China

Why is America so bad at public transit?

PNRJ development economics, inequality, politics, public policy , , , , , , , , , , , , , , , , ,

Sep 8 JDN 2460562

In most of Europe, 20-30% of the population commutes daily by public transit. In the US, only 13% do.

Even countries much poorer than the US have more widespread use of public transit; Kenya, Russia, and Venezuela all have very high rates of public transit use.

Cities around the world are rapidly expanding and improving their subway systems; but we are not here in the US.

Germany, France, Spain, Italy, and Japan are all building huge high-speed rail networks. We have essentially none.

Even Canada has better public transit than we do, and their population is just as spread out as ours.

Why are we so bad at this?

Surprisingly, it isn’t really that we are lacking in rail network. We actually have more kilometers of rail than China or the EU—though shockingly little of it is electrified, and we had nearly twice as many kilometers of rail a century ago. But we use this rail network almost entirely for freight, not passengers.

Is it that we aren’t spending enough government funds? Sort of. But it’s worth noting that we cover a higher proportion of public transit costs with government funds than most other countries. How can this be? It’s because transit systems get more efficient as they get larger, and attract more passengers as they provide better service. So when you provide really bad service, you end up spending more per passenger, and you need more government subsidies to stay afloat.

Cost is definitely part of it: It costs between two and seven times as much to build the same amount of light rail network in the US as it does in most EU countries. But that just raises another question: Why is it so much more expensive here?

This isn’t comparing with China—of course China is cheaper; they have a dictatorship, they abuse their workers, they pay peanuts. None of that is true of France or Germany, democracies where wages are just as high and worker protections are actually a good deal stronger than here. Yet it still costs two to seven times as much to build the same amount of rail in the US as it does in France or Germany.

Another part of the problem seems to be that public transit in the US is viewed as a social welfare program, rather than an infrastructure program: Rather than seeing it as a vital function of government that supports a strong economy, we see it as a last resort for people too poor to buy cars. And then it becomes politicized, because the right wing in the US hates social welfare programs and will do anything to make sure that they are cut down as much as possible.

It wasn’t always this way.

As recently as 1970, most US major cities had strong public transit systems. But now it’s really only the coastal cities that have them; cities throughout the South and Midwest have massively divested from their public transit. This goes along with a pattern of deindustrialization and suburbanization: These cities are stagnating economically and their citizens are moving out to the suburbs, so there’s no money for public transit and there’s more need for roads.

But the decline of US public transit goes back even further than that. Average transit trips per person in the US fell from 115 per year in 1950 to 36 per year in 1970.

This long, slow decline has only gotten worse as a result of the COVID pandemic; with more and more people working remotely, there’s just less need for commuting in general. (Then again, that also means fewer car miles, so it’s probably a good thing from an environmental perspective.)

Once public transit starts failing, it becomes a vicious cycle: They lose revenue, so they cut back on service, so they become more inconvenient, so they lose more revenue. Really successful public transit systems require very heavy investment in order to maintain fast, convenient service across an entire city. Any less than that, and people will just turn to cars instead.

Currently, the public transit systems in most US cities are suffering severe financial problems, largely as a result of the pandemic; they are facing massive shortfalls in their budgets. The federal government often helps with the capital costs of buying vehicles and laying down new lines, but not with the operating costs of actually running the system.

There seems to be some kind of systemic failure in the US in particular; something about our politics, or our economy, or our culture just makes us uniquely bad at building and maintaining public transit.

What should we do about this?

One option would be to do nothing—laissez faire. Maybe cars are just a more efficient mode of transportation, or better for what Americans want, and we should accept that.

But when you look at the externalities involved, it becomes clear that this is not the right approach. While cars produce enormous amounts of pollution and carbon emissions, public transit is much, much cleaner. (Electric cars are better than diesel buses, but still worse than trams and light rail—and besides, the vast majority of cars use gasoline.) Just for clean air and climate change alone, we have strong reasons to want fewer cars and more public transit.

And there are positive externalities of public transit too; it’s been estimated that for every $1 spent on public transit, a city gains $5 in economic activity. We’re leaving a lot of money on the table by failing to invest in something so productive.

We need a fundamental shift in how Americans think about public transit. Not as a last resort for the poor, but as a default option for everyone. Not as a left-wing social welfare program, but as a vital component of our nation’s infrastructure.

Whenever people get stuck in traffic, instead of resenting other drivers (who are in exactly the same boat!), they should resent that the government hasn’t supported more robust public transit systems—and then they should go out and vote for candidates and policies that will change that.

Of course, with everything else that’s wrong with our economy and our political system, I can understand why this might not be a priority right now. But sooner or later we are going to need to fix this, or it’s just going to keep getting worse and worse.

The inequality of factor mobility

PNRJ critique of neoclassical economics, public policy, tribal paradigm , , , , , , , , , , , , , , , , , , ,

Sep 24 JDN 2460212

I’ve written before about how free trade has brought great benefits, but also great costs. It occurred to me this week that there is a fairly simple reason why free trade has never been as good for the world as the models would suggest: Some factors of production are harder to move than others.

To some extent this is due to policy, especially immigration policy. But it isn’t just that.There are certain inherent limitations that render some kinds of inputs more mobile than others.

Broadly speaking, there are five kinds of inputs to production: Land, labor, capital, goods, and—oft forgotten—ideas.

You can of course parse them differently: Some would subdivide different types of labor or capital, and some things are hard to categorize this way. The same product, such as an oven or a car, can be a good or capital depending on how it’s used. (Or, consider livestock: is that labor, or capital? Or perhaps it’s a good? Oddly, it’s often discussed as land, which just seems absurd.) Maybe ideas can be considered a form of capital. There is a whole literature on human capital, which I increasingly find distasteful, because it seems to imply that economists couldn’t figure out how to value human beings except by treating them as a machine or a financial asset.

But this four-way categorization is particularly useful for what I want to talk about today. Because the rate at which those things move is very different.

Ideas move instantly. It takes literally milliseconds to transmit an idea anywhere in the world. This wasn’t always true; in ancient times ideas didn’t move much faster than people, and it wasn’t until the invention of the telegraph that their transit really became instantaneous. But it is certainly true now; once this post is published, it can be read in a hundred different countries in seconds.

