David D. Friedman's Blog, page 18

Celtic Wanderings?

My current writing project is a book on legal systems very different from ours, based on a seminar I have taught for some years at SCU; my current chapter drafts are webbed for a workshop I am doing at George Mason this fall.
The legal systems I have done chapters on so far include ancient Irish law (c. 6th century) and traditional Somali law. Surprisingly enough, they have several features in common. In both, one consequence of injuring someone is the legal obligation to provide your victim with sick-maintainance—hospitality and medical services until he recovers. 
In the Irish system the kin-group called the fine, consisting of all descendants in the paternal line of a common great-grandfather,  is responsible for seeing that its members pay any fines or damage payments they owe or, if they don't, paying for them. In the Somali system the kin-group called the juffo, consisting of all descendants in the paternal line of a common great-grandfather,  is responsible for some but not all fines owed by its members, the rest being the responsibility of the jilib, a group of several related juffos.
All very suspicious. The Celts wandered pretty far but, so far as I know, they never made it to the horn of Africa. Looking at it from the other side there are people referred to as "black Irish," but I don't believe ...   .

Drones, Geneva Convention, and Other Ambiguous Goods

"Any development that makes war appear to be easier or cheaper is dangerous and morally troubling. It lowers the political threshold of war. It threatens to weaken the moral presumption against the use of armed force." David Cortwright, writing at CNN.com on drones.
It is a legitimate argument, but its application is wider than may be obvious. The Geneva Conventions, for instance, are designed to make war cheaper—not in dollars but in human costs. The pre-Napoleonic rules of parole, under which a prisoner of war could give his word not to try to escape and then spend his imprisonment in the town inn instead of the much less comfortable prison, or even give his word not to fight until exchanged and then be sent home, were designed to make war less costly. 
Any such change has two effects. One is to reduce the cost, the amount of damage to things that matter to human beings, including human beings themselves, of warfare, which is good. The other is to increase the amount of warfare, which is bad. There is no theoretical basis to say, in general, which effect is larger—it depends on  the elasticity of supply of war.
In my Law's Order, I discuss [search for the word "duress" in the chapter] the same issue in a different context—whether contracts made under duress ought to be enforceable. When the mugger threatens to kill you if you don't pay him a hundred dollars and you pay with a check,  should you be free to call up your bank and cancel payment once he is out of sight? Being able to pay  him means that when mugged you don't get killed for failure to offer your mugger enough to let you go. But it also means that mugging is more profitable, so more of it happens.

In that particular case, I am pretty sure that making the contract enforceable has, on net, negative consequences. But there is no good reason to suppose that the same is true for innovations, technological or otherwise, that make war less costly.

How to Lie With Statistics: Tax Rates

A good deal of the recent rhetoric in support of Democratic proposals for raising taxes is designed to make it sound as though rich people pay federal taxes at a lower rate than everyone else. That, as one can easily check by looking at the published figures from the Congressional Budget Office, is not only false but wildly false. Most people in the bottom half of the income distribution pay no federal income tax at all, although they do pay payroll taxes and, arguably, some of the cost of corporate income tax passed on in higher prices or lower wages. On the CBO calculations, the ratio of total federal tax paid to income rises pretty much monotonically with income.
The less extreme claim, which has been getting a good deal of press of late, is that a quarter of the households with an income of at least a million dollar a year pay taxes at a lower rate than the ten percent of those with incomes of under $100,000 who pay at the highest rate. 
I have not seen any detailed explanation of how those numbers are calculated, but presumably they are based on income and tax for a single year. If so, although the claim may be literally true, it is also highly misleading—an elegant example of how to lie while telling the truth.
Income and tax liability vary for each individual from year to year. If you take a large capital loss one year, part of it carries over to reduce your taxes, but not your income, in the next year. If you have a large capital gain in one year, your taxes go up for that year but your average tax rate goes down, since capital gains are taxed at a lower rate than ordinary income. 
Some of the 25% of high income taxpayers paying at the lowest rate are people who regularly pay less taxes than most, some are taxpayers who happen to be paying a lower rate than average this year. Some of the 10% of middle income taxpayers paying at the highest rate are people who regularly pay more taxes than most, some are people who happen to be paying a higher rate this year than most years. So the widely reported calculation overstates, by how much I have no way of knowing, the spread of both distributions, both the number of middle income taxpayers who on average, year after year, are taxed at a higher rate than the bottom 25% of high income taxpayers and the number of high income taxpayers who on average are taxed at a higher rate than the top 10% of middle income taxpayers.
If the logic is not clear, consider betting on the races. Each day, a significant fraction of the bettors—say a quarter—make money. A few them make money because they really are much better than most at guessing which horse will win. Most of them make money because that was they day that they happened to be lucky. If you looked only at the day's results, you would conclude that the top quarter make money at the races. If you looked at the year's results, you would come up with a much smaller number.
Just as, if you looked at the tax rates paid by any group of taxpayers over a period of years, you would get fewer paying a rate that was unusually high or unusually low than if you look at them for a single year.

