David D. Friedman's Blog, page 11

Good News, Bad News

The bad news is that it looks as though Obama is going to win. The good news is that it looks as though Romney is going to lose.
As I commented a few elections back, the problem with electing a Republican is that he does about the same bad things the Democrat would have done, with about the same bad consequences—for which we, people who believe in the free markets he pretends to believe in, get blamed.

Physics, Economics, and Hurricane Arguments

I just finished an interview, via Skype, that will eventually be up on the web. One question I was asked was how knowledge of one field feeds into thinking about another. It occurred to me that I had an interesting example, a case where two unrelated fields, both of which I have worked in, showed that two different arguments for a conclusion in a third field were both wrong.
The three fields are physics, economics, and climate science. The conclusion, widely repeated, is that global warming will result in either more frequent or more violent hurricanes, or both. The conclusion may, for all I know, be correct. Two common arguments for it, however, are both wrong.
The first argument is that hurricanes get their energy from heat, so can be expected to be more violent or more frequent if there is more heat to feed them. That sounds plausible—provided you don't know the relevant physics. A hurricane is a heat engine, converting thermal energy to mechanical energy in the form of moving air. A heat engine does not, indeed cannot, simply convert thermal energy to work—one that did that and nothing else, say a ship that ran without fuel on the heat of the ocean, would be what is called a perpetual motion machine of the second kind and is impossible because it violates the second law of thermodynamics.
A heat engine works by taking heat from a high temperature source, turning some of it into work, and dumping the rest into a lower temperature sink. The amount of work it can get out depends not simply on the temperature of the source but on the temperature difference (if my memory from long ago studies is correct, actually the difference in 1/T) between source and sink. So if you warm both source and sink, air and sea in the case of a hurricane, there is no particular reason to expect that more work will be available, hence no particular reason to expect hurricanes to get either more frequent or more violent.
The second argument is empirical. It is claimed—I presume correctly—that on average you get more hurricanes in hot weather. The obvious conclusion is that if earth's climate gets warmer, we will have more (or more powerful) hurricanes. This time it is economics, in particular the history of ideas in economics, that points out the mistake.
Quite a long time ago, William Phillips, an economist from New Zealand, noticed an interesting empirical relation—on average, when inflation was high, unemployment was low. The relation got labeled the "Phillips Curve." The obvious conclusion was that one could hold down unemployment at the cost of tolerating some inflation. A variety of governments tried to implement such policies. Their failure in the U.S. got labeled "stagflation," a situation with both high unemployment and high inflation.
What was wrong with the Phillips Curve was not the empirical evidence but the causal conclusion. What was really going on, as the evidence is now widely interpreted, was that unemployment tended to be low when inflation was higher than people expected. That makes sense on a fairly simple model. If workers underestimate inflation, they will see wage offers as more attractive than they really are and so be more willing to accept them, less willing to wait for a better job, than they would be if they correctly estimated future inflation. If employers underestimate inflation, they will observe high demand for their products at current prices and see that as a reason to hire more workers and expand production.
Times when inflation is high are also, on average, times when it is higher than people expect, giving you the empirical relation Phillips had observed. But if a government tries to exploit the relation by maintaining an inflation rate of (say) five percent a year, after a while people adjust their expectations accordingly and the unemployment rate goes back up. Raise it to ten percent, unemployment falls briefly, people adjust their expectations, and unemployment goes back up again.
The same argument applies in the case of temperature and hurricanes. On average, times when air temperature are higher than normal are also times when the temperature difference between air and sea is larger than normal—the sea, after all, has enormous heat capacity, and so tends to average out short term fluctuations in air temperature. So the observation that hurricanes are more likely in hot weather does not imply that they would be more likely if both sea and air got warmer, as, in a global warming scenario, they do. 
None of this implies that global warming does not make hurricanes more frequent or more violent. I have seen empirical claims in both directions—both that hurricanes are and are not increasing—and do not know enough about the field to evaluate them. But it does mean that two apparently persuasive arguments for why we should expect such a relation are wrong. 
And in each case, I spotted the error because of my background in a different, in one case entirely unrelated, field.