Goods move in hours. Air shipping can take a product just about anywhere in less than a day. Sea shipping is a bit slower, but not radically so. It’s never been easier to move goods all around the world, and this has been the great success of free trade.

Capital moves in weeks. Here it might be useful to subdivide different types of capital: It’s surely faster to move an oven or even a car (the more good-ish sort of capital) than it is to move an entire factory (capital par excellence). But all in all, we can move stuff pretty fast these days. If you want to move your factory to China or Indonesia, you can probably get it done in a matter of weeks or at most months.

Labor moves in months. This one is a bit ironic, since it is surely easier to carry a single human person—or even a hundred human people—than all the equipment necessary to run an entire factory. But moving labor isn’t just a matter of physically carrying people from one place to another. It’s not like tourism, where you just pack and go. Moving labor requires uprooting people from where they used to live and letting them settle in a new place. It takes a surprisingly long time to establish yourself in a new environment—frankly even after two years in Edinburgh I’m not sure I quite managed it. And all the additional restrictions we’ve added involving border crossings and immigration laws and visas only make it that much slower.

Land moves never. This one seems perfectly obvious, but is also often neglected. You can’t pick up a mountain, a lake, a forest, or even a corn field and carry it across the border. (Yes, eventually plate tectonics will move our land around—but that’ll be millions of years.) Basically, land stays put—and so do all the natural environments and ecosystems on that land. Land isn’t as important for production as it once was; before industrialization, we were dependent on the land for almost everything. But we absolutely still are dependent on the land! If all the topsoil in the world suddenly disappeared, the economy wouldn’t simply collapse: the human race would face extinction. Moreover, a lot of fixed infrastructure, while technically capital, is no more mobile than land. We couldn’t much more easily move the Interstate Highway System to China than we could move Denali.

So far I have said nothing particularly novel. Yeah, clearly it’s much easier to move a mathematical theorem (if such a thing can even be said to “move”) than it is to move a factory, and much easier to move a factory than to move a forest. So what?

But now let’s consider the impact this has on free trade.

Ideas can move instantly, so free trade in ideas would allow all the world to instantaneously share all ideas. This isn’t quite what happens—but in the Internet age, we’re remarkably close to it. If anything, the world’s governments seem to be doing their best to stop this from happening: One of our most strictly-enforced trade agreements, the TRIPS Accord, is about stopping ideas from spreading too easily. And as far as I can tell, region-coding on media goes against everything free trade stands for, yet here we are. (Why, it’s almost as if these policies are more about corporate profits than they ever were about freedom!)

Goods and capital can move quickly. This is where we have really felt the biggest effects of free trade: Everything in the US says “made in China” because the capital is moved to China and then the goods are moved back to the US.

But it would honestly have made more sense to move all those workers instead. For all their obvious flaws, US institutions and US infrastructure are clearly superior to those in China. (Indeed, consider this: We may be so aware of the flaws because the US is especially transparent.) So, the most absolutely efficient way to produce all those goods would be to leave the factories in the US, and move the workers from China instead. If free trade were to achieve its greatest promises, this is the sort of thing we would be doing.


Of course that is not what we did. There are various reasons for this: A lot of the people in China would rather not have to leave. The Chinese government would not want them to leave. A lot of people in the US would not want them to come. The US government might not want them to come.

Most of these reasons are ultimately political: People don’t want to live around people who are from a different nation and culture. They don’t consider those people to be deserving of the same rights and status as those of their own country.

It may sound harsh to say it that way, but it’s clearly the truth. If the average American person valued a random Chinese person exactly the same as they valued a random other American person, our immigration policy would look radically different. US immigration is relatively permissive by world standards, and that is a great part of American success. Yet even here there is a very stark divide between the citizen and the immigrant.

There are morally and economically legitimate reasons to regulate immigration. There may even be morally and economically legitimate reasons to value those in your own nation above those in other nations (though I suspect they would not justify the degree that most people do). But the fact remains that in terms of pure efficiency, the best thing to do would obviously be to move all the people to the place where productivity is highest and do everything there.

But wouldn’t moving people there reduce the productivity? Yes. Somewhat. If you actually tried to concentrate the entire world’s population into the US, productivity in the US would surely go down. So, okay, fine; stop moving people to a more productive place when it has ceased to be more productive. What this should do is average out all the world’s labor productivity to the same level—but a much higher level than the current world average, and frankly probably quite close to its current maximum.

Once you consider that moving people and things does have real costs, maybe fully equaling productivity wouldn’t make sense. But it would be close. The differences in productivity across countries would be small.

They are not small.

Labor productivity worldwide varies tremendously. I don’t count Ireland, because that’s Leprechaun Economics (this is really US GDP with accounting tricks, not Irish GDP). So the prize for highest productivity goes to Norway, at $100 per worker hour (#ScandinaviaIsBetter). The US is doing the best among large countries, at an impressive $73 per hour. And at the very bottom of the list, we have places like Bangladesh at $4.79 per hour and Cambodia at $3.43 per hour. So, roughly speaking, there is about a 20-to-1 ratio between the most productive and least productive countries.

I could believe that it’s not worth it to move US production at $73 per hour to Norway to get it up to $100 per hour. (For one thing, where would we fit it all?) But I find it far more dubious that it wouldn’t make sense to move most of Cambodia’s labor to the US. (Even all 16 million people is less than what the US added between 2010 and 2020.) Even given the fact that these Cambodian workers are less healthy and less educated than American workers, they would almost certainly be more productive on the other side of the Pacific, quite likely ten times as productive as they are now. Yet we haven’t moved them, and have no plans to.

That leaves the question of whether we will move our capital to them. We have been doing so in China, and it worked (to a point). Before that, we did it in Korea and Japan, and it worked. Cambodia will probably come along sooner or later. For now, that seems to be the best we can do.

But I still can’t shake the thought that the world is leaving trillions of dollars on the table by refusing to move people. The inequality of factor mobility seems to be a big part of the world’s inequality, period.

