inequality

Just how poor is poor?

PNRJ core principles, current events, development economics, ethics, inequality, public policy , , , , , , , , , , ,

June 2 JDN 2458637

In last week’s post I told you about the richest of the rich, the billionaires with ten, eleven, or even twelve-figure net wealth. My concern about them is only indirect: I care that we have concentrated so many of the resources of our society into this handful of people instead of spreading it around where it would do more good. But it is not inherently bad for billionaires to exist; all other things equal, people having more wealth is good.

Today my topic is the poorest of the poor. Their status is inherently bad. No one deserves it, and while for much of history we may have been powerless to prevent it, we are no longer. We could help these people—quite substantially quite cheaply, as you’ll see—and we are simply choosing not to. Perhaps you as an individual are not making this choice; perhaps, like me, you vote for candidates who support international aid and donate to top-rated international charities. But as a society, we are making this choice. Voters in the First World could all agree—or even 51% agree—that this problem really should be fixed, and we could fix it.

If asked, most people would say they care about world hunger, but either they are deeply ignorant about the solutions we now have availble to us, or they can’t really care about world hunger, or they would have voted for politicians who were committed to actually implementing the spending necessary to fix it. Maybe people would prefer to fix world hunger as long as it didn’t cost them a cent; but ask them to pay even a little bit, and suddenly they’re not so sure.

At current prices, the official UN threshold for “extreme poverty” is $1.90 in real consumption per person per day. I want to be absolutely clear about this: This is adjusted for inflation and local purchasing power. They account for all consumption, including hunting, fishing, gathering, and goods made at home or obtained through bartering. This is not an artifact of failing to adjust for prices or not including goods that aren’t bought with money. These people really do live on less than $700 per year.

Shockingly, they are not all in Third World countries. While the majority of what we call “poverty” in the United States is well above the standard of living of UN “extreme poverty”, there are exceptions to this; there are about 5 million people in the US who are genuinely so poor that they are accurately categorized as at or near that $1.90 per day threshold.

This is such a shocking and horrifying truth that many people will try to deny it, as at least one libertarian think-tank did in a propagandistic screed. No, the UN isn’t lying; it’s really that bad. Extreme poverty in the US could be fixed so quickly, so easily that the fact that it remains in place can only be called an atrocity. Change a few numbers in the IRS code, work out a payment distribution system to reach people without bank accounts using cash or mobile payments, and by the end of the year you would have ended extreme poverty in the United States with no more than a few billion dollars diverted—which is to say, an amount that Jeff Bezos himself could afford to pay, or an amount that could be raised by a single percentage point of capital gains tax applied to billionaires only.
Even so, life is probably better for a homeless person on the street in New York City than it is for a child with malaria whose parents died in civil war in Congo. The New Yorker has access to clean water via drinking fountains, basic sanitation via public toilets (particularly in government buildings, since private businesses often specifically try to exclude the homeless), and basic nutrition via food banks and soup kitchens. The Congolese child has none of these things.

Life for the very poorest is a constant struggle for survival, against disease, malnutrition, dehydration, and parasites. Forget having a refrigerator or a microwave (as most of the poor in the US do, and rightly so—these things are really cheap here); they often have little clothing and no reliable shelter. The idea of going to a school or seeing a doctor sounds like a pipe dream. Surprisingly, there is a good chance that they or someone they know has a smartphone; if so it is likely their most prized possession. Though in Congo in particular, smartphones are relatively rare, which is ironic because the most critical raw material for smartphones—tantalum—is quite prevalent in Congo and a major source of conflict there.

Such a hard life is also typically a short one. The average life expectancy in Congo is less than 65 years. This is mainly due to the fact that almost 15% of children will die before the age of five, though fortunately infant and child mortality in Congo is rapidly declining (though that means it used to be worse than this!).

A disease that is merely inconvenient in a rich country is often fatal in a poor one; malaria is the classic example of this. Malaria remains the cause of over one million deaths per year, but essentially no one dies of malaria in First World countries. It can be treated with quinine, which costs no more than $3 per pill. But when your total consumption is $1.50 per day, a $3 pill is still prohibitively expensive. While in rich countries antibiotic-resistant tuberculosis is a real danger, for the world’s poorest people it doesn’t much matter if the bacteria are resistant to antibiotics, because nobody can afford antibiotics.

What could we do to save these people? A great deal, as it turns out.

Ending extreme poverty worldwide wouldn’t be as easy as ending it in the United States; there’s no central taxation authority that would let us simply change a few numbers and then start writing checks.
We could implement changes through either official development aid or by supporting specific vetted non-governmental organizations, but each of these options carries drawbacks. Development aid can be embezzled by corrupt governments. NGOs can go bankrupt or have their assets expropriated.

Yet even with such challenges in mind, the total cost to end extreme poverty—not all poverty, but extreme poverty—worldwide is probably less than $200 billion per year. This is not a small sum, but it is well within our means. This is less than a third of the US military budget (not counting non-DoD military spending!), or about half what the US spends on gasoline.

Frankly I think we could safely divert that $200 billion directly from military spending without losing any national security. 21st century warfare is much less about blowing up targets and much more about winning hearts and minds. Ending world hunger would win an awful lot of hearts and minds, methinks. Obviously we can’t eliminate all military spending; those first two or three aircraft carrier battle groups really are keeping us and our allies safer. Did we really need eleven?

But all right, suppose we did need to raise additional tax revenue to fund this program. How much would taxes have to go up? Let’s say that only First World countries pay, which we can approximate using the GDP of the US and the EU (obviously we could also include Canada and Australia, but we might not want to include some of Eastern Europe, so that roughly balances out). Add up the $19 trillion of European Union GDP and $21 trillion of US GDP together and you get $40 trillion per year; $200 billion is only 0.5% of that. We would only need to raise taxes by half a percentage point to fund this program. Even if we didn’t make the tax progressive (and why wouldn’t we?), a typical family making $60,000 per year would only need to pay an extra $300 per year.

Why aren’t we doing this?

This is a completely serious question. Feel free to read it in an exasperated voice. I honestly would like to know why the world is willing to leave so many people in so much suffering when we could save them for such little cost.

What would a new macroeconomics look like?

PNRJ critique of neoclassical economics, heuristics and biases, inequality, macroeconomics , , , , , , , , , , , , , ,

Dec 9 JDN 2458462

In previous posts I have extensively criticized the current paradigm of macroeconomics. But it’s always easier to tear the old edifice down than to build a better one in its place. So in this post I thought I’d try to be more constructive: What sort of new directions could macroeconomics take?

