Link Roundup

There have simply been too many good pieces published lately to keep up with. Here are some that I think are worth reading, with some select quotes and commentary.

First is David Frum’s worrying cover story in the Atlantic, ‘How to Build an Autocracy’, written even before the events of the past weekend. This is essential reading. Frum, the former George W. Bush speechwriter who coined the phrase ‘axis of evil’, is certainly no left wing shill, and people of all political persuasions should take him quite seriously. A short excerpt:

Yet the American system is also perforated by vulnerabilities no less dangerous for being so familiar. Supreme among those vulnerabilities is reliance on the personal qualities of the man or woman who wields the awesome powers of the presidency. A British prime minister can lose power in minutes if he or she forfeits the confidence of the majority in Parliament. The president of the United States, on the other hand, is restrained first and foremost by his own ethics and public spirit. What happens if somebody comes to the high office lacking those qualities?

Over the past generation, we have seen ominous indicators of a breakdown of the American political system: the willingness of congressional Republicans to push the United States to the brink of a default on its national obligations in 2013 in order to score a point in budget negotiations; Barack Obama’s assertion of a unilateral executive power to confer legal status upon millions of people illegally present in the United States—despite his own prior acknowledgment that no such power existed.

Donald Trump, however, represents something much more radical. A president who plausibly owes his office at least in part to a clandestine intervention by a hostile foreign intelligence service? Who uses the bully pulpit to target individual critics? Who creates blind trusts that are not blind, invites his children to commingle private and public business, and somehow gets the unhappy members of his own political party either to endorse his choices or shrug them off? If this were happening in Honduras, we’d know what to call it. It’s happening here instead, and so we are baffled.

The entire piece must be read; Frum soberly lays out all the ways in which a Trump administration could (and probably will) be corrosive to the already very weakened structure of our democracy. But Frum reminds us, this will only come to be if we allow it. This piece should galvanize any concerned citizen into action. Whether you are conservative or liberal, the stakes here are higher than any policy preference:

Those citizens who fantasize about defying tyranny from within fortified compounds have never understood how liberty is actually threatened in a modern bureaucratic state: not by diktat and violence, but by the slow, demoralizing process of corruption and deceit. And the way that liberty must be defended is not with amateur firearms, but with an unwearying insistence upon the honesty, integrity, and professionalism of American institutions and those who lead them. We are living through the most dangerous challenge to the free government of the United States that anyone alive has encountered. What happens next is up to you and me. Don’t be afraid. This moment of danger can also be your finest hour as a citizen and an American.

Next is an excellent piece by Benjamin Wittes from the Lawfare blog, a site that is a well regarded resource on national security law, examining in detail this past weekend’s executive order. (For my own quick take, see here). Spoiler: it doesn’t come out looking good.

The malevolence of President Trump’s Executive Order on visas and refugees is mitigated chiefly—and perhaps only—by the astonishing incompetence of its drafting and construction.

I don’t use the word “malevolence” here lightly. As readers of my work know, I believe in strong counterterrorism powers. I defend non-criminal detention. I’ve got no problem with drone strikes. I’m positively enthusiastic about American surveillance policies. I was much less offended than others were by the CIA’s interrogations in the years after September 11. I have defended military commissions.

Some of these policies were effective; some were not. Some worked out better than others. And I don’t mean to relitigate any of those questions here. My sole point is that all of these policies were conceptualized and designed and implemented by people who were earnestly trying to protect the country from very real threats. And the policies were, to a one, proximately related to important goals in the effort. While some of these policies proved tragically misguided and caused great harm to innocent people, none of them was designed or intended to be cruel to vulnerable, concededly innocent people. Even the CIA’s interrogation program, after all, was deployed against people the agency believed (mostly correctly) to be senior terrorists of the most dangerous sort and to garner information from them that would prevent attacks.

I actually cannot say that about Trump’s new executive order—and neither can anyone else.

Now something shorter from Tyler Cowen at Bloomberg View on bursting the filter bubble. In these times, not only does it seem increasingly difficult but also even more essential, to understand the views of those we disagree with. When many voices in media simply cater to their viewership and have no interest in actually informing the public or engaging in a productive dialogue, how can we burst the filter bubble? Cowen recommends engaging in a version of the Ideological Turing Test. The original Turing Test is a benchmark for artificial intelligence: if an AI can, through conversation, fool a human into thinking that the AI itself is human, then it has passed the Turing Test. Similarly, the Ideological Turing Test asks us to be able to explain an opposing view in such terms that we could fool others into thinking we held that view. It’s sound advice, and I anticipate using this space in the future to experiment with such pieces.

