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Finland was experimenting with a scheme resembling a universal basic income since 2016 but recently axed the funding for it. The initial 800 euros a month in unconditional income had been skimped down to 560 and eventually lost enough political support to keep it going. UBI advocates were excited by the prospect of the Finnish policy, in part because it would give researchers another opportunity to gather another solid dataset analyzing the effects of unconditional income payments. While I too am disappointed the Finnish government has pulled the plug on the policy, I am slowly drifting more into the “Jobs Guarantee” camp as time goes on. Giving cash to people has its benefits, but I don’t think it amply addresses the pressures high-income countries face from increased automation and globalization.

A Universal Basic Income – UBI – is a sum of money given to every citizen in a polity regardless of income and with no conditions attached. Though the amount of money and all the nuances can differ, that’s the basic idea. Unlike food stamps, the money does not need to be spent on food. Unlike TANF, the money is given to everyone regardless of income or need. The idea has diverse bipartisan support in a time when finding bipartisan support for anything is hard to come by. Those on the political left tend to support UBI because it gives everyone a base level of income, liberates many from the drudgery of bad jobs, and can give individuals the opportunity to pursue creative pursuits or take risks that they’d otherwise shy away from when struggling to pay rent. Those on the political right tend to support UBI because many UBI proposals get rid of all the clunkiness of a welfare state and replace it with one check: Forget all the administrative costs and bureaucracy involved in running dozens and dozens of agencies with different goals, all of these are eliminated and replaced by a simple transfer mechanism.

I was initially drawn to the idea of UBI for the reasons beloved by both the political right and left. It promises a simple, clean solution that’s more empowering and less paternalistic than telling people how they need to spend their money. Most importantly, the success thus far of charities like Give Directly in lower-income countries compared to old-fashioned targeted aid confirms a basic tenet of UBI: Give people money and they can be trusted to spend it optimally.

But high-income countries like the United States and Scandinavia are not like the beneficiaries of Give Directly. In many ways, high-income countries today are a land of plenty. We have no widespread shortage of basic material necessities like housing, infrastructure, food, or clean drinking water. One could argue the most significant economic pressures affecting high-income countries today are most strongly experienced by those left behind by increasing automation and globalization. Liberalized trade and capital policies are a net positive for the world, I still believe, but the downside effects to the “losers” of globalization were under predicted. As robots replace old middle-class jobs and rust belt work is sent overseas, many people are left with few work alternatives and can turn to opioids or scorched-earth politicians to soothe the pain.

The loss these communities feel is one of income, sure. But it’s also a loss of the myriad non-income benefits of employment: identity, community, purpose, and meaning. Middle Eastern Gulf countries that have significantly higher income because citizens are given a share of oil revenues don’t experience life satisfaction levels as high as their income would suggest. In fact, some evidence suggests their happiness level is more closely related to the income they have “earned” (in the traditional sense of the word) than what they have access to. To me, this shows the magnitude of neglect the policy commentariat has given to the importance of employment for life satisfaction that is unrelated to income.

I’m not advocating the elimination of the welfare state, or even against some sort of UBI altogether. Instead, I think UBI fans need to realize it is not the panacea they make it out to be. Economists specifically are too stuck in their models that suggest utility is purely a function of income. Models of the labor market that imply people frictionlessly moving from the coal mines to pink-collar healthcare jobs or from manufacturing to computer programming totally neglect these aspects. Equilibria in labor markets is a beautiful idea on the blackboard, but people do not effortlessly move across the country or world like electronic money. Among other issues, the old-fashioned rust-belt American men will not suddenly become nurses because “that’s where the work is.” Their identity, sometimes for generations, is tied strongly to a certain type of employment, and coal miners will struggle with the identity change of becoming a male nurse. In the same way, the professional class in America during a recession will shun working at a hardware store or cleaning houses and instead prefer unemployment, largely because it does not fit their identity. And despite the caricature of Welfare Queens or lazy people on the dole, the vast majority of people get purpose and meaning out of their job. Giving them a UBI check will help them pay the rent and put food on the table (nontrivial matters to take care of), but it won’t give them the community or purpose that showing up to work gives them.

