segregation

Toward a positive vision of the future

PNRJ current events, ethics, inequality, politics, tribal paradigm , , , , , , , , , , , , , , , , , , , , ,

Jun 22 JDN 2460849

Things look pretty bleak right now. Wildfires rage across Canada, polluting the air across North America. Russia is still at war with Ukraine, and Israel seems to be trying to start a war with Iran. ICE continues sending agents without badges to kidnap people in unmarked vehicles and sending them to undisclosed locations. Climate change is getting worse, and US policy is pivoting from subsidizing renewables back to subsidizing fossil fuels. And Trump, now revealed to be a literal fascist, is still President.

But things can get better.

I can’t guarantee that they will, nor can I say when; but there is still hope that a better future is possible.

It has been very difficult to assemble a strong coalition against the increasingly extreme far-right in this country (epitomized by Trump). This seems odd, when most Americans hold relatively centrist views. Yes, more Americans identify as conservative than as liberal, but Trump isn’t a conservative; he’s a radical far-right fascist. Trump recently gave a speech endorsing ethnic cleansing, for goodness’ sake! I’m liberal, but I’d definitely vote for a conservative like Mitt Romney rather than a Stalinist! So why are “conservatives” voting for a fascist?

But setting aside the question of why people voted for Trump, we still have the question of why the left has not been able to assemble a strong coalition against him.

I think part of the problem is that the left really has two coalitions within it: The center left, who were relatively happy with the status quo before Trump and want to go back to that; and the far left, who were utterly unhappy with that status quo and want radical change. So while we all agree that Trump is awful, we don’t really agree on what he’s supposed to be replaced with.

It’s of course possible to be in between, and indeed I would say that I am. While clearly things were better under Obama and Biden than they have been under Trump, there were still a lot of major problems in this country that should have been priorities for national policy but weren’t:

  1. Above all, climate change—the Democrats at least try to do something against it, but not nearly enough. Our carbon emissions are declining, but it’s very unclear if we’ll actually hit our targets. The way we have been going, we’re in for a lot more hurricanes and wildfires and droughts.
  2. Housing affordability is still an absolute crisis; half of renters spend more than the targeted 30% of their income on housing, and a fourth spend more than 50%.Homelessness is now at a record high.
  3. Healthcare is still far too expensive in this country; we continue to spend far more than other First World countries without getting meaningfully better care.
  4. While rights and protections for LGB people have substantially improved in the last 30 years, rights and protections for trans people continue to lag behind.
  5. Racial segregation in housing remains the de facto norm, even though it is de jure illegal.
  6. Livestock remain exempted from the Animal Welfare Act and in 2002 laboratory rats and mice were excluded as well, meaning that cruel or negligent treatment which would be illegal for cats and dogs is still allowed on livestock and lab rats.
  7. Income and wealth inequality in this country remains staggeringly high, and the super-rich continue to gain wealth at a terrifying rate.
  8. Our voting system is terrible—literally the worst possible system that can technically still be considered democracy.

This list is by no means exhaustive, but these are the issues that seem most salient to me.

2 and 3 both clearly showed up in my Index of Necessary Expenditure; these costs were the primary reason why raising a family of 4 was unaffordable on a median household income.

So it isn’t right to say that I was completely happy with how things were going before. But I still think of myself as center left, because I don’t believe we need to tear everything down and start over.

I have relatively simple recommendations that would go a long way toward solving all 8 of these problems:

Climate change could be greatly mitigated if we’d just tax carbon already, or implement a cap-and-trade system like California’s nationwide. If that’s too politically unpalatable, subsidize nuclear power, fusion research, and renewables instead. That’s way worse from a budget perspective, but for some reason Americans are just fanatically opposed to higher gas prices.

Housing affordability is politically thorny, but economically quite simple: Build more housing. Whatever we have to do to make that happen, we should do it. Maybe this involves changes to zoning or other regulations. Maybe it involves subsidies to developers. Maybe it involves deploying eminent domain to build public housing. Maybe it involves using government funds to build housing and then offering it for sale on the market. But whatever we do, we need more housing.