Finally, the Niskanen Center, a libertarian think tank, has been publishing a fantastic series of pieces on liberalism. Jacob T. Levy, whose work I wrote about earlier, in particular has been very good. While nearly everything so far is worth reading, these pieces in particular are essential:

The Future of Liberalism and the Politicization of Everything: A good primer on liberalism.

A Tale of Two Moralities, Part One: Regional Inequality and Moral Polarization: Expands on many of the issues of inequality and sorting I discussed in Our Kids Are Coming Apart.

The Party Declines: A defense of party politics. Novice political observers tend to be very cynical about political parties, and imagine that a universe without party politics would be a better one. Levy mounts a convincing case for strengthening America’s political parties, which are actually very weak, and this weakness is one source of our current political dysfunction.

The Defense of Liberty Can’t Do Without Identity Politics: In the wake the 2016 election, many voices called for the left to abandon the identity politics they felt had come to dominate Clinton’s campaign and subsequently lead to her defeat. Levy assures us that identity politics are instead essential to a functioning democracy. This Vox piece is a useful companion.

The Free Society is an Open Society: In which Levy argues that a war against immigration is at its roots a war against a free society.

That’s all for now!

 

 

 

 

 

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Seven State Travel Ban

So the rumored travel ban came into effect last night, and has led to considerable outcry. Here’s what it does:

  • Bans travel for 90 days from citizens of seven countries, including those with green cards: Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen
  • Bans refugees for 120 days from above countries, and Syria indefinitely
  • Lowers the number of refugees to be settled in the US from 110,000/year to 50,000/year

The purported reason for the ban is to give the administration time to develop a better system of screening, Trump’s ‘extreme vetting,’ to identify and prevent radicalized persons from entering the country and causing harm. Despite invoking 9/11 in its justification, the order does not ban anyone from the countries where the 9/11 attackers actually came from: primarily Saudi Arabia, with Egypt and the UAE. So even if a blanket travel ban were effective in preventing terrorism, the absence of the actual countries where actual terrorists who killed Americans is puzzling; as is the coincidence that these same absent countries also happen to be ones in which the Trump Organization has business.

It is a legitimate for a government and a citizenry to take reasonable precautions to prevent those who would do harm from entering a country. But under what circumstances would such a blanket travel ban, temporary or otherwise, make sense?

I would imagine if we were at war with a country, it would be reasonable to restrict travel. Of course, we are not currently at war with any nation.

We could imagine a scenario in which intelligence agencies had information that an attack was imminent. This could potentially justify a sudden travel ban, but a scenario where there is knowledge of an attack but no specifics regarding persons beyond ‘anyone from these seven countries’ seems very unlikely.

If there is not knowledge of an imminent attack, a justifiable travel ban would need there to be an extremely high likelihood that restricted persons would engage in violent activity in the next 90-120 days. This would be a world where the United States was experiencing regular acts of terrorism, and where there was clear evidence existing protocols were inadequate and responsible for allowing said terrorists into the country. In this world, a travel ban along the lines of the one implemented yesterday could be justified.

But that is not the world we live in.

 

Since 9/11, there have been only a handful of what could be considered terrorist attacks, and fewer still clearly motivated by any sort of religious ideology. In the last 16 years, only 154 deaths are directly attributable to ‘Muslim extremism’. Tens of thousands more people die in car or gun accidents every year.

Refugees in particular are already subject to high scrutiny: in many cases, it can take up to three years for a refugee to be admitted into the country. As such, the idea that ISIS or some other organized terror group would attempt to sneak in through the refugee program is simply bizarre.

For any action, we must not only consider benefits, but also the costs. Yes, banning entry citizens of particular countries will lower the risk that we will experience terrorism from those people. But if that probability is already very low, then the expected benefit will also be low.

Some quick back of the envelope calculations. Let’s say this ban will totally reduce the probability of being killed in an immigrant terrorist attack to zero from the estimate of about 1 in 3.6 million per year. For the individual benefit, we multiply this probability by the value of a statistical life (VSL), which is commonly cited around $7 million dollars.

Benefit = P(death)*VSL = 3X10^-7 * $7X10^6 = $2

Roughly speaking, the average American gains a benefit of around $2 per year from this restriction. For the national as a whole, with 320 million people, that’s a benefit of:

$640,000,000

Let’s say we just restrict the costs to the lost economic activity of refugees who will no longer be arriving, which will now be 60,000 less persons. Let’s generously say only half of them end up working, at the average salary of $30,000/year. The lost economic activity is, at minimum:

3X10^4 * $3X10^4 = $9X10^8 or $900,000,000.