The rise and plateau of China’s economy

PNRJ current events, development economics, public policy , , , , , , ,

Sep 3 JDN 2460191

It looks like China’s era of extremely rapid economic growth may be coming to an end. Consumer confidence in China cratered this year (and, in typical authoritarian fashion, the agency responsible just quietly stopped publishing the data after that). Current forecasts have China’s economy growing only about 4-5% this year, which would be very impressive for a First World country—but far below the 6%, 7%, even 8% annual growth rates China had in recent years.

Some slowdown was quite frankly inevitable. A surprising number of people—particularly those in or from China—seem to think that China’s ultra-rapid growth was something special about China that could be expected to continue indefinitely.

China’s growth does look really impressive, in isolation:

But in fact this is a pattern we’ve seen several times now (admittedly mostly in Asia): A desperately poor Third World country finally figures out how to get its act together, and suddenly has extremely rapid growth for awhile until it manages to catch up and become a First World country.

It happened in South Korea:

It happened in Japan:

It happened in Taiwan:

It even seems to be happening in Botswana:

And this is a good thing! These are the great success stories of economic development. If we could somehow figure out how to do this all over the world, it might literally be the best thing that ever happened. (It would solve so many problems!)

Here’s a more direct comparison across all these countries (as well as the US), on a log scale:

From this you can pretty clearly see two things.

First, as countries get richer, their growth tends to slow down gradually. By the time Japan, Korea, and Taiwan reached the level that the US had been at back in 1950, their growth slowed to a crawl. But that was okay, because they had already become quite rich.

And second, China is nothing special: Yes, their growth rate is faster than the US, because the US is already so rich. But they are following the same pattern as several other countries. In fact they’ve actually fallen behind Botswana—they used to be much richer than Botswana, and are now slightly poorer.

So while there are many news articles discussing why China’s economy is slowing down, and some of them may even have some merit (they really seem to have screwed up their COVID response, for instance, and their terrible housing price bubble just burst); but the ultimate reason is really that 7% annual economic growth is just not sustainable. It will slow down. When and how remains in question—but it will happen.

Thus, I am not particularly worried about the fact that China’s growth has slowed down. Or at least, I wouldn’t be, if China were governed well and had prepared for this obvious eventuality the way that Korea and Japan did. But what does worry me is that they seem unprepared for this. Their authoritarian government seems to have depended upon sky-high economic growth to sustain support for their regime. The cracks are now forming in that dam, and something terrible could happen when it bursts.

Things may even be worse than they look, because we know that the Chinese government often distorts or omits statistics when they become inconvenient. That can only work for so long: Eventually the reality on the ground will override whatever lies the government is telling.

There are basically two ways this could go: They could reform their government to something closer to a liberal democracy, accept that growth will slow down and work toward more shared prosperity, and then take their place as a First World country like Japan did. Or they could try to cling to their existing regime, gripping ever tighter until it all slips out of their fingers in a potentially catastrophic collapse. Unfortunately, they seem to be opting for the latter.

I hope I’m wrong. I hope that China will find its way toward a future of freedom and prosperity.

But at this point, it doesn’t look terribly likely.

Why is cryptocurrency popular?

PNRJ financial advice, financial fraud, futurism, heuristics and biases, market failure, public policy , , , , , , , , , , , , ,

May 30 JDN 2459365

At the time of writing, the price of most cryptocurrencies has crashed, likely due to a ban on conventional banks using cryptocurrency in China (though perhaps also due to Elon Musk personally refusing to accept Bitcoin at his businesses). But for all I know by the time this post goes live the price will surge again. Or maybe they’ll crash even further. Who knows? The prices of popular cryptocurrencies have been extremely volatile.

This post isn’t really about the fluctuations of cryptocurrency prices. It’s about something a bit deeper: Why are people willing to put money into cryptocurrencies at all?

The comparison is often made to fiat currency: “Bitcoin isn’t backed by anything, but neither is the US dollar.”

But the US dollar is backed by something: It’s backed by the US government. Yes, it’s not tradeable for gold at a fixed price, but so what? You can use it to pay taxes. The government requires it to be legal tender for all debts. There are certain guaranteed exchange rights built into the US dollar, which underpin the value that the dollar takes on in other exchanges. Moreover, the US Federal Reserve carefully manages the supply of US dollars so as to keep their value roughly constant.

Bitcoin does not have this (nor does Dogecoin, or Etherium, or any of the other hundreds of lesser-known cryptocurrencies). There is no central bank. There is no government making them legal tender for any debts at all, let alone all of them. Nobody collects taxes in Bitcoin.

And so, because its value is untethered, Bitcoin’s price rises and falls, often in huge jumps, more or less randomly. If you look all the way back to when it was introduced, Bitcoin does seem to have an overall upward price trend, but this honestly seems like a statistical inevitability: If you start out being worthless, the only way your price can change is upward. While some people have become quite rich by buying into Bitcoin early on, there’s no particular reason to think that it will rise in value from here on out.

Nor does Bitcoin have any intrinsic value. You can’t eat it, or build things out of it, or use it for scientific research. It won’t even entertain you (unless you have a very weird sense of entertainment). Bitcoin doesn’t even have “intrinsic value” the way gold does (which is honestly an abuse of the term, since gold isn’t actually especially useful): It isn’t innately scarce. It was made scarce by its design: Through the blockchain, a clever application of encryption technology, it was made difficult to generate new Bitcoins (called “mining”) in an exponentially increasing way. But the decision of what encryption algorithm to use was utterly arbitrary. Bitcoin mining could just as well have been made a thousand times easier or a thousand times harder. They seem to have hit a sweet spot where they made it just hard enough that it make Bitcoin seem scarce while still making it feel feasible to get.

We could actually make a cryptocurrency that does something useful, by tying its mining to a genuinely valuable pursuit, like analyzing scientific data or proving mathematical theorems. Perhaps I should suggest a partnership with Folding@Home to make FoldCoin, the crypto coin you mine by folding proteins. There are some technical details there that would be a bit tricky, but I think it would probably be feasible. And then at least all this computing power would accomplish something, and the money people make would be to compensate them for their contribution.

But Bitcoin is not useful. No institution exists to stabilize its value. It constantly rises and falls in price. Why do people buy it?

