Bryan Caplan's Blog, page 107

EconLog Reading Club: Ancestry and Long-Run Growth, by Bryan Caplan

In last year's Caplan-Jones immigration debate, Garett heavily appealed to research on ancestry and growth.  The gist:

Countries now inhabited by the descendants of historically advanced
civilizations do much better than countries now inhabited by descendants
of historically backwards civilizations.  How do they measure
"advanced" and "backward"?  Several ways, especially state history (S),
dawn of agriculture (A), and technology in 1500 AD (T).

Since this research is interesting, important, and neglected, I'm starting off the new year with a reading club on the topic.  I propose the following articles and due dates:

Reading #1 (Wednesday, January 27): Putterman, Louis, and David Weil. 2010. "Post-1500 Population Flows and the Long-Run Determinants of Economic Growth and Inequality." Quarterly Journal of Economics 125(4): 1627-1682.

Reading #2 (Wednesday, February 3): Comin, Diego, William Easterly, and Erick Gong. 2010. "Was the Wealth of Nations Determined in 1000 BC?" American Economic Journal: Macroeconomics 2(3): 63-97.

Reading #3 (Wednesday, February 10): Spolaore, Enrico, and Romain Wacziarg. 2013. "How Deep Are the Roots of Economic Development?" Journal of Economic Literature 51(2): 325-369.

Reading #4 (Wednesday, February 17): Chanda, Areendam, C. Cook, and Louis Putterman. 2014. "Persistence of Fortune: Accounting for Population Movements, There Was No Post-Columbian Reserval." American Economic Journal: Macroeconomics 6(3): 1-28.

As in earlier book clubs, I'll open each discussion with a post summarizing, then analyzing, the reading.  Readers can join the conversation in the comments.  I'll also invite the authors to participate, either in the comments or as guest posts.  I'll close the book club with an "Ask Me Anything" post.

Who's in?

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I Changed My Mind About Betting, by Bryan Caplan

The most profound way I changed my mind:

When I was a child, I thought betting was like playing with matches.  Only fools did either.  The habit stuck through my twenties until I met Robin Hanson. 

Hanging out with Robin didn't just make me lose my prejudice against betting.  He led me to my current view: intellectuals who refuse to bet on their beliefs are tricksters, frauds, phonies, eels, and blowhards. 

In slogan form: I used to think people who bet were fools.  Now I think people who don't bet are knaves.

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"Poor Programs" Bleg, by Bryan Caplan

"Poverty programs will always be poor programs."  I've heard this thought many times, but the original source seems to be former HEW Secretary Wilbur Cohen.  His exact words: "A program that deals only with the poor will end up being a poor program."

Question: What is the best empirical evidence in favor of Cohen's claim?  Please include URLs in the comments.

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The Great Pacification, U.S. Edition, by Bryan Caplan

Recent horrors notwithstanding, there is a strong long-run global trend toward fewer war deaths.  A new paper by Tim Kane somewhat surprisingly shows that there is also a strong long-run trend toward lower U.S. troop deployments.  Basic graph:
 
US troops to US population uses the left scale; deployed US troops to world population uses the right scale.

The regional breakdown is also striking:


Extremely low deployments in Eastern Europe and the FSU make it even harder to take Russian nationalists' resentment of American interference in their "sphere of influence" seriously.

Don't drones change the whole story?  No.  High body counts for U.S. drones come to under 6000.  The includes some heinous manslaughter, but even that's a tiny share of global wrongful killing.  As least so far, the U.S. is not taking advantage of robot soldiers to wage wars the American public would have refused to fight with human soldiers.

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Terrorism and Innumeracy, by Bryan Caplan

Maverick Philosopher Bill Vallicella responds to my praise of Nathan Smith on terrorism:

The
Caplan/Smith argument is that because the number of auto-related deaths
is much greater than terror-related deaths so far, a high level  of
concern about terrorism is not objectively warranted.

But
this sort of reasoning involves  vicious abstraction.  It is highly
unreasonable to consider merely the numbers on both sides while
abstracting from the motives of the terrorists and the societal impact
of terrorism.    With very few exceptions, drivers do not intend to kill
anyone, and when their actions bring about deaths, those deaths involve
only themselves and a few others.