Benefit-Cost = $640,000,000 – $900,000,000 = -$260,000,000

A utility loss of nearly $300 million.

Already, this policy does not pass a simple cost benefit test. And this figure does not account for any additional enforcement costs. It does not account for the costs to green card holders who are now unable to return to their jobs and families. It does not account for the cost to refugees with visas who were in flight when the order was signed have been detained upon landing, their legal status in limbo. It does not account for the lost productivity of the next Steve Jobs, a child of a Syrian refugee. It does not account for the lives that will be lost in war torn countries as people have nowhere to flee to. And it does not account for the moral stain on America that will damage our reputation across the world and lead to further radicalization as we play into the hands of extremist propaganda.

As a legitimate counter terrorism measure, this executive order does not pass any test of reasonableness. I think it obvious this was not the intention. I will close with a quote from Ben Sasse, a Republican Senator from Nebraska and member of the Senate Armed Services Committee:

“The President is right to focus attention on the obvious fact that borders matter. At the same time, while not technically a Muslim ban, this order is too broad. There are two ways to lose our generational battle against jihadism by losing touch with reality. The first is to keep pretending that jihadi terrorism has no connection to Islam or to certain countries. That’s been a disaster. And here’s the second way to fail: If we send a signal to the Middle East that the U.S. sees all Muslims as jihadis, the terrorist recruiters win by telling kids that America is banning Muslims and that this is America versus one religion. Both approaches are wrong, and both will make us less safe. Our generational fight against jihadism requires wisdom.”

 

Trump, Week 1

The first week of the Trump administration has already produced some striking shifts in policy. In more normal times, you would expect an incoming administration that only won the electoral college via 100,000 votes across three states, and lost the popular vote by millions, would proceed more slowly and with more care. The administration is acting as if they had overwhelming support for their positions. To the extent that any politician can claim a mandate for action, and I am very skeptical that there are ever legitimate claims to a mandate, this is far from such a situation. This is even more remarkable given the historical unpopularity of this President.

George W. Bush entered office under similarly contentious circumstances, but remained generally popular throughout his first 100 days. The most contentious of his initial actions was probably the reversal of Clinton-era environmental protections and the abandonment of the Kyoto protocols. His other major accomplishments in the first 100 days were a 1.6 trillion dollar tax cut and No Child Left Behind, both of which were passed through legislative means.

In contrast, even with Republican majorities in both houses of Congress, the Trump administration seems prepared to govern through executive actions from the start. Here’s what we’ve seen so far:

Immigration:

First there is the order to ‘build the wall’ (more on that in a second). There is also an order that limits agents’ responses to catching people at the border, basically limiting them to detention or deportation.

Some perspective. This all seems very odd, given that 1) the number of people crossing the border is at historic lows, 2) the majority of which are no longer Mexicans, but asylum seekers from Central and South America, and 3) the fence that was built during the Bush administration seems to have done a pretty good job already of reducing flow of people.

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Source

Along these lines, as of this writing four additional executive orders have leaked to the press. Among these is a travel ban that bars anyone from several countries from entering the US as well as a suspension of refugee admission and reduction of total refugee allowance per year from 110,00 to 50,000. Notably, the list of countries on the travel ban excludes countries where the Trump Organization has business and where actual terrorists who actually killed people on 9/11 were from, and includes countries (like Iraq) that the US is responsible for creating the conditions people are trying to escape from.

Apparently the administration will also be publishing a weekly list of crimes committed by immigrants; whether the list would include legal immigrants as well was left unclear. I find this truly disturbing. As far as the best evidence shows, immigrants, undocumented or otherwise, do not commit a disproportionate share of crime. I think the potential for abuse of such a precedent is clear.

If we were in the midst of some sort of crisis, I could understand taking immediate action. If there were millions of people coming across the border every year, committing huge amounts of crime, yes, this would be a problem, and an administration would be justified in upping the ante. But as the facts stand, this whole line of action seems very strange.

The Wall:

‘The wall’ was one of Trump’s signature campaign themes, along with a promise to have Mexico pay for it. As noted above, border crossings from Mexico are at an all time low. The existing fence seems to be doing its job well enough:

20170204_woc960_3

Putting that to the side, the method for Mexico paying for the wall was floated at this: a 20% tax on imports from Mexico, which was quickly walked back as merely one possibility (Trump himself seemed to have no understanding of the matter). To an economist, this is patently absurd: a tax on imports is paid by the importers, i.e. US consumers and businesses. In fact, since much of what is imported from Mexico is intermediate and investment goods, this would also end up hurting American exporters.