The most important change we need to make is to abandon the assumption of dynamic optimization. This will be a very hard sell, as most macroeconomists have become convinced that the Lucas Critique means we need to always base everything on the dynamic optimization of a single representative agent. I don’t think this was actually what Lucas meant (though maybe we should ask him; he’s still at Chicago), and I certainly don’t think it is what he should have meant. He had a legitimate point about the way macroeconomics was operating at that time: It was ignoring the feedback loops that occur when we start trying to change policies.

Goodhart’s Law is probably a better formulation: Once you make an indicator into a target, you make it less effective as an indicator. So while inflation does seem to be negatively correlated with unemployment, that doesn’t mean we should try to increase inflation to extreme levels in order to get rid of unemployment; sooner or later the economy is going to adapt and we’ll just have both inflation and unemployment at the same time. (Campbell’s Law provides a specific example that I wish more people in the US understood: Test scores would be a good measure of education if we didn’t use them to target educational resources.)

The reason we must get rid of dynamic optimization is quite simple: No one behaves that way.

It’s often computationally intractable even in our wildly oversimplified models that experts spend years working on—now you’re imagining that everyone does this constantly?

The most fundamental part of almost every DSGE model is the Euler equation; this equation comes directly from the dynamic optimization. It’s supposed to predict how people will choose to spend and save based upon their plans for an infinite sequence of future income and spending—and if this sounds utterly impossible, that’s because it is. Euler equations don’t fit the data at all, and even extreme attempts to save them by adding a proliferation of additional terms have failed. (It reminds me very much of the epicycles that astronomers used to add to the geocentric model of the universe to try to squeeze in weird results like Mars, before they had the heliocentric model.)

We should instead start over: How do people actually choose their spending? Well, first of all, it’s not completely rational. But it’s also not totally random. People spend on necessities before luxuries; they try to live within their means; they shop for bargains. There is a great deal of data from behavioral economics that could be brought to bear on understanding the actual heuristics people use in deciding how to spend and save. There have already been successful policy interventions using this knowledge, like Save More Tomorrow.

The best thing about this is that it should make our models simpler. We’re no longer asking each agent in the model to solve an impossible problem. However people actually make these decisions, we know it can be done, because it is being done. Most people don’t really think that hard, even when they probably should; so the heuristics really can’t be that complicated. My guess is that you can get a good fit—certainly better than an Euler equation—just by assuming that people set a target for how much they’re going to save (which is also probably pretty small for most people), and then spend the rest.

The second most important thing we need to add is inequality. Some people are much richer than others; this is a very important fact about economics that we need to understand. Yet it has taken the economics profession decades to figure this out, and even now I’m only aware of one class of macroeconomic models that seriously involves inequality, the Heterogeneous Agent New Keynesian (HANK) models which didn’t emerge until the last few years (the earliest publication I can find is 2016!). And these models are monsters; they are almost always computationally intractable and have a huge number of parameters to estimate.

Understanding inequality will require more parameters, that much is true. But if we abandon dynamic optimization, we won’t need as many as the HANK models have, and most of the new parameters are actually things we can observe, like the distribution of wages and years of schooling.

Observability of parameters is a big deal. Another problem with the way the Lucas Critique has been used is that we’ve been told we need to be using “deep structural parameters” like the temporal elasticity of substitution and the coefficient of relative risk aversion—but we have no idea what those actually are. We can’t observe them, and all of our attempts to measure them indirectly have yielded inconclusive or even inconsistent results. This is probably because these parameters are based on assumptions about human rationality that are simply not realistic. Most people probably don’t have a well-defined temporal elasticity of substitution, because their day-to-day decisions simply aren’t consistent enough over time for that to make sense. Sometimes they eat salad and exercise; sometimes they loaf on the couch and drink milkshakes. Likewise with risk aversion: many moons ago I wrote about how people will buy both insurance and lottery tickets, which no one with a consistent coefficient of relative risk aversion would ever do.

So if we are interested in deep structural parameters, we need to base those parameters on behavioral experiments so that we can understand actual human behavior. And frankly I don’t think we need deep structural parameters; I think this is a form of greedy reductionism, where we assume that the way to understand something is always to look at smaller pieces. Sometimes the whole is more than the sum of its parts. Economists obviously feel a lot of envy for physics; but they don’t seem to understand that aerodynamics would never have (ahem) gotten off the ground if we had first waited for an exact quantum mechanical solution of the oxygen atom (which we still don’t have, by the way). Macroeconomics may not actually need “microfoundations” in the strong sense that most economists intend; it needs to be consistent with small-scale behavior, but it doesn’t need to be derived from small-scale behavior.

This means that the new paradigm in macroeconomics does not need to be computationally intractable. Using heuristics instead of dynamic optimization and worrying less about microfoundations will make the models simpler; adding inequality need not make them so much more complicated.

For labor day, thoughts on socialism

PNRJ critique of neoclassical economics, ethics, inequality, market failure, public policy , , , , , , , , , , , , , , ,

Planned Post 255: Sep 9 JDN 2458371

This week includes Labor Day, the holiday where we are perhaps best justified in taking the whole day off from work and doing nothing. Labor Day is sort of the moderate social democratic counterpart to the explicitly socialist holiday May Day.

The right wing in this country has done everything in their power to expand the definition of “socialism”, which is probably why most young people now have positive views of socialism. There was a time when FDR was seen as an alternative to socialism; but now I’m pretty sure he’d just be called a socialist.

Because of this, I am honestly not sure whether I should be considered a socialist. I definitely believe in the social democratic welfare state epitomized by Scandinavia, but I definitely don’t believe in total collectivization of all means of production.

I am increasingly convinced that shareholder capitalism is a terrible system (the renowned science fiction author Charles Stross actually gave an excellent talk on this subject), but I would not want to abandon free markets.
The best answer might be worker-owned cooperatives. The empirical data is actually quite consistent in showing worker co-ops to be as efficient if not more efficient than conventional corporations, and by construction their pay systems produce less inequality than corporations.

Indeed, I think there is reason to believe that a worker co-op is a much more natural outcome for free markets under a level playing field than a conventional corporation, and the main reason we have corporations is actually that capitalism arose out of (and in response to) feudalism.

Think about it: Why should most things be owned by the top 1%? (Okay, not quite “most”: to be fair, the top 1% only owns 40% of all US net wealth.) Why is 80% of the value of the stock market held by the top 10% of the population?

Most things aren’t done by the top 1%. There are a handful of individuals (namely, scientists who make seminal breakthroughs: Charles Darwin, Marie Curie, Albert Einstein, Rosalind Franklin, Alan Turing, Jonas Salk) who are so super-productive that they might conceivably deserve billionaire-level compensation—but they are almost never the ones who are actually billionaires. If markets were really distributing capital to those who would use it most productively, there’s no reason to think that inequality would be so self-sustaining—much less self-enhancing as it currently seems to be.