Libertarian Books: Sales vs Downloads

I recently came across a web page listing libertarian books in order of their rating on Amazon.com; my Machinery of Freedom was number 70, not surprising given its Amazon rating.
The book is also available as a free pdf from my web page, so I checked the download statistics and was pleasantly surprised to find that it is being downloaded at a rate of almost two thousand downloads a month, plus about 300 more of the .prc (ebook) version. That got me curious—what would the list look like if it was restricted to books available as free downloads, ordered by the rate at which they were downloaded?
The Mises site has a lot of libertarian books on it. Are there any of my readers who are connected with that site and willing to report download rates, or who know of public information on the subject?

The Half-life of Euphemisms

For no particular reason, I was recently thinking about the futility of the euphemism strategy—replacing a word that has negative connotations in the hope that the change will get rid of the connotations. The problem  is that if, as is usually the case, the connotations are based on what the word means not how it sounds, they will rapidly transfer to the substitute. The record for sequence length may be held by what we now usually refer to as a toilet. I do not know what the earliest term was, but the string includes "privy," "guarderobe," "WC," "lavatory," "bathroom," "toilet," and probably more that I have missed.
A different example that I noticed a few years ago was "gay." It was introduced as a substitute for "homosexual" on the theory that the latter was an insulting term. The problem, as usual, was that what made it insulting was that many people regarded what it described as immoral, disgusting, or both—and although  such feelings may weaken over time, they are not eliminated by a change in label. 
Not only did the negative connotations spread to the new word, the effect was not limited to its euphemistic use—a fact I discovered listening to casual chatter on World of Warcraft. Posters routinely used "gay" as a general purpose negative term, often with no connection to homosexuality. "That's gay" meant, more or less, "isn't that terrible."
There used to be a theory known as the Sapir-Whorf hypothesis, according to which language shaped thought. As best I can tell, the supposed evidence for it was mostly bogus. The euphemism strategy is the applied version.
And doesn't work.

Anyone in Europe Want a Talk?

It looks as though I'm going to be visiting Spain sometime early next year. Given how long the trip is, I would like to combine that visit with something else, and one obvious possibility is giving a talk or talks somewhere else in that part of the world--which, seen from California, covers most of Europe. 
It occurred to me that a blog post might be one way of seeing if anyone was interested. Some of my talks can be found online.

Macro and Micro Predators, Territorial Behavior and the Tragedy of the Commons

There are no large organisms that support themselves primarily by preying on humans; so far as I know, there have been none for several thousand years. There are lots of microscopic organisms that do so. Why the difference?
One possible answer is that macro predators face a tragedy of the commons—the deer I don't eat today will not be around, and fatter, next season because someone else will have eaten it. Micro-predators, on the other hand, have an "incentive" to preserve their food supply, both because the bacteria or viruses on me are all close kin to each other and so face evolutionary pressure to act in their common interest and because I am much larger and much longer lived than they are, so that many generations of them are dependent on a single me. From which it follows that a lethal disease is a mistake. From an evolutionary standpoint, diseases want to live off me while doing as little damage as possible.
When I made this point to my wife, she pointed out that some macro-predators solve the problem the same way humans do—via property rights. Their version is territorial behavior. If a single tiger succeeds in monopolizing his chunk of jungle, it is in his interest to let the fawn grow up today to be a better meal next year. 
Which leads to an interesting conjecture. Territorial behavior solves the tragedy of the commons only if the prey species is not too mobile—if the fawn spared today is likely, as an adult deer, to still be within the range of the tiger that spared it. It would be interesting to know whether there is an inverse relation between the probability that a species is territorial and the mobility of its prey.
All of which gets me some distance from my original point, which was about humans, not deer. One special reasons macro-predators have reason not to choose humans as prey is that humans fight back. Until recently, we have had no similar ability with regard to micro-predators.
With regard to fighting back, the tragedy of the commons point is still relevant. A prudent macro-predator might hunt humans in a fashion sufficiently selective not to provoke any major retaliation, tiger hunts or the equivalent. But doing so means giving up today's meal for a benefit shared with the rest of his species, making the incentive for prudence a weak one.