ACA:

The 2017 ACA enrollment period ends January 31st, and the last week typically has had the most sign ups (since we all tend to put things off until the last minute). As such, the government had a program of TV ad buys, as well as emails, reminding people to sign up before the deadline. Yet, the White House has suddenly cancelled all advertising, including ads that were already paid for. Given that insurance companies depend upon the young and healthy (who tend to be the last minute purchasers) to turn a profit, this action seems like a deliberate attempt to sabotage the marketplace.

Federal Hiring Freeze:

Another odd action was an order freezing the size of the federal work force. The number of federal workers, as a share of total employment, is at historic lows, and in terms of sheer numbers has been fairly stable for quite some time. I understand that many people feel the federal government is too large, but the number of government workers is not a problem.

fredgraph

This is a graph total number of government employees (federal, state, local) in blue, and share of government workers as a fraction of all employees. There is no trend of ‘out of control’ growth in the size of government. If you solely look at federal workers, that number has been hovering around two million and change for several decades.

fredgraph-1

As this piece convincingly argues, freezing federal hiring just means more money will go into the hands of unaccountable contractors. I share a belief in limited government, but flashy actions like this hiring freeze this do far more harm than good. 

Inauguration/ VOTER FRAUD:

So far, most of the actions taken have been what probably any Republican would have done in the presidency (excepting the wall). But the bizarre dust up over the size of the inauguration over the past week, as well as unsubstantiated claims of massive voter fraud, has been truly beyond the pale. In his first morning in office, Trump insisted that the National Park Service Director provide photos that proving that there were, “a million, million and a half” people at his inauguration. Apparently Trump doesn’t understand how visual perspective works, or rather, his ego won’t allow him. I have been to all three inaugurations since 2009, and this was definitely smaller than both of Obama’s. The photos circulating of the Trump crowd size accurately reflect what I saw.

This wouldn’t be such a big deal if Trump hadn’t had his press secretary convene a special press conference, with prop photos from the inauguration dais, to declare that this was the biggest inauguration ever, period. At the next press meeting, the press secretary tried to walk this back by insisting they were including television and online views, but 1) that is not the impression you get from watching the initial conference and 2) there is no good evidence this is true, either.

Then there is the ‘voter fraud’. Apparently, the President, who won, truly believes the only reason he lost the popular vote is because of widespread voter fraud. Of course, there is no evidence of this, and I find the voter fraud talking point to be one of the strangest of the last several years. Many people fervently believe it though, despite having no empirical basis; I suspect this is because a select few media outlets have been pushing the meme incessantly.

It may be easy to dismiss these last two incidents as minor personality hang ups, but in a real crisis this is a very frightening disposition to have: an inability to weight the veracity of competing narratives, an inability to consider that you may be wrong, an inability to set ego to the side. 

I haven’t even gotten into the unresolved conflicts of interest and the continued refusal to release his tax returns, but that will have to wait until another time. Overall, this first week was both aggressive and chaotic, and showed little sign of the supposed business acumen that many believed Trump would bring to the office. Instead, the White House spent its first week operating like a very badly run business; should we expect anything more?

Democracy for Realists, Part I

Democracy is our secular religion. Virtually every government on the planet at least pays lip service to the idea; even autocrats feel the need to maintain a veneer of democracy through rigged elections. But for many (in the Western world, at least) 2016 was a year that shook their faith. While the US in particular has significant problems with the design of its political institutions that are more to blame in this instance, a broader point remains: it’s time we began reevaluating democracy.

Democracy for Realists, which came out last year, is a work by political scientists Christopher Achen and Larry Bartels seeking to do just this. Unlike some other recent works, summarised here, these two are not necessarily out to reject democracy. But they do seek to correct the narrative of how the democratic process operates. The failure lies not in democracy itself, but in the fact that we have designed political institutions with a flawed understanding of how democracy actually works.

The basic structure of the book is a systematic dismantling of most understandings of democracy. Having torn democracy down, they conclude by building a ‘realist theory of democracy’. Exciting stuff! I’m still reading the book, and so will be using this space to work through their argument.

To begin: what exactly is it about democracy that we like so much? Many of the characteristics that people like democracy for really have their origin in liberalism: equal rights and rule of law, for example. There are many instances of illiberal democracies, where the majority tramps on the rights of minorities, and a country like Singapore may be considered a liberal autocracy. It’s not inherent that the two go together, and indeed there is significant tension between liberalism and democracy, as Dani Rodrik and Sharun Mukand argue.

Setting that side then, what is unique to democracy that we find so appealing? A common answer might be that in a democracy ‘the people decide’, and this is the origin of the ‘folk theory of democracy’ and where Achen and Bartels’ argument begins.  