But when you realize that capitalism emerged out of a system where the top 1% (or less) already owned most things, and did so by a combination of “divine right” ideology and direct, explicit violence, this inequality becomes a lot less baffling. We never had a free market on a level playing field. The closest we’ve ever gotten has always been through social-democratic reforms (like the New Deal and Scandinavia).

How does this result in corporations? Well, when all the wealth is held by a small fraction of individuals, how do you start a business? You have to borrow money from the people who have it. Borrowing makes you beholden to your creditors, and puts you at great risk if your venture fails (especially back in the days when there were debtor’s prisons—and we’re starting to go back that direction!). Equity provides an alternative: In exchange for giving them the downside risk if your venture fails, you also give your creditors—now shareholders—the upside risk if your venture succeeds. But at the end of the day when your business has succeeded, where did most of the profits go? Into the hands of the people who already had money to begin with, who did nothing to actually contribute to society. The world would be better off if those people had never existed and their wealth had simply been shared with everyone else.

Compare this to what would happen if we all started with similar levels of wealth. (How much would each of us have? Total US wealth of about $44 trillion, spread among a population of 328 million, is about $130,000 each. I don’t know about you, but I think I could do quite a bit with that.) When starting a business, you wouldn’t go heavily into debt or sign away ownership of your company to some billionaire; you’d gather a group of dedicated partners, each of whom would contribute money and effort into building the business. As you added on new workers, it would make sense to pool their assets, and give them a share of the company as well. The natural structure for your business would be not a shareholder corporation, but a worker-owned cooperative.

I think on some level the super-rich actually understand this. If you look closely at the sort of policies they fight for, they really aren’t capitalist. They don’t believe in free, unfettered markets where competition reigns. They believe in monopoly, lobbying, corruption, nepotism, and above all, low taxes. (There’s actually nothing in the basic principles of capitalism that says taxes should be low. Taxes should be as high as they need to be to cover public goods—no higher, and no lower.) They don’t want to provide nationalized healthcare, not because they believe that private healthcare competition is more efficient (no one who looks at the data for even a few minutes can honestly believe that—US healthcare is by far the most expensive in the world), but because they know that it would give their employees too much freedom to quit and work elsewhere. Donald Trump doesn’t want a world where any college kid with a brilliant idea and a lot of luck can overthrow his empire; he wants a world where everyone owes him and his family personal favors that he can call in to humiliate them and exert his power. That’s not capitalism—it’s feudalism.

Crowdfunding also provides an interesting alternative; we might even call it the customer-owned cooperative. Kickstarter and Patreon provide a very interesting new economic model—still entirely within the realm of free markets—where customers directly fund production and interact with producers to decide what will be produced. This might turn out to be even more efficient—and notice that it would run a lot more smoothly if we had all started with a level playing field.

Establishing such a playing field, of course, requires a large amount of redistribution of wealth. Is this socialism? If you insist. But I think it’s more accurate to describe it as reparations for feudalism (not to mention colonialism). We aren’t redistributing what was fairly earned in free markets; we are redistributing what was stolen, so that from now on, wealth can be fairly earned in free markets.

We are in a golden age of corporate profits

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

Sep 2 JDN 245836

Take a good look at this graph, from the Federal Reserve Economic Database:

corporate_profits
The red line is corporate profits before tax. It is, unsurprisingly, the largest. The purple line is corporate profits after tax, with the standard adjustments for inventory depletion and capital costs. The green line is revenue from the federal corporate tax. Finally, I added a dashed blue line which multiplies before-tax profits by 30% to compare more directly with tax revenues. All these figures are annual, inflation-adjusted using the GDP deflator. The units are hundreds of billions of 2012 dollars.

The first thing you should notice is that the red and purple lines are near the highest they have ever been. Before-tax profits are over $2 trillion. After-tax profits are over $1.6 trillion.

Yet, corporate tax revenues are not the highest they have ever been. In 2006, they were over $400 billion; yet this year they don’t even reach $300 billion. The obvious reason for this is that we have been cutting corporate taxes. The more important reason is that corporations have gotten very good at avoiding whatever corporate taxes we charge.

On the books, we used to have a corporate tax rate of about 35%, which Trump just cut to 21%. But if you look at my dashed line, you can see that corporations haven’t actually paid more than 30% of their profits in taxes since 1970—and back then, the rate on the books was almost 50%.

Corporations have always avoided taxes. The effective tax rate—tax revenue divided by profits—is always much lower than the rate on the books. In 1951, the statutory tax rate was 50.75%; the effective rate was 47%. In 1970, the statutory rate was 49.2%; the effective rate was 31%. In 1993, the statutory rate was 35%; the effective rate was 26%. On average, corporations paid about 2/3 to 3/4 of what the statutory rate said.

corporate_tax_rate

You can even see how the effective rate trended steadily downward, much faster than the statutory rate. Corporations got better and better at finding and creating loopholes to let them avoid taxes. In 1950, the statutory rate was 38%—and sure enough, the effective rate was… 38%. Under Truman, corporations actually paid what they said they paid. Compare that to 1987, under Reagan, when the statutory rate was 40%—but the effective rate was only 26%.

Yet even with that downward trend, something happened under George W. Bush that widened the gap even further. While the statutory rate remained fixed at 35%, the effective rate plummeted from 26% in 2000 to 16% in 2002. The effective rate never again rose above 19%, and in 2009 it hit a minimum of just over 10%—less than one-third the statutory tax rate. It was trending upward, making it as “high” as 15%, until Trump’s tax cuts hit; in 2017 it was 13%, and it is projected to be even lower this year.

This is why it has always been disingenuous to compare our corporate tax rates with other countries and complain that they are too high. Our effective corporate tax rates have been in line with most other highly-developed countries for a long time now. The idea of “cutting rates and removing loopholes” sounds good in principle—but never actually seems to happen. George W. Bush’s “tax reforms” which were supposed to do this added so many loopholes that the effective tax rate plummeted.

I’m actually fairly ambivalent about corporate taxes in general. Their incidence really isn’t well-understood, though as Krugman has pointed out, so much of corporate profit is now monopoly rent that we can reasonably expect most of the incidence to fall on shareholders. What I’d really like to see happen is a repeal of the corporate tax combined with an increase in capital gains taxes. But we haven’t been increasing capital gains taxes; we’ve just been cutting corporate taxes.

