Norway and Denmark each have fewer people than the core of New York City, and Sweden has slightly more people than the Chicago metropolitan area. Put them all together, add in Finland and Iceland (which aren’t quite Scandinavia), and all together you have about the population of the New York City Combined Statistical Area.

But some of the world’s smallest countries are also its poorest. Samoa and Kiribati each have populations comparable to the city of Ann Arbor and per-capita GDPs 1/10 that of the US. Eritrea is the same size as Norway, and 70 times poorer. Burundi is slightly larger than Sweden, and has a per-capita GDP PPP of only $3.14 per day.

There’s actually a good statistical reason to expect that the smallest countries should vary the most in their incomes; you’re averaging over a smaller sample so you get more variance in the estimate. But this doesn’t explain why Norway is rich and Eritrea is poor. Incomes aren’t assigned randomly. This might be a reason to try comparing Norway to specifically New York City or Los Angeles rather than to the United States as a whole (Norway still does better, in case you were wondering—especially compared to LA); but it’s not a reason to say that Norway’s wealth doesn’t really count.

Is it because they are ethnically homogeneous? Yes, relatively speaking; but perhaps not as much as you imagine. 14% of Sweden’s population is immigrants, of which 64% are from outside the EU. 10% of Denmark’s population is comprised of immigrants, of which 66% came from non-Western countries. Immigrants are 13% of Norway’s population, of which half are from non-Western countries.

That’s certainly more ethnically homogeneous than the United States; 13% of our population is immigrants, which may sound comparable, but almost all non-immigrants in Scandinavia are of indigenous Nordic descent, all “White” by the usual classification. Meanwhile the United States is 64% non-Hispanic White, 16% Hispanic, 12% Black, 5% Asian, and 1% Native American or Pacific Islander.

Scandinavian countries are actually by some measures less homogeneous than the US in terms of religion, however; only 4% of Americans are not Christian (78.5%), atheist (16.1%), or Jewish (1.7%), and only 0.6% are Muslim. As much as In Sweden, on the other hand, 60% of the population is nominally Lutheran, but 80% is atheist, and 5% of the population is Muslim. So if you think of Christian/Muslim as the sharp divide (theologically this doesn’t make a whole lot of sense, but it seems to be the cultural norm in vogue), then Sweden has more religious conflict to worry about than the US does.

Moreover, there are some very ethnically homogeneous countries that are in horrible shape. North Korea is almost completely ethnically homogeneous, for example, as is Haiti. There does seem to be a correlation between higher ethnic diversity and lower economic prosperity, but Canada and the US are vastly more diverse than Japan and South Korea yet significantly richer. So clearly ethnicity is not the whole story here.

I do think ethnic homogeneity can partly explain why Scandinavian countries have the good policies they do; because humans are tribal, ethnic homogeneity engenders a sense of unity and cooperation, a notion that “we are all in this together”. That egalitarian attitude makes people more comfortable with some of the policies that make Scandinavia what it is, which I will get into at the end of this post.

What about culture? Is there something about Nordic ideas, those Viking traditions, that makes Scandinavia better? Miles Kimball has argued this; he says we need to import “hard work, healthy diets, social cohesion and high levels of trust—not Socialism”. And truth be told, it’s hard to refute this assertion, since it’s very difficult to isolate and control for cultural variables even though we know they are important.

But this difficulty in falsification is a reason to be cautious about such a hypothesis; it should be a last resort when all the more testable theories have been ruled out. I’m not saying culture doesn’t matter; it clearly does. But unless you can test it, “culture” becomes a theory that can explain just about anything—which means that it really explains nothing.

The “social cohesion and high levels of trust” part actually can be tested to some extent—and it is fairly well supported. High levels of trust are strongly correlated with economic prosperity. But we don’t really need to “import” that; the US is already near the top of the list in countries with the highest levels of trust.

I can’t really disagree with “good diet”, except to say that almost everywhere eats a better diet than the United States. The homeland of McDonald’s and Coca-Cola is frankly quite dystopian when it comes to rates of heart disease and diabetes. Given our horrible diet and ludicrously inefficient healthcare system, the only reason we live as long as we do is that we are an extremely rich country (so we can afford to pay the most for healthcare, for certain definitions of “afford”), and almost no one here smokes anymore. But good diet isn’t so much Scandinavian as it is… un-American.

But as for “hard work”, he’s got it backwards; the average number of work hours per week is 33 in Denmark and Norway, compared to 38 in the US. Among full-time workers in the US, the average number of hours per week is a whopping 47. Working hours in the US are much more intensive than anywhere in Europe, including Scandinavia. Though of course we are nowhere near the insane work addiction suffered by most East Asian countries; lately South Korea and Japan have been instituting massive reforms to try to get people to stop working themselves to death. And not surprisingly, work-related stress is a leading cause of death in the United States. If anything, we need to import some laziness, or at least a sense of work-life balance. (Indeed, I’m fairly sure that the only reason he said “hard work” is that it’s a cultural Applause Light in the US; being against hard work is like being against the American Flag or homemade apple pie. At this point, “we need more hard work” isn’t so much an assertion as it is a declaration of tribal membership.)

But none of these things adequately explains why poverty and inequality is so much lower in Scandinavia than it is in the United States, and there’s really a quite simple explanation.

Why is it that #ScandinaviaIsBetter? They’re not afraid to make rich people pay higher taxes so they can help poor people.

In the US, this idea of “redistribution of wealth” is anathema, even taboo; simply accusing a policy of being “redistributive” or “socialist” is for many Americans a knock-down argument against that policy. In Denmark, “socialist” is a meaningful descriptor; some policies are “socialist”, others “capitalist”, and these aren’t particularly weighted terms; it’s like saying here that a policy is “Keynesian” or “Monetarist”, or if that’s too obscure, saying that it’s “liberal” or “conservative”. People will definitely take sides, and it is a matter of political importance—but it’s inside the Overton Window. It’s not almost unthinkable as it is here.

If culture has an effect here, it likely comes from Scandinavia’s long traditions of egalitarianism. Going at least back to the Vikings, in theory at least (clearly not always in practice), people—or at least fellow Scandinavians—were considered equal participants in society, no one “better” or “higher” than anyone else. Even today, it is impolite in Denmark to express pride at your own accomplishments; there’s a sense that you are trying to present yourself as somehow more deserving than others. Honestly this attitude seems unhealthy to me, though perhaps preferable to the unrelenting narcissism of American society; but insofar as culture is making Scandinavia better, it’s almost certainly because this thoroughgoing sense of egalitarianism underlies all their economic policy. In the US, the rich are brilliant and the poor are lazy; in Denmark, the rich are fortunate and the poor are unlucky. (Which theory is more accurate? Donald Trump. I rest my case.)

To be clear, Scandinavia is not communist; and they are certainly not Stalinist. They don’t believe in total collectivization of industry, or complete government control over the economy. They don’t believe in complete, total equality, or even a hard cap on wealth: Stefan Persson is an 11-figure billionaire. Does he pay high taxes, living in Sweden? Yes he does, considerably higher than he’d pay in the US. He seems to be okay with that. Why, it’s almost like his marginal utility of wealth is now negligible.

Scandinavian countries also don’t try to micromanage your life in the way often associated with “socialism”–in fact I’d say they do it less than we do in the US. Here we have Republicans who want to require drug tests for food stamps even though that literally wastes money and helps no one; there they just provide a long list of government benefits for everyone free of charge. They just held a conference in Copenhagen to discuss the possibility of transitioning many of these benefits into a basic income; and basic income is the least intrusive means of redistributing wealth.

In fact, because Scandinavian countries tax differently, it’s not necessarily the case that people always pay higher taxes there. But they pay more transparent taxes, and taxes with sharper incidence. Denmark’s corporate tax rate is only 22% compared to 35% in the US; but their top personal income tax bracket is 59% while ours is only 39.6% (though it can rise over 50% with some state taxes). Denmark also has a land value tax and a VAT, both of which most economists have clamored for for generations. (The land value tax I totally agree with; the VAT I’m a little more ambivalent about.) Moreover, filing your taxes in Denmark is not a month-long stress marathon of gathering paperwork, filling out forms, and fearing that you’ll get something wrong and be audited as it is in the US; they literally just send you a bill. You can contest it, but most people don’t. You just pay it and you’re done.

Now, that does mean the government is keeping track of your income; and I might think that Americans would never tolerate such extreme surveillance… and then I remember that PRISM is a thing. Apparently we’re totally fine with the NSA reading our emails, but God forbid the IRS just fill out our 1040s for us (that they are going to read anyway). And there’s no surveillance involved in requiring retail stores to incorporate sales tax into listed price like they do in Europe instead of making us do math at the cash register like they do here. It’s almost like Americans are trying to make taxes as painful as possible.