Under the folk theory, democracy is a way of aggregating preferences from the populace. If we have five people deciding on whether to get vanilla or chocolate ice cream, putting the matter to a vote will reveal the group’s overall preference. Because (alas) the world is not so simple, and for all of human history a system of direct democacy was wholly impractical, in practice democracies have used a system of elected representatives to convert the will of the people into action. Under the folk theory of democracy, representatives are understood to be, well, representatives: they are to express the views of their constituencies, regardless of their own feelings. They are a vessel. (This contrasts with the trustee model of representation, which we will come to in a later post).

Let’s say next year we’re passing a resolution on the official ice cream flavor of our nation. In the interim there is an election for our congress. Under the folk theory of democracy, people will vote for the party that represents their preferred flavor. If more people like chocolate best, they will vote for the party that is pro-chocolate, and we will end up with chocolate as our official ice cream flavor.

Obviously this is a simple example, but the intuition can and has been extended and formalized in the ‘spatial model’ of voting. The spatial model comes from economics, and is similar to models of competition in industrial organization. The canonical example is to imagine a stretch of beach. Beachgoers are randomly distributed across the beach. Now add two identical ice cream vendors to the mix. Where will they set up to capture the biggest market share of hungry customers? The answer is both will set up right in the very middle, giving each one half of the beach. (This assumes a uniform distribution; if the beach goers were distributed normally, then the vendors would set up at the location of the median beach goer.)

Likewise, we can imagine ideology to be a single continuous variable, like the narrow strip of beach, and political parties to be the vendors. To capture the biggest market share, both parties will set up at the location where the average ‘distance’ to any given voter is minimized: at the median. If the vendors can carry only one flavor, both will choose chocolate, because the median voter is pro-chocolate.

This model explained nicely the non-ideological parties of the postwar United States that dominated until the 80s and 90s: both were trying to maximize their market share, and so set up camp in the middle of political space. But there has been a well documented trend towards political polarization that challenges this model.

The challenges to the spatial model are both theoretical and empirical. Theory presents two major hurdles: first, the assumption of unidimensionality, and second, the challenges of Arrow’s theorem.

The idea of ideology as a single variable, with a left and a right, is of course common and part of our standard political lexicon. But for a long time there have been advocates of adding additional axes to political ideology, as can been seen in the many online political ideology quizzes. And when additional dimensions are added, the functioning of the spatial theory collapses: there is no longer any unique solution to the median voter question.

Furthermore, the work of Ken Arrow demonstrated that in any voting system with three or more choices there are no unique answers to the question of what the majority ‘wants’, because the design of the voting system can itself affect the outcome. Plurality voting can give a different answer from runoff voting: which is the true ‘will of the people?’

Let’s go back to the ice cream example. If we add a third flavor, suddenly things get more complicated. Let’s say 40% vote for chocolate, 30% for vanilla, and 30% for strawberry. In a plurality system chocolate would still win, despite the fact that 60% of people voted against it. Ranked or runoff voting systems try to deal with this by having voters make second or third choices, and transferring votes until one candidate receives a majority, but these systems can also lead to strange outcomes.

Now, even if theoretically we can dream up edge cases where voting is inconclusive, maybe in the real world democracy does well enough. Alas, no, as the empirical evidence shows that most of the time, voters don’t have particularly strong ideology. Strong partisanship, yes, but actual views on policy (when they exist) seem to have little correlation with voting patterns. As Achen and Bartels put it, ‘the folk theory is of little use in understanding actual democratic politics’ (p. 36), and I can think of no better proof than the 2016 election.

In sum, the idea behind the folk theory of democracy, that the public has coherent and knowable policy preferences and makes electoral decisions based on those preferences, is not tenable in the face of major theoretical and empirical evidence to the contrary.

Next time, we’ll deal with the argument that, by cutting politicians out of the process, a more direct democracy would lead to better outcomes, and then move on to the retrospective theory of political accountability.

Our Kids are Coming Apart, Part III

<Parts I and II>

Finally I’m finishing up with the two books and their proposed solutions to the problem of inequality of opportunity.

First, I think I mischaracterized Putnam’s position last time as being mostly due to developmental outcomes. A considerable amount of the book is about the decline in social ties both between the rich and poor and within low SES communities. High SES communities still possess an informal social safety net that was distributed in a more egalitarian manner a few generations ago. So for example, a high SES child that develops problems with addiction or depression has a much broader social well to draw upon for support. A low SES child with the same problems simply does not. Putnam’s 2000 book Bowling Alone was about the general decline in social ties among Americans; what Our Kids shows is that this decline has not been evenly distributed.