The result has been a golden age for corporate profits. Make higher profits than ever before, and keep almost all of them without paying taxes! Nevermind that the deficit is exploding and our infrastructure is falling apart. America was founded in part on a hatred of taxes, so I guess we’re still carrying on that proud tradition.

Slides from my presentation at Worldcon

PNRJ current events, futurism, inequality, personal, public policy , , , , , , , , , ,

Whether you are a regular reader curious about my Worldcon talk, or a Worldcon visitor interested in seeing the slides, The slides from my presentation, “How do we get to the Federation from here?” can be found here.

Is a job guarantee better than a basic income?

PNRJ ethics, futurism, inequality, macroeconomics, market failure, public policy , , , , , , , , , , , ,

Aug 5 JDN 2458336

In previous posts I’ve written about both the possibilities and challenges involved in creating a universal basic income. Today I’d like to address what I consider the most serious counter-argument against a basic income, an alternative proposal known as a job guarantee.

Whereas a basic income is literally just giving everyone free money, a job guarantee entails offering everyone who wants to work a job paid by the government. They’re not necessarily contradictory, but I’ve noticed a clear pattern: While basic income proponents are generally open to the idea of a job guarantee on the side, job guarantee proponents are often vociferously opposed to a basic income—even calling it “sinister”. I think the reason for this is that we see jobs as irrelevant, so we’re okay with throwing them in if you feel you must, while they see jobs as essential, so they meet any attempt to remove them with overwhelming resistance.

Where a basic income is extremely simple and could be implemented by a single act of the legislature, a job guarantee is considerably more complicated. The usual proposal for a job guarantee involves federal funding but local implementation, which is how most of our social welfare system is implemented—and why social welfare programs are so much better in liberal states like California than in conservative states like Mississippi, because California actually believes in what it’s implementing and Mississippi doesn’t. Anyone who wants a job guarantee needs to take that aspect seriously: In the places where poverty is worst, you’re offering control over the policy to the very governments that made poverty worst—and whether it is by malice or incompetence, what makes you think that won’t continue?

Another argument that I think job guarantee proponents don’t take seriously enough is the concern about “make-work”. They insist that a job guarantee is not “make-work”, but real work that’s just somehow not being done. They seem to think that there are a huge number of jobs that we could just create at the snap of a finger, which would be both necessary and useful on the one hand, and a perfect match for the existing skills of the unemployed population on the other hand. If that were the case, we would already be creating those jobs. It doesn’t even require a particularly strong faith in capitalism to understand this: If there is a profit to be made at hiring people to do something, there is probably already a business hiring people to do that. I don’t think of myself as someone with an overriding faith in capitalism, but a lot of the socialist arguments for job guarantees make me feel that way by comparison: They seem to think that there’s this huge untapped reserve of necessary work that the market is somehow failing to provide, and I’m just not seeing it.

There are public goods projects which aren’t profitable but would still be socially beneficial, like building rail lines and cleaning up rivers. But proponents of a job guarantee don’t seem to understand that these are almost all highly specialized jobs at our level of technology. We don’t need a bunch of people with shovels. We need engineers and welders and ecologists.

If you propose using people with shovels where engineers would be more efficient, that is make-work, whether you admit it or not. If you’re making people work in a less-efficient way in order to create jobs, then the jobs you are creating are fake jobs that aren’t worth creating. The line is often credited to Milton Friedman, but actually said first by William Aberhart in 1935:

Taking up the policy of a public works program as a solution for unemployment, it was criticized as a plan that took no account of the part that machinery played in modern construction, with a road-making machine instanced as an example. He saw, said Mr. Aberhart, work in progress at an airport and was told that the men were given picks and shovels in order to lengthen the work, to which he replied why not give them spoons and forks instead of picks and shovels if the object was to lengthen out the task.

I’m all for spending more on building rail lines and cleaning up rivers, but that’s not an anti-poverty program. The people who need the most help are precisely the ones who are least qualified to work on these projects: Children, old people, people with severe disabilities. Job guarantee proponents either don’t understand this fact or intentionally ignore it. If you aren’t finding jobs for 7-year-olds with autism and 70-year-olds with Parkinson’s disease, this program will not end poverty. And if you are, I find it really hard to believe that these are real, productive jobs and not useless “make-work”. A basic income would let the 7-year-olds stay in school and the 70-year-olds live in retirement homes—and keep them both out of poverty.

Another really baffling argument for a job guarantee over basic income is that a basic income would act as a wage subsidy, encouraging employers to reduce wages. That’s not how a basic income works. Not at all. A basic income would provide a pure income effect, necessarily increasing wage demands. People would not be as desperate for work, so they’d be more comfortable turning down unreasonable wage offers. A basic income would also incentivize some people to leave the labor force by retiring or going back to school; the reduction in labor supply would further increase wages. The Earned Income Tax Credit is in many respects similar to a wage subsidy. While superficially it might seem similar, a basic income would have the exact opposite effect.

One reasonable argument against a basic income is the possibility that it could cause inflation. This is something that can’t really be tested with small-scale experiments, so we really won’t know for sure until we try it. But there is reason to think that the inflation would be small, as the people removed from the labor force will largely be the ones who are least-productive to begin with. There is a growing body of empirical evidence suggesting that inflationary effects of a basic income would be small. For example, data on cash transfer programs in Mexico show only a small inflationary effect despite large reductions in poverty. The whole reason a basic income looks attractive is that automation technology is now so advanced is that we really don’t need everyone to be working anymore. Productivity is so high now that a policy of universal 40-hour work weeks just doesn’t make sense in the 21st century.

Probably the best argument for a job guarantee over a basic income concerns cost. A basic income is very expensive, there’s no doubt about that; and a job guarantee could be much cheaper. That is something I take very seriously: Saving $1.5 trillion a year is absolutely a good reason. Indeed, I don’t really object to this argument; the calculations are correct. I merely think that a basic income is enough better that its higher cost is justifiable. A job guarantee can eliminate unemployment, but not poverty.

But the argument for a job guarantee that most people seem to be find most compelling concerns meaning. The philosopher John Danaher expressed this one most cogently. Unemployment is an extremely painful experience for most people, far beyond what could be explained simply by their financial circumstances. Most people who win large sums of money in the lottery cut back their hours, but continue working—so work itself seems to have some value. What seems to happen is that when people lose the chance to work, they feel that they have lost a vital source of meaning in their lives.

Yet this raises two more questions:

First, would a job guarantee actually solve that problem?
Second, are there ways we could solve it under a basic income?