I happily admit that Nathan's case would have been stronger if he'd focused on garden-variety wrongful killings (murder and non-negligent manslaughter) rather than accidental killings.  But the substance stands: Despite the worst terrorist attack in history in 2001, terrorism sums to just 1.5% of U.S. wrongful killings in the 21st century.

Vallicella:

One
cannot reasonably abstract from the political agenda of terrorists and
the effects even a few terrorist events have on an entire society.  Ask
yourself: has your life changed at all since 9/11?  It most certainly
has if you travel by air whether domestically or internationally.  And
even if you don't.  Terrorists don't have to kill large numbers to
attain their political goal and wreak large-scale disruption.  The
Tsarnaev attack on the Boston Marathon shut down the city for a few
days.  Same with Paris, San Bernardino, Madrid, London, etc.   That had
all sorts of repercussions economic and psychological.  

And
if you care about civil liberties, then you should take the terror
threat seriously and do your bit to combat it. For the more terror, the
more government surveillance and the more infringement of civil
liberties.

This boils down to complaining about the reaction to terrorism.  But that's ultimately my and Nathan's point: Popular cures for terrorism are far worse than the disease.  "Terrorism is a terrible problem we must fight with everything in our power" and "Terrorism is a terrible problem because we want to fight it with everything in our power" sound alike, but they're diametrically opposed positions.

Vallicella's strongest point:

There is also the obvious
point that jihadis would kill millions if they could.  Would they use
nukes against the West if they could? Of course they would. And that
would change the raw numbers!

I think the same goes for many, if not most, non-terrorist mass killers.  Anyone who murders a classroom of children for fun might detonate a nuke for fun.  That too would change the raw numbers!  I will admit that the odds of a terrorist obtaining a nuke seem much higher than a mere sociopath doing so, but both are extremely remote.



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Western Civilization is a Hardy Weed: The Case of Islam, by Bryan Caplan

The brilliant Nathan Smith has a brilliant new essay, "The Islamophobic Case for Open Borders."  Here are choice selections.

A familiar truism well-expressed:

If we're still driving cars despite thousands of automobile accident deaths per year, we don't really set the value of human life so high that attacks in Paris (130 victims) and San Bernardino (22 victims) objectively warrant the massive media attention, revolutions in foreign policy, and proposals to shut the borders completely to Muslims that they evoke. Such events get such attention because of statistical illiteracy.

Sensitive candor:

Since I believe Islam to be false, I would be a poor lover of my fellow
men if I did not wish for it to disappear, that is, if I desired that
millions of people remain forever imprisoned in a web of errors. But
inasmuch as the word "Islamophobe" implies irrational, uncritical
feelings of hatred and disgust towards Muslims as an opaque Other, I do
not feel that way at all. I have traveled in Muslim countries like
Turkey, Azerbaijan, Tajikistan, Kyrgyzstan, and Uzbekistan, have been on
warmly friendly terms with many Muslims (some nominal, but some
devout)...
In foretelling a steep decline of Islam under open borders, I am
anticipating developments of which my head and my conscience approve,
but towards which my heart and imagination are ambivalent.

Immigration usually doesn't lead Muslims to apostasy, but still sharply increases their rate of apostasy:

In America, 77% of those raised Muslim, are still Muslim,
according to Pew. That's a fairly high retention rate, but Islam in the
West still loses about one-fourth of each Muslim-born generation. At
that rate of member loss, less than half of the descendants of Muslims
would still be Muslim after three generations. Germany's assimilation of
Turkish migrants seems to illustrate how this process plays out. Less than 2%
of the German population self-identifies as Muslim. Almost twice as
many people in Germany are of Turkish descent, and there are also
substantial numbers of Arabs. Since Turkey's population is almost exclusively Muslim,
it seems that Islam must have lost roughly half of the natural increase
of its emigrants in Germany to apostasy. Germany is a relevant case
study because its great Turkish immigration mostly occurred around half a
century ago, so it's had time for assimilation to play out across a
couple of generations.

This is asymmetric:

What about conversion the other way? In America, there are probably a few hundred thousand converts to Islam in America, mostly in the black nationalist Nation of Islam,
most famously exemplified by Malcolm X. The Nation of Islam is an
interesting instance of the special political purposes that a Muslim
religious identity can serve, and might foreshadow future uses of Islam
as a vehicle of radical politics in an open borders world. But it
doesn't seem indicative of an ability of Islam to make many converts, in
general. There may be 100,000 converts to Islam in Britain.