And for readers interested in a more general account of how to lie with statistics, I have a book to recommend.

Are the Amish Anarchists?

I have been reading up on the Amish for one chapter of the book on legal systems very different from ours that I'm currently working on. They provide an example of what I think of as an embedded legal system—a group that is under the authority of an external legal system, but also has its own legal system which it succeeds in enforcing on its members. Other examples are modern gypsies and Jewish communities during the diaspora, which were often given the right to impose Jewish law on their members by their gentile rulers.
It occurred to me that one could view the Amish as a working example of a form of anarchy. It is a very strange form, since the rules that the Amish are under are considerably more constraining—including rules on what styles of clothing they can wear, rules against owning automobiles or flying on airplanes, and much else—than the rules the rest of us are under. But those rules are all voluntarily accepted, and the system that generates them may reasonably be viewed as a competitive system of private law.
To expand on that, for readers not familiar with the Amish... . The only level of Amish "government" with any authority is the congregation, typically made up of about thirty to forty households. Its authority is over individuals who, as adults, have chosen to swear to accept its rules. The only punishment it can impose is shunning—the refusal of members of the congregation to associate in various ways with a member who has been excommunicated. Members, including excommunicated members, are free to resign from their congregation and join any other congregation that will accept them, or drop out of the Amish sect entirely.
The rules—the ordnung—vary from one congregation to another and change over time. In some settlements the congregations are, in effect, miniature territorial sovereigns, so if a member of one congregation wants to shift to another, perhaps because its rules are less (or more) strict than the rules of his current congregation, he has to physically move, although often not very far. In other settlements, especially ones where there are congregations with a considerable range of different versions of the Ordnung, congregations overlap, so you can switch congregations while remaining in the same location.
It's true, of course, that the Amish are under the rule of the U.S. (or, for a smaller number, Canadian) government. But they receive very few services from government, since they are unwilling to accept most of the conventional forms of government aid and, as pacifists, are unwilling to report crimes against themselves to the police or sue in the government courts to collect debts. Off hand, the only significant benefit I can think of that they get is protection against foreign invasion. And, on the other hand, governments at various levels imposes sizable costs on them, in the form of taxes that (with the exception of Social Security) they have to pay and regulations.
So I think they provide pretty good evidence of at least one form of (very structured) anarchy that works.

