Bryan Caplan's Blog, page 115

The Monopoly Motive, by Bryan Caplan

Today's the first day of GMU's fall semester, and for some reason I'm thinking about a class I haven't taught in years: Industrial Organization.  I wrote the notes when I was much younger and more enamored of theory.  Much of the class was a critique of the Structure-Conduct-Performance model so prevalent at Berkeley and Princeton.  Slogan version of the model, to paraphrase Orwell: "Many firms good, few firms bad."

While I hate to claim vindication by vaguely-defined events, the last two decades seem wildly incompatible with the S-C-P model.  Many of our favorite new firms have no close competitors.  What's the next-best-thing to Amazon?  Netflix?  Facebook?  Starbucks?  Even weirder, a sizable chunk of these apparent monopolies give their product away gratis.  Meanwhile, the spread of occupational licensing and rise of Uber have raised awareness of the elephant in the IO room: governments' deliberate effort to make markets less competitive than they would naturally be.  (And don't get me started on immigration restrictions).

Still, it's easy to see the intuitive appeal of S-C-P.  Namely: If you are a monopoly, you'll charge high prices, and hence produce low quantity.

The problem with S-C-P is that it ignores an even more intuitive truism.  Namely: If you want to become and remain a monopoly, you will produce high quantity, and hence charge low prices.

In short, the desire to become and remain a monopoly leads firms to do the exact opposite of what they'd do if their monopoly status were a law of nature - or the law of the land.

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Scott on Victimology, by Bryan Caplan

Scott against me on victimhood:

Or let's take another case; you decide to violate the law by jaywalking,
crossing the street in the middle of the block. You are struck and
killed by a car. (This happened to a Bentley student a couple years
ago.) Are you going to claim this person was a "victim" when she was
clearly violating the law? Um, actually yes, I sort of do view her as a
victim. Now you might say that my example is quite different from
infidelity. Well, pardon my French attitude, but aren't chainsaws also
kind of different?

I brought up chainsaws as an existence theorem.  If you admit that a guy who cuts off his own hand while trying to chainsaw your neck is no "victim," it's possible that other sufferers aren't victims either.  The point of the hypothetical isn't that victims don't exist, but the non-victims DO exist.

None of this means that people who suffer horribly as a result of committing minor offenses aren't victims.  I don't think that.  I jaywalk, and I don't deserve to die.  When people seriously suffer as a result of committing major offenses, however, I call that just deserts.

I know that utilitarianism says I'm wrong here.  Utilitarianism's denial of desert is another reason I'm not a utilitarian.
 
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Question-Begging and Victim-Blaming, by Bryan Caplan

Jonathan Ichikawa joins Jason Brennan in the philosophical symposium on the Ashley Madison hack.  He begins innocuously:

Here is a sadly familiar story: a teenage girl sneaks out of her
parents' house, goes to a party, and gets drunk. A man rapes her. Here
is another sadly familiar story: a black man in the wrong neighbourhood
shouts angrily at a police officer, who kills him. While this isn't yet
settled ground in the culture at large, I suspect that most reading here
will agree that victim-blaming in cases like these is both
morally repugnant and practically dangerous...

Victim-blaming comes in stronger and weaker forms--the stronger
straightforwardly asserts that the victim is responsible for the harm
undergone; we also recognize a weaker form of 'victim-blaming' where one
focuses inappropriately on the victim's actual or perceived
wrongdoings: she shouldn't have drunk so much; he should have been more
deferential to the police officer. Whether or not these criticisms are true, they are highly inappropriate under the circumstances...

Are these analogies apt?

In case it needs saying--I hope it doesn't--in the vast majority of
cases, I do not think that the harm the Ashley Madison victims are
suffering is equivalent to rape or murder; nor are Ashley Madison users
systematically oppressed in the way women and black people are. But
victim-blaming is problematic, even for lesser and more episodic harms... And the harm done to many of the current victims is by no means
trivial. Families are being broken up. People will lose jobs. It's not
at all hard to imagine that lives will be lost. For
many, it is all too easy to trivialize these harms and blame the
victims: 'I have no sympathy for cheaters,' or 'the real victims are the
spouses.'

Strangely, Ichikawa never addresses the obvious question: When would it be appropriate to "blame the victim"?  If you say, "Never.  Victims by definition should not be blamed," you'd be right.  But only trivially right.  Since victim-blaming is never appropriate, attacking "victim-blaming" is as pointless as attacking "evil."  The real question isn't "Should we do evil?" or "Should we victim-blame," but "What's evil?" or "Who's a victim?"