Historically, Islam has never made major advances by migration, or by
conversion from below, as Christianity has often done. Stagnation or
decline has been its fate where it was politically subordinate. Islam
spread by conquest, not missionary work. It is still strongest in the
historic heartland where it was established by Arab conquerors in the
7th and 8th centuries. That's not to say that the Middle East and North
Africa became Muslim through forced conversions. Forced conversions to
Islam were not the norm. Rather, first Arab, and later Turkish,
conquerors, became the power elite, permitting Christianity, Judaism,
and sometimes other religions, such as Hinduism in India, to persist
among the subject populations. But non-Muslims enjoyed various
disadvantages, such as paying a special tax called the jizya, could not proselytize, sometimes suffered political violence, sometimes had their children kidnapped to become janissaries,
and in general, enjoyed few or no rights and comprehensively inferior
treatment. In the very long run, this made it hard for Christian and
other minority communities to flourish...

There are, as far as I know, no historical examples of substantial
Christian populations converting to Islam except under Muslim rule.

While this is a great piece, Nathan grossly overstates the incompatibility between Christian doctrine and religious violence:

The Old Testament, to be sure, contains some hair-raising passages that
seem very much opposed to religious freedom, but that's part of the
Mosaic law, which St. Paul's epistles clearly and insistently establish
is not comprehensively binding on Christians, but has been superseded,
fulfilled, replaced by the higher ethical teachings of Jesus. The early
Church never used violence.

Yes, St. Paul did "clearly and insistently establish" that the Mosaic law "is not comprehensively binding on Christians."  But he focuses almost entirely on dietary requirements, circumcision, and the like.  If Paul (or Jesus) meant to spearhead a culturally novel rejection of religious violence, he would have explicitly said so.  And to make "The early Church never used violence" true, you would have to torturously gerrymander both who counts as "the Church" and when counts as "early."

To be fair, this reservation only makes Nathan's case stronger, as he himself realizes:

If people think Christianity authorizes the murder of apostates, that
might make people more relaxed about Muslim immigrants. After all,
Christians obviously get along fine as citizens of liberal societies, so
if they can do that in spite of being theoretically required by their
religion to kill apostates, might we not expect the same happy result
from assimilating Muslims into liberal societies?

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A Teen Tries the Ideological Turing Test, by Bryan Caplan

A practice test essay question from Cracking the A.P. U.S. History Exam:

Evaluate the extent to which farmers and factory workers did not easily adapt to changes stemming from industrialization in the years 1865-1900.

Standard textbooks lament the plights of farmers and factory workers alike, barely mentioning the era's skyrocketing living standards.  Since my thirteen-year-old sons took my labor econ class, they know better.  But my son Aidan saw an opportunity to piggyback an Ideological Turing Test onto his A.P. practice test.  Could he simulate a well-prepared but economically illiterate history student?  In his allotted 35 minutes, he produced the following essay:

Farmers and factory workers did not adapt very well to
industrialization in the latter portion of the 19th century, though it was more
difficult for farmers. We see this effect chiefly in the South's difficulty to
adapt to a Northern-style economy after the Civil War. We also this effect in
the failure of Northern workers to coordinate, leading to their being taken
advantage of by Scrooge-like employers. Finally, monopolies and other
unscrupulous organizations led to difficulty for both farmers and factory workers
to cope.

Firstly, it was very difficult for the post-war South to cope with
the changes industrialization caused. Most farmers simply found it difficult to
work in a monotonous factory for 12 hours a day, often with little or no
respite, when they were so used to a day which was often flexible and involved
more varying forms of labor. Others simply did not have the education required
to operate the machines, or were baffled by their operation. While many
Southern politicians of the era called for a New South-for the South to become
industrialized like the North-, the dream did not become reality. The South
also had very few farmers per square mile to do factory labor. In short, the
South, where more and more of the nation's farmers resided, was ill-suited for
industrialization, making it difficult for its many farmers to make a living in
factories.

Secondly, Northern workers did not adapt well because they were
not very effective at unionizing and otherwise banding together to form a
coalition which would protect them from the miserly employer. While it is true
that many workers experienced a rising standard of living, accidents induced by
machines were all to frequent. As if this was not enough, income disparity went
up tremendously during this era, signifying an upper class which profited at
the expense of the workers. Many a time, unions were broken by a few
strikebreakers, or were not coordinated enough to become important. Thus, the
urban worker failed to adapt to industrialization mainly because of a lack of
coordination.