Indeed, I think Scandanavian socialism is a good example of how high taxes are a sign of a free society, not an authoritarian one. Taxes are a minimal incursion on liberty. High taxes are how you fund a strong government and maintain extensive infrastructure and public services while still being fair and following the rule of law. The lowest tax rates in the world are in North Korea, which has ostensibly no taxes at all; the government just confiscates whatever they decide they want. Taxes in Venezuela are quite low, because the government just owns all the oil refineries (and also uses multiple currency exchange rates to arbitrage seigniorage). US taxes are low by First World standards, but not by world standards, because we combine a free society with a staunch opposition to excessive taxation. Most of the rest of the free world is fine with paying a lot more taxes than we do. In fact, even using Heritage Foundation data, there is a clear positive correlation between higher tax rates and higher economic freedom:

What’s really strange, though, is that most Americans actually support higher taxes on the rich. They often have strange or even incoherent ideas about what constitutes “rich”; I have extended family members who have said they think $100,000 is an unreasonable amount of money for someone to make, yet somehow are totally okay with Donald Trump making $300,000,000. The chant “we are the 99%” has always been off by a couple orders of magnitude; the plutocrat rentier class is the top 0.01%, not the top 1%. The top 1% consists mainly of doctors and lawyers and engineers; the top 0.01%, to a man—and they are nearly all men, in fact White men—either own corporations or work in finance. But even adjusting for all this, it seems like at least a bare majority of Americans are all right with “redistributive” “socialist” policies—as long as you don’t call them that.

So I suppose that’s sort of what I’m trying to do; don’t think of it as “socialism”. Think of it as #ScandinaviaIsBetter.

Nuclear power is safe. Why don’t people like it?

2016-09-242016-09-18 PNRJ ethics, heuristics and biases, public policy availability heuristic, Chernobyl, China, climate change, coal, Deepak Chopra, Deepwater Horizon, Feynman, fossil fuels, Fukushima, Naomi Klein, nuclear, nuclear energy, nuclear weapons, oil, pollution, quantum mechanics, safety, Three Mile Island, uncertainty, vividness, WHO

Sep 24, JDN 2457656

This post will have two parts, corresponding to each sentence. First, I hope to convince you that nuclear power is safe. Second, I’ll try to analyze some of the reasons why people don’t like it and what we might be able to do about that.

Depending on how familiar you are with the statistics on nuclear power, the idea that nuclear power is safe may strike you as either a completely ridiculous claim or an egregious understatement. If your primary familiarity with nuclear power safety is via the widely-publicized examples of Chernobyl, Three Mile Island, and more recently Fukushima, you may have the impression that nuclear power carries huge, catastrophic risks. (You may also be confusing nuclear power with nuclear weapons—nuclear weapons are indeed the greatest catastrophic risk on Earth today, but equating the two is like equating automobiles and machine guns because both of them are made of metal and contain lubricant, flammable materials, and springs.)

But in fact nuclear energy is astonishingly safe. Indeed, even those examples aren’t nearly as bad as people have been led to believe. Guess how many people died as a result of Three Mile Island, including estimated increased cancer deaths from radiation exposure?

Zero. There are zero confirmed deaths and the consensus estimate of excess deaths caused by the Three Mile Island incident by all causes combined is zero.

What about Fukushima? Didn’t 10,000 people die there? From the tsunami, yes. But the nuclear accident resulted in zero fatalities. If anything, those 10,000 people were killed by coal—by climate change. They certainly weren’t killed by nuclear.

Chernobyl, on the other hand, did actually kill a lot of people. Chernobyl caused 31 confirmed direct deaths, as well as an estimated 4,000 excess deaths by all causes. On the one hand, that’s more than 9/11; on the other hand, it’s about a month of US car accidents. Imagine if people had the same level of panic and outrage at automobiles after a month of accidents that they did at nuclear power after Chernobyl.

The vast majority of nuclear accidents cause zero fatalities; other than Chernobyl, none have ever caused more than 10. Deepwater Horizon killed 11 people, and yet for some reason Americans did not unite in opposition against ever using oil (or even offshore drilling!) ever again.

In fact, even that isn’t fair to nuclear power, because we’re not including the thousands of lives saved every year by using nuclear instead of coal and oil.

Keep in mind, the WHO estimates 10 to 100 million excess deaths due to climate change over the 21 ^st century. That’s an average of 100,000 to 1 million deaths every year. Nuclear power currently produces about 11% of the world’s energy, so let’s do a back-of-the-envelope calculation for how many lives that’s saving. Assuming that additional climate change would be worse in direct proportion to the additional carbon emissions (which is conservative), and assuming that half that energy would be replaced by coal or oil (also conservative, using Germany’s example), we’re looking at about a 6% increase in deaths due to climate change if all those nuclear power plants were closed. That’s 6,000 to 60,000 lives that nuclear power plants save every year.

I also haven’t included deaths due to pollution—note that nuclear power plants don’t pollute air or water whatsoever, and only produce very small amounts of waste that can be quite safely stored. Air pollution in all its forms is responsible for one in eight deaths worldwide. Let me say that again: One in eight of all deaths in the world is caused by air pollution—so this is on the order of 7 million deaths per year, every year. We burn our way to a biannual Holocaust. Most of this pollution is actually caused by burning wood—fireplaces, wood stoves, and bonfires are terrible for the air—and many countries would actually see a substantial reduction in their toxic pollution if they switched to oil or even coal in favor of wood. But a large part of that pollution is caused by coal, and a nontrivial amount is caused by oil. Coal-burning factories and power plants are responsible for about 1 million deaths per year in China alone. Most of that pollution could be prevented if those power plants were nuclear instead.

Factor all that in, and nuclear power currently saves tens if not hundreds of thousands of lives per year, and expanding it to replace all fossil fuels could save millions more. Indeed, a more precise estimate of the benefits of nuclear power published a few years ago in Environmental Science and Technology is that nuclear power plants have saved some 1.8 million human lives since their invention, putting them on a par with penicillin and the polio vaccine.

So, I hope I’ve convinced you of the first proposition: Nuclear power plants are safe—and not just safe, but heroic, in fact one of the greatest life-saving technologies ever invented. So, why don’t people like them?

Unfortunately, I suspect that no amount of statistical data by itself will convince those who still feel a deep-seated revulsion to nuclear power. Even many environmentalists, people who could be nuclear energy’s greatest advocates, are often opposed to it. I read all the way through Naomi Klein’s This Changes Everything and never found even a single cogent argument against nuclear power; she simply takes it as obvious that nuclear power is “more of the same line of thinking that got us in this mess”. Perhaps because nuclear power could be enormously profitable for certain corporations (which is true; but then, it’s also true of solar and wind power)? Or because it also fits this narrative of “raping and despoiling the Earth” (sort of, I guess)? She never really does explain; I’m guessing she assumes that her audience will simply share her “gut feeling” intuition that nuclear power is dangerous and untrustworthy. One of the most important inconvenient truths for environmentalists is that nuclear power is not only safe, it is almost certainly our best hope for stopping climate change.

Perhaps all this is less baffling when we recognize that other heroic technologies are often also feared or despised for similarly bizarre reasons—vaccines, for instance.

First of all, human beings fear what we cannot understand, and while the human immune system is certainly immensely complicated, nuclear power is based on quantum mechanics, a realm of scientific knowledge so difficult and esoteric that it is frequently used as the paradigm example of something that is hard to understand. (As Feynman famously said, “I think I can safely say that nobody understands quantum mechanics.”) Nor does it help that popular treatments of quantum physics typically bear about as much resemblance to the actual content of the theory as the X-Men films do to evolutionary biology, and con artists like Deepak Chopra take advantage of this confusion to peddle their quackery.

Nuclear radiation is also particularly terrifying because it is invisible and silent; while a properly-functioning nuclear power plant emits less ionizing radiation than the Capitol Building and eating a banana poses substantially higher radiation risk than talking on a cell phone, nonetheless there is real danger posed by ionizing radiation, and that danger is particularly terrifying because it takes a form that human senses cannot detect. When you are burned by fire or cut by a knife, you know immediately; but gamma rays could be coursing through you right now and you’d feel no different. (Huge quantities of neutrinos are coursing through you, but fear not, for they’re completely harmless.) The symptoms of severe acute radiation poisoning also take a particularly horrific form: After the initial phase of nausea wears off, you can enter a “walking ghost phase”, where your eventual death is almost certain due to your compromised immune and digestive systems, but your current condition is almost normal. This makes the prospect of death by nuclear accident a particularly vivid and horrible image.

Vividness makes ideas more available to our memory; and thus, by the availability heuristic, we automatically infer that it must be more probable than it truly is. You can think of horrific nuclear accidents like Chernobyl, and all the carnage they caused; but all those millions of people choking to death in China don’t make for a compelling TV news segment (or at least, our TV news doesn’t seem to think so). Vividness doesn’t actually seem to make things more persuasive, but it does make them more memorable.

Yet even if we allow for the possibility that death by radiation poisoning is somewhat worse than death by coal pollution (if I had to choose between the two, okay, maybe I’d go with the coal), surely it’s not ten thousand times worse? Surely it’s not worth sacrificing entire cities full of people to coal in order to prevent a handful of deaths by nuclear energy?