In a word, FOMO. The fear of missing out. People buy Bitcoin because they see that a handful of other people have become rich by buying and selling Bitcoin. Bitcoin symbolizes financial freedom: The chance to become financially secure without having to participate any longer in our (utterly broken) labor market.

In this, volatility is not a bug but a feature: A stable currency won’t change much in value, so you’d only buy into it because you plan on spending it. But an unstable currency, now, there you might manage to get lucky speculating on its value and get rich quick for nothing. Or, more likely, you’ll end up poorer. You really have no way of knowing.

That makes cryptocurrency fundamentally like gambling. A few people make a lot of money playing poker, too; but most people who play poker lose money. Indeed, those people who get rich are only able to get rich because other people lose money. The game is zero-sum—and likewise so is cryptocurrency.

Note that this is not how the stock market works, or at least not how it’s supposed to work (sometimes maybe). When you buy a stock, you are buying a share of the profits of a corporation—a real, actual corporation that produces and sells goods or services. You’re (ostensibly) supplying capital to fund the operations of that corporation, so that they might make and sell more goods in order to earn more profit, which they will then share with you.

Likewise when you buy a bond: You are lending money to an institution (usually a corporation or a government) that intends to use that money to do something—some real actual thing in the world, like building a factory or a bridge. They are willing to pay interest on that debt in order to get the money now rather than having to wait.

Initial Coin Offerings were supposed to be away to turn cryptocurrency into a genuine investment, but at least in their current virtually unregulated form, they are basically indistinguishable from a Ponzi scheme. Unless the value of the coin is somehow tied to actual ownership of the corporation or shares of its profits (the way stocks are), there’s nothing to ensure that the people who buy into the coin will actually receive anything in return for the capital they invest. There’s really very little stopping a startup from running an ICO, receiving a bunch of cash, and then absconding to the Cayman Islands. If they made it really obvious like that, maybe a lawsuit would succeed; but as long as they can create even the appearance of a good-faith investment—or even actually make their business profitable!—there’s nothing forcing them to pay a cent to the owners of their cryptocurrency.

The really frustrating thing for me about all this is that, sometimes, it works. There actually are now thousands of people who made decisions that by any objective standard were irrational and irresponsible, and then came out of it millionaires. It’s much like the lottery: Playing the lottery is clearly and objectively a bad idea, but every once in awhile it will work and make you massively better off.

It’s like I said in a post about a year ago: Glorifying superstars glorifies risk. When a handful of people can massively succeed by making a decision, that makes a lot of other people think that it was a good decision. But quite often, it wasn’t a good decision at all; they just got spectacularly lucky.

I can’t exactly say you shouldn’t buy any cryptocurrency. It probably has better odds than playing poker or blackjack, and it certainly has better odds than playing the lottery. But what I can say is this: It’s about odds. It’s gambling. It may be relatively smart gambling (poker and blackjack are certainly a better idea than roulette or slot machines), with relatively good odds—but it’s still gambling. It’s a zero-sum high-risk exchange of money that makes a few people rich and lots of other people poorer.

With that in mind, don’t put any money into cryptocurrency that you couldn’t afford to lose at a blackjack table. If you’re looking for something to seriously invest your savings in, the answer remains the same: Stocks. All the stocks.

I doubt this particular crash will be the end for cryptocurrency, but I do think it may be the beginning of the end. I think people are finally beginning to realize that cryptocurrencies are really not the spectacular innovation that they were hyped to be, but more like a high-tech iteration of the ancient art of the Ponzi scheme. Maybe blockchain technology will ultimately prove useful for something—hey, maybe we should actually try making FoldCoin. But the future of money remains much as it has been for quite some time: Fiat currency managed by central banks.

The Race to the Bottom is not inevitable

PNRJ development economics, ethics, inequality, macroeconomics, market failure, public policy , , , , , , , , , , , , , , , , , , , ,

Jul 19 JDN 2459050

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ancient plagues, modern pandemics

PNRJ current events, public policy , , , , , , , ,

Mar 1 JDN 2458917

The coronavirus epidemic continues; though it originated in Wuhan province, the virus has now been confirmed in places as far-flung as Italy, Brazil, and Mexico. So far, about 90,000 people have caught it, and about 3,000 have died, mostly in China.

There are legitimate reasons to be concerned about this epidemic: Like influenza, coronavirus spreads quickly, and can be carried without symptoms, yet unlike influenza, it has a very high rate of complications, causing hospitalization as often as 10% of the time and death as often as 2%. There’s a lot of uncertainty about these numbers, because it’s difficult to know exactly how many people are infected but either have no symptoms or have symptoms that can be confused with other diseases. But we do have reason to believe that coronavirus is much deadlier for those infected than influenza: Influenza spreads so widely that it kills about 300,000 people every year, but this is only 0.1% of the people infected.

And yet, despite our complex interwoven network of international trade that sends people and goods all around the world, our era is probably the safest in history in terms of the risk of infectious disease.

Partly this is technology: Especially for bacterial infections, we have highly effective treatments that our forebears lacked. But for most viral infections we actually don’t have very effective treatments—which means that technology per se is not the real hero here.

Vaccination is a major part of the answer: Vaccines have effectively eradicated polio and smallpox, and would probably be on track to eliminate measles and rubella if not for dangerous anti-vaccination ideology. But even with no vaccine against coronavirus (yet) and not very effective vaccines against influenza, still the death rates from these viruses are nowhere near those of ancient plagues.

The Black Death killed something like 40% of Europe’s entire population. The Plague of Justinian killed as many as 20% of the entire world’s population. This is a staggeringly large death rate compared to a modern pandemic, in which even a 2% death rate would be considered a total catastrophe.

Even the 1918 influenza pandemic, which killed more than all the battle deaths in World War I combined, wasn’t as terrible as an ancient plague; it killed about 2% of the infected population. And when a very similar influenza virus appeared in 2009, how many people did it kill? About 400,000 people, roughly 0.1% of those infected—slightly worse than the average flu season. That’s how much better our public health has gotten in the last century alone.