What do these authors propose be done to remedy the divergence they’ve described? For Murray, as he put it in a discussion forum with Putnam, “I’m a libertarian…we don’t do solutions.” And that is the sense you get from his book. Perhaps surprisingly, the one concrete proposal he makes is for a guaranteed basic income for all Americans (of around $10,000/year) as a replacement for current welfare programs.

He also suggests that the successful should be more vocal about their cultural values. Not in a paternalistic way, but in a ‘City Upon the Hill’ way. If I recall correctly he frames it as “preach what you practice”. After all, one of the consequences of class segregation is that the poor don’t have much contact with the behaviors of successful people. In Putnams’ book, actually, there is a wrenching anecdote about one of the interviews where a low SES father asked if he could bring his children to the session so they could meet a real college graduate.

Ultimately, there is a great deal of pessimism in Murray’s view, stemming from his belief in the primacy of biology. Looking beyond Coming Apart to his whole body of work, we might sum up his view as thus: cognitive ability matters; genetics determines cognitive ability; culture/virtue can compensate for low cognitive ability; welfare programs disincentive ‘virtuous’ behavior. This makes his support for a GBI less surprising, since he believes that the current smattering of welfare programs have bad incentives while also believing that the poor should not be left behind in the new high cognitive ability economy.

Putnam has a more policy oriented plan. He argues for an expansion of the EITC and child tax credit (to add to incomes), strengthening food stamps, housing, and child care support, and an invigoration of center-based early childhood education: these all correspond to dealing with 1b) in my causal scheme.  For 2a), he suggests criminal justice reform (to reduce the breakup of families for non violent offenses), investment in failing schools (which I found odd, considering his own evidence suggests that schools don’t make much of a difference in life outcomes), and neighborhood reinvestment. In general, it’s a pretty standard center-left policy oriented program.

What I want to dwell on for the remainder of this post is this base assumption both authors make: that societal sorting by class is a given. It’s certainly a reality, as they both document extensively, but need it be so? It’s similar (and related to) to debates around income inequality: it is better to let the market ‘speak’ and address inequalities after the fact with transfers (EITC, EBT, and the like); or is it better to focus on making pre-transfer incomes more equitable through investments in education, wage policies, and so on (basically make less productive workers more productive so their market price is higher)? Likewise, is it better to allow people to sort themselves by SES into areas with vastly different wealth, cultural tastes, political clout, crime, etc, and try to mitigate after the fact? Is the degree to which this occurs in the United States natural, or have we created a system that led us down this path?

If there were a way to prevent sorting, we could cut the Gordian knot of biological and social factors that make post hoc solutions to SES heritability so intractable. I’ll consider two possibilities: One, that the sorting is inevitable and that it requires active pushback; and Two, that policies are the main driver of intense sorting, and that changing said policies will mitigate the issue.

First let’s deal with the idea that sorting is inevitable and requires active pushback. An example of a country that has actively worked to prevent sorting along ethnic lines is Singapore. In contrast with its neighbor Malaysia, which has a similar mix of Malay, Chinese, and Indians, Singapore has been largely successful in integrating its different races together (Malaysia remains very divided along ethnic lines and tensions continue to grow). The government has achieved this through a course of forced ethnic integration: housing has racial quotas, the parliament has guaranteed seats for minorities, and there are strong penalties (including jail time) for racially charged speech. While not perfect, by all accounts this system seems to work pretty well, but it requires a strongly paternalistic governmental system that runs counter to many conceptions of liberalism (in the classic sense).

Here in America, we have a (failed) example in the history of desegregation and the busing program that forcefully integrated school districts in the wake of Brown v Board of Education. The resulting implementations of integration were highly unpopular, possibly led to exacerbated sorting through ‘white flight’, and at this point in time school busing programs have been largely dismantled. Or to go further back we can look to Reconstruction, another attempt at forcing racial integration that failed.

Now, it could be the case that ethnic integration is a far greater hurdle than economic integration, in which case the growing disentanglement of race and class is a positive development, and the heavy hand of government isn’t necessary as a corrective. In this case, we could be in the second world described above, where bad policy is what has led to the status quo. What policies would these be?

My number one culprit, as I’ve mentioned before, is housing policy. I really think that outdated zoning laws, density restrictions, historic preservation rules, and the like are the source of a lot of America’s current problems. Additionally, the horrific redlining (both official and unofficial) of the past was a huge contributor to current segregation and racial wealth gaps. I don’t think it’s too crazy to imagine a past with more liberal housing policies and strict non discrimination laws leading to a more egalitarian present. But would it be enough?