Healthcare costs are a trickier one; Obamacare helped, but wasn’t enough. I think what I would like to see next is an option to buy into Medicare; before you are old enough to get it for free, you can pay a premium to be covered by it. Because Medicare is much more efficient than private insurance, you could pay a lower premium and get better coverage, so a lot of people would likely switch (which is of course exactly why insurance companies would fight the policy at every turn). Even putting everyone on Medicare might not be enough; to really bring costs down, we may need to seriously address the fact that US doctors, particularly specialists, are just radically higher-paid than any other doctors in the world. Is an American doctor who gets $269,000 per year really 88% better than a French doctor who gets $143,000?

The policies we need for LGBT rights are mostly no-brainers.

Okay, I can admit to some reasonable nuance when it comes to trans women in pro sports (the statistical advantages they have over cis women are not as clear-cut as many people think, but they do seem to exist; average athletic performance for trans women seems to be somewhere in between the average for cis men and the average for cis women), but that’s really not a very important issue. Like, seriously, why do we care so much about pro sports? Either let people play sports according to their self-identified gender, or make the two options “cis women” and “other” and let trans people play the latter. And you can do the same thing with school sports, or you can eliminate them entirely because they are a stupid waste of academic resources; but either way this should not be considered a top priority policy question. (If parents want their kids to play sports, they can form their own leagues; the school shouldn’t be paying for it. Winning games is not one of the goals of an academic institution. If you want kids to get more exercise, give them more recess and reform the physical education system so it isn’t so miserable for the kids who need it most.)

But there is absolutely no reason not to let people use whatever pronouns and bathrooms they want; indeed, there doesn’t really seem to be a compelling reason to gender-segregate bathrooms in the first place, and removing that segregation would most benefit women, who often have to wait much longer in line for the bathroom. (The argument that this somehow protects women never made sense to me; if a man wants to assault women in the bathroom, what’s to stop him from just going into the women’s bathroom? It’s not like there’s a magic field that prevents men from entering. He’s already planning on committing a crime, so it doesn’t seem like he’s very liable to held back by social norms. It’s worthwhile to try to find ways to prevent sexual assault, but segregating bathrooms does little or nothing toward that goal—and indeed, trans-inclusive bathrooms do not statistically correlate with higher rates of sexual assault.) But okay, fine, if you insist on having the segregation, at least require gender-neutral bathrooms as well. This is really not that difficult; it’s pretty clearly bigotry driving this, not serious policy concerns.

Not exempting any vertebrate animals from anti-cruelty legislation is an incredibly simple thing to do, obviously morally better, and the only reason we’re not doing it is that it would hurt agribusinesses and make meat more expensive. There is literally zero question what the morally right thing to do here is; the question is only how to get people to actually do that morally right thing.

Finally, how do we fix income inequality? Some people—including some economists—treat this as a very complicated, difficult question, but I don’t think it is. I think the really simple, obvious answer is actually the correct one: Tax rich people more, and use the proceeds to help poor people. We should be taxing the rich a lot more; I want something like the revenue-maximizing rate, estimated at about 70%. (And an even higher rate like the 90% we had in the 1950s is not out of the question.) These funds could either provide services like education and healthcare, or they could simply be direct cash transfers. But one way or another, the simplest, most effective way to reduce inequality is to tax the rich and help the poor. A lot of economists fear that this would hurt the overall economy, but particularly if these rates are really targeted at the super-rich (the top 0.01%), I don’t see how they could, because all those billions of dollars are very clearly monopoly rents rather than genuine productivity. If anything, making it harder to amass monopoly rents should make the economy more efficient. And taking say 90% of the roughly 10% return just the top 400 billionaires make on their staggering wealth would give us an additional $480 billion per year.