With regard to the first question, I want to re-emphasize the fact that a large proportion of these guaranteed jobs necessarily cannot be genuinely efficient production. If efficient production would have created these jobs, we would most likely already have created them. Our society does not suffer from an enormous quantity of necessary work that could be done with the skills already possessed by the unemployed population, which is somehow not getting done—indeed, it is essentially impossible for a capitalist economy with a highly-liquid financial system to suffer such a malady. If the work is so valuable, someone will probably take out a loan to hire someone to do it. If that’s not happening, either the unemployed people don’t have the necessary skills, or the work really can’t be all that productive. There are some public goods projects that would be beneficial but aren’t being done, but that’s a different problem, and the match between the public goods projects that need done and the skills of the unemployed population is extremely poor. Displaced coal miners aren’t useful for maintaining automated photovoltaic factories. Truckers who get replaced by robot trucks won’t be much good for building maglev rails.

With this in mind, it’s not clear to me that people would really be able to find much meaning in a guaranteed job. You can’t be fired, so the fact that you have the job doesn’t mean anyone is impressed by the quality of your work. Your work wasn’t actually necessary, or the private sector would already have hired someone to do it. The government went out of its way to find a job that precisely matched what you happen to be good at, regardless of whether that job was actually accomplishing anything to benefit society. How is that any better than not working at all? You are spending hours of drudgery to accomplish… what, exactly? If our goal was simply to occupy people’s time, we could do that with Netflix or video games.

With regard to the second question, note that a basic income is quite different from other social welfare programs in that everyone gets it. So it’s very difficult to attach a social stigma to receiving basic income payments—it would require attaching the stigma to literally everyone. Much of the lost meaning, I suspect, from being unemployed comes from the social stigma attached.

Now, it’s still possible to attach social stigma to people who only get the basic income—there isn’t much we can do to prevent that. But in the worst-case scenario, this means unemployed people get the same stigma as before but more money. Moreover, it’s much harder to detect a basic income recipient than, say, someone who eats at a soup kitchen or buys food using EBT; since it goes in your checking account, all everyone else sees is you spending money from your debit card, just like everyone else. People who know you personally would probably know; but people who know you personally are also less likely to destroy your well-being by imposing a high stigma. Maybe they’ll pressure you to get off the couch and get a job, but they’ll do so because they genuinely want to help you, not because they think you are “one of those lazy freeloaders”.

And, as BIEN points out, think about retired people: They don’t seem to be so unhappy. Being on basic income is more like being retired than like being unemployed. It’s something everyone gets, not some special handout for “those people”. It’s permanent, so it’s not like you need to scramble to get a job before it goes away. You just get money automatically, so you don’t have to navigate a complex bureaucracy to get it. Controlling for income, retired people don’t seem to be any less happy than working people—so maybe work doesn’t actually provide all that much meaning after all.

I guess I can’t rule out the possibility that people need jobs to find meaning in their lives, but I both hope and believe that this is not generally the case. You can find meaning in your family, your friends, your community, your hobbies. You can still work even if you don’t need to work for a living: Build a shed, mow your lawn, tune up your car, upgrade your computer, write a story, learn a musical instrument, or try your hand at painting.

If you need to be taking orders from a corporation five days a week in order to have meaning in your life, you have bigger problems. I think what has happened to many people is that employment has so drained their lives of the real sources of meaning that they cling to it as the only thing they have left. But in fact work is not the cure to your ennui—it is the cause of it. Finally being free of the endless toil that has plagued humanity since the dawn of our species will give you the chance to reconnect with what really matters in life. Show your children that you love them in person, to their faces, instead of in this painfully indirect way of “providing for” them by going to work every day. Find ways to apply your skills in volunteering or creating works of art, instead of in endless drudgery for the profit of some faceless corporation.

The asymmetric impact of housing prices

PNRJ financial advice, heuristics and biases, inequality, market failure , , , , ,

Jul 22 JDN 2458323

In several previous posts I’ve talked about the international crisis of high housing prices. Today, I want to talk about some features of housing that make high housing prices particularly terrible, in a way that other high prices would not be.

First, there is the fact that some amount of housing is a basic necessity, and houses are not easily divisible. So even if the houses being built are bigger than you need, you still need some kind of house, and you can’t buy half a house; the best you could really do would be to share it with someone else, and that introduces all sorts of other complications.

Second, t here is a deep asymmetry here. While rising housing prices definitely hurt people who want to buy houses, they benefit hardly anyone.


If you bought a house for $200,000 and then all housing prices doubled so it would now sell for $400,000, are you richer? You might feel richer. You might even have access to home equity loans that would give you more real liquidity. But are you actually richer?

I contend you are not, because the only way for you to access that wealth would be to sell your home, and then you’d need to buy another home, and that other home would also be twice as expensive. The amount of money you can get for your house may have increased, but the amount of house you can get for your house is exactly the same.

Conversely, suppose that housing prices fell by half, and now that house only sells for $100,000. Are you poorer? You still have your house. Even if your mortgage isn’t paid off, it’s still the same mortgage. Your payments haven’t changed. And once again, the amount of house you can get for your house will remain the same. In fact, if you are willing to accept a deed in lieu of foreclosure (it’s bad for your credit, of course), you can walk away from that underwater house and buy a new one that’s just as good with lower payments than what you are currently making. You may actually be richer because the price of your house fell.

Relative housing prices matter, certainly. If you own a $400,000 house and move to a city where housing prices have fallen to $100,000, you are definitely richer. And if you own a $100,000 house and move to a city where housing prices have risen to $400,000, you are definitely poorer. These two effects necessarily cancel out in the aggregate.

But do absolute housing prices matter for homeowners? It really seems to me that they don’t. The people who care about absolute housing prices are not homeowners; they are people trying to enter the market for the first time.
And this means that lower housing prices are almost always better. If you could buy a house for $1,000, we would live in a paradise where it was basically impossible to be homeless. (When social workers encountered someone who was genuinely homeless, they could just buy them a house then and there.) If every home cost $10 million, those who bought homes before the price surge would be little better off than they are, but the rest of us would live on the streets.

Psychologically, people very strongly resist falling housing prices. Even in very weak housing markets, most people will flatly refuse to sell their house for less than they paid for it. As a result, housing prices usually rise with inflation, but don’t usually fall in response to deflation. Rents also display similar rigidity over time. But in reality, lower prices are almost always better for almost everyone.

There is a group of people who are harmed by low housing prices, but it is a very small group of people, most of whom are already disgustingly rich: The real estate industry. Yes, if you build new housing, or flip houses, or buy and sell houses on speculation, you will be harmed by lower housing prices. Of these, literally the only one I care about even slightly is developers; and I only care about developers insofar as they are actually doing their job building housing that people need. If falling prices hurt developers, it would be because the supply of housing was so great that everyone who needs a house could have one.