Remember SARS, a previous viral pandemic that also emerged in China? It only killed 774 people, in a year in which over 300,000 died of influenza.

Sanitation is probably the most important factor: Certainly sanitation was far worse in ancient times. Today almost everyone routinely showers and washes their hands, which makes a big difference—but it’s notable that widespread bathing didn’t save the Romans from the Plague of Justinian.

I think it’s underappreciated just how much better our communication and quarantine procedures are today than they once were. In ancient times, the only way you heard about a plague was a live messenger carrying the news—and that messenger might well be already carrying the virus. Today, an epidemic in China becomes immediate news around the world. This means that people prepare—they avoid travel, they stock up on food, they become more diligent about keeping clean. And perhaps even more important than the preparation by individual people is the preparation by institutions: Governments, hospitals, research labs. We can see the pandemic coming and be ready to respond weeks or even months before it hits us.

So yes, do wash your hands regularly. Wash for at least 20 seconds, which will definitely feel like a long time if you haven’t made it a habit—but it does make a difference. Try to avoid travel for awhile. Stock up on food and water in case you need to be quarantined. Follow whatever instructions public health officials give as the pandemic progresses. But you don’t need to panic: We’ve got this under control. That Horseman of the Apocalypse is dead; and fear not, Famine and War are next. I’m afraid Death himself will probably be awhile, though.

The real cost of high rent

PNRJ inequality, market failure , , , , , , , , ,

Jan 26 JDN 2458875

The average daily commute time in the United States is about 26 minutes each way—for a total of 52 minutes every weekday. Public transit commute times are substantially longer in most states than driving commute times: In California, the average driving commute is 28 minutes each way, while the average public transit commute is 51 minutes each way. Adding this up over 5 workdays per week, working 50 weeks per year, means that on average Americans spend over 216 hours each year commuting.

Median annual income in the US is about $33,000. Assuming about 2000 hours of work per year for a full-time job, that’s a wage of $16.50 per hour. This makes the total cost of commute time in the United States over $3500 per worker per year. Multiplied by a labor force of 205 million, this makes the total cost of commute time over $730 billion per year. That’s not even counting the additional carbon emissions and road fatalities. This is all pure waste. The optimal commute time is zero minutes; the closer we can get to that, the better. Telecommuting might finally make this a reality, at least for a large swath of workers. Already over 40% of US workers telecommute at least some of the time.

Let me remind you that it would cost about $200 billion per year to end world hunger. We could end world hunger three times over with the effort we currently waste in commute time.

Where is this cost coming from? Why are commutes so long? The answer is obvious: The rent is too damn high. People have long commutes because they can’t afford to live closer to where they work.

Almost half of all renter households in the US pay more than 30% of their income in rent—and 25% pay more than half of their income. The average household rent in the US is over $1400 per month, almost $17,000 per year—more than the per-capita GDP of China.

Not that buying a home solves the problem: In many US cities the price-to-rent ratio of homes is over 20 to 1, and in Manhattan and San Francisco it’s as high as 50 to 1. If you already bought your home years ago, this is great for you; for the rest of us, not so much. Interestingly, high rents seem to correlate with higher price-to-rent ratios, so it seems like purchase prices are responding even more to whatever economic pressure is driving up rents.

Overall about a third of all US consumer spending is on housing; out of our total consumption spending of $13 trillion, this means we are spending over $4 trillion per year on housing, about the GDP of Germany. Of course, some of this is actually worth spending: Housing costs a lot to build, and provides many valuable benefits.

What should we be spending on housing, if the housing market were competitive and efficient?

I think Chicago’s housing market looks fairly healthy. Homes there go for about $250,000, with prices that are relatively stable; and the price-to-rent ratio is about 20 to 1. Chicago is a large city with a population density of about 6,000 people per square kilometer, so it’s not as if I’m using a tiny rural town as my comparison. If the entire population of the United States were concentrated at the same density as the city of Chicago, we’d all fit in only 55,000 square kilometers—less than the area of West Virginia.
Compare this to the median housing price in California ($550,000), New York ($330,000), or Washington, D.C. ($630,000). There are metro areas with housing prices far above even this: In San Jose the median home price is $1.1 million. I find it very hard to believe that it is literally four times as hard to build homes in San Jose as it is in Chicago. Something is distorting that price—maybe it’s over-regulation, maybe it’s monopoly power, maybe it’s speculation—I’m not sure what exactly, but there’s definitely something out of whack here.

This suggests that a more efficient housing market would probably cut prices in California by 50% and prices in New York by 25%. Since about 40% of all spending in California is on housing, this price change would effectively free up 20% of California’s GDP—and 20% of $3 trillion is $600 billion per year. The additional 8% of New York’s GDP gets us another $130 billion, and we’re already at that $730 billion I calculated for the total cost of commuting, only considering New York and California alone.

This means that the total amount of waste—including both time and money—due to housing being too expensive probably exceeds $1.5 trillion per year. This is an enormous sum of money: We’re spending an Australia here. We could just about pay for a single-payer healthcare system with this.

The “market for love” is a bad metaphor

PNRJ core principles, critique of neoclassical economics , , , , , , , , , , , , , , , , ,

Feb 14 JDN 2458529

Valentine’s Day was this past week, so let’s talk a bit about love.

Economists would never be accused of being excessively romantic. To most neoclassical economists, just about everything is a market transaction. Love is no exception.

There are all sorts of articles and books and an even larger number of research papers going back multiple decades and continuing all the way through until today using the metaphor of the “marriage market”.

In a few places, marriage does actually function something like a market: In China, there are places where your parents will hire brokers and matchmakers to select a spouse for you. But even this isn’t really a market for love or marriage. It’s a market for matchmaking services. The high-tech version of this is dating sites like OkCupid.
And of course sex work actually occurs on markets; there is buying and selling of services at monetary prices. There is of course a great deal worth saying on that subject, but it’s not my topic for today.

But in general, love is really nothing like a market. First of all, there is no price. This alone should be sufficient reason to say that we’re not actually dealing with a market. The whole mechanism that makes a market a market is the use of prices to achieve equilibrium between supply and demand.