Doing Well by Doing Good: Motel Version

The motel room I'm staying in has a note explaining that, in order to serve the environment by reducing the waste of water for washing things, it only changes linens every other day. In many other motels that I have stayed in, the corresponding note tells you how to signal, by where you leave your towels, whether you want them washed or are willing to reuse them.
I have no objection to the policy—we don't, after all, change our sheets at home every day. But I find it amusing to see the motel using a "we are good people doing good things" justification for a policy that saves them time and money at a (usually very small) cost to their customers.
Which makes me wonder what other examples there are of people doing things in their own interest which others might object to, and justifying them as serving some greater good.

The First Experimental Science?

I have been reading through a large and interesting 10th century middles eastern cookbook. Unlike most medieval European cookbooks, it gives, for many recipes, precise quantities of ingredients. Reading it, it occurred to me that cooking may have been the first experimental science and perhaps a stepping stone towards other sciences.
The experiments get done daily, in the process of feeding people. It's natural enough for a cook to try different herbs, different spices, a hotter or cooler oven, a shorter or longer baking time, frying or boiling instead of baking, any of a wide range of variants, in the process of trying to produce something better.
In medieval Islam, and presumably other places, tasty food was a luxury valued by the rich—which meant that their cooks had both the resources and incentive to try to make it still tastier. And while some of what such experiments reveal consists of subtle differences, some is quite striking. Start with a basic  bread recipe—flour, water, and some source of yeast. Add a significant amount of fat—butter or oil—and instead of bread you have pastry crust. Brown flour in fat, stir in liquid, and you have just invented a new way of thickening your dish. Separate eggs, beat the whites thoroughly, and the result is almost magical. Experienced cooks can think of other examples.

Wanted: Motel Occupancy Data Online

Suppose you are driving across the country—as, at the moment, we are. At some point each day, you reserve a motel room for the night. The earlier you reserve it, the more likely it is that you can get the room you want. Also the more likely it is that something that happens during the day, slow traffic due to construction, a long stop at some interesting place you didn't know existed, will change your schedule, leaving you with a room reservation an hour or two too far down the road.
Most of the time, the first half of the problem is imaginary; most motels, most nights, have empty rooms, so if you put off your reservation until you arrive at the motel the odds are pretty good that you will still have a bed for the night. 
Most of the time, but not all the time—a fact of which we were rudely reminded this evening. We were leaving Laramie Wyoming, heading east, planning to spend the night in Cheyenne, when I checked online for rooms. And discovered that Frontier Days, a major Cheyenne event, had filled every motel room in town. 
Which is why I am writing this in a motel room in Laramie.
It would be nice to have an easy way of spotting problems like the one we just encountered in advance. It might take the form of an online web page, perhaps a map, showing where in the country today's motel occupancy rate was close to 100%. If such a map existed, Cheyenne this morning would have shown as a bright red dot, Laramie--where it took two tries to find a motel with space, Laramie being a mere fifty miles from Cheyenne and Frontier Days--a pink one. We would have called ahead this morning and either planned in advance to stay in Laramie or changed our plans to push on to the next town after Cheyenne, about two hours further east.
The funny thing about this post is that I composed it, in my head, a day or so ago—before my theoretical problem turned out to be real.

Mitt Romney, The Ideal Experiment

There are lots of things that can be said for or against Romney's candidacy, but it has at least one attractive feature—it provides a direct test of Obama's theory of how to win an election. A central feature of Obama's political strategy has been what his critics refer to as class warfare—attacks on the rich, with the implication that they are taxed at lower  rates than other people (pretty clearly not true) and ought to be taxed at higher.
It looks like a sensible strategy. It appeals to people's desire to think well of themselves, and so to believe that those who have been more successful got that way through, at best, luck and do not deserve their (possibly ill gotten) gains. It also appeals to the very natural desire to get something at someone else's expense—hence Obama's repeated claims that he will deal with budgetary problems entirely at the expense of very rich taxpayers. 
Most voters are not rich, so one might expect them to be persuaded. On the other hand, the midterm elections and current polling numbers suggest that a lot of them are not.
For an experiment on how well that particular strategy is likely to work in the U.S., Romney is the ideal test bed. He is very wealthy. He got his money not by writing best selling novels, being a sports or movie star, or inventing and marketing new and obviously useful high-tech gizmos, but by buying and selling companies, an activity that few voters are likely to identify with and one easy for the other side to present in an unflattering light—as the other side, of course, has been doing.
If, despite that, Romney wins, it will be good evidence that the strategy does not work very well in present day America. Which would, I think, be good news.