Another reason that has been proposed is a sense that we can control risk from other sources, but a nuclear meltdown would be totally outside our control. Perhaps that is the perception, but if you think about it, it really doesn’t make a lot of sense. If there’s a nuclear meltdown, emergency services will report it, and you can evacuate the area. Yes, the radiation moves at the speed of light; but it also dissipates as the inverse square of distance, so if you just move further away you can get a lot safer quite quickly. (Think about the brightness of a lamp in your face versus across a football field. Radiation works the same way.) The damage is also cumulative, so the radiation risk from a meltdown is only going to be serious if you stay close to the reactor for a sustained period of time. Indeed, it’s much easier to avoid nuclear radiation than it is to avoid air pollution; you can’t just stand behind a concrete wall to shield against air pollution, and moving further away isn’t possible if you don’t know where it’s coming from. Control would explain why we fear cars less than airplanes (which is also statistically absurd), but it really can’t explain why nuclear power scares people more than coal and oil.

Another important factor may be an odd sort of bipartisan consensus: While the Left hates nuclear power because it makes corporations profitable or because it’s unnatural and despoils the Earth or something, the Right hates nuclear power because it requires substantial government involvement and might displace their beloved fossil fuels. (The Right’s deep, deep love of the fossil fuel industry now borders on the pathological. Even now that they are obviously economically inefficient and environmentally disastrous, right-wing parties around the world continue to defend enormous subsidies for oil and coal companies. Corruption and regulatory capture could partly explain this, but only partly. Campaign contributions can’t explain why someone would write a book praising how wonderful fossil fuels are and angrily denouncing anyone who would dare criticize them.) So while the two sides may hate each other in general and disagree on most other issues—including of course climate change itself—they can at least agree that nuclear power is bad and must be stopped.

Where do we go from here, then? I’m not entirely sure. As I said, statistical data by itself clearly won’t be enough. We need to find out what it is that makes people so uniquely terrified of nuclear energy, and we need to find a way to assuage those fears.

And we must do this now. For every day we don’t—every day we postpone the transition to a zero-carbon energy grid—is another thousand people dead.

The replication crisis, and the future of science

2016-08-272019-06-16 PNRJ core principles, ethics, public policy, science and academia, statistics adjunct, bias, economics, faculty, file drawer problem, incentives, journal, medicine, p-value, Patreon, precognition, psychology, publish or perish, replication, research, Rogart-Reinhoff, science, tenure, tuition

Aug 27, JDN 2457628 [Sat]

After settling in a little bit in Irvine, I’m now ready to resume blogging, but for now it will be on a reduced schedule. I’ll release a new post every Saturday, at least for the time being.

Today’s post was chosen by Patreon vote, though only one person voted (this whole Patreon voting thing has not been as successful as I’d hoped). It’s about something we scientists really don’t like to talk about, but definitely need to: We are in the middle of a major crisis of scientific replication.

Whenever large studies are conducted attempting to replicate published scientific results, their ability to do so is almost always dismal.

Psychology is the one everyone likes to pick on, because their record is particularly bad. Only 39% of studies were really replicated with the published effect size, though a further 36% were at least qualitatively but not quantitatively similar. Yet economics has its own replication problem, and even medical research is not immune to replication failure.

It’s important not to overstate the crisis; the majority of scientific studies do at least qualitatively replicate. We are doing better than flipping a coin, which is better than one can say of financial forecasters.
There are three kinds of replication, and only one of them should be expected to give near-100% results. That kind is reanalysis—when you take the same data and use the same methods, you absolutely should get the exact same results. I favor making reanalysis a routine requirement of publication; if we can’t get your results by applying your statistical methods to your data, then your paper needs revision before we can entrust it to publication. A number of papers have failed on reanalysis, which is absurd and embarrassing; the worst offender was probably Rogart-Reinhoff, which was used in public policy decisions around the world despite having spreadsheet errors.

The second kind is direct replication—when you do the exact same experiment again and see if you get the same result within error bounds. This kind of replication should work something like 90% of the time, but in fact works more like 60% of the time.

The third kind is conceptual replication—when you do a similar experiment designed to test the same phenomenon from a different perspective. This kind of replication should work something like 60% of the time, but actually only works about 20% of the time.

Economists are well equipped to understand and solve this crisis, because it’s not actually about science. It’s about incentives. I facepalm every time I see another article by an aggrieved statistician about the “misunderstanding” of p-values; no, scientist aren’t misunderstanding anything. They know damn well how p-values are supposed to work. So why do they keep using them wrong? Because their jobs depend on doing so.

The first key point to understand here is “publish or perish”; academics in an increasingly competitive system are required to publish their research in order to get tenure, and frequently required to get tenure in order to keep their jobs at all. (Or they could become adjuncts, who are paid one-fifth as much.)

The second is the fundamentally defective way our research journals are run (as I have discussed in a previous post). As private for-profit corporations whose primary interest is in raising more revenue, our research journals aren’t trying to publish what will genuinely advance scientific knowledge. They are trying to publish what will draw attention to themselves. It’s a similar flaw to what has arisen in our news media; they aren’t trying to convey the truth, they are trying to get ratings to draw advertisers. This is how you get hours of meaningless fluff about a missing airliner and then a single chyron scroll about a war in Congo or a flood in Indonesia. Research journals haven’t fallen quite so far because they have reputations to uphold in order to attract scientists to read them and publish in them; but still, their fundamental goal is and has always been to raise attention in order to raise revenue.

The best way to do that is to publish things that are interesting. But if a scientific finding is interesting, that means it is surprising. It has to be unexpected or unusual in some way. And above all, it has to be positive; you have to have actually found an effect. Except in very rare circumstances, the null result is never considered interesting. This adds up to making journals publish what is improbable.

In particular, it creates a perfect storm for the abuse of p-values. A p-value, roughly speaking, is the probability you would get the observed result if there were no effect at all—for instance, the probability that you’d observe this wage gap between men and women in your sample if in the real world men and women were paid the exact same wages. The standard heuristic is a p-value of 0.05; indeed, it has become so enshrined that it is almost an explicit condition of publication now. Your result must be less than 5% likely to happen if there is no real difference. But if you will only publish results that show a p-value of 0.05, then the papers that get published and read will only be the ones that found such p-values—which renders the p-values meaningless.

It was never particularly meaningful anyway; as we Bayesians have been trying to explain since time immemorial, it matters how likely your hypothesis was in the first place. For something like wage gaps where we’re reasonably sure, but maybe could be wrong, the p-value is not too unreasonable. But if the theory is almost certainly true (“does gravity fall off as the inverse square of distance?”), even a high p-value like 0.35 is still supportive, while if the theory is almost certainly false (“are human beings capable of precognition?”—actual study), even a tiny p-value like 0.001 is still basically irrelevant. We really should be using much more sophisticated inference techniques, but those are harder to do, and don’t provide the nice simple threshold of “Is it below 0.05?”

But okay, p-values can be useful in many cases—if they are used correctly and you see all the results. If you have effect X with p-values 0.03, 0.07, 0.01, 0.06, and 0.09, effect X is probably a real thing. If you have effect Y with p-values 0.04, 0.02, 0.29, 0.35, and 0.74, effect Y is probably not a real thing. But I’ve just set it up so that these would be published exactly the same. They each have two published papers with “statistically significant” results. The other papers never get published and therefore never get seen, so we throw away vital information. This is called the file drawer problem.

Researchers often have a lot of flexibility in designing their experiments. If their only goal were to find truth, they would use this flexibility to test a variety of scenarios and publish all the results, so they can be compared holistically. But that isn’t their only goal; they also care about keeping their jobs so they can pay rent and feed their families. And under our current system, the only way to ensure that you can do that is by publishing things, which basically means only including the parts that showed up as statistically significant—otherwise, journals aren’t interested. And so we get huge numbers of papers published that tell us basically nothing, because we set up such strong incentives for researchers to give misleading results.

The saddest part is that this could be easily fixed.

First, reduce the incentives to publish by finding other ways to evaluate the skill of academics—like teaching for goodness’ sake. Working papers are another good approach. Journals already get far more submissions than they know what to do with, and most of these papers will never be read by more than a handful of people. We don’t need more published findings, we need better published findings—so stop incentivizing mere publication and start finding ways to incentivize research quality.

Second, eliminate private for-profit research journals. Science should be done by government agencies and nonprofits, not for-profit corporations. (And yes, I would apply this to pharmaceutical companies as well, which should really be pharmaceutical manufacturers who make cheap drugs based off of academic research and carry small profit margins.) Why? Again, it’s all about incentives. Corporations have no reason to want to find truth and every reason to want to tilt it in their favor.

Third, increase the number of tenured faculty positions. Instead of building so many new grand edifices to please your plutocratic donors, use your (skyrocketing) tuition money to hire more professors so that you can teach more students better. You can find even more funds if you cut the salaries of your administrators and football coaches. Come on, universities; you are the one industry in the world where labor demand and labor supply are the same people a few years later. You have no excuse for not having the smoothest market clearing in the world. You should never have gluts or shortages.

Fourth, require pre-registration of research studies (as some branches of medicine already do). If the study is sound, an optimal rational agent shouldn’t care in the slightest whether it had a positive or negative result, and if our ape brains won’t let us think that way, we need to establish institutions to force it to happen. They shouldn’t even see the effect size and p-value before they make the decision to publish it; all they should care about is that the experiment makes sense and the proper procedure was conducted.
If we did all that, the replication crisis could be almost completely resolved, as the incentives would be realigned to more closely match the genuine search for truth.