A price doesn’t necessarily have to be monetary; you can barter apples for bananas, or trade in one used video game for another, and we can still legitimately call that a market transaction with a price.

But love isn’t like that either. If your relationship with someone is so transactional that you’re actually keeping a ledger of each thing they do for you and each thing you do for them so that you could compute a price for services, that isn’t love. It’s not even friendship. If you really care about someone, you set such calculations aside. You view their interests and yours as in some sense shared, aligned toward common goals. You stop thinking in terms of “me” and “you” and start thinking in terms of “us”. You don’t think “I’ll scratch your back if you scratch mine.” You think “We’re scratching each other’s backs today.”

This is of course not to say that love never involves conflict. On the contrary, love always involves conflict. Successful relationships aren’t those where conflict never happens, they are those where conflict is effectively and responsibly resolved. Your interests and your loved ones’ are never completely aligned; there will always be some residual disagreement. But the key is to realize that your interests are still mostly aligned; those small vectors of disagreement should be outweighed by the much larger vector of your relationship.

And of course, there can come a time when that is no longer the case. Obviously, there is domestic abuse, which should absolutely be a deal-breaker for anyone. But there are other reasons why you may find that a relationship ultimately isn’t working, that your interests just aren’t as aligned as you thought they were. Eventually those disagreement vectors just get too large to cancel out. This is painful, but unavoidable. But if you reach the point where you are keeping track of actions on a ledger, that relationship is already dead. Sooner or later, someone is going to have to pull the plug.

Very little of what I’ve said in the preceding paragraphs is likely to be controversial. Why, then, would economists think that it makes sense to treat love as a market?

I think this comes down to a motte and bailey doctrine. A more detailed explanation can be found at that link, but the basic idea of a motte and bailey is this: You have a core set of propositions that is highly defensible but not that interesting (the “motte”), and a broader set of propositions that are very interesting, but not as defensible (the “bailey”). The terms are related to a medieval defensive strategy, in which there was a small, heavily fortified tower called a motte, surrounded by fertile, useful land, the bailey. The bailey is where you actually want to live, but it’s hard to defend; so if the need arises, you can pull everyone back into the motte to fight off attacks. But nobody wants to live in the motte; it’s just a cramped stone tower. There’s nothing to eat or enjoy there.

The motte comprised of ideas that almost everyone agrees with. The bailey is the real point of contention, the thing you are trying to argue for—which, by construction, other people must not already agree with.

Here are some examples, which I have intentionally chosen from groups I agree with:

Feminism can be a motte and bailey doctrine. The motte is “women are people”; the bailey is abortion rights, affirmative consent and equal pay legislation.

Rationalism can be a motte and bailey doctrine. The motte is “rationality is good”; the bailey is atheism, transhumanism, and Bayesian statistics.

Anti-fascism can be a motte and bailey doctrine. The motte is “fascists are bad”; the bailey is black bloc Antifa and punching Nazis.

Even democracy can be a motte and bailey doctrine. The motte is “people should vote for their leaders”; my personal bailey is abolition of the Electoral College, a younger voting age, and range voting.

Using a motte and bailey doctrine does not necessarily make you wrong. But it’s something to be careful about, because as a strategy it can be disingenuous. Even if you think that the propositions in the bailey all follow logically from the propositions in the motte, the people you’re talking to may not think so, and in fact you could simply be wrong. At the very least, you should be taking the time to explain how one follows from the other; and really, you should consider whether the connection is actually as tight as you thought, or if perhaps one can believe that rationality is good without being Bayesian or believe that women are people without supporting abortion rights.

I think when economists describe love or marriage as a “market”, they are applying a motte and bailey doctrine. They may actually be doing something even worse than that, by equivocating on the meaning of “market”. But even if any given economist uses the word “market” totally consistently, the fact that different economists of the same broad political alignment use the word differently adds up to a motte and bailey doctrine.

The doctrine is this: “There have always been markets.”

The motte is something like this: “Humans have always engaged in interaction for mutual benefit.”

This is undeniably true. In fact, it’s not even uninteresting. As mottes go, it’s a pretty nice one; it’s worth spending some time there. In the endless quest for an elusive “human nature”, I think you could do worse than to focus on our universal tendency to engage in interaction for mutual benefit. (Don’t other species do it too? Yes, but that’s just it—they are precisely the ones that seem most human.)

And if you want to define any mutually-beneficial interaction as a “market trade”, I guess it’s your right to do that. I think this is foolish and confusing, but legislating language has always been a fool’s errand.

But of course the more standard meaning of the word “market” implies buyers and sellers exchanging goods and services for monetary prices. You can extend it a little to include bartering, various forms of financial intermediation, and the like; but basically you’re still buying and selling.

That makes this the bailey: “Humans have always engaged in buying and selling of goods and services at prices.”

And that, dear readers, is ahistorical nonsense. We’ve only been using money for a few thousand years, and it wasn’t until the Industrial Revolution that we actually started getting the majority of our goods and services via market trades. Economists like to tell a story where bartering preceded the invention of money, but there’s basically no evidence of that. Bartering seems to be what people do when they know how money works but don’t have any money to work with.

Before there was money, there were fundamentally different modes of interaction: Sharing, ritual, debts of honor, common property, and, yes, love.

These were not markets. They perhaps shared some very broad features of markets—such as the interaction for mutual benefit—but they lacked the defining attributes that make a market a market.

Why is this important? Because this doctrine is used to transform more and more of our lives into actual markets, on the grounds that they were already “markets”, and we’re just using “more efficient” kinds of markets. But in fact what’s happening is we are trading one fundamental mode of human interaction for another: Where we used to rely upon norms or trust or mutual affection, we instead rely upon buying and selling at prices.

In some cases, this actually is a good thing: Markets can be very powerful, and are often our best tool when we really need something done. In particular, it’s clear at this point that norms and trust are not sufficient to protect us against climate change. All the “Reduce, Reuse, Recycle” PSAs in the world won’t do as much as a carbon tax. When millions of lives are at stake, we can’t trust people to do the right thing; we need to twist their arms however we can.

But markets are in some sense a brute-force last-resort solution; they commodify and alienate (Marx wasn’t wrong about that), and despite our greatly elevated standard of living, the alienation and competitive pressure of markets seem to be keeping most of us from really achieving happiness.