Finally, the rise of the monopoly, generally through trusts and
corporations, led to many workers suffering. John D. Rockefeller's Standard Oil
Company, and the American Steel Corporation, often charged high prices for
their products, which in turn reduced the average worker's wages. Railroad
companies would often charge exorbitant rates, prompting the formation of
Farmer's Alliances and the Populist Party. As with unions, however, these early
progressive movements failed to give workers a better lifestyle due largely to
a lack of coordination. Consequently, the rise of monopolies, although they
eventually inspired Progressive Era movements, caused much misery in the 19th
century for the regular worker. 

In conclusion, it was difficult for both factory workers and
farmers to adjust to the New Industrial Order mainly because of a lack of
coordination and necessary skills respectively. Monopolies also ruined things
for workers by indirectly or directly cheating them out of their money. While
movements such as the Populist Party, which called for an end to such
monopolies, did eventually arise, they were often ineffectual, due, once again,
to a lack of coordination. In the 20th century, a new hope would arise for
workers on the farm and in the factory with the rise of the Progressive Era.

Correcting for paternal bias, I think Aidan passed the Ideological Turing Test with aplomb.  If there were a ten-essay line-up on this topic - nine sincere plus my son's - I doubt even 20% of history teachers could single him out.  In fact, I doubt the graders would do better than chance.  What say you?

P.S. Vigorous criticism is welcome as always, but comments that insult my kids will be deleted.

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I Win My Inflation Bet with Robert Murphy, by Bryan Caplan

Six years ago, Robert Murphy and I made the following bet:

At any point between now and January 2016, if there is a year/year
increase in seasonally adjusted CPI that is at least 10%, then you pay me at that time $100.

If we get to January 2016, and there has not been any 12-month
stretch in which the above happened, then I pay you $100 at that time.

The December data is not yet in, but unless an unhailed hyperinflation stuck last month, I've comfortably won the bet.  Indeed, cumulative inflation over the entire period from January 2010 to November 2015 was only 9.5%.

Why was I so eager to bet Bob on this?  The TIPS market, which consistently forecast very low inflation for many years.  And continues to do so.  The upshot is that I'm happy to make the same bet for the next six years, too.  Takers?

P.S. Respect Bob in the comments.

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Recession Bet, by Bryan Caplan

At the Cato Holiday Party, I hammered out the following bet with outgoing Cato intern Jackson Taylor:

$200 on whether or not America will have a recession, defined as two consecutive quarters of negative real GDP growth, in the next two years. Q4 of 2017 being the end of the period. But if that quarter happens to be negative, then we can look to the next one to see if we were or were not in the middle of a recession.

We agreed on even odds.  But since - per my terms for betting with people I don't know well - he pre-paid me, I added $25 in the event that he wins to cover foregone interest. 

Why do I think I'll win?  Base rates.  U.S. quarterly GDP growth is about 3%, and there's a high short-run positive correlation for quarterly growth.  So we're extremely unlikely to have negative GDP growth for the next two or three quarters.  The chance we actually get two consecutive quarter of negative growth before the clock runs out therefore seems well below 50% to me, making this a good bet.

In any case, I commend Mr. Taylor on his willingness to bet his beliefs.  He's a model for his generation - and all generations.

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Coercive Priors, by Bryan Caplan

I enjoyed scoffing at the 30% of Americans who want to bomb the fictional kingdom of Agrabah.  But for balance, note that multiple surveys - and a Penn and Teller episode - have found plenty of Americans who want to ban water - as long as you call it "dihydrogen monoxide."  A national representative survey on could easily find 30% support for such a ban. 

By construction, these policy proposals have no evidence in their favor.  Why then would anyone support them?  Prior probabilities.  Some people have the prior, "If we're discussing the bombing of a Muslim country, bomb it."  Some people have the prior, "If we're discussing the banning of a chemical, ban it."  And as a counter-survey points out, 44% of Democrats favor admitting refugees from the fictional kingdom of Agrabah.

What lesson should we draw?  If you're a strict consequentialist, no lesson at all.  If however you think there's a moral presumption against coercion, widespread coercive priors are a symptom of moral corruption.  Decent people say, "After careful examination of the facts and consideration of our options, we regretfully conclude that coercion is the only viable way to prevent great harm," not "Coercion - hell yes!"

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