economics – Page 4 – Common Infirmities

Mining rights and intellectual property rights

I was talking recently with an Australian, who expressed outrage that the Australian government allows mining companies to extract valuable resources from state-owned land, almost for free. Now, I have expressed similar sentiments in the past about the comparable US practice. But on reflection, it occurred to me that I couldn’t agree with the claim of another lunch participant that it is a “no-brainer” that the public should be taking a significant portion of the value realised from the resources extracted from public land.

If you think back to the time when US mining laws were first laid out — I think the main US law dates back to 1871 or so — the general view must have been, there are vast territories out there, where valuable minerals are buried, that would be of great use to the general economy, if only we could get them out of the earth. Rather than pay people to go search for them systematically, we offer that anyone who finds some and figures out how to get them to market, can keep the profits from their sale. Continue reading “Mining rights and intellectual property rights”

The tragic contradiction of rooting for the underdog

Everyone loves stories of plucky individuals, beaten down by circumstances but working hard to get ahead. Dickens made a career out of them. It’s a noble sentiment, but it’s a terrible basis for public policy, which is unfortunate for the US, which has persistently put that heart-warming story at the centre of its social welfare policies. I was reminded of this recently when reading an article in the German newsweekly Der Spiegel about the push in some American cities — Seattle, in particular — to raise the minimum wage substantially. (The article doesn’t seem to be available online, but a related interview with activist-entrepreneur Nick Hanauer is here.) I am all in favour of these proposals — there’s no better way to help poor people stop being poor than to give them more money — but it’s clearly not going to solve all of society’s problems. In particular, the Spiegel reporter talks to a single mother of two children, working 32 hours a week for Domino’s Pizza, whose apartment is too small for both children, only manages to get enough to eat by taking home leftover pizza, and has to admit shamefacedly that she never can afford to buy her children any sort of gift. It’s wonderful that she will be earning 60 percent more in a few years (unless she loses her job), but the reporter adds in the sort of detail that German reporters inevitably include in reports on US urban misery:

She lives in a suburb of Seattle. Not a good neighbourhood, she says, lots of drugs and crime. Once someone was shot to death in front of her house.

So, maybe the increase in the minimum wage is going to help her and her sons move to a better neighbourhood. But it’s not going to make the neighbourhood better! The only way to reduce the number of people who have someone shot in front of their house is to reduce the number of people who are shot. If all the people earning minimum wage decide to use their raises to move to a better neighbourhood, the rent in the better neighbourhoods will just go up. Their negotiating position for housing will be improved relative to retirees, nonworking poor, students, etc. But the number of sad stories of people who can’t afford to move out of their run-down crime-infested neighbourhood will not change, though possibly the people suffering will be less sympathetic, which might seem like an improvement.

Continue reading “The tragic contradiction of rooting for the underdog”

“Not infinite”

From The Guardian:

British nurses are planning to debate whether GPs should start charging patients for appointments.

The Royal College of Nursing’s (RCN) annual conference in Liverpool will discuss whether the union backs the idea of charging people a fee to see their family doctors.

Traditionally the RCN has stood behind the belief that the NHS should be free at the point of delivery. But nurses have put forward the motion, saying that NHS finances are “not infinite”.

“Not infinite” sounds like a sensible observation. Neither are the funds available to the police infinite, which is why we charge people a fee to report a burglary, with extra hourly charges for the investigation. And schools. And that’s why when the smoke alarm klaxons you out of bed, the first thing you need to do is grab enough cash to pay the firefighters who show up. Because their finances are not infinite.

Obviously, the RCN is just trying to make the point that healthcare workers are having their salaries squeezed up against the free-at-the-point-of-delivery. But this argument is made often, and it’s ridiculous. If you want to advocate patient fees, as opposed to all the other ways that the nation could increase funding of the NHS, it can only be because you think that the service that is now free is being overused, and you want to encourage ill people to do something else, besides visiting their GPs. In any case, the cost of administering the £10 fee would probably be more than the fee would bring in.

Here’s what charging for fire and rescue services looks like.

Why are the one percent only 1%?

Have the years of unremitting oppression cut short their lifespans and suppressed their fertility? Is it because they’ve been hunted nearly to extinction?

These are questions that naturally come to mind in reading the novel genre, pioneered by the Wall Street Journal editorial page, of billionaire lamentations, the most recent of which is this cri de coeur of trust fund Croesus and libertarian political manipulator Charles Koch, with the title “I’m Fighting to Restore a Free Society”. He accuses his opponents, the nameless beasts called “Collectivists”, of acting like “20th century despots” by engaging in “character assassination”, which, as we all know, is exactly the sort of thing that 20th century despots were famous for, except for the “character” part. But character assassination is almost exactly the same as assassination, except without the bombs and stuff, and except for the fact that it’s sometimes hard to distinguish from “criticism”, which people might think a natural part of a “Free Society”. But, in case you’re not sure of how perfidious are these Collectivists who “discredit and intimidate”, Koch informs us that this approach is one that “Arthur Schopenhauer described in the 19th century”, which pretty much settles the issue, as far as I’m concerned.