This is why it’s extremely dangerous to talk about a “market for love”. Love is perhaps the last bastion of our lives that has not been commodified into a true market, and if it goes, we’ll have nothing left. If sexual relationships built on mutual affection were to disappear in favor of apps that will summon a prostitute or a sex robot at the push of a button, I would count that as a great loss for human civilization. (How we should regulate prostitution or sex robots are a different question, which I said I’d leave aside for this post.) A “market for love” is in fact a world with no love at all.

The upsides of life extension

PNRJ development economics, ethics, futurism, Uncategorized , , , , , , , , , , , , , , , ,

Dec 16 JDN 2458469

If living is good, then living longer is better.

This may seem rather obvious, but it’s something we often lose sight of when discussing the consequences of medical technology for extending life. It’s almost like it seems too obvious that living longer must be better, and so we go out of our way to find ways that it is actually worse.

Even from a quick search I was able to find half a dozen popular media articles about life extension, and not one of them focused primarily on the benefits. The empirical literature is better, asking specific, empirically testable questions like “How does life expectancy relate to retirement age?” and “How is lifespan related to population and income growth?” and “What effect will longer lifespans have on pension systems?” Though even there I found essays in medical journals complaining that we have extended “quantity” of life without “quality” (yet by definition, if you are using QALY to assess the cost-effectiveness of a medical intervention, that’s already taken into account).

But still I think somewhere along the way we have forgotten just how good this is. We may not even be able to imagine the benefits of extending people’s lives to 200 or 500 or 1000 years.

To really get some perspective on this, I want you to imagine what a similar conversation must have looked like in roughly the year 1800, the Industrial Revolution, when industrial capitalism came along and made babies finally stop dying.

There was no mass media back then (not enough literacy), but imagine what it would have been like if there had been, or imagine what conversations about the future between elites must have been like.

And we do actually have at least one example of an elite author lamenting the increase in lifespan: His name was Thomas Malthus.

The Malthusian argument was seductive then, and it remains seductive today: If you improve medicine and food production, you will increase population. But if you increase population, you will eventually outstrip those gains in medicine and food and return once more to disease and starvation, only now with more mouths to feed.

Basically any modern discussion of “overpopulation” has this same flavor (by the way, serious environmentalists don’t use that concept; they’re focused on reducing pollution and carbon emissions, not people). Why bother helping poor countries, when they’re just going to double their population and need twice the help?

Well, as a matter of fact, Malthus was wrong. In fact, he was not just wrong: He was backwards. Increased population has come with increased standard of living around the world, as it allowed for more trade, greater specialization, and the application of economies of scale. You can’t build a retail market with a hunter-gatherer tribe. You can’t built an auto industry with a single city-state. You can’t build a space program with a population of 1 million. Having more people has allowed each person to do and have more than they could before.

Current population projections suggest world population will stabilize between 11 and 12 billion. Crucially, this does not factor in any kind of radical life extension technology. The projections allow for moderate increases in lifespan, but not people living much past 100.

Would increased lifespan lead to increased population? Probably, yes. I can’t be certain, because I can very easily imagine people deciding to put off having kids if they can reasonably expect to live 200 years and never become infertile.

I’m actually more worried about the unequal distribution of offspring: People who don’t believe in contraception will be able to have an awful lot of kids during that time, which could be bad for both the kids and society as a whole. We may need to impose regulations on reproduction similar to (but hopefully less draconian than) the One-Child policy imposed in China.

I think the most sensible way to impose the right incentives while still preserving civil liberties is to make it a tax: The first kid gets a subsidy, to help care for them. The second kid is revenue-neutral; we tax you but you get it back as benefits for the child. (Why not just let them keep the money? One of the few places where I think government paternalism is justifiable is protection against abusive or neglectful parents.) The third and later kids result in progressively higher taxes. We always feed the kids on government money, but their parents are going to end up quite poor if they don’t learn how to use contraceptives. (And of course, contraceptives will be made available for free without a prescription.)

But suppose that, yes, population does greatly increase as a result of longer lifespans. This is not a doomsday scenario. In fact, in itself, this is a good thing. If life is worth living, more lives are better.

The question becomes how we ensure that all these people live good lives; but technology will make that easier too. There seems to be an underlying assumption that increased lifespan won’t come with improved health and vitality; but this is already not true. 60 is the new 50: People who are 60 years old today live as well as people who were 50 years old just a generation ago.

And in fact, radical life extension will be an entirely different mechanism. We’re not talking about replacing a hip here, a kidney there; we’re talking about replenishing your chromosomal telomeres, repairing your cells at the molecular level, and revitalizing the content of your blood. The goal of life extension technology isn’t to make you technically alive but hooked up to machines for 200 years; it’s to make you young again for 200 years. The goal is a world where centenarians are playing tennis with young adults fresh out of college and you have trouble telling which is which.

There is another inequality concern here as well, which is cost. Especially in the US—actually almost only in the US, since most of the world has socialized medicine—where medicine is privatized and depends on your personal budget, I can easily imagine a world where the rich live to 200 and the poor die at 60. (The forgettable Justin Timberlake film In Time started with this excellent premise and then went precisely nowhere with it. Oddly, the Deus Ex games seem to have considered every consequence of mixing capitalism with human augmentation except this one.) We should be proactively taking steps to prevent this nightmare scenario by focusing on making healthcare provision equitable and universal. Even if this slows down the development of the technology a little bit, it’ll be worth it to make sure that when it does arrive, it will arrive for everyone.

We really don’t know what the world will look like when people can live 200 years or more. Yes, there will be challenges that come from the transition; honestly I’m most worried about keeping alive ideas that people grew up with two centuries prior. Imagine talking politics with Abraham Lincoln: He was viewed as extremely progressive for his time, even radical—but he was still a big-time racist.

The good news there is that people are not actually as set in their ways as many believe: While the huge surge in pro-LGBT attitudes did come from younger generations, support for LGBT rights has been gradually creeping up among older generations too. Perhaps if Abraham Lincoln had lived through the Great Depression, the World Wars, and the Civil Rights Movement he’d be a very different person than he was in 1865. Longer lifespans will mean people live through more social change; that’s something we’re going to need to cope with.