A public Jobs Guarantee – the hot topic right now on Economics Twitter – has varied manifestations, but all proposals seemingly target this benefit of employment. I’m skeptical on many grounds, though I have hope that a good proposal emerges. A JG can act complementary with a UBI, so I don’t mean to dismiss the benefits of UBI entirely or see it as one-or-the-other. Instead, I think UBI cheerleaders need to realize that giving money will be a significantly incomplete substitute for the purpose/community/identity that a job gives.

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The disturbing effect “Fox and Friends” has on our public discourse has brought into focus the power of corporate media in the era of Fake News. The President has repeatedly and immediately tweeted opinions after they’ve been discussed on Fox and Friends. The tendency for Fox News in general to pander to their audience – seemingly  spewing whatever nonsense their viewers want to hear – naturally makes one question whether profit-driven media is a part of the problem these days, and whether public broadcasting could be a solution. But like many leftist dreams of government correcting the ills of the market, the idea that public broadcasting would necessarily be an improvement has become even more unlikely in the age of Trump.

In the recent Bruenig-Caplan debate on socialism vs capitalism, my strongest takeaway was perhaps this: One of the most underrated arguments against socialism is that socialists’ arguments are always in favor of policy outcomes rather than institutions that will lead to these desired outcomes while safeguarding against abuses of power. If the drive to profits is what keeps organizations like Fox News, Breitbart, and tabloid magazines spewing outright lies and propaganda instead of cold-hard facts, a public or non-profit alternative must be an improvement…right? Here’s the thing with any leftist idea that the government solution will be an improvement to the current market landscape: The theorizing is based on the idea that their benevolent bureaucrat is in power. It never seems to account for the probability (and now reality) that an unbelievably incompetent and shameless bigot like Donald Trump will be the one controlling the government. If our media industry consisted entirely of BBC- or PBS-type companies, the officials our country elected would now be dictating what they broadcast as “news.” Imagine if Donald Trump and/or a Republican-controlled Congress decided who was heading the state-run media agencies. The Fox News of today would appear harmless to the filth and propaganda the government would broadcast with taxpayer dollars. A likely outcome would be that a Roger Ailes-type would be elected Media Chairman. Hopes for a technocratic appointment like Federal Reserve Chairman can’t be guaranteed.

In other times, the libertarian scaremongering about government-run media looked simply overdramatic. “If we have the government run tv stations and newspapers, we’ll turn out like North Korea or Saudi Arabia!” The BBC, for one, is a fine organization, and any plausible criticisms of it having bias or skew are within a reasonable margin of error for how much a media organization can venture from optimality. There’s no reason to think that just because the government takes over certain operations, we’ll end up with an authoritarian regime. But government-run institutions are accountable directly or indirectly to the officials we elect, and when those elected officials really suck, the mediocrity trickles downward. With Donald Trump in office and an acquiescent Congress behind him, that libertarian scaremongering is not so farfetched.

One could argue a choice between government-run media versus a totally profit-driven one is a false dichotomy. Could an independent oversight board make sure the public media companies don’t venture into lunacy? Well who appoints those boards? Even the Congressional Budget Office is under threat from partisan hackery these days. I haven’t seen a plausible policy scheme that would convincingly ensure a public media organization from becoming a wing of taxpayer-funded propaganda under the Trump administration. Are there other regulations, subsidies, or vouchers, that could give a better alternative? Maybe there’s one out there, I just haven’t heard of it.