Sure, it seems natural to look at the increasing concentration of wealth in the US (and not just in the US) and see a tiny oligarchy enriching itself at the expense of the rest of us. But you could look at the same numbers and see an oppressed and shrinking minority of wealth producers, slowly evaporating like a brackish pool in the sun, with its salt (wealth) concentration rising as it shrinks.

Where some of us see an opulent gated community, the reality (Charles Koch tells us) is just a gilded concentration camp. Where his character gets assassinated EVERY DAY. (True story.)

Four ways of paying the piper

I was thinking about four different expressions, interestingly different, for the platitude that people shape their consciences to their circumstances.

The most straightforward is the English classic

Who pays the piper calls the tune.

This is the most straightforwardly economical. The boss makes the decisions, and the opinions of the underlings are irrelevant. It says nothing about what those underling opinions might be.

A step more cynical is the old-German proverb

Wes Brot ich ess, des Lied ich Sing. [Whose bread I eat, that’s whose song I sing.]

It has the same general musical theme, suggesting the court jester performing for his master. But the singing, rather than piping, is more intimate, and to my mind suggests a more complete subordination of ones own beliefs to those of the master.

Perhaps the most pessimistic is the saying that Mark Twain claims to have learned as a boy, from a young slave:

You tell me whar a man gits his corn pone, en I’ll tell you what his ‘pinions is.

In other words, as Twain explains, no one can afford to have opinions that interfere with his livelihood. It’s not a matter of dissembling — which is what makes this more pessimistic (but maybe less cynical?) — but rather of naturally adopting the opinions that are a comfortable fit to his circumstances. (Twain’s more cynical version was “It is by the fortune of God that, in this country, we have three benefits: freedom of speech, freedom of thought, and the wisdom never to use either.”)

And then there was the perfection of the corn pone line, the famous dictum of Upton Sinclair,

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

Here we see the complete identification of master and slave. The slave not only gives voice to his master’s views, he not only comes to accept the master’s views, he has deformed his intellect to the point where any other opinion has become completely incomprehensible to him.

“Buyer’s market”

When did the values of the market become a substitute for ethical standards? I found myself wondering this in reading this article in Inside Higher Education about a young philosophy PhD who was offered a tenure-track job at Nazareth College in New York, replied with an enthusiastic email attempting to start a negotiation about starting salary, sabbatical, maternity leave, and limited teaching in her first year. Although she made clear that she didn’t expect all of her requests to be possible, the university responded with a brusque retraction of the job offer. Now, the misogyny of philosophy departments is by now well established, but this smackdown of a young colleague who has just been selected as the best available for a job in your department, merely for making some requests, seemed shocking to me. Not to the commenters on the IHE blog, though, who may be supposed to be mainly higher education professionals. Some sample comments:

She has too many requests and this is always a sign that a person is going to be a pain in the *&*%. Her requests on balance are not unreasonable but she is in no position to ask for all of this — it is a buyer’s market. … Lots of great people to choose from so why saddle yourself with someone who is challenged right off the bat.

several substantial requests, the sum of which went beyond the pale for hat-in-hand applicants.

You just spent a semester narrowing hundreds (or more) candidates and arguing for this ONE person… only to have them forward THAT? Not exactly who I want to spend the rest of my career with (not to mention that the person clearly felt they were ‘playing with house money’ and could afford to lose the job offer… someone who REALLY wants the job wouldn’t risk that message).

(To be fair, some comments are supportive of the candidate, and others take on other issues.) What fascinate me in these responses are these references to a “buyer’s market” to which the presumably arrogant candidate should have meekly submitted, with the clear presumption that the logic of the market is proper and just. If you are in a powerful position, where you can take advantage of those unfortunate enough to have qualifications that are in high supply and low demand, then of course you should, and no one could be surprised if you do. It’s an argument that is rarely applied to those who are robbed at knifepoint by those stronger or more ruthless than themselves, but it does show up in certain comments on rape and on international relations. It’s the belief that power creates its own justification.

I am frequently reminded of Nietzsche’s remarks on markets in Die Fröhliche Wissenschaft (The Gay Science):

Kaufen und verkaufen gilt jetzt als gemein, wie die Kunst des Lesens und Schreibens; Jeder ist jetzt darin eingeübt, selbst wenn er kein Handelsmann ist, und übt sich noch an jedem Tage in dieser Technik: ganz wie ehemals, im Zeitalter der wilderen Menschheit, Jedermann Jäger war und sich Tag für Tag in der Technik der Jagd übte.