Constructing hypotheticals with blameworthy pseudo-victims is easy enough.  Imagine someone attacks you with a chainsaw because you failed to kiss his feet.  When he misses your head, he accidentally saw offs his own hand.  Telling him, "This is your fault" as he clutches his bloody stump is not victim-blaming.  Or to take a less egregious case, suppose a worker feigns sickness so he can go to the basketball game.  Co-workers spot him on t.v. in the audience and he gets fired.  If he decries is fate, "This is all on you" is the bitter truth.

Or, to get a lot less hypothetical: Imagine you swear a solemn vow of fidelity to your alleged one true love.  Then you get bored and sign up for an adultery website.  Your life seems fine until hackers steal your information and publicly post it.  Your spouse discovers your betrayal and divorces you.  The obvious victims in this story are the betrayed spouse, children, and other family members who trusted and depended on you.  Not you, the adulterer who's sorry he got caught.

Ichikawa does point to potentially mitigating circumstances:

While there are individual cases deserving of little sympathy--one
name in particular comes conspicuously to mind--I think it's a mistake to
have this reaction in general, for many reasons. One is that many of
the 33 million users whose privacy has been violated weren't cheaters:
they signed up, had a look around, and left and forgot about it; or they
were just there for the thrill of thinking about the possibilities,
with no intentions of any physical connection.

This is a weak defense when you reflect on the fraction of Ashley Madison customers who didn't cheat because they couldn't find anyone who wanted to cheat with them.  (In fact, it looks like Ashley Madison facilitated near-zero cheating, because near-zero women ever used their accounts!)  But even for all the purely thrill-seeking customers, dire familial consequences are a strong sign that merely signing up is a major betrayal. 

Suppose you ask users with no intention of cheating, "What would your spouse think if they knew what you were doing?" They answer, "They'd want to divorce me."  The obvious reaction is, "Then it's a major betrayal, you shouldn't do it, and if you get caught you only have yourself to blame."

Some were in ethical open
relationships;

A solid counter-example.  But if they're really in open relationships, there's little reason to fear dire relationship consequences.

[S]ome were closeted LGBTQ people who needed discretion.

Conventional marriages are solemn vows of fidelity and commitment.  If that conflicts with your LGBTQ orientation, you should marry someone that wants an unconventional marriage, or stay single - not enter a conventional marriage and cheat.  "What if you have to marry under false pretenses to save your life?" is a fair question for Saudi LGBTQs to pose, but it's bait and switch for all the LGBTQs who's lives are patently not on the line.

And even when we're talking about the actual adulterers, it's a serious
lack of empathy broadly to vilify them or consider them unworthy of
privacy protections. People cheat for many reasons, some of them very
understandable.

People also feign illness to attend basketball games for many reasons, some of them very understandable.  Like, "My job is boring and I like basketball."  But we appropriately give their reasons little weight.  Conventional jobs provide two recourses for disgruntled employees: negotiate with your boss or quit.  Conventional marriages provide two recourses for disgruntled spouses: negotiate with your partner or divorce.  If you find these rules draconian, negotiate a prenup or don't marry.  Don't pretend you want the conventional deal, then break it because your reasons are very understandable.



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Good News That Should Have Been Kept Secret, by Bryan Caplan

I've long scorned mainstream media for their relentless, misleading negativity.  Now the NYT publishes a gloriously positive story - and I wish it hadn't.  This is Huemerian civil disobedience in action:

The
tens of thousands of migrants who have flooded into the Balkans in
recent weeks need food, water and shelter, just like the millions
displaced by war the world over. But there is also one other thing they
swear they cannot live without: a smartphone charging station...

Technology
has transformed this 21st-century version of a refugee crisis, not
least by making it easier for millions more people to move...

[...]

In fact, the ease and autonomy the apps provide may be cutting into the smuggling business.

"Right
now, the traffickers are losing business because people are going
alone, thanks to Facebook," said Mohamed Haj Ali, 38, who works with the
Adventist Development and Relief Agency in Belgrade, Serbia's capital -- a major stopover for migrants.

Originally
from Syria, Mr. Ali has lived in Belgrade for three years, helping
migrants and listening to their stories. At first, he said, most
migrants passing through Serbia had paid traffickers for most or all of
their trip.

But
as tens of thousands completed their journeys, they shared their
experiences on social media -- even the precise GPS coordinates of every
stop along their routes, recorded automatically by some smartphones.

For
those traveling today, the prices charged by traffickers have gone down
by about half since the beginning of the conflict, Mr. Ali said.

Why do I wish this story hadn't been written?  Because laws this evil are made to be broken - and NYT-level publicity raises public pressure to make immigration enforcement even more draconian than it already is.

P.S. Of course now that the cat's out of the bag, I see no harm in further discussion here on EconLog.