The unfortunate irony of many leftists complaining about Trump’s abuse of Executive power so far is the same people’s silence during the Obama administration. It’s totally fine when Obama did it because it agreed with certain policy prescriptions. In an age of immeasurable and unbelievable outrage, it can be hard to have a clear head and accurately critique government actions. But consider this whenever Trump does something you deem terribly awful: if what he is doing is within his legal scope as head of the Executive branch, should we reconsider how much power we give the Executive branch, or do you just not like how he’s using that power? Put another way, policy proposals are really easy to get enthusiastic about when the only reality you can envision is when Your Person is in power. But the next time you consider government presence as an alternative to market forces, try to picture what a government run by The Other Team can do with that power.

It gets back to a theme I find particularly relevant this day in age that applies to every public policy debate: when are individuals/institutions best held accountable through market forces and when are they best held accountable through the democratic process? As toxic as Fox News is for our culture, I’d take our profit-driven landscape over a Trump-run state media anyday.

I’ve been thinking lately about the power of language and the role of government- and society-enforced censorship. Many people – including yours truly – hold seemingly contradictory views on the power of words and liberal public policy. When is it permissible/optimal for the government and society to enforce norms on what is “ok” regarding language and rhetoric?

I’ll start by saying that the youthful me believed censorship to be almost always wrong. Books like Fahrenheit 451 and 1984 put censoring in the context of stopping radical ideas, free thought, questioning authority, and artistic works that made people uncomfortable. Music and video games, of course, were common targets for censorship.

Here’s a clip of Frank Zappa testifying in front of Congress, claiming that words in music are only words. Essentially, a “sticks and stones can break my bones but words can never hurt me” argument.

I don’t think Zappa was telling 100% of the story. Words of course can hurt. Language is incredibly powerful. Deirdre McCloskey believes a change in rhetoric was a huge impetus for the Industrial Revolution. Using the n-word or any other racial slur should not be tolerated. We should be conscientious of using inaccurate words like “Indians” to describe “Native Americans” and it goes without saying that we shouldn’t call them offensive terms like “savages.” Pronoun usage is an important consideration for people who identify as trans or non-binary genders.

Much of “censorship” comes not from a Parental Warning on an album cover as much as social norms of people telling their peers “yo, that’s not ok” when they use language that is not deemed permissible. So when is censorship, or more broadly “socially enforced norms on language,” acceptable? The liberal tradition is based on the idea of people being able to live together, even if not living the same lives; it’s accepting differences of preferences, tastes, and values.

[I think when to give certain views a platform under the pretense of “diversity of thought” is a slightly different conversation to have. This has been a hot topic recently, with Kevin Williamson having been fired from The Atlantic for some extreme anti-abortion comments and climate-denier Bret Stephens being hired to the NYT editorial board. Giving a platform to flat-earthers and holocaust-deniers to “hear both sides” is not the ideal we’re striving for, but where this boundary lies I am not sure. However, again, I think this is a different conversation.]

The standard liberal recipe for free speech is that offending someone is fine, but you can’t threaten/slander someone else. What happens if the standard for “threat” is as low as writing Trump on a sidewalk at Emory University? Is using an incorrect gender pronoun really considered a threat or slanderous? Is showing a gay couple on tv considered a threat? Consider your opinion on these three matters and what your reasoning is. Is your reasoning consistent about when it is “ok” to do something even if you disagree with it? Remember that the formal legal system is often uninvolved in these judgements of tolerating certain behavior.

This debate is interesting to me because, like many topics, we have our own intuition about what is right, use boilerplate rhetoric to defend our position, and yet never really fully consider the roots of our view. I’m not going to shame someone for being in favor of gun rights, but I probably will shame them for denying slavery existed. My shaming is a form of censorship, even if it’s not government-imposed. In most situations, people are in favor to some extent of disapproving certain beliefs. We all recognize the power of language.