Buying and selling are common skills nowadays, like the art of reading and writing: Everyone is accomplished in it, even if he’s not a businessman, and practices every day, just as in earlier times, in the days of primitive man, everyone was a hunter, and practiced that skill every day.

One last point: The largest number of commenters fault the young scholar for her “tone”. Everyone knows, apparently, that you don’t put this sort of thing so baldly in an email, for God’s sake! Obviously they had no choice but to rescind the offer when she attacked them with an EMAIL that clearly laid out what she would like. This is pretty hilarious, given how much philosophers pride themselves on their ruthlessly direct style of academic disputation, with some of them arguing that the would-be philosophers with excessive numbers of X chromosomes can’t hack it.

Vitamins, homeopathy, and economic austerity

I was thinking about this comment by Paul Krugman, about the hegemonic certainty among European banking elites that genuine solid prosperity will only come through a long period of suffering through budget austerity:

Europe’s Very Serious People — people who believe in austerity regardless of circumstances, and who also say things like this, from the Bundesbank’s Jens Weidmann, declaring that “the money printer is definitely not the way to solve [Europe’s problems]“. This is stated as if it is a self-evident truth — even though any PRE can easily make the case (as Praet does) that the money printer is, in fact, something that can offer a great deal of help in solving Europe’s problems.

It reminded me of a similar but opposite delusion that I have noticed among health cranks promoting vitamins. “Pharmaceuticals” are by nature unnatural, and to be viewed with suspicion, even while few are willing to go full Christian Scientist when their lives are at stake. The presumption is that there are side effects, maybe worse than the disease, and the companies that developed and manufactured the drugs are basically pernicious in their goals and methods. “Vitamins”, on the other hand, even when manufactured by the same pharmaceutical company in the same factory, are presumptively good, even in doses far exceeding anything that has ever been tested clinically, much less found in nature. On the other side of the holistic medicine world — but often the same people — are the homeopaths, who take nonexistent doses of generally poisonous substance, under the plausible theory that once they’ve been diluted down to the point where not a single molecule of the substance is left in the vial, it can’t hurt.

But how could it help? That’s where they get into some mystical physics. But if we accept the efficacy of water memory, or whatever the explanation is supposed to be, then why should we continue to assume that the modified water couldn’t hurt? My presumption is that anything effective enough to help is also effective enough to harm, and it’s all a matter of getting the timing and the dosage right. That’s why there are few really easy questions in medicine. It’s always a matter of tradeoffs. The same with the vitamins. How can they help if they can’t hurt? And how could a large dose of a completely untargeted substance be more likely to help than to hurt? And indeed, every trial I know of that has put large doses of vitamins to the test has found them to be generally harmful.

One of the greatest nuggets of wisdom offered up by a (nonreligious) crackpot was Paracelsus’s famous apothegm:

Alle Ding’ sind Gift, und nichts ohn’ Gift; allein die Dosis macht, daß ein Ding kein Gift ist.
All things are poison, and nothing is without poison; only the dose permits something not to be poisonous.

The delusion of the austerians is to believe that monetary expansion — “the money printer”, encouraging inflation — obviously can’t help the economy, it can only hurt. Now, there are serious arguments that purport to show that monetary policy has no effect at all on the “real economy”. My nonspecialist impression is that these arguments have been mostly seen off by behavioural economics, but it’s a plausible idea, in principle. Intuitively, it seems strange that something as ethereal as changing the numbers on the central bank’s balance sheet will be effective in mobilising idle labour.

But if you think that inflation and deficit spending are efficacious, it is implausible to suppose that they can only be harmful. I have respect for the conservative mindset that says, tinkering with a complicated structure is more likely to kill than to cure, but it’s not as though this is just some crackpot idea that some radicals just made up last Tuesday. Smart people have been thinking for quite a while about how to structure and dose fiscal stimulus. They might be wrong, but they’re not likely to be obviously wrong.

For the same reason that it can’t be self-evident that megadoses of vitamins couldn’t hurt.

On-street parking

Matthew Yglesias has given a pithy summary of the case against free on-street parking:

Obviously people who currently get to occupy valuable urban space with their private vehicles would like to keep that privilege. But by the same token, I’d love it for the city government to just give me a free car or stop charging me property tax. That doesn’t mean it would be a good idea. There may be an argument that 30 to 40 parking spaces for cars is a better use for a given piece of land than protected bicycle lanes, but “Waaaah, don’t affect my parking” is not a very persuasive argument. The streets are public spaces and they need to be used for public benefit, not just the benefit of whoever happens to own a car on the block.