Alas, I don’t see universities or governments or research journals having the political will to actually make such changes, which is very sad indeed.

Why are movies so expensive? Did they used to be? Do they need to be?

2016-08-102016-08-03 PNRJ ethics, market failure, public policy Avatar, budget, copyright, film, Gone with the Wind, inflation, intellectual property, Michele Boldrin, monopoly, movie, patent, pizzaright, porn, trademark

August 10, JDN 2457611

One of the better arguments in favor of copyright involves film production. Films are extraordinarily expensive to produce; without copyright, how would they recover their costs? $100 million is a common budget these days.

It is commonly thought that film budgets used to be much smaller, so I looked at some data from The Numbers on over 5,000 films going back to 1915, and inflation-adjusted the budgets using the CPI. (I learned some interesting LibreOffice Calc functions in the process of merging the data; also LibreOffice crashed a few times trying to make the graphs, so that’s fun. I finally realized it had copied over all the 10,000 hyperlinks from the HTML data set.)

If you just look at the nominal figures, there does seem to be some sort of upward trend:

But once you do the proper inflation adjustment, this trend basically disappears:

In real terms, the grosses of some early movies are quite large. Adjusted to 2015 dollars, Gone with the Wind grossed $6.659 billion—still the highest ever. In 1937, Snow White and the Seven Dwarfs grossed over $3.043 billion in 2015 dollars. In 1950, Cinderella made it to $2.592 billion in today’s money. (Horrifyingly, The Birth of a Nation grossed $258 million in today’s money.)

Nor is there any evidence that movie production has gotten more expensive. The linear trend is actually negative, though with a very small slope that is not statistically significant. On average, the real budget of a movie falls by $1752 per year.

While the two most expensive movies came out recently (Pirates of the Caribbean: At World’s End and Avatar), the third most expensive was released in 1963 (Cleopatra). The really hugely expensive movies do seem to cluster relatively recently—but then so do the really cheap films, some of which have budgets under $10,000. It may just be that more movies are produced in general, and overall the cost of producing a film doesn’t seem to have changed in real terms. The best return on investment is My Date with Drew, released in 2005, which had a budget of $1,100 but grossed $181,000, giving it an ROI of 16,358%. The highest real profit was of course Gone with the Wind, which made an astonishing $6.592 billion, though Titanic, Avatar, Aliens and Terminator 2 combined actually beat it with a total profit of $6.651 billion, which may explain why James Cameron can now basically make any movie he wants and already has four sequels lined up for Avatar.

The biggest real loss was 1970’s Waterloo, which made back only $18 million of its $153 million budget, losing $135 million and having an ROI of -87.7%. This was not quite as bad an ROI as 2002’s The Adventures of Pluto Nash, which had an ROI of -92.91%.

But making movies has always been expensive, at least for big blockbusters. (The $8,900 budget of Primer is something I could probably put on credit cards if I had to.) It’s nothing new to spend $100 million in today’s money.

When considering the ethics and economics of copyright, it’s useful to think about what Michele Boldrin calls “pizzaright”: you can’t copy my pizza, or you are guilty of pizzaright infringement. Many of the arguments for copyright are so general—this is a valuable service, it carries some risk of failure, it wouldn’t be as profitable without the monopoly, so fewer companies might enter the business—that they would also apply to pizza. Yet somehow nobody thinks that pizzaright should be a thing. If there is a justification for copyrights, it must come from the special circumstances of works of art (broadly conceived, including writing, film, music, etc.), and the only one that really seems strong enough is the high upfront cost of certain types of art—and indeed, the only ones that really seem to fit that are films and video games.

Painting, writing, and music just aren’t that expensive. People are willing to create these things for very little money, and can do so more or less on their own, especially nowadays. If the prices are reasonable, people will still want to buy from the creators directly—and sure enough, widespread music piracy hasn’t killed music, it has only killed the corporate record industry. But movies and video games really can easily cost $100 million to make, so there’s a serious concern of what might happen if they couldn’t use copyright to recover their costs.

The question for me is, did we really need copyright to fund these budgets?

Let’s take a look at how Star Wars made its money. $6.249 billion came from box office revenue, while $873 million came from VHS and DVD sales; those would probably be substantially reduced if not for copyright. But even before The Force Awakens was released, the Star Wars franchise had already made some $12 billion in toy sales alone. “Merchandizing, merchandizing, where the real money from the movie is made!”

Did they need intellectual property to do that? Well, yes—but all they needed was trademark. Defenders of “intellectual property” like to use that term because it elides fundamental distinctions between the three types: trademark, copyright, and patent.
Trademark is unproblematic. You can’t lie about who you are or where you products came from when you’re selling something. So if you are claiming to sell official Star Wars merchandise, you’d better be selling official Star Wars merchandise, and trademark protects that.

Copyright is problematic, but may be necessary in some cases. Copyright protects the content of the movies from being copied or modified without Lucasfilm’s permission. So now rather than simply protecting against the claim that you represent Lucasfilm, we are protecting against people buying the movie, copying it, and reselling the copies—even though that is a real economic service they are providing, and is in no way fraudulent as long as they are clear about the fact that they made the copies.

Patent is, frankly, ridiculous. The concept of “owning” ideas is absurd. You came up with a good way to do something? Great! Go do it then. But don’t expect other people to pay you simply for the privilege of hearing your good idea. Of course I want to financially support researchers, but there are much, much better ways of doing that, like government grants and universities. Patents only raise revenue for research that sells, first of all—so vaccines and basic research can’t be funded that way, even though they are the most important research by far. Furthermore, there’s nothing to guarantee that the person who actually invented the idea is the one who makes the profit from it—and in our current system where corporations can own patents (and do own almost 90% of patents), it typically isn’t. Even if it were, the whole concept of owning ideas is nonsensical, and it has driven us to the insane extremes of corporations owning patents on human DNA. The best argument I’ve heard for patents is that they are a second-best solution that incentivizes transparency and avoids trade secrets from becoming commonplace; but in that case they should definitely be short, and we should never extend them. Companies should not be able to make basically cosmetic modifications and renew the patent, and expiring patents should be a cause for celebration.

Hollywood actually formed in Los Angeles precisely to escape patents, but of course they love copyright and trademark. So do they like “intellectual property”?

Could blockbuster films be produced profitably using only trademark, in the absence of copyright?

Clearly Star Wars would have still turned a profit. But not every movie can do such merchandizing, and when movies start getting written purely for merchandizing it can be painful to watch.

The real question is whether a film like Gone with the Wind or Avatar could still be made, and make a reasonable profit (if a much smaller one).

Well, there’s always porn. Porn raises over $400 million per year in revenue, despite having essentially unenforceable copyright. They too are outraged over piracy, yet somehow I don’t think porn will ever cease to exist. A top porn star can make over $200,000 per year.Then there are of course independent films that never turn a profit at all, yet people keep making them.

So clearly it is possible to make some films without copyright protection, and something like Gone with the Wind needn’t cost $100 million to make. The only reason it cost as much as it did (about $66 million in today’s money) was that movie stars could command huge winner-takes-all salaries, which would no longer be true if copyright went away. And don’t tell me people wouldn’t be willing to be movie stars for $200,000 a year instead of $1.8 million (what Clark Gable made for Gone with the Wind, adjusted for inflation).

Yet some Hollywood blockbuster budgets are genuinely necessary. The real question is whether we could have Avatar without copyright. Not having films like Avatar is something I would count as a substantial loss to our society; we would lose important pieces of our art and culture.

So, where did all that money go? I don’t have a breakdown for Avatar in particular, but I do have a full budget breakdown for The Village. Of its $71.7 million, $33.5 million was “above the line”, which basically means the winner-takes-all superstar salaries for the director, producer, and cast. That amount could be dramatically reduced with no real cost to society—let’s drop it to say $3 million. Shooting costs were $28.8 million, post-production was $8.4 million, and miscellaneous expenses added about $1 million; all of those would be much harder to reduce (they mainly go to technical staff who make reasonable salaries, not to superstars), so let’s assume the full amount is necessary. That’s about $38 million in real cost to produce. Avatar had a lot more (and better) post-production, so let’s go ahead and multiply the post-production budget by an order of magnitude to $84 million. Our new total budget is $113.8 million.
That sounds like a lot, and it is; but this could be made back without copyright. Avatar sold over 14.5 million DVDs and over 8 million Blu-Rays. Conservatively assuming that the price elasticity of demand is zero (which is ridiculous—assuming the monopoly pricing is optimal it should be -1), if those DVDs were sold for $2 each and the Blu-Rays were sold for $5 each, with 50% of those prices being profit, this would yield a total profit of $14.5 million from DVDs and $20 million from Blu-Rays. That’s already $34.5 million. With realistic assumptions about elasticity of demand, cutting the prices this much (DVDs down from an average of $16, Blu-Rays down from an average of $20) would multiply the number of DVDs sold by at least 5 and the number of Blu-Rays sold by at least 3, which would get us all the way up to $132 million—enough to cover our new budget. (Of course this is much less than they actually made, which is why they set the prices they did—but that doesn’t mean it’s optimal from society’s perspective.)