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Markets Without Limits and Ashley Madison, by Bryan Caplan

As a rule, news is a distraction from worthy intellectual pursuits.  But Jason Brennan manages to thoughtfully filter the Ashley Madison hack through the lens of his new Markets without Limits (co-authored with Peter Jaworski):

Most people believe what Ashley Madison did was wrong, because they
profited from immorality. I agree what they did was wrong, but the
problem wasn't that they profited. Peter Jaworski and I have a book on commodification, Markets without Limits,
coming out next month. Our thesis is that any service or good that you
may give away for free, you may sell for money. The only types of goods
and services that are not properly objects of sale are the things you
shouldn't do or have anyways. In our view, most of the objections to
commodifying this or that are really objections to how the thing is sold, not what is sold.

So, for instance, we agree that child pornography and nuclear weapons
ought not be bought and sold, but that's because people ought not have
them in the first place. If people were distributing these goods for
free, it would still be wrong...

Ashley Madison provides a nice illustration of our central thesis... [T]he problem with Ashley Madison is not primarily that it
helps people break promises for profit. It's that it helps people break promises,
period. If Jaworski and I were to set up the Help You Secretly Cheat On
Your Spouse Charitable Foundation, an NGO that matches would-be
paramours, the service would also be wrong. The wrongness here doesn't originate in the market, in the buying and selling of the service. It originates in the activity itself.

In surveying the various books on the limits of markets, we find that
about half of the so-called "contested commodities" or "noxious
markets" that the authors discuss concern cases like Ashley Madison,
where the good or service in question is something people should not
have or do anyways. Sure, if some behaviors are wrongful or some
products bad, then we generally don't want to industrialize providing
them. Still, we need to be clear what the issue is. Markets in bad
things are bad because bad things are bad, not because markets are
introducing badness where there wasn't any.

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The Denunciation Deficit, by Bryan Caplan

Some intriguing Psychology & Economics of the media from post-libertarian Joshua Hedland:

"If Muslims are peaceful, why don't they condemn terrorism?"

This is a common question in some philosophical corners in response to headlines about attacks by radical Islamists.

After providing a long long list of Muslim condemnations of terrorism, Hedland explains the origin of the perceived denunciation deficit:

Denunciations about terrorist attacks face multiple handicaps. First.
people being killed tends to attract more attention than people
talking. The latter is less likely to be introduced as "breaking news"
or front-page headlines. Regardless of how prominently it is introduced,
it is less likely to propagate through clicks, shares, comments, and
general discussion.

Sometimes people talking about big events can attract more attention due to the connection to the big event. But a second
handicap is that Western media and its Western consumers tend to pay
more attention to Western people, especially those who are Important.
That's how Obama not going to France - a non-event that would
normally register even less attention than Obama talking about something
- was apparently a bigger deal last week than hundreds or thousands of
Nigerians killed by Boko Haram. If dying Africans can't compete with Obama's travel plans, what hope do talking Arabs have?

A third handicap is that we tend to pay more
attention to events that elicit emotion than events that absorb emotion.
An article about someone condemning violence - if it finally manages to
make it past the other handicaps - is less likely to elicit much
reaction. Well, duh, denouncing violence is what we would expect any
normal person to do. Normal expectation satisfied, emotion absorbed, not
much impulse to share that story with others.

Hedland concludes:

It can be simultaneously true that there are Muslims condemning violence
done in the name of Islam and that the efforts of those voices should
be increased. But I think people in good faith, if they really
want those moderate voices to be more successful, should not respond
with derision, but by recognizing the handicaps faced by those moderate
voices and helping them out by encouraging and amplifying their voices.

Wise advice despite my prescription for fighting statistical discrimination against your group.

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The Happy Hypocrisy of Unpaid Internships, by Bryan Caplan

Let me begin, like virtually every writer on unpaid internships, by blockquoting the Department of Labor's rules about such positions' permissibility.  Unpaid internships in the for-profit sector are allowed as long as all of the following are true:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Unlike virtually every writer on unpaid internships, I'm not going to suggest that many unpaid internships in the for-profit sector are illegal because they run afoul of one or more of these rules.  Instead, I'm going to categorically state: No unpaid internship in the for-profit sector ever has or ever will satisfy these rules!  Why?  Because Rule #4 is absurd beyond belief.

Simple question: Why on earth would a for-profit firm hire interns from whom the firm derives "no immediate advantage"?  Imagine you're a human resources officer at a firm and you want to launch an unpaid internship program.  How would the Board of Directors respond if you declared, "I propose hiring unpaid interns from whom we derive no immediate advantage whatsoever"?  What would they think if you added, "Oh, and these interns will occasionally impede our operations"?  The Board's obvious reaction would be, "We're a business, not a charity."  No profit-maximizing firm would want to hire unpaid interns under the written rules.