This is even more of an issue here in Oxford, where people with private cars get to take up not only the streets, but also substantial portions of the already quite narrow sidewalks. (Yglesias was discussing the debate over installing a new bicycle lane in Washington DC. I’m not sure if it would be quite so contentious here, since — as I discussed here — drivers don’t hesitate to park in bicycle lanes, and so far as I can tell the enforcement is zero. See, for example, the photograph below, of a typical local cycle lane.) [Update 5 Oct, 2013: Not quite zero. I actually saw a car in the cycle lane with a fixed-penalty notice on the windscreen. So there.]

People clearly have ideas about things that by right and nature ought to be free. Perhaps because I don’t drive a car myself, I cannot imagine why parking spaces should be one of them, particularly not residents’ parking. To be sure, residents’ parking is not free here. It’s £50 a car — just enough to create a sense of entitlement among those who have paid for it, not enough to come anywhere close to covering the real costs of providing

It’s not at all clear why people have any more right to 6 square metres of public road to semi-permanently store their automobiles than I have to store my surplus books. I would not be permitted to set out a storage shed by the side of the road. (I suppose I could use an automobile as a storage facility — some people clearly do, at least in Berkeley — but I would at least need a driver’s license and a car that was sufficiently functional to be registered.)

Is “shrill” gender-coded?

The Dish recently quoted a correspondent who, on his or her way to making a point about Chinese tourists wrote

This all has a cogent economic explanation. Paul Krugman, before his current role as shrill liberal attack dog, used to explain…

I found this comment irritating, for reasons that were not immediately clear to me. I have enormous respect for Paul Krugman, both in his earlier incarnation as a populariser of economic theory — particularly trade theory, but also macroeconomics — and as a blogger and twice-weekly columnist who occasionally veers away from economic issues. I think he has a healthy appreciation for his own intellectual strengths, but that he mostly stops short of egotistic attachment to his pet theories, whether defending past statements or being overly sure of his predictions. But I can’t say that there is no basis for someone to think that his tone is overly aggressive, that his political analysis is weak, that even his economic analysis may be distorted by political wishful thinking or antagonism. Those aren’t my opinions, but they’re widely held, and don’t seem to me outrageous.

But what is the role of shrill in that sentence? It’s not a word I hear often, but maybe it’s common in some circles. What does it mean? It’s clearly a free-floating insult, which somehow suggests derangement due to becoming overly emotional, and as such merely replicates “attack dog”. And yet “shrill” seems more contemptuous. What does it mean? Imagine replacing it by strident. It has the same signification with regard to the strength of advocacy, but the contempt is gone. So, is the contempt associated with high-pitched speech? Is this something like bitch, or the dialectical equivalent of “he throws like a girl”? Or is it taking the place of the free-form homosexual slurs that used to be ubiquitous, but are now no longer permitted?

Renters are horrible, evil people, says the NY Times

In many parts of the US the financial crisis has led to more houses being rented rather than bought by the people who want to live in them, according to an article in today’s NY Times, titled “As Renters Move In and Neighborhoods Change, Homeowners Grumble”.

Now, this might seem like a good thing, given how many families and overextended themselves financially to invest in real estate. But if you think that, you are forgetting renters are a bunch of thieves and drug dealers and all around no-goodniks. Why are they occupying single-family homes among nice Americans? Are there no prisons? Are there no workhouses?

The Times reporter Shaila Dawan visited a neighbourhood of Memphis, TN called Hillshire.

On a recent evening, parents pushed strollers and lawn mowers droned, children played on a tire swing and in one driveway, a longtime resident and his grandson tinkered with the fat tire of a slick red drag racer.

But there was a seedy underside. Jimmy Fumich, a homeowner and air-conditioner repairman, said he had been in court that day as a witness in an animal cruelty case against a neighbor, a renter, who had left a dog chained to a stop sign in the heat. She was already in trouble, he said, for breaking into an empty house on the block. Mr. Fumich… mentioned a couple of meth houses and one that had been used as a brothel. All were rentals.

A renter mistreated an animal. Others ran a brothel (in a rented house). Or did they just have too many visitors? Mr. Fumich complains further that the renters don’t join the neighbourhood watch.

It almost seems irrelevant when the article adds, parenthetically, that “Police department records show that major crime in the area, which does not include drug offenses, has actually gone down.”

But it’s not just the homeowners who hate the renters. The renters hate themselves:

In a small cul-de-sac near Hillshire… Rusby Amador cooked dinner for her three sons while waiting for her husband, a tile layer, to get home. One son was hosing off the walkway of their rented home. Two prodigious Boston ferns hung in the entry, and at the curb a colorful ceramic urn sat atop the mailbox.

“When the people buy a house, the people’s more nice,” Ms. Amador said. “Renters, they don’t care about neighbors. We don’t know who’s going to move in. We worry all the time because we don’t know. I have children.”

So, neighbours are good, but new neighbours are instruments of the devil. Unless you know who is going to move in which, in my experience, is not usual.