Government attempts to reshape society should be viewed skeptically. We don’t have to look very far in space or time to see why. In general, I believe we should err on the side of less intervention and tend to prefer solutions that allow markets to play out naturally. What I worry about is the case of social problems that cannot be solved without coercion, as may very likely be the case with inequality of opportunity.

How can we, a priori, determine in what instances radical government intervention is appropriate? Can dramatically unpopular policies ever be justified? These are the questions we will need to grapple with as we struggle to keep our kids from coming apart.

Three Perversities of Indian Law

I came across this fascinating paper (pdf) by Jacob T Levy, a political science professor at McGill University, after reading another excellent piece of his at the Niskanen Center on liberalism and identity politics (which I may go into at another time). Coincidentally, the EconTalk episode this week also dealt with this topic, though with a broader focus.

I’ve long had an interest in the Native American experience, which I suppose comes from being born and raised in South Dakota, where there is a relatively large (~8%) Native American population. (The state correctly replaced Columbus Day with Native American Day in 1990, for whatever it’s worth). Inescapable is the fact that American Indians are overwhelmingly poor; the poverty rate nationwide is higher than any other minority group, some of the poorest counties in the entire country are on the reservations in South Dakota, and my hometown had the highest poverty rate among American Indians of any city with substantial Indian population (over 50% in poverty!).

Being interested in economic development as well, the economics of the reservation system have always seemed quite understudied. The conditions on many reservations are comparable to the poorest of developing nations, despite being within the borders of the richest country on the planet, and yet it’s hard to find much good research on them. It’s easy to find journal articles about theories of economic development in Indonesia or Nigeria or what have you, but despite similar examples right in our own backyard we seem to have comparatively little research.

What I’m trying to say is, the reasons many reservations remain so poor seems criminally understudied, which is why I liked this paper. Even though it is primarily about the law, it lucidly demonstrates how the design of legal institutions can have powerful effects on economic incentives.

Indian law is notoriously complicated, because the Native American tribes exist in some legal superposition both inside and outside the jurisdiction of the United States Federal government. Tribes retain the sovereignty they possessed over their members before being incorporated into the United States, except when that conflicts with their status as “domestic dependant nations” or Federal law. As such, tribes are both foreign nations and wards of the federal government. As a body of law has developed around this curious status, it has led to the three perversities of the title, which are:

  1. Criminal jurisdiction
  2. Civil and regulatory jurisdiction
  3. Economic policy

 

  1. If a non-Indian commits a crime again an Indian on a reservation, jurisdiction lies only with the federal government. Why? The Supreme Court has decided that it would be unconstitutional to subject a citizen to the jurisdiction of a government to which they have not given, nor ever could give, consent. This means that tribal governments do not have complete sovereignty over their territory, only over their members.

 

  1.  This idea has been expanded beyond the criminal sphere, so that tribes don’t have sovereignty over commercial activities either. Beginning with Montana v United States in 1981, the Supreme Court began a rollback that has resulted in a shrinking of the jurisdictional boundaries for tribal governments in virtually every subsequent case. In essence, tribal governments have little to no ability to regulate any sort of activity from non-Indians on tribal lands, from the same logic as above.

 

  1. Finally, tax incentives and regulatory exemptions lead to strong preference for tribally (i.e. government) owned businesses, even over Indian owned private businesses.

 

Together, Levy argues these facts strongly favor, on the margin, less economic activity. Why?

Imagine an outside company is considering building a factory on the reservation lands. The tribal government would certainly consider this would bring in outsiders to the reservation, outsiders the tribe has no criminal jurisdiction over (and the federal government isn’t exactly chomping at the bit to enforce the laws on reservations, particularly in very rural areas). A lack of civil jurisdiction as well means they would have no ability to tax or regulate such activities. In general, then, we would expect they would tend to err on the side of caution and not allow the company to enter.

The terrible irony is that in a situation where economic development were to begin growing apace, the tribal government would be faced with the prospect of shrinking jurisdiction over the activity on its territory.  Additionally, there is considerable historical precedent for the shrinking of reservation boundaries once enough non-Indians had taken up residence. (Yes, the Federal government has essentially decided in instances that since so many non-Indians were living on particular land, it should no longer be considered as part of Indian territory.) On the margin, most governments don’t want to shrink their authority, and will avoid courses of action that would lead to such a situation. As Levy summarizes, “Tribes’ institutional incentives to discourage newcomers amounts to a disincentive for economic growth.” (p. 31)

Regarding the perversity of economic incentives, “The domination of reservation economies by firms owned by tribes has been occasionally remarked upon, but typically in connection with the ostensibly socialistic cultural inheritance of the tribes. I am agnostic as to the importance of that inheritance, but mean to point out that, regardless of cultural explanations, tribes have been left with strong legal and policy incentives to engage in government-led and government-owned development.” (p.41) These incentives include: tribally owned enterprises are exempt from federal corporate taxation (while private enterprises are not); non-Indians are exempt from tribal taxation; tribally owned enterprises have the potential for sovereign immunity.