But okay, suppose I’m wrong about the elasticity, and dropping the price from $16 to $2 for a DVD somehow wouldn’t actually increase the number purchased. What other sources of revenue would they have? Well, box office tickets would still be a thing. They’d have to come down in price, but given the high-quality high-fidelity versions that cinemas require—making them quite hard to pirate—they would still get decent money from each cinema. Let’s say the price drops by 90%—all cinemas are now $1 cinemas!—and the sales again somehow remain exactly the same (rather than dramatically increasing as they actually would). What would Avatar’s worldwide box office gross be then? $278 million. They could give the DVDs away for free and still turn a profit.

And that’s Avatar, one of the most expensive movies ever made. By cutting out the winner-takes-all salaries and huge corporate profits, the budget can be substantially reduced, and then what real costs remain can be quite well covered by box office and DVD sales at reasonable prices. If you imagine that piracy somehow undercuts everything until you have to give away things for free, you might think this is impossible; but in reality pirated versions are of unreliable quality, people do want to support artists and they are willing to pay something for their entertainment. They’re just tired of paying monopoly prices to benefit the shareholders of Viacom.

Would this end the era of the multi-millionaire movie star? Yes, I suppose it might. But it would also put about $10 billion per year back in the pockets of American consumers—and there’s little reason to think it would take away future Avatars, much less future Gone with the Winds.

We need to be honest about free trade’s costs, and clearer about its benefits

2016-08-062016-08-06 PNRJ core principles, ethics, public policy Bernie Sanders, China, Denmark, Donald Trump, environment, environmentalism, exports, free trade, globalization, imports, job guarantee, Naomi Klein, poverty, The Economist, William Poole

August 6, JDN 2457607

I discussed in a post awhile ago the fact that economists overwhelmingly favor free trade but most people don’t. There are some deep psychological reasons for this, particularly the loss aversion which makes people experience losses about twice as much as they experience gains. Free trade requires change; it creates some jobs and destroys others. Those forced transitions can be baffling and painful.

The good news is that views on trade in the US are actually getting more positive in recent years—which makes Trump that much more baffling. I honestly can’t make much sense of the fact that candidates who are against free trade have been so big in this election (and let’s face it, even Bernie Sanders is largely against free trade!), in light of polls showing that free trade is actually increasingly popular.

Partly this can be explained by the fact that people are generally more positive about free trade in general than they are about particular trade agreements, and understandably so, as free trade agreements often include some really awful provisions that in no way advance free trade. But that doesn’t really explain the whole effect here. Maybe it’s a special interest effect: People who hate trade are much more passionate about hating trade than people who like trade are passionate about liking trade. If that’s the case, then this is what we need to change.

Today I’d like to focus on what we as economists and the economically literate more generally can do to help people understand what free trade is and why it is so important. This means two things:

First, of course, we must be clearer about the benefits of free trade. Many economists seem to think that it is simply so obvious that they don’t even bother to explain it, and end up seeming like slogan-chanting ideologues. “Free trade! Free trade! Free trade!”

Above all, we need to talk about how it was primarily through free trade that global extreme poverty is now at the lowest level it has ever been. This benefit needs to be repeated over and over, and anyone who argues for protectionism needs to be confronted with the millions of people they will throw back into poverty. Most people don’t even realize that global poverty is declining, so first of all, they need to be shown that it is.

American ideas are often credited with fighting global poverty, but that’s not so convincing, since most of the improvement in poverty has happened in China (not exactly a paragon of free markets, much less liberal democracy); what really seems to have made the difference is American dollars, spent in free trade. Imports to the US from China have risen from $3.8 billion in 1985 to $483 billion in 2015. Extreme poverty in China fell from 61% of the population in 1990 to 4% in 2015. Coincidence? I think not. Indeed, that $483 billion is just about $1 per day for every man, woman, and child in China—and the UN extreme poverty line is $1.25 per person per day.

We need to be talking about the jobs that are created by trade—if need be, making TV commercials interviewing workers at factories who make products for export. “Most of our customers are in Japan,” they might say. “Without free trade, I’d be out of a job.” Interview business owners saying things like, “Two years ago we opened up sales to China. Now I need to double my workforce just to keep up with demand.” Unlike a lot of other economic policies where the benefits are diffuse and hard to keep track of, free trade is one where you can actually point to specific people and see that they are now better off because they make more selling exports. From there, we just need to point out that imports and exports are two sides of the same transaction—so if you like exports, you’d better have imports.

We need to make it clear that the economic gains from trade are just as real as the losses from transition, even if they may not be as obvious. William Poole put it very well in this article on attitudes toward free trade:

Economists are sometimes charged with insensitivity over job losses, when in fact most of us are extremely sensitive to such losses. What good economics tells us is that saving jobs in one industry does not save jobs in the economy as a whole. We urge people to be as sensitive to the jobs indirectly lost as a consequence of trade restriction as to those lost as a consequence of changing trade patterns.

Second, just as importantly, we must be honest about the costs of free trade. We need to stop eliding the distinction between net aggregate benefits and benefits for everyone everywhere. There are winners and losers, and we need to face up to that.

For example, we need to stop saying thinks like “Free trade will not send jobs to Mexico and China.” No, it absolutely will, and has, and does—and that is part of what it’s for. Because people in Mexico and China are people, and they deserve to have better jobs just as much as we do. Sending jobs to China is not a bug; it’s a feature. China needs jobs particularly badly.

Then comes the next part: “But if our jobs get sent to China, what will we do?” Better jobs, created here by the economic benefits of free trade. No longer will American workers toil in factories assembling parts; instead they will work in brightly-lit offices designing those parts on CAD software.

Of course this raises another problem: What happens to people who were qualified to toil in factories, but aren’t qualified to design parts on CAD software? Well, they’ll need to learn. And we should be paying for that education (though in large part, we are; altogether US federal, state, and local governments spend over $1 trillion a year on education).

And what if they can’t learn, can’t find another job somewhere else? What if they’re just not cut out for the kind of work we need in a 21st century economy? Then here comes my most radical statement of all: Then they shouldn’t have to.

The whole point of expanding economic efficiency—which free trade most certainly does—is to create more stuff. But if you create more stuff, you then have the opportunity to redistribute that stuff, in such a way that no one is harmed by that transition. This is what we have been failing to do in the United States. We need to set up our unemployment and pension systems so that people who lose their jobs due to free trade are not harmed by it, but instead feel like it is an opportunity to change careers or retire. We should have a basic income so that even people who can’t work at all can still live with dignity. This redistribution will not happen automatically; it is a policy choice we must make.

In theory there is a way around it, which is often proposed as an alternative to a basic income; it is called a job guarantee. Simply giving everyone free money for some reason makes people uncomfortable (never could quite fathom why; Donald Trump inherits capital income from his father, that’s fine, but we all inherit shared capital income as a nation, that’s a handout?), so instead we give everyone a job, so they can earn their money!

Well, here’s the thing: They won’t actually be earning it—or else it’s not a job guarantee. If you just want an active labor-market program to retrain workers and match them with jobs, that sounds great; Denmark has had great success with such things, and after all #ScandinaviaIsBetter. But no matter how good your program is, some people are going to not have any employable skills, or have disabilities too severe to do any productive work, or simply be too lazy to actually work. And now you’ve got a choice to make: Do you give those people jobs, or not?

If you don’t, it’s not a job guarantee. If you do, they’re not earning it anymore. Either employment is tied to actual productivity, or it isn’t; if you are guaranteed a certain wage no matter what you do, then some people are going to get that wage for doing nothing. As The Economist put it:

However, there are two alternatives: give people money with no strings attached (through a guaranteed basic income, unemployment insurance, disability payments, and so forth), or just make unemployed people survive on whatever miserable scraps they can cobble together.

If it’s really a job guarantee, we would still need to give jobs to people who can’t work or simply won’t. How is this different from a basic income? Well, it isn’t, except you added all these extra layers of bureaucracy so that you could feel like you weren’t just giving a handout. You’ve added additional costs for monitoring and administration, as well as additional opportunities for people to slip through the cracks. Either you are going to leave some people in poverty, or you are going to give money to people who don’t work—so why not give money to people who don’t work?

Another cost we need to be honest about is ecological. In our rush to open free trade, we are often lax in ensuring that this trade will not accelerate environmental degradation and climate change. This is often justified in the name of helping the world’s poorest people; but they will be hurt far more when their homes are leveled by hurricanes than by waiting a few more years to get the trade agreement right. That’s one where Poole actually loses me:

Few Americans favor a world trading system in which U.S. policies on environmental and other conditions could be controlled by foreign governments through their willingness to accept goods exported by the United States.

Really? You think we should be able to force other countries to accept our goods, regardless of whether they consider them ecologically sustainable? You think most Americans think that? It’s easy to frame it as other people imposing on us, but trade restrictions on ecologically harmful goods are actually a very minimal—indeed, almost certainly insufficient—regulation against environmental harm. Oil can still kill a lot of people even if it never crosses borders (or never crosses in liquid form—part of the point is you can’t stop the gaseous form). We desperately need global standards on ecological sustainability, and while we must balance environmental regulations with economic efficiency, currently that balance is tipped way too far against the environment—and millions will die if it remains this way.