Fixing our voting system is also quite straightforward. Ranked-choice voting would be a huge improvement, and has already been implemented successfully in several states. Even better would be range voting, but so far very few places have been bold enough to actually try it. But even ranked-choice voting would remove most of the terrible incentives that plurality voting creates, and likely allow us to move beyond the two-party system into a much more representative multiparty system.

None of this requires overthrowing the entire system or dismantling capitalism.

That is, we can have a positive vision of the future that doesn’t require revolution or radical change.

Unfortunately, there’s still a very good chance we’ll do none of it.

What exactly is “gentrification”? How should we deal with it?

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

Nov 26, JDN 2458083

“Gentrification” is a word that is used in a variety of mutually-inconsistent ways. If you compare the way social scientists use it to the way journalists use it, for example, they are almost completely orthogonal.

The word “gentrification” is meant to invoke the concept of a feudal gentry—a hereditary landed class that extracts rents from the rest of the population while contributing little or nothing themselves.

If indeed that is what we are talking about, then obviously this is bad. Moreover, it’s not an entirely unfounded fear; there are some remarkably strong vestiges of feudalism in the developed world, even in the United States where we never formally had a tradition of feudal titles. There really is a significant portion of the world’s wealth held by a handful of billionaire landowner families.

But usually when people say “gentrification” they mean something much broader. Almost any kind of increase in urban real estate prices gets characterized as “gentrification” by at least somebody, and herein lies the problem.

In fact, the kind of change that is most likely to get characterized as “gentrification” isn’t even the rising real estate prices we should be most worried about. People aren’t concerned when the prices of suburban homes double in 20 years. You might think that things that are already too expensive getting more expensive would be the main concern, but on the contrary, people are most likely to cry “gentrification” when housing prices rise in poor areas where housing is cheap.

One of the most common fears about gentrification is that it will displace local residents. In fact, the best quasi-experimental studies show little or no displacement effect. It’s actually mainly middle-class urbanites who get displaced by rising rents. Poor people typically own their homes, and actually benefit from rising housing prices. Young upwardly-mobile middle-class people move to cities to rent apartments near where they work, and tend to assume that’s how everyone lives, but it’s not. Rising rents in a city are far more likely to push out its grad students than they are poor families that have lived there for generations. Part of why displacement does not occur may be because of policies specifically implemented to fight it, such as subsidized housing and rent control. If that’s so, let’s keep on subsidizing housing (though rent control will always be a bad idea).

Nor is gentrification actually a very widespread phenomenon. The majority of poor neighborhoods remain poor indefinitely. In most studies, only about 30% of neighborhoods classified as “gentrifiable” actually end up “gentrifying”. Less than 10% of the neighborhoods that had high poverty rates in 1970 had low poverty rates in 2010.

Most people think gentrification reduces crime, but in the short run the opposite is the case. Robbery and larceny are higher in gentrifying neighborhoods. Criminals are already there, and suddenly they get much more valuable targets to steal from, so they do.

There is also a general perception that gentrification involves White people pushing Black people out, but this is also an overly simplistic view. First of all, a lot of gentrification is led by upwardly-mobile Black and Latino people. Black people who live in gentrified neighborhoods seem to be better off than Black people who live in non-gentrified neighborhoods; though selection bias may contribute to this effect, it can’t be all that strong, or we’d observe a much stronger displacement effect. Moreover, some studies have found that gentrification actually tends to increase the racial diversity of neighborhoods, and may actually help fight urban self-segregation, though it does also tend to increase racial polarization by forcing racial mixing.

What should we conclude from all this? I think the right conclusion is we are asking the wrong question.

Rising housing prices in poor areas aren’t inherently good or inherently bad, and policies designed specifically to increase or decrease housing prices are likely to have harmful side effects. What we need to be focusing on is not houses or neighborhoods but people. Poverty is definitely a problem, for sure. Therefore we should be fighting poverty, not “gentrification”. Directly transfer wealth from the rich to the poor, and then let the housing market fall where it may.