The point I want to get across is that if one holds the view that racial slurs are harmful to our social fabric, one implicitly recognizes the power of language and expression in certain contexts and needs to acknowledge the power of art/music to also be powerful. To this extent, I naturally tend towards the position that people’s views on censorship or political correctness are very likely to fall in line with their own preferences/beliefs rather than a well-grounded philosophy on when or when not to censor. I will call out use of the n-word but not push for censorship of music. Why? Well, it probably has a lot to do with how I don’t like racism but I really like music that is usually the target of censorship. What needs to be fully recognized is that my opposition to music censorship cannot claim that the lyrics are unharmful. I could argue that I don’t trust the government to make that judgement for us, but I don’t think I can use the Zappa defense that the words are meaningless.

 

 

 

 

 

 

A few months ago, I made a conscious decision to overhaul my Twitter feed. The vast majority of accounts I followed were not only economists, but they were white, male, and in an ideological range from libertarian to Technocratic Left. I eliminated a lot of those accounts, replacing them with accounts representing a diverse range of views/demographics. Even in this simple experiment, the A/B test gives me conscious conclusions about how one’s media bubble affects one’s line of thinking, and suggests there are even more implicit outcomes that I don’t recognize. It also made me realize how reasonable it is that nearly everyone is under-exposed to an optimally diverse set of views in their media diet.

B.O. (Before Overhaul), I was pretty sure there weren’t any smart socialist thinkers out there. And this extends past purist socialism and even into what you might now call the “Bernie Left.” Most arguments I read were caricature defenses of socialism that frankly could easily be refuted. Naomi Klein would make outrageous ad hominem attacks on Milton Friedman and claim it delegitimized the market economy, Jeremy Corbyn would defend the wonderful work Hugo Chavez did in Venezuela for the poor, college-aged kids would spew half-baked defenses of what they thought Marx meant, and a plethora of writers would accuse anyone against rent control as selfish idiots. If the best arguments I came across were entirely unconvincing, it only made sense that I became more confident in my views.

But that’s where the problem is. I assumed the views I was being exposed to were the best ones out there. By default, my media diet as a self-identifying liberal/cosmopolitan/technocratic/educated guy included MainstreamMedia sources like the New York Times, Washington Post, The Economist, The Atlantic, Vox.com, etc. Those sources don’t often include a prominent voice on the socialist left. Just as David Brooks and Thomas Friedman are unconvincing voices for a centrist conservatism, the voices I was being exposed to were making weak arguments for socialist and left-populist economic policy. The reasonable voices were in a narrow range of centrism somewhere between Paul Krugman, Matt Yglesias, and Greg Mankiw. In hindsight, this group of people has way more in common than I or they ever realized. What I mean to highlight is that these sources, the ones I was reading as an Enlightened Educated Gentleman, were not amply exposing me to economic arguments for strong pro-labor, pro-nationalization, massive taxation, or significant adjustment to labor laws aiming to equalize gender/racial disparities. The people I was reading were all pretty in favor of markets as a basis for economic policy, where technocratic solutions through NBER papers and incremental adjustments were the road to ideal policy. The debates, in retrospect, were over the magnitude of redistribution and balancing economic liberty with regulation. Joseph Stiglitz would enter into the picture every now and then, but not enough to really shake my worldview.

It turns out there are a lot of smart people that have very far left economic views. Matt Bruenig, Elizabeth Bruenig, Marshall Steinbaum, to name a few, consistently are writing things that not only give a drastically different point of view – they are writing things that I find very difficult to argue against given my current toolkit of existing knowledge. This is when you know you’re actually exposing yourself to new ideas. Before, it was as if I was unconsciously exposing myself only to straw men arguments and red herrings in order to simultaneously reenforce my priors and give me a false sense of being open-minded. These people were always out there, but they don’t have a prominent (enough) voice in where I assumed a good media diet was found. [Elizabeth writes for the Washington Post now, and many of these people have some exposure, but you get my point]

The same can be said for the level of female economists out there. I used to rationalize not reading many female economists by saying that the field just didn’t have many women. While the discipline does seem to be hostile to women and it’s not at total parity, I was dead wrong. Some of the best work in academia is being done by people like Alice Evans, Claudia Goldin, Dina Pomeranz, and many many more. But except for Janet Yellen, Joan Robinson, Anna Schwartz, and a handful of others, female economists don’t have too much exposure in the mass media. Only one woman has ever won the Nobel Prize in economics (and she could be considered more of a political scientist). Paul Krugman, Greg Mankiw, Mark Thoma, Brad Delong all seem to get much more exposure than their female counterparts. Without making a conscious effort to include more female voices in my media diet, I was left reading a much more homogenized set of views.