There is a subtler nuance here, which is that some people may be buying more expensive housing as a speculative saving vehicle, hoping that they can cash out on their house when they retire. To that, I really only have one word of advice: Don’t. Don’t contribute to another speculative housing bubble that could cause another Great Recession. A house is not even a particularly safe investment, because it’s completely undiversified. Buy stocks. Buy all the stocks. Buy a house because you want that house, not because you hope to make money off of it.

And if the price of your house does fall someday? Don’t panic. You may be no worse off, and other people are probably much better off.

The injustice of positional goods

PNRJ ethics, inequality, market failure , , , ,

July 15 JDN 2458315

At Disneyland, you can now buy a special pass that will let you skip ahead in line. On several airlines including American, Delta, Spirit, and Southwest, you can pay extra to be allowed to board before other passengers (which has been particularly salient for me on the many flights I’ve been taking this summer). This is only an extreme form of a long-standing phenomenon: Since the beginning of commercial ship and train travel, there have been first-class and second-class tickets.

I don’t have any formal survey data on the matter, but just about everyone I have spoken to about such policies is at least vaguely uncomfortable with them, if not totally outraged. The exception is other economists, who typically don’t express any concern whatsoever. “People are willing to pay for this service because they value it,” they say; “so what’s the problem?”

On this one, I think the economists are wrong and everyone else is right. There is something different about this sort of service.

Part of the difference between first-class and second-class is in actual quality of services that actually incur additional costs (I hate to break it to you, but legroom on an aircraft is just such an example; every inch of legroom on each seat is another row of seats they can’t have, which is another $2000 or so they don’t get in revenue on each and every flight). But part of it is something else, something that costs the company literally nothing.

This makes early boarding a clearer example. What are you buying when you pay for early boarding? On most airlines, it’s not even a better seat; your seat is pre-assigned (Southwest is an exception). We could say you are paying for extra time, but that’s not really even true; the plane leaves at the same time for everyone. From your perspective, you are paying for convenience; you get to settle in on the plane, maybe get started working or whatever, before everyone else. Maybe you’d rather wait on the plane than wait in the airport (though frankly I’m not sure why; the airport has restaurants and comfortable restrooms).

What you are really buying is position. Early boarding is a positional good. Every person who gets bumped forward in the queue is someone else who is bumped backward. The net benefit for all customers as a whole is precisely zero, as is the cost for the company to provide it—and yet, it still has a positive price! This is impressive economic alchemy: The airline has managed to take something with zero marginal cost and zero marginal benefit, and still make money off of it. They have transmuted the lead of something costless and worthless into the gold of profit.

They achieve this by pitting customers against one another. In a post awhile back I talked about rent-seeking, such as lobbying and advertising. Usually it’s the corporations doing the rent-seeking, but early boarding and queue-jumping are examples of corporations intentionally generating a circumstances where they can obtain revenue from the rent-seeking of others.

To be fair, there might be some welfare gains to be had from auctioning off order in a queue. Some people have genuinely higher costs of time than others (a cardiac surgeon’s time is particularly important, for example), and an auction could potentially order people who have very high cost of time first.

But this argument is much weaker than it may at first appear, because people also have very different marginal utility of wealth, and indeed I think the correlation between your willingness to pay for time and your total wealth is considerably higher than the correlation between your willingness-to-pay for time and your actual real cost in terms of pain and suffering.

This is a more general problem, as I’ve discussed in previous posts; but I think it’s especially acute in the case of time, because real cost of time doesn’t actually vary all that much between most people. The reason poor people take buses and rich people take limousines isn’t because poor people don’t care about their time; it’s because they can’t afford limousines. A cardiac surgeon and an economist could very well have the same salary and the same willingness-to-pay for time, but people rarely die when an economist turns up an hour late. (It’s not that our work isn’t important—actually a good development economist can save far more lives than any cardiac surgeon—but it’s not nearly so urgent.) Also, consider the fact that teachers and social workers generally contribute a good deal more to society than derivatives traders (and thus, from a social welfare perspective, their time should be considered more valuable), but they are far less likely to pay for first-class seats. In fact, a first-come, first-served method actually seems better than an auction from a social welfare perspective: If your time is really important to you, you’re more likely to go out of your way to check in as soon as you can. That costly signal provides a sorting mechanism which relies directly upon real costs of time, rather than indirectly via monetary willingness-to-pay.

And of course when it comes to Disneyland, this argument utterly fails; I see little reason to think that a cardiac surgeon’s vacation time is substantially more valuable to society. (Don’t get me wrong; surgeons need and deserve vacation time—but if they get too much, their performance actually suffers!) So maybe paying for a place in queue isn’t completely rent-seeking, but it’s pretty close.

That is why paying for positional goods feels unjust to most people: Because it is. Charging a price for positional goods is a means of extracting profit from customers without providing any (net) real service. It’s a way of applying price discrimination without even having much monopoly power. If another airline doesn’t let you pay to skip ahead in the queue, you have a slightly lower expected wait time on that other airline, but any revenue they lose from charging a bit less for economy tickets can be easily made up by charging more for the front of the line.

For example, if the first 10% of the line on airline A is decided by selling spots, while airline B chooses at random, and the average time waiting in line to board is 30 minutes, the expected wait times are as follows. Fly airline A and don’t buy a spot: 16.5 minutes. Fly airline A and buy a spot: 1.5 minutes. Fly airline B: 15 minutes. Those 10% are paying for, on average, 13.5 minutes; but you’re only gaining 1.5 minutes. Of course, there are more people waiting that extra 1.5 minutes than saving those 13.5 minutes (9 times as many, in fact). If the per-minute willingness-to-pay were exactly the same, the airline would break even; but they know of course that the willingness-to-pay of that top 10% is considerably higher than that of most of the bottom 90%. If they have any market power at all (which they generally do, by being the only airline serving certain routes, offering loyalty benefits, etc.), they can squeeze out even more profit.

They may even sometimes go out of their way to make life miserable for those who don’t pay extra, increasing the incentive to pay extra. This requires some market power to pull off, but as I said, they often have that. Most airlines don’t offer power outlets at every seat, for example. This is not a serious question of installation cost or even power consumption. We’re talking about a few hundred dollars on an aircraft that costs hundreds of millions of dollars, or a few kilowatts from a system that can generate over one hundred megawatts (of course most of it is used for propulsion, but adding an alternator that would generate an extra few kilowatts of electrical power would still not be difficult or expensive). This is a way of making life worse for the economy-class passengers so they have a stronger incentive to pay for upgraded tickets.