This is the kernel of truth in otherwise economically-ignorant environmentalist diatribes like Naomi Klein’s This Changes Everything; free trade in principle doesn’t say anything about being environmentally unsustainable, but free trade in practice has often meant cutting corners and burning coal. Where we currently have diesel-powered container ships built in coal-powered factories and Klein wants no container ships and perhaps even no factories, what we really need are nuclear-powered container ships and solar-powered factories. Klein points out cases where free trade agreements have shut down solar projects that tried to create local jobs—but neither side seems to realize that a good free trade agreement would expand that solar project to create global jobs. Instead of building solar panels in Canada to sell only in Canada, we’d build solar panels in Canada to sell in China and India—and build ten times as many. That is what free trade could be, if we did it right.

The facts will not speak for themselves, so we must speak for them

2016-08-032016-08-03 PNRJ cognitive science, core principles, current events, ethics, heuristics and biases, public policy abortion, argument, bias, climate change, Donald Trump, election, facts, feelings, Hitler, immigration, Islam, John Oliver, media, mercantilism, Muslims, NATO, natural disasters, nuclear weapons, persuasion, politics, Politifact, racism, reality, terrorism, trade, trade policy, truth

August 3, JDN 2457604

I finally began to understand the bizarre and terrifying phenomenon that is the Donald Trump Presidential nomination when I watched this John Oliver episode:

https://www.youtube.com/watch?v=U-l3IV_XN3c

These lines in particular, near the end, finally helped me put it all together:

What is truly revealing is his implication that believing something to be true is the same as it being true. Because if anything, that was the theme of the Republican Convention this week; it was a four-day exercise in emphasizing feelings over facts.

The facts against Donald Trump are absolutely overwhelming. He is not even a competent business man, just a spectacularly manipulative one—and even then, it’s not clear he made any more money than he would have just keeping his inheritance in a diversified stock portfolio. His casinos were too fraudulent for Atlantic City. His university was fraudulent. He has the worst honesty rating Politifact has ever given a candidate. (Bernie Sanders, Barack Obama, and Hillary Clinton are statistically tied for some of the best.)

More importantly, almost every policy he has proposed or even suggested is terrible, and several of them could be truly catastrophic.

Let’s start with economic policy: His trade policy would set back decades of globalization and dramatically increase global poverty, while doing little or nothing to expand employment in the US, especially if it sparks a trade war. His fiscal policy would permanently balloon the deficit by giving one of the largest tax breaks to the rich in history. His infamous wall would probably cost about as much as the federal government currently spends on all basic scientific research combined, and his only proposal for funding it fundamentally misunderstands how remittances and trade deficits work. He doesn’t believe in climate change, and would roll back what little progress we have made at reducing carbon emissions, thereby endangering millions of lives. He could very likely cause a global economic collapse comparable to the Great Depression.

His social policy is equally terrible: He has proposed criminalizing abortion, (in express violation of Roe v. Wade) which even many pro-life people find too extreme. He wants to deport all Muslims and ban Muslims from entering, which not just a direct First Amendment violation but also literally involves jackbooted soldiers breaking into the homes of law-abiding US citizens to kidnap them and take them out of the country. He wants to deport 11 million undocumented immigrants, the largest deportation in US history.

Yet it is in foreign policy above all that Trump is truly horrific. He has explicitly endorsed targeting the families of terrorists, which is a war crime (though not as bad as what Ted Cruz wanted to do, which is carpet-bombing cities). Speaking of war crimes, he thinks our torture policy wasn’t severe enough, and doesn’t even care if it is ineffective. He has made the literally mercantilist assertion that the purpose of military alliances is to create trade surplus es, and if European countries will not provide us with trade surpluses (read: tribute), he will no longer commit to defending them, thereby undermining decades of global stability that is founded upon America’s unwavering commitment to defend our allies. And worst of all, he will not rule out the first-strike deployment of nuclear weapons.

I want you to understand that I am not exaggerating when I say that a Donald Trump Presidency carries a nontrivial risk of triggering global nuclear war. Will this probably happen? No. It has a probability of perhaps 1%. But a 1% chance of a billion deaths is not a risk anyone should be prepared to take.

All of these facts scream at us that Donald Trump would be a catastrophe for America and the world. Why, then, are so many people voting for him? Why do our best election forecasts give him a good chance of winning the election?

Because facts don’t speak for themselves.

This is how the left, especially the center-left, has dropped the ball in recent decades. We joke that reality has a liberal bias, because so many of the facts are so obviously on our side. But meanwhile the right wing has nodded and laughed, even mockingly called us the “reality-based community”, because they know how to manipulate feelings.

Donald Trump has essentially no other skills—but he has that one, and it is enough. He knows how to fan the flames of anger and hatred and point them at his chosen targets. He knows how to rally people behind meaningless slogans like “Make America Great Again” and convince them that he has their best interests at heart.

Indeed, Trump’s persuasiveness is one of his many parallels with Adolf Hitler; I am not yet prepared to accuse Donald Trump of seeking genocide, yet at the same time I am not yet willing to put it past him. I don’t think it would take much of a spark at this point to trigger a conflagration of hatred that launches a genocide against Muslims in the United States, and I don’t trust Trump not to light such a spark.

Meanwhile, liberal policy wonks are looking on in horror, wondering how anyone could be so stupid as to believe him—and even publicly basically calling people stupid for believing him. Or sometimes we say they’re not stupid, they’re just racist. But people don’t believe Donald Trump because they are stupid; they believe Donald Trump because he is persuasive. He knows the inner recesses of the human mind and can harness our heuristics to his will. Do not mistake your unique position that protects you—some combination of education, intellect, and sheer willpower—for some inherent superiority. You are not better than Trump’s followers; you are more resistant to Trump’s powers of persuasion. Yes, statistically, Trump voters are more likely to be racist; but racism is a deep-seated bias in the human mind that to some extent we all share. Trump simply knows how to harness it.

Our enemies are persuasive—and therefore we must be as well. We can no longer act as though facts will automatically convince everyone by the power of pure reason; we must learn to stir emotions and rally crowds just as they do.

Or rather, not just as they do—not quite. When we see lies being so effective, we may be tempted to lie ourselves. When we see people being manipulated against us, we may be tempted to manipulate them in return. But in the long run, we can’t afford to do that. We do need to use reason, because reason is the only way to ensure that the beliefs we instill are true.

Therefore our task must be to make people see reason. Let me be clear: Not demand they see reason. Not hope they see reason. Not lament that they don’t. This will require active investment on our part. We must actually learn to persuade people in such a manner that their minds become more open to reason. This will mean using tools other than reason, but it will also mean treading a very fine line, using irrationality only when rationality is insufficient.

We will be tempted to take the easier, quicker path to the Dark Side, but we must resist. Our goal must be not to make people do what we want them to—but to do what they would want to if they were fully rational and fully informed. We will need rhetoric; we will need oratory; we may even need some manipulation. But as we fight our enemy, we must be vigilant not to become them.

This means not using bad arguments—strawmen and conmen—but pointing out the flaws in our opponents’ arguments even when they seem obvious to us—bananamen. It means not overstating our case about free trade or using implausible statistical results simply because they support our case.

But it also means not understating our case, not hiding in page 17 of an opaque technical report that if we don’t do something about climate change right now millions of people will die. It means not presenting our ideas as “political opinions” when they are demonstrated, indisputable scientific facts. It means taking the media to task for their false balance that must find a way to criticize a Democrat every time they criticize a Republican: Sure, he is a pathological liar and might trigger global economic collapse or even nuclear war, but she didn’t secure her emails properly. If you objectively assess the facts and find that Republicans lie three times as often as Democrats, maybe that’s something you should be reporting on instead of trying to compensate for by changing your criteria.

Speaking of the media, we should be pressuring them to include a regular—preferably daily, preferably primetime—segment on climate change, because yes, it is that important. How about after the weather report every day, you show a climate scientist explaining why we keep having record-breaking summer heat and more frequent natural disasters? If we suffer a global ecological collapse, this other stuff you’re constantly talking about really isn’t going to matter—that is, if it mattered in the first place. When ISIS kills 200 people in an attack, you don’t just report that a bunch of people died without examining the cause or talking about responses. But when a typhoon triggered by climate change kills 7,000, suddenly it’s just a random event, an “act of God” that nobody could have predicted or prevented. Having an appropriate caution about whether climate change caused any particular disaster should not prevent us from drawing the very real links between more carbon emissions and more natural disasters—and sometimes there’s just no other explanation.