The same can be said for non-economists. I have made more of an effort to include historians, sociologists, and anthropologists in my twitter feed and blog roll. Robert Solow once quipped, “Everything reminds Milton of the money supply. Well, everything reminds me of sex, but I keep it out of the paper.” Economists are prone to see everything as an economic problem; it’s all about incentives. All other disciplines fall prey to their own unique narrow-mindedness. But forcing yourself to look through that lens can be quite revealing. Looking through a lens of “everything is gendered” or “everything is explained by our irrational cognitive biases” at least exposes you to the possibility of these ideas.

So far in my experiment, I’m happy to report I’m much less sure of any of my beliefs. When Matt Bruenig gives an analysis with thorough empirics and theory showing the greatness of socialism, I can scoff all I want but if I can’t convincingly refute his points, how sure am I of the greatness of markets? I think I have a good idea of how economic history shows that markets and liberalism set the stage for the industrial revolution, but when Pseudoerasmus talks about the oh-so-ridiculous conventional wisdom that I of course had wrong, how sure am I about any of those beliefs?

Twitter is pretty much the worst, but also can be used for good. The freewheeling platform made it pretty easy to find these new alternative voices once I made the conscious effort. My worry is not that people don’t have access to a diverse set of views, it’s that their habits and circumstances will inevitably lead to equilibria that perpetuates echo chambers.

There’s still one thing everyone in my twitter feed agrees on: Trump is the worst. I’m not yet ready to start following alt-right accounts, Holocaust deniers, or MAGA fanboys. Yet it does beg the question: if I did, what would the mere exposure to these accounts do to my confidence in my own beliefs?

New podcast episode with Brink Lindsey and Steven Teles about their new book The Captured Economy:

Brink Lindsey and Steven Teles argue in their new book “The Captured Economy” that the last few decades have been characterized by an increase in political rent-seeking. Focusing on the financial sector, intellectual property laws, occupational licensure, and land use, they show how legislation has been captured by special interests in ways that slow growth and increase inequality. In this episode, Lindsey and Teles discuss how these policies distort various markets and cause upward redistribution, as well as the different ways we can work to better “rent-proof” our politics.

Harvey Weinstein, Bill O’Reilly, Donald, and on and on and on. There can no longer be any doubt about the existence of male privilege and how it breeds sexual entitlement. Something has to change.

The obvious answer for men on the individual level is to call out instances of misogyny and loudly condemn any sexual assault within our own immediate vicinity (in addition to not being a pig). But what to do on a systemic level? A lot of the commentary coming out now casually connects misogynist culture with some notion of capitalism, but it’s not clear to me what role the American economic system plays in all this.

[Anyone who has ever read this blog knows my sympathies to the market economy, though I’ll admit it’s not perfect and there can always be productive tinkering.]

Capitalism, in most real world manifestations of the word, allocates resources based on consumers’ preferences. When inequality is such as it is in the United States, rich people’s preferences are overrepresented massively because consumption is a function of income. If the consumers’ dollar is their vote, people with more dollars have a lot more votes. Money is power and I don’t think this is up for debate. In this sense, movies will be made that reflect men’s view of the opposite gender because they write the checks for the movies to be made and have more money to spend on movie tickets. If those with more money don’t want to see football players kneeling in social protest, then the profit-maximizing action for the NFL is to make a rule disallowing kneeling during the national anthem. Essentially, a capitalist system will shake out to reflect the interests of those with money and power, even if those interests are discriminatory and completely exploitative like in the case of Harvey Weinstein. Under these scenarios, I admit, the market economy is a system that rewards and perpetuates unethical behavior. [Not all corporate behavior is done under profit-maximizing conditions, however.]