And of course violent death becomes even more terrifying when aging is out of the picture: It’s tragic enough when a 20-year-old dies in a car accident today and we imagine the 60 years they lost—but what if it was 180 years or 480 years instead? But violent death in basically all its forms is declining around the world.

But again, I really want to emphasize this: Think about how good this is. Imagine meeting your great-grandmother—and not just meeting her, not just having some fleeting contact you half-remember from when you were four years old or something, but getting to know her, talking with her as an adult, going to the same movies, reading the same books. Imagine the converse: Knowing your great-grandchildren, watching them grow up and have kids of their own, your great-great-grandchildren. Imagine the world that we could build if people stopped dying all the time.

And if that doesn’t convince you, I highly recommend Nick Bostrom’s “Fable of the Dragon-Tyrant”.

Stop making excuses for the dragon.

Fighting the zero-sum paradigm

PNRJ development economics, ethics, heuristics and biases, inequality, public policy, tribal paradigm , , , , , , , , , , , ,

Dec 2 JDN 2458455

It should be obvious at this point that there are deep, perhaps even fundamental, divides between the attitudes and beliefs of different political factions. It can be very difficult to even understand, much less sympathize, with the concerns of people who are racist, misogynistic, homophobic, xenophobic, and authoritarian.
But at the end of the day we still have to live in the same country as these people, so we’d better try to understand how they think. And maybe, just maybe, that understanding will help us to change them.

There is one fundamental belief system that I believe underlies almost all forms of extremism. Right now right-wing extremism is the major threat to global democracy, but left-wing extremism subscribes to the same core paradigm (consistent with Horseshoe Theory).

I think the best term for this is the zero-sum paradigm. The idea is quite simple: There is a certain amount of valuable “stuff” (money, goods, land, status, happiness) in the world, and the only political question is who gets how much.

Thus, any improvement in anyone’s life must, necessarily, come at someone else’s expense. If I become richer, you become poorer. If I become stronger, you become weaker. Any improvement in my standard of living is a threat to your status.

If this belief were true, it would justify, or at least rationalize, all sorts of destructive behavior: Any harm I can inflict upon someone else will yield a benefit for me, by some fundamental conservation law of the universe.

Viewed in this light, beliefs like patriarchy and White supremacy suddenly become much more comprehensible: Why would you want to spend so much effort hurting women and Black people? Because, by the fundamental law of zero-sum, any harm to women is a benefit to men, and any harm to Black people is a benefit to White people. The world is made of “teams”, and you are fighting for your own against all the others.

And I can even see why such an attitude is seductive: It’s simple and easy to understand. And there are many circumstances where it can be approximately true.
When you are bargaining with your boss over a wage, one dollar more for you is one dollar less for your boss.
When your factory outsources production to China, one more job for China is one less job for you.

When we vote for President, one more vote for the Democrats is one less vote for the Republicans.

But of course the world is not actually zero-sum. Both you and your boss would be worse off if your job were to disappear; they need your work and you need their money. For every job that is outsourced to China, another job is created in the United States. And democracy itself is such a profound public good that it basically overwhelms all others.

In fact, it is precisely when a system is running well that the zero-sum paradigm becomes closest to true. In the space of all possible allocations, it is the efficient ones that behave in something like a zero-sum way, because when the system is efficient, we are already producing as much as we can.

This may be part of why populist extremism always seems to assert itself during periods of global prosperity, as in the 1920s and today: It is precisely when the world is running at its full capacity that it feels most like someone else’s gain must come at your loss.

Yet if we live according to the zero-sum paradigm, we will rapidly destroy the prosperity that made that paradigm seem plausible. A trade war between the US and China would put millions out of work in both countries. A real war with conventional weapons would kill millions. A nuclear war would kill billions.

This is what we must convey: We must show people just how good things are right now.

This is not an easy task; when people want to believe the world is falling apart, they can very easily find excuses to do so. You can point to the statistics showing a global decline in homicide, but one dramatic shooting on the TV news will wipe that all away. You can show the worldwide rise in real incomes across the board, but that won’t console someone who just lost their job and blames outsourcing or immigrants.

Indeed, many people will be offended by the attempt—the mere suggestion that the world is actually in very good shape and overall getting better will be perceived as an attempt to deny or dismiss the problems and injustices that still exist.

I encounter this especially from the left: Simply pointing out the objective fact that the wealth gap between White and Black households is slowly closing is often taken as a claim that racism no longer exists or doesn’t matter. Congratulating the meteoric rise in women’s empowerment around the world is often paradoxically viewed as dismissing feminism instead of lauding it.

I think the best case against progress can be made with regard to global climate change: Carbon emissions are not falling nearly fast enough, and the world is getting closer to the brink of truly catastrophic ecological damage. Yet even here the zero-sum paradigm is clearly holding us back; workers in fossil-fuel industries think that the only way to reduce carbon emissions is to make their families suffer, but that’s simply not true. We can make them better off too.

Talking about injustice feels righteous. Talking about progress doesn’t. Yet I think what the world needs most right now—the one thing that might actually pull us back from the brink of fascism or even war—is people talking about progress.

If people think that the world is full of failure and suffering and injustice, they will want to tear down the whole system and start over with something else. In a world that is largely democratic, that very likely means switching to authoritarianism. If people think that this is as bad as it gets, they will be willing to accept or even instigate violence in order to change to almost anything else.

But if people realize that in fact the world is full of success and prosperity and progress, that things are right now quite literally better in almost every way for almost every person in almost every country than they were a hundred—or even fifty—years ago, they will not be so eager to tear the system down and start anew. Centrism is often mocked (partly because it is confused with false equivalence), but in a world where life is improving this quickly for this many people, “stay the course” sounds awfully attractive to me.
That doesn’t mean we should ignore the real problems and injustices that still exist, of course. There is still a great deal of progress left to be made.  But I believe we are more likely to make progress if we acknowledge and seek to continue the progress we have already made, than if we allow ourselves to fall into despair as if that progress did not exist.