It should not be shocking that government run enterprises tend to be less efficient than privately owned ones, particularly when there is no other economic activity as competition. Furthermore, the casino based economy that has come to dominate many tribal areas is not altogether different from finding oil or diamonds: a single, lucrative resource in a small area. As such, the ‘resource curse’ present in many developing countries is likely also a contributing factor to poor governance and more robust economic activity.

To conclude (and Levy puts it better than I ever could), “If the rule of law, private sector-led and broad-based economic development, and effective democratic institutions are worthwhile goals for reservations, they ought not to be set in conflict with one another.” (p.48) While Levy does not intend his argument to be a complete explanation of the generally poor conditions on reservations, it certainly serves as a useful point of inquiry for more serious research.

Our Kids are Coming Apart, Part II

What causes the heritability of socioeconomic status (SES), and thereby leads to inequality of opportunity? We need to understand the mechanism by which this occurs if we hope to devise a remedy.

From these authors, I see two ultimate spheres of explanation: 1) biological and 2) social. 1) can be further divided into 1a) genetic and 1b) developmental factors, and 2) as 2a) cultural and 2b) tribal factors.

1a) The base from which all other factors are built upon. We all begin as raw genetic material inherited from our parents. While not concretely determinative, our genes set our limits and predispositions.

1b) The actual implementation of the genetic blueprint. This is where the environment interacts with genes to produce the individual, and when when some portion of our potential is realized.

2a) Different cultures have different values. Some values are more or less amenable to success in different contexts. For example, the famous ‘Protestant work ethic’ is often invoked in explaining the success of Northern European cultures in the context of the rise of capitalism.

2b) Humans have innate desire to form in and out groups, often based on some sort of tribal identity. I use tribal in the loosest sense: Cubs fans are a tribe; Republicans are a tribe; Texans are a tribe. In a society we both identify with and are identified as belonging to a tribe (but these need not be the same). This area gets into deep questions of identity, but sufficient for now is the assumption that people tend to want to associate with others they identify as belong to their tribe.

Both Putnam and Murray stress the importance of sorting in the inheritance of SES, and I can’t see any scenarios of increased divergence play out without it.  What I’d like to do now is run through some quick monocausal explanations for inequality of opportunity through each of the four factors above (with sorting assumed), and then go into what these authors feel is most responsible. I should reiterate that this discussion is taking place in the context of the modern American economy. One hundred years ago, when much of the economy was still agriculturally based, we would be telling a very different story. For 1), the cognitive requirements of the information economy are paramount in success; for 2), they are less so.

1a) Cognitive ability is mostly determined through genes: on average smart people tend to pair up with other smart people and have smarter children.

1b) Cognitive ability is mostly determined by early childhood development: children exposed to poor environments will grow up to be less successful and unable to provide a good developmental environment for their own children.

2a) Regardless of cognitive ability, success is dependent upon possessing particular virtues. Children raised in cultures that don’t value ethics like industriousness and honesty will be less successful than those that do.

2b) Even if there is no meaningful difference between two groups of people, if one possesses the levers of power and the other does not, the tribal nature of humans leads to the group in power towards directing resources and opportunities away from the out group and to the in group.

I think Putnam (and most people in the center-left policy space) view 1b) as the primary culprit. Specifically, low income families are not able to provide such that children reach their full potential in early childhood (particularly with regards to cognitive ability), which has lifelong repercussions. Lacking the capability to perform cognitive tasks at the level of those who were raised in an environment of abundance, such individuals end up at the bottom of the income distribution, and the cycle continues.

Murray is interesting because he falls so far outside the usual discussion space. His primary culprits are 1a) and 2a). Put simply, he believes that cognitive ability is mostly genetic and there is a strong sorting mechanism via elite institutions (i.e. Ivy League schools). Since most people meet their partners in college, and elite institutions sort their members by cognitive ability, you have high ability people only mating only with other high ability people. Where 2a) comes into play is that Murray also thinks that certain values are critical for success and can even make up for a lack of cognitive ability, but those values (his four ‘Founding Virtues’) are currently lacking in the low SES culture (as to why that is he does not address in Coming Apart, but his other body of work suggests he believes the incentives of the welfare state are the culprit).

Next time I’ll get into what I find most convincing.