It means demanding fact-checks immediately, not as some kind of extra commentary that happens after the debate, but as something the moderator says right then and there. (You have a staff, right? And they have Google access, right?) When a candidate says something that is blatantly, demonstrably false, they should receive a warning. After three warnings, their mic should be cut for that question. After ten, they should be kicked off the stage for the remainder of the debate. Donald Trump wouldn’t have lasted five minutes. But instead, they not only let him speak, they spent the next week repeating what he said in bold, exciting headlines. At least CNN finally realized that their headlines could actually fact-check Trump’s statements rather than just repeat them.
Above all, we will need to understand why people think the way they do, and learn to speak to them persuasively and truthfully but without elitism or condescension. This is one I know I’m not very good at myself; sometimes I get so frustrated with people who think the Earth is 6,000 years old (over 40% of Americans) or don’t believe in climate change (35% don’t think it is happening at all, another 30% don’t think it’s a big deal) that I come off as personally insulting them—and of course from that point forward they turn off. But irrational beliefs are not proof of defective character, and we must make that clear to ourselves as well as to others. We must not say that people are stupid or bad; but we absolutely must say that they are wrong. We must also remember that despite our best efforts, some amount of reactance will be inevitable; people simply don’t like having their beliefs challenged.

Yet even all this is probably not enough. Many people don’t watch mainstream media, or don’t believe it when they do (not without reason). Many people won’t even engage with friends or family members who challenge their political views, and will defriend or even disown them. We need some means of reaching these people too, and the hardest part may be simply getting them to listen to us in the first place. Perhaps we need more grassroots action—more protest marches, or even activists going door to door like Jehovah’s Witnesses. Perhaps we need to establish new media outlets that will be as widely accessible but held to a higher standard.

But we must find a way–and we have little time to waste.

The only thing necessary for the triumph of evil is that good people refuse to do cost-benefit analysis

2016-07-272016-07-27 PNRJ core principles, critique of neoclassical economics, public policy climate change, coal, cost-benefit analysis, deontology, Edmund Burke, Exxon, Ford Pinto, George W. Bush, Hillary Clinton, Iraq War, Less Wrong, Mao, Michael Sandel, morality, oil, Osama bin Laden, tobacco, WHO

July 27, JDN 2457597

My title is based on a famous quote often attributed to Edmund Burke, but which we have no record of him actually saying:

The only thing necessary for the triumph of evil is that good men do nothing.

The closest he actually appears to have written is this:

When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle.

Burke’s intended message was about the need for cooperation and avoiding diffusion of responsibility; then his words were distorted into a duty to act against evil in general.

But my point today is going to be a little bit more specific: A great deal of real-world evils would be eliminated if good people were more willing to engage in cost-benefit analysis.

As discussed on Less Wrong awhile back, there is a common “moral” saying which comes from the Talmud (if not earlier; and of course it’s hardly unique to Judaism), which gives people a great warm and fuzzy glow whenever they say it:

Whoever saves a single life, it is as if he had saved the whole world.

Yet this is in fact the exact opposite of moral. It is a fundamental, insane perversion of morality. It amounts to saying that “saving a life” is just a binary activity, either done or not, and once you’ve done it once, congratulations, you’re off the hook for the other 7 billion. All those other lives mean literally nothing, once you’ve “done your duty”.

Indeed, it would seem to imply that you can be a mass murderer, as long as you save someone else somewhere along the line. If Mao Tse-tung at some point stopped someone from being run over by a car, it’s okay that his policies killed more people than the population of Greater Los Angeles.

Conversely, if anything you have ever done has resulted in someone’s death, you’re just as bad as Mao; in fact if you haven’t also saved someone somewhere along the line and he has, you’re worse.

Maybe this is how you get otherwise-intelligent people saying such insanely ridiculous things as “George W. Bush’s crimes are uncontroversially worse than Osama bin Laden’s.” (No, probably not, since Chomsky at least feigns something like cost-benefit analysis. I’m not sure what his failure mode is, but it’s probably not this one in particular. “Uncontroversially”… you keep using that word…)

Cost-benefit analysis is actually a very simple concept (though applying it in practice can be mind-bogglingly difficult): Try to maximize the good things minus the bad things. If an action would increase good things more than bad things, do it; if it would increase bad things more than good things, don’t do it.

What it replaces is simplistic deontological reasoning about “X is always bad” or “Y is always good”; that’s almost never true. Even great evils can be justified by greater goods, and many goods are not worth having because of the evils they would require to achieve. We seem to want all our decisions to have no downside, perhaps because that would resolve our cognitive dissonance most easily; but in the real world, most decisions have an upside and a downside, and it’s a question of which is larger.

Why is it that so many people—especially good people—have such an aversion to cost-benefit analysis?

I gained some insight into this by watching a video discussion from an online Harvard course taught by Michael Sandel (which is free, by the way, if you’d like to try it out). He was leading the discussion Socratically, which is in general a good method of teaching—but like anything else can be used to teach things that are wrong, and is in some ways more effective at doing so because it has a way of making students think they came up with the answers on their own. He says something like, “Do we really want our moral judgments to be based on cost-benefit analysis?” and gives some examples where people made judgments using cost-benefit analysis to support his suggestion that this is something bad.

But of course his examples are very specific: They all involve corporations using cost-benefit analysis to maximize profits. One of them is the Ford Pinto case, where Ford estimated the cost to them of a successful lawsuit, multiplied by the probability of such lawsuits, and then compared that with the cost of a total recall. Finding that the lawsuits were projected to be cheaper, they opted for that result, and thereby allowed several people to be killed by their known defective product.

Now, it later emerged that Ford Pintos were not actually especially dangerous, and in fact Ford didn’t just include lawsuits but also a standard estimate of the “value of a statistical human life”, and as a result of that their refusal to do the recall was probably the completely correct decision—but why let facts get in the way of a good argument?

But let’s suppose that all the facts had been as people thought they were—the product was unsafe and the company was only interested in their own profits. We don’t need to imagine this hypothetically; this is clearly what actually happened with the tobacco industry, and indeed with the oil industry. Is that evil? Of course it is. But not because it’s cost-benefit analysis.

Indeed, the reason this is evil is the same reason most things are evil: They are psychopathically selfish. They advance the interests of those who do them, while causing egregious harms to others.

Exxon is apparently prepared to sacrifice millions of lives to further their own interests, which makes them literally no better than Mao, as opposed to this bizarre “no better than Mao” that we would all be if the number of lives saved versus killed didn’t matter. Let me be absolutely clear; I am not speaking in hyperbole when I say that the board of directors of Exxon is morally no better than Mao. No, I mean they literally are willing to murder 20 million people to serve their own interests—more precisely 10 to 100 million, by WHO estimates. Maybe it matters a little bit that these people will be killed by droughts and hurricanes rather than by knives and guns; but then, most of the people Mao killed died of starvation, and plenty of the people killed by Exxon will too. But this statement wouldn’t have the force it does if I could not speak in terms of quantitative cost-benefit analysis. Killing people is one thing, and most industries would have to own up to it; being literally willing to kill as many people as history’s greatest mass murderers is quite another—and yet it is true of Exxon.

But I can understand why people would tend to associate cost-benefit analysis with psychopaths maximizing their profits; there are two reasons for this.

First, most neoclassical economists appear to believe in both cost-benefit analysis and psychopathic profit maximization. They don’t even clearly distinguish their concept of “rational” from the concept of total psychopathic selfishness—hence why I originally titled this blog “infinite identical psychopaths”. The people arguing for cost-benefit analysis are usually economists, and economists are usually neoclassical, so most of the time you hear arguments for cost-benefit analysis they are also linked with arguments for horrifically extreme levels of selfishness.

Second, most people are uncomfortable with cost-benefit analysis, and as a result don’t use it. So, most of the cost-benefit analysis you’re likely to hear is done by terrible human beings, typically at the reins of multinational corporations. This becomes self-reinforcing, as all the good people don’t do cost-benefit analysis, so they don’t see good people doing it, so they don’t do it, and so on.

Therefore, let me present you with some clear-cut cases where cost-benefit analysis can save millions of lives, and perhaps even save the world.

Imagine if our terrorism policy used cost-benefit analysis; we wouldn’t kill 100,000 innocent people and sacrifice 4,400 soldiers fighting a war that didn’t have any appreciable benefit as a bizarre form of vengeance for 3,000 innocent people being killed. Moreover, we wouldn’t sacrifice core civil liberties to prevent a cause of death that’s 300 times rarer than car accidents.

Imagine if our healthcare policy used cost-benefit analysis; we would direct research funding to maximize our chances of saving lives, not toward the form of cancer that is quite literally the sexiest. We would go to a universal healthcare system like the rest of the First World, and thereby save thousands of additional lives while spending less on healthcare.

With cost-benefit analysis, we would reform our system of taxes and subsidies to internalize the cost of carbon emissions, most likely resulting in a precipitous decline of the oil and coal industries and the rapid rise of solar and nuclear power, and thereby save millions of lives. Without cost-benefit analysis, we instead get unemployed coal miners appearing on TV to grill politicians about how awful it is to lose your job even though that job is decades obsolete and poisoning our entire planet. Would eliminating coal hurt coal miners? Yes, it would, at least in the short run. It’s also completely, totally worth it, by at least a thousandfold.

We would invest heavily in improving our transit systems, with automated cars or expanded rail networks, thereby preventing thousands of deaths per year—instead of being shocked and outraged when an automated car finally kills one person, while manual vehicles in their place would have killed half a dozen by now.

We would disarm all of our nuclear weapons, because the risk of a total nuclear apocalypse is not worth it to provide some small increment in national security above our already overwhelming conventional military. While we’re at it, we would downsize that military in order to save enough money to end world hunger.