Mormons, Fundamentalists, and Critics

Various people of late have been going back and forth over claims that Mormons are a cult and are not Christians. What strikes me is how much better press Mormons get, in the political context, than evangelical fundamentalists. If you look at the actual beliefs of the two groups, the official doctrines of the Church of Latter Day Saints are at least as nutty as those of fundamentalist groups that deny evolution, believe humans and dinosaurs coexisted ten thousand years or so back, and get routinely mocked for those beliefs. 
The LDS claims that if you live a good life you will eventually become a god with a universe of your own to run, or that your ancestors can be converted post-mortem and so saved, are a bit odd, but there is no way of proving they are false, any more than one can prove false the beliefs of those who expect the second coming of Christ real soon now. But the belief that there was a lively civilization in the New World long before Columbus, and one that fits the description in LDS scripture, is inconsistent with what archaeology tells us about the relevant history. That surely ranks with the more direct versions of creationism as a denial of accepted scientific views.
The odd beliefs of fundamentalist Christians are an issue at the moment for Republican political candidates, many of whom sound as though they agree with them, raising the question of whether they actually believe or only pretend to. But I have not noticed any of the people who pick on candidates such as Palin or Bachmann for their religious views asking whether Romney and Huntsman really believe in the pre-Columbian "history" that their church proclaims or are being prudently silent on the subject.

Random Thoughts on Education

Part I: Marshall as Textbook
In a recent book review in The New Republic, Robert Solow writes:
"When I first studied economics in 1940, we were not given Marshall to read as a textbook; it would probably have been an improvement if we had."
Although I was not literally given Marshall to read as a textbook, I came pretty close. My first position as an economics professor was at VPI, and while there I ended up, over a period of years, teaching a wide range of courses. It occurred to me later that my doing so might have been, not an accident, but a deliberate policy by James Buchanan, who was the dominant figure in the department. I had never taken an economics course for credit, and teaching things is a good way of learning them.
One of the courses I taught was the history of economic thought, which I taught as economic thought not as history. As I put it later when teaching the same course at UCLA, I wanted the students to imagine that they were graduate students in economics getting ready for their prelim exams, the year was 1776, and The Wealth of Nations was the latest thing in the field.
I did not learn all that much economics from Smith, a brilliant writer and thinker but a somewhat muddled economic theorist. But the other two figures I focused on were David Ricardo and Alfred Marshall, and I learned quite a lot of economics from them. One result is that, to this day, I teach the concept of economic efficiency in terms of Marshall's version rather than the later, more fashionable, and (in my view) inferior approaches associated with Pareto, Hicks and Kaldor.
Part II: How Kids Learn to Write Nowadays
Talking with my younger son on the phone, he mentioned that he was planning to write and web an account of his recent playing of Rome: Total War, a computer game he is fond of—and do it as the work of a later historian describing the rise of whatever empire established itself as victor in the course of the game. His sister, as of a few years ago, spent a good deal of time writing up and webbing battle reports describing events in World of Warcraft. I don't think either of them has gotten into fanfic, the practice of writing stories set in the world of Star Trek, or Harry Potter, or Lord of the Rings, but a lot of other young people have. And quite a lot of the people I know online who write novels, including some who get them published, started out running role playing games.
All of which suggests to me that English classes, in high school and college, play a much smaller role in teaching this generation how to write than their teachers might suppose.