There is still some role for government in urban planning more generally, regarding things like disaster preparedness, infrastructure development, and transit systems. It may even be worthwhile to design regulations or incentives that directly combat racial segregation at the neighborhood level, for, as the Schelling Segregation Model shows, it doesn’t take a large amount of discriminatory preference to have a large impact on socioeconomic outcomes. But don’t waste effort fighting “gentrification”; directly design policies that will incentivize desegregation.

Rising rent as a proportion of housing prices is still bad, and the fundamental distortions in our mortgage system that prevent people from buying houses are a huge problem. But rising housing prices are most likely to be harmful in rich neighborhoods, where housing is already overpriced; in poor neighborhoods where housing is cheap, rising prices might well be a good thing.
In fact, I have a proposal to rapidly raise homeownership across the United States, which is almost guaranteed to work, directly corrects an enormous distortion in financial markets, and would cost about as much as the mortgage interest deduction (which should probably be eliminated, as most economists agree). Give each US adult a one-time grant voucher which gives them $40,000 that can only be spent as a down payment on purchasing a home. Each time someone turns 18, they get a voucher. You only get one over your lifetime, so use it wisely (otherwise the policy could become extremely expensive); but this is an immediate direct transfer of wealth that also reduces your credit constraint. I know I for one would be house-hunting right now if I were offered such a voucher. The mortgage interest deduction means nothing to me, because I can’t afford a down payment. Where the mortgage interest deduction is regressive, benefiting the rich more than the poor, this policy gives everyone the same amount, like a basic income.

In the short run, this policy would probably be expensive, as we’d have to pay out a large number of vouchers at once; but with our current long-run demographic trends, the amortized cost is basically the same as the mortgage interest deduction. And the US government especially should care about the long-run amortized cost, as it is an institution that has lasted over 200 years without ever missing a payment and can currently borrow at negative real interest rates.

Bigotry is more powerful than the market

PNRJ cognitive science, core principles, critique of neoclassical economics, current events, ethics, heuristics and biases, inequality, market failure, public policy , , , , , , , , , , , , , , , , , , , , , , ,

Nov 20, JDN 2457683

If there’s one message we can take from the election of Donald Trump, it is that bigotry remains a powerful force in our society. A lot of autoflagellating liberals have been trying to explain how this election result really reflects our failure to help people displaced by technology and globalization (despite the fact that personal income and local unemployment had negligible correlation with voting for Trump), or Hillary Clinton’s “bad campaign” that nonetheless managed the same proportion of Democrat turnout that re-elected her husband in 1996.

No, overwhelmingly, the strongest predictor of voting for Trump was being White, and living in an area where most people are White. (Well, actually, that’s if you exclude authoritarianism as an explanatory variable—but really I think that’s part of what we’re trying to explain.) Trump voters were actually concentrated in areas less affected by immigration and globalization. Indeed, there is evidence that these people aren’t racist because they have anxiety about the economy—they are anxious about the economy because they are racist. How does that work? Obama. They can’t believe that the economy is doing well when a Black man is in charge. So all the statistics and even personal experiences mean nothing to them. They know in their hearts that unemployment is rising, even as the BLS data clearly shows it’s falling.

The wide prevalence and enormous power of bigotry should be obvious. But economists rarely talk about it, and I think I know why: Their models say it shouldn’t exist. The free market is supposed to automatically eliminate all forms of bigotry, because they are inefficient.

The argument for why this is supposed to happen actually makes a great deal of sense: If a company has the choice of hiring a White man or a Black woman to do the same job, but they know that the market wage for Black women is lower than the market wage for White men (which it most certainly is), and they will do the same quality and quantity of work, why wouldn’t they hire the Black woman? And indeed, if human beings were rational profit-maximizers, this is probably how they would think.

More recently some neoclassical models have been developed to try to “explain” this behavior, but always without daring to give up the precious assumption of perfect rationality. So instead we get the two leading neoclassical theories of discrimination, which are statistical discrimination and taste-based discrimination.