And oh by the way, we would end world hunger. The benefits of doing so are enormous; the costs are remarkably small. We’ve actually been making a great deal of progress lately—largely due to the work of development economists, and lots and lots of cost-benefit analysis. This process involves causing a lot of economic disruption, making people unemployed, taking riches away from some people and giving them to others; if we weren’t prepared to bear those costs, we would never get these benefits.

Could we do all these things without cost-benefit analysis? I suppose so, if we go through the usual process of covering of our ears whenever a downside is presented and amplification whenever an upside is presented, until we can more or less convince ourselves that there is no downside even though there always is. We can continue having arguments where one side presents only downsides, the other side presents only upsides, and then eventually one side prevails by sheer numbers, and it could turn out to be the upside team (or should I say “tribe”?).

But I think we’d progress a lot faster if we were honest about upsides and downsides, and had the courage to stand up and say, “Yes, that downside is real; but it’s worth it.” I realize it’s not easy to tell a coal miner to his face that his job is obsolete and killing people, and I don’t really blame Hillary Clinton for being wishy-washy about it; but the truth is, we need to start doing that. If we accept that costs are real, we may be able to mitigate them (as Hillary plans to do with a $30 billion investment in coal mining communities, by the way); if we pretend they don’t exist, people will still get hurt but we will be blind to their suffering. Or worse, we will do nothing—and evil will triumph.

Lukewarm support is a lot better than opposition

2016-07-232016-07-13 PNRJ core principles, ethics, heuristics and biases, public policy, Uncategorized agreement, apostate, betrayal, betrayal aversion, bigotry, Blue Wall of Silence, Christianity, Donald Trump, environmentalism, heretic effect, Islam, libertarian, policy, politics, racism, Spanish Inquisition, special interest, tribal paradigm

July 23, JDN 2457593

Depending on your preconceptions, this statement may seem either eminently trivial or offensively wrong: Lukewarm support is a lot better than opposition.

I’ve always been in the “trivial” camp, so it has taken me awhile to really understand where people are coming from when they say things like the following.

From a civil rights activist blogger (“POC” being “person of color” in case you didn’t know):

“Many of my POC friends would actually prefer to hang out with an Archie Bunker-type who spits flagrantly offensive opinions, rather than a colorblind liberal whose insidious paternalism, dehumanizing tokenism, and cognitive indoctrination ooze out between superficially progressive words.

From the Daily Kos:

Right-wing racists are much more honest, and thus easier to deal with, than liberal racists.

From a Libertarian blogger:

I can deal with someone opposing me because of my politics. I can deal with someone who attacks me because of my religious beliefs. I can deal with open hostility. I know where I stand with people like that.

They hate me or my actions for (insert reason here). Fine, that is their choice. Let’s move onto the next bit. I’m willing to live and let live if they are.

But I don’t like someone buttering me up because they need my support, only to drop me the first chance they get. I don’t need sweet talk to distract me from the knife at my back. I don’t need someone promising the world just so they can get a boost up.

In each of these cases, people are expressing a preference for dealing with someone who actively opposes them, rather than someone who mostly supports them. That’s really weird.

The basic fact that lukewarm support is better than opposition is basically a mathematical theorem. In a democracy or anything resembling one, if you have the majority of population supporting you, even if they are all lukewarm, you win; if you have the majority of the population opposing you, even if the remaining minority is extremely committed to your cause, you lose.

Yes, okay, it does get slightly more complicated than that, as in most real-world democracies small but committed interest groups actually can pressure policy more than lukewarm majorities (the special interest effect); but even then, you are talking about the choice between no special interests and a special interest actively against you.

There is a valid question of whether it is more worthwhile to get a small, committed coalition, or a large, lukewarm coalition; but at the individual level, it is absolutely undeniable that supporting you is better for you than opposing you, full stop. I mean that in the same sense that the Pythagorean theorem is undeniable; it’s a theorem, it has to be true.

If you had the opportunity to immediately replace every single person who opposes you with someone who supports you but is lukewarm about it, you’d be insane not to take it. Indeed, this is basically how all social change actually happens: Committed supporters persuade committed opponents to become lukewarm supporters, until they get a majority and start winning policy votes.

If this is indeed so obvious and undeniable, why are there so many people… trying to deny it?

I came to realize that there is a deep psychological effect at work here. I could find very little in the literature describing this effect, which I’m going to call heretic effect (though the literature on betrayal aversion, several examples of which are linked in this sentence, is at least somewhat related).

Heretic effect is the deeply-ingrained sense human beings tend to have (as part of the overall tribal paradigm) that one of the worst things you can possibly do is betray your tribe. It is worse than being in an enemy tribe, worse even than murdering someone. The one absolutely inviolable principle is that you must side with your tribe.

This is one of the biggest barriers to police reform, by the way: The Blue Wall of Silence is the result of police officers identifying themselves as a tight-knit tribe and refusing to betray one of their own for anything. I think the best option for convincing police officers to support reform is to reframe violations of police conduct as themselves betrayals—the betrayal is not the IA taking away your badge, the betrayal is you shooting an unarmed man because he was Black.

Heretic effect is a particular form of betrayal aversion, where we treat those who are similar to our tribe but not quite part of it as the very worst sort of people, worse than even our enemies, because at least our enemies are not betrayers. In fact it isn’t really betrayal, but it feels like betrayal.

I call it “heretic effect” because of the way that exclusivist religions (including all the Abrahamaic religions, and especially Christianity and Islam) focus so much of their energy on rooting out “heretics”, people who almost believe the same as you do but not quite. The Spanish Inquisition wasn’t targeted at Buddhists or even Muslims; it was targeted at Christians who slightly disagreed with Catholicism. Why? Because while Buddhists might be the enemy, Protestants were betrayers. You can still see this in the way that Muslim societies treat “apostates”, those who once believed in Islam but don’t anymore. Indeed, the very fact that Christianity and Islam are at each other’s throats, rather than Hinduism and atheism, shows that it’s the people who almost agree with you that really draw your hatred, not the people whose worldview is radically distinct.

This is the effect that makes people dislike lukewarm supporters; like heresy, lukewarm support feels like betrayal. You can clearly hear that in the last quote: “I don’t need sweet talk to distract me from the knife at my back.” Believe it or not, Libertarians, my support for replacing the social welfare state with a basic income, decriminalizing drugs, and dramatically reducing our incarceration rate is not deception. Nor do I think I’ve been particularly secretive about my desire to make taxes more progressive and environmental regulations stronger, the things you absolutely don’t agree with. Agreeing with you on some things but not on other things is not in fact the same thing as lying to you about my beliefs or infiltrating and betraying your tribe.

That said, I do sort of understand why it feels that way. When I agree with you on one thing (decriminalizing cannabis, for instance), it sends you a signal: “This person thinks like me.” You may even subconsciously tag me as a fellow Libertarian. But then I go and disagree with you on something else that’s just as important (strengthening environmental regulations), and it feels to you like I have worn your Libertarian badge only to stab you in the back with my treasonous environmentalism. I thought you were one of us!

Similarly, if you are a social justice activist who knows all the proper lingo and is constantly aware of “checking your privilege”, and I start by saying, yes, racism is real and terrible, and we should definitely be working to fight it, but then I question something about your language and approach, that feels like a betrayal. At least if I’d come in wearing a Trump hat you could have known which side I was really on. (And indeed, I have had people unfriend me or launch into furious rants at me for questioning the orthodoxy in this way. And sure, it’s not as bad as actually being harassed on the street by bigots—a thing that has actually happened to me, by the way—but it’s still bad.)

But if you can resist this deep-seated impulse and really think carefully about what’s happening here, agreeing with you partially clearly is much better than not agreeing with you at all. Indeed, there’s a fairly smooth function there, wherein the more I agree with your goals the more our interests are aligned and the better we should get along. It’s not completely smooth, because certain things are sort of package deals: I wouldn’t want to eliminate the social welfare system without replacing it with a basic income, whereas many Libertarians would. I wouldn’t want to ban fracking unless we had established a strong nuclear infrastructure, but many environmentalists would. But on the whole, more agreement is better than less agreement—and really, even these examples are actually surface-level results of deeper disagreement.

Getting this reaction from social justice activists is particularly frustrating, because I am on your side. Bigotry corrupts our society at a deep level and holds back untold human potential, and I want to do my part to undermine and hopefully one day destroy it. When I say that maybe “privilege” isn’t the best word to use and warn you about not implicitly ascribing moral responsibility across generations, this is not me being a heretic against your tribe; this is a strategic policy critique. If you are writing a letter to the world, I’m telling you to leave out paragraph 2 and correcting your punctuation errors, not crumpling up the paper and throwing it into a fire. I’m doing this because I want you to win, and I think that your current approach isn’t working as well as it should. Maybe I’m wrong about that—maybe paragraph 2 really needs to be there, and you put that semicolon there on purpose—in which case, go ahead and say so. If you argue well enough, you may even convince me; if not, this is the sort of situation where we can respectfully agree to disagree. But please, for the love of all that is good in the world, stop saying that I’m worse than the guys in the KKK hoods. Resist that feeling of betrayal so that we can have a constructive critique of our strategy. Don’t do it for me; do it for the cause.

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