It’s not always easy to tell what is a positional good: First-class seats are ambiguous, for example. But I think a good heuristic is to ask, “Could everyone benefit from this?” If the answer is “No, even in principle”, then you are definitely dealing with a positional good. Not everyone can be first in line at Disneyland. Not everyone can board the plane first. In theory at least, everyone could be provided the same legroom and meal service as a first-class ticket (it would be expensive, but not impossible), so that is at least in part not a positional good.

The “pay-to-win” effect of some video game downloadable content (DLC) is also a positional good, which we can see by the above heuristic: If everyone pays to have the best gun in the game, there’s no point in having the best gun in the game. This is why gamers are rightfully outraged by “pay-to-win” effects, but typically have no objection to paying for DLC that provides them with extra game content (such as new characters, locations, or missions) or cosmetic upgrades (hats, decorations, and “skins”). Personally I tend to think that most DLC is overpriced, and succeeds at being so due to a kind of monopoly power (Mass Effect DLC doesn’t work on Skyrim or vice-versa) but I certainly don’t object to the basic idea of charging additional money for additional content. The reason we object to “pay-to-win” is not that winning the game is so important; it’s that this business model is so obviously a form of rent extraction. (It’s interesting that gamers in China don’t seem to be as bothered by “pay-to-win” as gamers in the US; this runs counter to the standard narrative that American people are competitive capitalists and Chinese people are collectivist socialists, don’t you think?)

There may be some circumstances in which we have no choice but to allow corporations to charge prices for positional goods—especially if we can’t tell whether we are dealing with a positional good or not. But it would not be very difficult to draft legislation that would at least reduce such business practices: We could simply use my “Could everyone benefit?” heuristic. If a business charges money for something that even in principle they could not possibly provide all of their customers, they are charging a price for a positional good, and should be penalized. The benefits of such a policy would be relatively small, but the costs would be even smaller. If we are really concerned about letting cardiac surgeons board aircraft faster (we should really be concerned about deboarding faster—and especially faster security screening!), we could make such a rule that applies to particular classes of high-urgency professions; we don’t need to allow airlines to extract millions of dollars in rent by pitting their customers against each other.

The housing shortage is an international phenomenon

PNRJ inequality, market failure, public policy , , , , , , , , , ,

Jul 1 JDN 2458301

My posts for the next couple of weeks are going to be shorter, since I am in Europe and will be either on vacation (at the time I write this) or busy with a conference and a workshop (by the time this post goes live).

For today, I’d just like to point out that the crisis of extremely high housing prices is not unique to California or even the United States. In some respects it may even be worse elsewhere.

San Francisco remains especially bad; the median price for a home in San Francisco is a horrifying $1.6 million.

But London (where I am at the time of writing) is also terrible; the median price for a home in London recently fell to 430,000 pounds (about $600,000 at current exchange rates). The most expensive flat—not house, flat—sold a couple years ago for the mind-boggling sum of 150 million pounds (about $200 million). If I had $200 million, I would definitely not use it to buy a flat. At that point it would literally be cheaper to buy a yacht with a helipad, park it in the harbor, and commute by helicopter. Here’s a yacht with a helipad for only $20 million, and a helicopter to go with it for $6 million. That leaves $174 million; keep $20 million in stocks to be independently wealthy for the rest of your life, and then donate the remaining $154 million to charity.

The median price of a house in Vancouver stands at 1.1 million Canadian dollars, about $830,000 US.

A global comparison finds that on a per-square-meter basis, the most expensive real estate in the world is in Monaco, where $1 million US will only buy you 15 square meters. The remaining cities in the top 10 are Hong Kong, London, Singapore, Geneva, New York, Sydney, Paris, Moscow, and Shanghai.

There is astonishing variation in the level of housing prices, even within countries. Some of the most affordable markets in the US (like San Antonio and Oklahoma City) cost as little as $80 per square foot; that means that $1 million would buy you 1,160 square meters. That’s not an error; real estate in Monaco is literally 77 times more expensive than real estate in Oklahoma City. 15 square meters is a studio apartment; 1,160 square meters is a small mansion. Just comparing within the US, the price per square foot in San Francisco is over $1,120, 14 times as high as Oklahoma City. $1 million in San Francisco will buy you about 80 square meters, which is at least a two or three-bedroom house.

This says to me that policy choices matter. It may not be possible to make San Francisco as cheap as Oklahoma City—most people would definitely rather live in San Francisco, so demand is always going to be higher there. But I don’t think it’s very plausible to say that housing is just inherently 14 times as expensive to construct as housing in Oklahoma City. If it’s really that much more expensive to construct (and that may not even be the issue—this could be more a matter of oligopoly than high costs), it must be at least in part because of something the local and state governments are doing differently. Cross-national comparisons underscore that point even further: The geography of Hong Kong and Taiwan is not that different, but housing prices in Taiwan are not nearly as high.

What exactly are different cities (and countries) doing differently that has such large effects on housing prices? That’s something I’ll try to figure out in future posts.

The inherent atrocity of “border security”

PNRJ core principles, ethics, public policy , , , , , , , , , , , , , , , , , , , , ,

Jun 24 JDN 2458294

By now you are probably aware of the fact that a new “zero tolerance” border security policy under the Trump administration has resulted in 2,000 children being forcibly separated from their parents by US government agents. If you weren’t, here are a variety of different sources all telling the same basic story of large-scale state violence and terror.

Make no mistake: This is an atrocity. The United Nations has explicitly condemned this human rights violation—to which Trump responded by making an unprecedented threat of withdrawing unilaterally from the UN Human Rights Council.

#ThisIsNotNormal, and Trump was everything we feared—everything we warned—he would be: Corrupt, incompetent, cruel, and authoritarian.

Yet Trump’s border policy differs mainly in degree, not kind, from existing US border policy. There is much more continuity here than most of us would like to admit.

The Trump administration has dramatically increased “interior removals”, the most obviously cruel acts, where ICE agents break into the houses of people living in the US and take them away. Don’t let the cold language fool you; this is literally people with guns breaking into your home and kidnapping members of your family. This is characteristic of totalitarian governments, not liberal democracies.

And yet, the Obama administration actually holds the record for most deportations (though only because they included “at-border deportations” which other administrations did not). A major policy change by George W. Bush started this whole process of detaining people at the border instead of releasing them and requiring them to return for later court dates.

I could keep going back; US border enforcement has gotten more and more aggressive as time goes on. US border security staffing has quintupled since just 1990. There was a time when the United States was a land of opportunity that welcomed “your tired, your poor, your huddled masses”; but that time is long past.