Random Thoughs on Education

Part I: Marshall as Textbook
In a recent book review in The New Republic, Robert Solow writes:
"When I first studied economics in 1940, we were not given Marshall to read as a textbook; it would probably have been an improvement if we had."
Although I was not literally given Marshall to read as a textbook, I came pretty close. My first position as an economics professor was at VPI, and while there I ended up, over a period of years, teaching a wide range of courses. It occurred to me later that my doing so might have been, not an accident, but a deliberate policy by James Buchanan, who was the dominant figure in the department. I had never taken an economics course for credit, and teaching things is a good way of learning them.
One of the courses I taught was the history of economic thought, which I taught as economic thought not as history. As I put it later when teaching the same course at UCLA, I wanted the students to imagine that they were graduate students in economics getting ready for their prelim exams, the year was 1776, and The Wealth of Nations was the latest thing in the field.
I did not learn all that much economics from Smith, a brilliant writer and thinker but a somewhat muddled economic theorist. But the other two figures I focused on were David Ricardo and Alfred Marshall, and I learned quite a lot of economics from them. One result is that, to this day, I teach the concept of economic efficiency in terms of Marshall's version rather than the later, more fashionable, and (in my view) inferior approaches associated with Pareto, Hicks and Kaldor.
Part II: How Kids Learn to Write Nowadays
Talking with my younger son on the phone, he mentioned that he was planning to write and web an account of his recent playing of Rome: Total War, a computer game he is fond of—and do it as the work of a later historian describing the rise of whatever empire established itself as victor in the course of the game. His sister, as of a few years ago, spent a good deal of time writing up and webbing battle reports describing events in World of Warcraft. I don't think either of them has gotten into fanfic, the practice of writing stories set in the world of Star Trek, or Harry Potter, or Lord of the Rings, but a lot of other young people have. And quite a lot of the people I know online who write novels, including some who get them published, started out running role playing games.
All of which suggests to me that English classes, in high school and college, play a much smaller role in teaching this generation how to write than their teachers might suppose.

Donating to Both Sides: A Research Proposal

It is, I gather, fairly common for corporate donors to give money to both candidates in some two candidate races. Assuming that is correct, the question is why.
Both donations can't be intended to influence the outcome of the election, since they push it in opposite directions, so presumably the purpose is to buy influence with the winner. But doesn't the donation to the loser reduce the donor's influence with the winner, just balancing an equal donation to the winner?
I can see two possible answers. One is that the information is not always public, so the winner may not know about the donation to the loser. I don't think that's been possible in recent elections, but I'm far from expert on the subject.
The other possibility is that the money isn't intended to be spent on the election. It's my understanding (those who know more are welcome to correct me) that, under some circumstances, a candidate who retires is allowed to keep the balance of past campaign donations. If so, one would expect the pattern of donating to both candidates to be most common when at least one of them is near the end of his career. 
Which suggests some interesting possibilities for research.

Should We Hope for a Republican Sweep?

Like many other people unhappy with the administration, I have been worried by the apparent inability of the Republicans to find a candidate who is both electable and likely to make a significant improvement, and worried that they may end up losing an election that they ought to win. Thinking about it this evening, it occurred to me that perhaps that isn't such a bad outcome.
Suppose the Republicans convert Obama's current unpopularity into majorities in both House and Senate, but manage to lose the presidential election. Would that outcome be obviously worse than one in which they won everything?
There is much to be said for divided government. Consider what happened the last time the Republicans had both Congress and the White House.
Or, for that matter, the last time the Democrats did.

Could There Be a European War?

There are lots of things that the supporters of the Euro, and the Common Market, and the broader project of which both are a part, hope to get from increased European unification. But the one big thing is future peace. The first half of the 20th century featured two horrific wars, originating in and largely fought in Europe, largely between European states. Behind all the talk about the convenience of a common currency or the advantages of free trade within the EU is that memory, and a burning desire that it not happen again.
Which raises two interesting questions, to neither of which I can offer a confident answer:
1. If the EU dissolves, with countries going back to separate currencies and separate trade policies, is there any significant risk of a third major European war within, say, the next fifty years? My gut reaction is that there is not, but I do not have any real support for it.
2. If the EU is maintained and European integration increased, perhaps along the lines that the supporters of the Euro have been urging as necessary to save Greece, Italy, Ireland, and Spain, is there any significant risk of a third major European war within, say, the next fifty years? 
Before dismissing the possibility out of hand, it is worth considering what came out of the "integration" of the American states. I am not sure how much of a stretch it is to imagine a future where some of the countries, such as Germany, feel that they are being outvoted and exploited by others, such as Greece and Italy, through the institutions of a United States of Europe, with the tension eventually exploding into civil war. Each side would, of course, start out confident that once it was clear they were willing to fight the other would back down.
(Might make an interesting sf plot.)
Which suggests a third question: Does European integration make a major European war less likely, or more?
Comments welcome.