Statistical discrimination is the idea that under asymmetric information (and we surely have that), features such as race and gender can act as signals of quality because they are correlated with actual quality for various reasons (usually left unspecified), so it is not irrational after all to choose based upon them, since they’re the best you have.

Taste-based discrimination is the idea that people are rationally maximizing preferences that simply aren’t oriented toward maximizing profit or well-being. Instead, they have this extra term in their utility function that says they should also treat White men better than women or Black people. It’s just this extra thing they have.

A small number of studies have been done trying to discern which of these is at work.
The correct answer, of course, is neither.

Statistical discrimination, at least, could be part of what’s going on. Knowing that Black people are less likely to be highly educated than Asians (as they definitely are) might actually be useful information in some circumstances… then again, you list your degree on your resume, don’t you? Knowing that women are more likely to drop out of the workforce after having a child could rationally (if coldly) affect your assessment of future productivity. But shouldn’t the fact that women CEOs outperform men CEOs be incentivizing shareholders to elect women CEOs? Yet that doesn’t seem to happen. Also, in general, people seem to be pretty bad at statistics.

The bigger problem with statistical discrimination as a theory is that it’s really only part of a theory. It explains why not all of the discrimination has to be irrational, but some of it still does. You need to explain why there are these huge disparities between groups in the first place, and statistical discrimination is unable to do that. In order for the statistics to differ this much, you need a past history of discrimination that wasn’t purely statistical.

Taste-based discrimination, on the other hand, is not a theory at all. It’s special pleading. Rather than admit that people are failing to rationally maximize their utility, we just redefine their utility so that whatever they happen to be doing now “maximizes” it.

This is really what makes the Axiom of Revealed Preference so insidious; if you really take it seriously, it says that whatever you do, must by definition be what you preferred. You can’t possibly be irrational, you can’t possibly be making mistakes of judgment, because by definition whatever you did must be what you wanted. Maybe you enjoy bashing your head into a wall, who am I to judge?

I mean, on some level taste-based discrimination is what’s happening; people think that the world is a better place if they put women and Black people in their place. So in that sense, they are trying to “maximize” some “utility function”. (By the way, most human beings behave in ways that are provably inconsistent with maximizing any well-defined utility function—the Allais Paradox is a classic example.) But the whole framework of calling it “taste-based” is a way of running away from the real explanation. If it’s just “taste”, well, it’s an unexplainable brute fact of the universe, and we just need to accept it. If people are happier being racist, what can you do, eh?

So I think it’s high time to start calling it what it is. This is not a question of taste. This is a question of tribal instinct. This is the product of millions of years of evolution optimizing the human brain to act in the perceived interest of whatever it defines as its “tribe”. It could be yourself, your family, your village, your town, your religion, your nation, your race, your gender, or even the whole of humanity or beyond into all sentient beings. But whatever it is, the fundamental tribe is the one thing you care most about. It is what you would sacrifice anything else for.

And what we learned on November 9 this year is that an awful lot of Americans define their tribe in very narrow terms. Nationalistic and xenophobic at best, racist and misogynistic at worst.

But I suppose this really isn’t so surprising, if you look at the history of our nation and the world. Segregation was not outlawed in US schools until 1955, and there are women who voted in this election who were born before American women got the right to vote in 1920. The nationalistic backlash against sending jobs to China (which was one of the chief ways that we reduced global poverty to its lowest level ever, by the way) really shouldn’t seem so strange when we remember that over 100,000 Japanese-Americans were literally forcibly relocated into camps as recently as 1942. The fact that so many White Americans seem all right with the biases against Black people in our justice system may not seem so strange when we recall that systemic lynching of Black people in the US didn’t end until the 1960s.

The wonder, in fact, is that we have made as much progress as we have. Tribal instinct is not a strange aberration of human behavior; it is our evolutionary default setting.

Indeed, perhaps it is unreasonable of me to ask humanity to change its ways so fast! We had millions of years to learn how to live the wrong way, and I’m giving you only a few centuries to learn the right way?