The absurdity of Rule #3 isn't quite as blatant, but no firm complies with it either.  Anything useful an intern does could have been done by a regular employee.  Don't believe me?  Fire the interns and see who picks up the slack.  Of course, if it's compliant with Rule #4, no intern can do anything useful for the firm anyway.

Mainstream writers on unpaid internships take it for granted that rule-breaking internships must be stopped.  Many would be delighted to use my observations to ban unpaid internships altogether.  My point, of course, is the opposite: Rules this stupid are made to be broken.  Hypocrisy and double-talk shield us from the malevolent folly of the Department of Labor. 

What makes these rules so stupid?  Simple: Internships are vocational education.  If schools can educate students in exchange for their tuition, why can't businesses educate students in exchange for their labor?  No reason, just anti-market bigotry. 

The real problem with unpaid internships is that we're not hypocritical enough.  Regulators look the other way when businesses train college students for college-type jobs in exchange for their labor.  But the rest of the labor market is out of luck.  If McDonald's set up unpaid internships for high school dropouts, regulators would come down on it like a ton of bricks.  As a result, the only people who can get on-the-job training are those who need it the least.  Instead of banning unpaid internships, we should make them available to everyone.

P.S. Does this mean we should abolish the minimum wage?  Well, if there's a good reason why trainees should get either $0.00 or $7.25 but nothing in between, I'd like to hear it.

P.P.S.: Nathaniel Bechhofer points out that John Stossel made a related point some years ago...

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Patriotism as Political Correctness: The Conquest of America, by Bryan Caplan

I scorn political correctness in all its forms - and its most widespread and successful form is patriotism.  Think about it: Schools take millions of kids, then endlessly tell them they all belong to the same glorious blameless imaginary community.  Any child who thinks otherwise - who insists that his so-called "fellow Americans" are mere strangers with no special claim on his time or affection - is a pariah.  The patriotism of political correctness is so powerful that only a few iconoclasts treat it as controversial.

The good news: Contrary to most of its avowed foes, political correctness isn't as bad as it used to be.  When I was a kid, I saw this video - "Elbow Room" - dozens of times on t.v.  It first aired in 1976 for the bicentennial.  Don't read any irony into it, for there is none.

And just for fun, count the total number of Indians who appear.



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Policies that Affect Growth Rates: Question for Scott, by Bryan Caplan

Question for Scott: Suppose a government executed anyone who created or publicized any new idea.  Wouldn't that affect output growth - and not just output level?

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The Welfare State, Migration, and the Global Race to the Bottom, by Bryan Caplan

I'm now reading the 3rd edition of David Friedman's Machinery of Freedom .  From the new material:

The argument against
immigration takes the level of redistribution as given and points out its effect on who
migrates where and why. One should also consider causation in the opposite direction, the effect of migration on levels of redistribution. The harder
it is for people to move from one country to another, the more politically attractive
redistribution is. The possibility of redistribution tends to
increase inefficient migration, but the possibility of migration tends to
decrease inefficient redistribution.

Consider a government in a world of free migration that is trying to decide whether to
increase or decrease the level of welfare. Giving people money may be
politically attractive, but collecting the taxes to pay for it is not. A ten
percent increase in levels will attract indigents from abroad, swell the
welfare rolls, and increase costs by much more than ten percent. A ten percent
decrease will cause some indigents presently on welfare to migrate to countries
with more generous policies, reducing costs by much more than ten percent. The
existence of easy migration makes welfare state policies less attractive, with
the result that levels of redistribution are likely to be lower.

While I have not seen this argument used in discussions of international
migration, it is a commonplace in discussions of interstate migration. American
supporters of the welfare state routinely argue that welfare ought to be federal rather than state, precisely because state welfare is held down by the
threat of interstate migration. Indeed, one possible explanation for why the
U.S. moved more slowly than European countries towards a welfare state is that
European redistribution was by national governments with control over
immigration, whereas American redistribution was largely by state governments
without such control. [emphasis mine]

Personally, I've long been skeptical that the interstate "race to the bottom" heavily constrains state-level redistribution.  I almost never hear non-economists complaining that out-of-state residents are taking advantage of their state's poverty programs.  Why don't they?  Because modern Americans are Americans first, residents of their states second.  Getting really angry at out-of-state Americans is unAmerican.  The race to the bottom probably operates at a subtle level and in extreme cases, but that's about it.

If my story is right, though, the "race to the bottom" should be much more powerful at the international level.  Non-economists routinely complain that foreigners take advantage of America's poverty programs. And getting really angry at people from other countries is very American.  No offense, Americans; getting really angry at people from other countries is also very French, German, Swedish, British, Danish, Russian, Chinese, and Indian.  Friedman's conjecture should trouble multicultural social democrats.  Libertarians, however, should cheer the misnamed "race to the bottom," because the welfare state is a giant mistake and a grave injustice.

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