On the other hand, I’m cognizant of arguments that show the market economy as being a force for good in this debate. Money talks, but this can go both ways. Bill O’Reilly was effectively forced out from Fox News because advertisers were boycotting. They didn’t want to be associated with such a vulgar human being. Were their decisions based on ethics, or just avoiding bad PR? Either way, the boycott worked. Similarly, Harvey Weinstein was forced out from his own company and seemingly blacklisted from the entire industry. Compare this to the President: his first wife alleged marital rape, he’s had countless sexual assault allegations, and the Access Hollywood tape was a smoking gun showing what kind of person he is. But he’s still in power. He’s not the only politician or person in government to retain their position after doing terrible things. We can all choose to support companies that we think are ethical and not use our dollar votes to support unethical ones, yet we are all bound to pay taxes to the same government.

So then I wonder: Under what circumstances do market forces punish men for this behavior better than the democratic process? It’s easy to look at the very real faults of a consumer-driven market economy and see an alternate system based on public control as the antidote. But if culture is the real problem, a new economic system might not make much of a difference. In fact, high-quality legislation from the democratic process could be disappointingly ineffective if the underlying culture is so engrained. If you think of different countries around the world with less ‘capitalist’ economies, how much of an improvement is there? For European countries that boast higher female participation in corporate boardrooms or the legislature, was it because of their culture or some sort of tinkering in how their economy is structured? I’m skeptical that replacing the current US economic system with, say, a full-on Bernie Sanders system will improve much. A sexist culture will still put sexist men in charge, though often we assume the right democratic outcome weeds them out.

The economy is not always a zero-sum game. We can both be better off without it coming at the expense of someone else. But power is a zero-sum game. So the asymmetric power of men, reenforced by their asymmetric holdings of money and connections, does come at the expense of women. Closing this power gap absolutely needs to be a policy priority, but more importantly it must be a cultural priority. Market forces should be used in tandem with legislation and the democratic process; anyone suggesting only markets or only a new economic system will cause the change which we would like to see should rethink their approach.

Two oft-repeated assumptions about big companies in market economies:

  1. Corporations pursue profit by all means without regard to concerns for ethics, the environment, diversity (racial/gender/socioeconomic), and community externalities.
  2. Corporations consistently underpay minorities and women for doing the same work that white men do.

I see these as contradictory. A vast amount of literature shows that diversity at a company is good for its bottom line. Having more women and people of color in an office is good for everyone’s productivity and increases the likelihood of good ideas that are essential for keeping a company strong. Furthermore, if a company was only concerned about its bottom line, it’d only employ women and minorities (much cheaper!). The obvious reality is that companies do pursue profit, they do discriminate against women and minorities, but they engage in behavior that is not always profit-maximizing.

Consider an alternate proposition:

  • Corporations pursue profits in an environment that is constrained by the prevailing culture and ethical norms; sometimes that culture leads to discriminatory behavior and sometimes it means putting ethics over profits.

This means that if the higher-ups at a corporation come from a culture that gives them implicit bias towards men, white people, or those that went to their alma mater, hiring decisions will be made that reflect those biases even when it is against the self-interest of the company. At the same time, culture can also influence business decisions that put ethics over profits. Price-gouging during a natural disaster, for example, might not happen (even if profit-maximizing) because cultural norms shun such behavior.

Essentially, prudence is not the only thing guiding human behavior, even if economic models often suggest so. What’s interesting to me is the overlap of people who a) attack the utility-maximizing framework of mainstream economics as being oversimplified; and b) say that people in a “capitalist” economy are purely self-interested.

 

 

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