The problem, of course, is that the pace of technological change leaves us with no choice. It might be better if we could wait a thousand years for people to gradually adjust to globalization and become cosmopolitan; but climate change won’t wait a hundred, and nuclear weapons won’t wait at all. We are thrust into a world that is changing very fast indeed, and I understand that it is hard to keep up; but there is no way to turn back that tide of change.

Yet “turn back the tide” does seem to be part of the core message of the Trump voter, once you get past the racial slurs and sexist slogans. People are afraid of what the world is becoming. They feel that it is leaving them behind. Coal miners fret that we are leaving them behind by cutting coal consumption. Factory workers fear that we are leaving them behind by moving the factory to China or inventing robots to do the work in half the time for half the price.

And truth be told, they are not wrong about this. We are leaving them behind. Because we have to. Because coal is polluting our air and destroying our climate, we must stop using it. Moving the factories to China has raised them out of the most dire poverty, and given us a fighting chance toward ending world hunger. Inventing the robots is only the next logical step in the process that has carried humanity forward from the squalor and suffering of primitive life to the security and prosperity of modern society—and it is a step we must take, for the progress of civilization is not yet complete.

They wouldn’t have to let themselves be left behind, if they were willing to accept our help and learn to adapt. That carbon tax that closes your coal mine could also pay for your basic income and your job-matching program. The increased efficiency from the automated factories could provide an abundance of wealth that we could redistribute and share with you.

But this would require them to rethink their view of the world. They would have to accept that climate change is a real threat, and not a hoax created by… uh… never was clear on that point actually… the Chinese maybe? But 45% of Trump supporters don’t believe in climate change (and that’s actually not as bad as I’d have thought). They would have to accept that what they call “socialism” (which really is more precisely described as social democracy, or tax-and-transfer redistribution of wealth) is actually something they themselves need, and will need even more in the future. But despite rising inequality, redistribution of wealth remains fairly unpopular in the US, especially among Republicans.

Above all, it would require them to redefine their tribe, and start listening to—and valuing the lives of—people that they currently do not.

Perhaps we need to redefine our tribe as well; many liberals have argued that we mistakenly—and dangerously—did not include people like Trump voters in our tribe. But to be honest, that rings a little hollow to me: We aren’t the ones threatening to deport people or ban them from entering our borders. We aren’t the ones who want to build a wall (though some have in fact joked about building a wall to separate the West Coast from the rest of the country, I don’t think many people really want to do that). Perhaps we live in a bubble of liberal media? But I make a point of reading outlets like The American Conservative and The National Review for other perspectives (I usually disagree, but I do at least read them); how many Trump voters do you think have ever read the New York Times, let alone Huffington Post? Cosmopolitans almost by definition have the more inclusive tribe, the more open perspective on the world (in fact, do I even need the “almost”?).

Nor do I think we are actually ignoring their interests. We want to help them. We offer to help them. In fact, I want to give these people free money—that’s what a basic income would do, it would take money from people like me and give it to people like them—and they won’t let us, because that’s “socialism”! Rather, we are simply refusing to accept their offered solutions, because those so-called “solutions” are beyond unworkable; they are absurd, immoral and insane. We can’t bring back the coal mining jobs, unless we want Florida underwater in 50 years. We can’t reinstate the trade tariffs, unless we want millions of people in China to starve. We can’t tear down all the robots and force factories to use manual labor, unless we want to trigger a national—and then global—economic collapse. We can’t do it their way. So we’re trying to offer them another way, a better way, and they’re refusing to take it. So who here is ignoring the concerns of whom?

Of course, the fact that it’s really their fault doesn’t solve the problem. We do need to take it upon ourselves to do whatever we can, because, regardless of whose fault it is, the world will still suffer if we fail. And that presents us with our most difficult task of all, a task that I fully expect to spend a career trying to do and yet still probably failing: We must understand the human tribal instinct well enough that we can finally begin to change it. We must know enough about how human beings form their mental tribes that we can actually begin to shift those parameters. We must, in other words, cure bigotry—and we must do it now, for we are running out of time.