And this, in itself, is a human rights violation. Indeed, I am convinced that border security itself is inherently a human rights violation, always and everywhere; future generations will not praise us for being more restrained than Trump’s abject and intentional cruelty, but condemn us for acting under the same basic moral framework that justified it.

There is an imaginary line in the sand just a hundred miles south of where I sit now. On one side of the line, a typical family makes $66,000 per year. On the other side, a typical family makes only $20,000. On one side of the line, life expectancy is 81 years; on the other, 77. This means that over their lifetime, someone on this side of the line can expect to make over one million dollars more than they would if they had lived on the other side. Step across this line, get a million dollars; it sounds ridiculous, but it’s an empirical fact.

This would be bizarre enough by itself; but now consider that on that line there are fences, guard towers, and soldiers who will keep you from crossing it. If you have appropriate papers, you can cross; but if you don’t, they will arrest and detain you, potentially for months. This is not how we treat you if you are carrying contraband or have a criminal record. This is how we treat you if you don’t have a passport.

How can we possibly reconcile this with the principles of liberal democracy? Philosophers have tried, to be sure. Yet they invariably rely upon some notion that the people who want to cross our border are coming from another country where they were already granted basic human rights and democratic representation—which is almost never the case. People who come here from the UK or the Netherlands or generally have the proper visas. Even people who come here from China usually have visas—though China is by no means a liberal democracy. It’s people who come here from Haiti and Nicaragua who don’t—and these are some of the most corrupt and impoverished nations in the world.

As I said in an earlier post, I was not offended that Trump characterized countries like Haiti and Syria as “shitholes”. By any objective standard, that is accurate; these countries are terrible, terrible places to live. No, what offends me is that he thinks this gives us a right to turn these people away, as though the horrible conditions of their country somehow “rub off” on them and make them less worthy as human beings. On the contrary, we have a word for people who come from “shithole” countries seeking help, and that word is “refugee”.

Under international law, “refugee” has a very specific legal meaning, under which most immigrants do not qualify. But in a broader moral sense, almost every immigrant is a refugee. People don’t uproot themselves and travel thousands of miles on a whim. They are coming here because conditions in their home country are so bad that they simply cannot tolerate them anymore, and they come to us desperately seeking our help. They aren’t asking for handouts of free money—illegal immigrants are a net gain for our fiscal system, paying more in taxes than they receive in benefits. They are looking for jobs, and willing to accept much lower wages than the workers already here—because those wages are still dramatically higher than what they had where they came from.

Of course, that does potentially mean they are competing with local low-wage workers, doesn’t it? Yes—but not as much as you might think. There is only a very weak relationship between higher immigration and lower wages (some studies find none at all!), even at the largest plausible estimates, the gain in welfare for the immigrants is dramatically higher than the loss in welfare for the low-wage workers who are already here. It’s not even a question of valuing them equally; as long as you value an immigrant at least one tenth as much as a native-born citizen, the equation comes out favoring more immigration.

This is for two reasons: One, most native-born workers already are unwilling to do the jobs that most immigrants do, such as picking fruit and laying masonry; and two, increased spending by immigrants boosts the local economy enough to compensate for any job losses.

 

But even aside from the economic impacts, what is the moral case for border security?

I have heard many people argue that “It’s our home, we should be able to decide who lives here.” First of all, there are some major differences between letting someone live in your home and letting someone come into your country. I’m not saying we should allow immigrants to force themselves into people’s homes, only that we shouldn’t arrest them when they try cross the border.

But even if I were to accept the analogy, if someone were fleeing oppression by an authoritarian government and asked to live in my home, I would let them. I would help hide them from the government if they were trying to escape persecution. I would even be willing to house people simply trying to escape poverty, as long as it were part of a well-organized program designed to ensure that everyone actually gets helped and the burden on homeowners and renters was not too great. I wouldn’t simply let homeless people come live here, because that creates all sorts of coordination problems (I can only fit so many, and how do I prioritize which ones?); but I’d absolutely participate in a program that coordinates placement of homeless families in apartments provided by volunteers. (In fact, maybe I should try to petition for such a program, as Southern California has a huge homelessness rate due to our ridiculous housing prices.)

Many people seem to fear that immigrants will bring crime, but actually they reduce crime rates. It’s really kind of astonishing how much less crime immigrants commit than locals. My hypothesis is that immigrants are a self-selected sample; the kind of person willing to move thousands of miles isn’t the kind of person who commits a lot of crimes.
I understand wanting to keep out terrorists and drug smugglers, but there are already plenty of terrorists and drug smugglers here in the US; if we are unwilling to set up border security between California and Nevada, I don’t see why we should be setting it up between California and Baja California. But okay, fine, we can keep the customs agents who inspect your belongings when you cross the border. If someone doesn’t have proper documentation, we can even detain and interrogate them—for a few hours, not a few months. The goal should be to detect dangerous criminals and nothing else. Once we are confident that you have not committed any felonies, we should let you through—frankly, we should give you a green card. We should only be willing to detain someone at the border for the same reasons we would be willing to detain a citizen who already lives here—that is, probable cause for an actual crime. (And no, you don’t get to count “illegal border crossing” as a crime, because that’s begging the question. By the same logic I could justify detaining people for jaywalking.)

A lot of people argue that restricting immigration is necessary to “preserve local culture”; but I’m not even sure that this is a goal sufficiently important to justify arresting and detaining people, and in any case, that’s really not how culture works. Culture is not advanced by purism and stagnation, but by openness and cross-pollination. From anime to pizza, many of our most valued cultural traditions would not exist without interaction across cultural boundaries. Introducing more Spanish speakers into the US may make us start saying no problemo and vamonos, but it’s not going to destroy liberal democracy. If you value culture, you should value interactions across different societies.

Most importantly, think about what you are trying to justify. Even if we stop doing Trump’s most extreme acts of cruelty, we are still talking about using military force to stop people from crossing an imaginary line. ICE basically treats people the same way the SS did. “Papers, please” isn’t something we associate with free societies—it’s characteristic of totalitarianism. We are so accustomed to border security (or so ignorant of its details) that we don’t see it for the atrocity it so obviously is.

National borders function something very much like feudal privilege. We have our “birthright”, which grants us all sorts of benefits and special privileges—literally tripling our incomes and extending our lives. We did nothing to earn this privilege. If anything, we show ourselves to be less deserving (e.g. by committing more crimes). And we use the government to defend our privilege by force.

Are people born on the other side of the line less human? Are they less morally worthy? On what grounds do we point guns at them and lock them away for the “crime” of wanting to live here?

What Trump is doing right now is horrific. But it is not that much more horrific than what we were already doing. My hope is that this will finally open our eyes to the horrors that we had been participating in all along.