David D. Friedman's Blog, page 20

The Syrian Bodycount Puzzle

"a crackdown that, by the count of some human rights groups, has killed more than 2,000 people. Hama, the victim of one of the bloodiest moments in modern Middle East history, is a national symbol of violent repression. The military crushed an Islamist revolt there in 1982, killing at least 10,000 people. The assault in Hama last week, in which more than 200 people were killed, inflamed sentiments across the country" 

             (recent news story)
Syria has been in revolt for months. News stories describe attacks by tanks and troops on nonviolent protesters. At least one story on the recent attack on Hama made it sound as though the city had been bombed out and destroyed. 
Checking Wikipedia, the population of Hama is 696,863. 200 people killed comes to fewer than one in 3000.
Which raises an obvious puzzle. The figures on bodycounts are coming from the opposition, which one would not expect to minimize them. Yet they seem surprisingly small, given the scale of the violence.
Which makes me wonder if, at this stage of things, a lot of what is happening is bluff—security forces killing a handful of demonstrators in order to shut down demonstrations, while refraining from the sort of large scale violence of which they are surely capable for fear of setting off a level of conflict with which they cannot adequately deal.

Probability of U.S. Default

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press.

 The first sentence is true. The second is not.
Suppose that avoiding default requires money creation on a scale that would set off an inflation rate of fifty or a hundred percent a year. The U.S. could--but would it? That would be a de facto default although not a de jure one, since creditors would be being paid back in inflated dollars. And it would have all the added costs of inflation.
Would Greenspan advise doing it? Unlikely.

Reality Based Community?

I was struck by a recent post to a NYT blog on the subject of "What Happened to Obama." The author is identified as a psychology professor. His thesis is that Obama should have told a story to the American people  that made sense of what happened. The story he should have told is the standard left of center view of who did what and was at fault. No mention of the fact that the collapse started in an industry dominated by two giant firms, both created by the federal government, both (along with private firm) long pressured by politicians of both parties to make it easier for people to buy houses with borrowed money.
Three things struck me about the piece. The first was that depended on the author's opinions about subjects in which he had no expertise—in at least one case, in which his factual belief was strikingly false ("a deficit that didn't exist until George W. Bush gave nearly $2 trillion in tax breaks largely to the wealthiest Americans and squandered $1 trillion in two wars." I suppose he could mean that there was at least one post-war year in which the budget was in surplus—but that would require him to care about facts, not stories.) He simply took for granted, as almost everyone on his side does, the 1960's Keynesian story that deficits reduce enemployment—despite the fact that the predictions the administration made based on that theory have not turned out to be true.

The second thing was the confidence with which he wrote. He has no doubt that his opinions on subjects in which he has no professional expertise are correct—presumably because they fit his political views and those of the people he knows. He probably does not even know that there are professionals in the field, including ones with Nobel prizes, who are skeptical of the economic theories he takes for granted.
The third and most interesting was the focus on "story." As he put it, "in similar circumstances, Franklin D. Roosevelt offered Americans a promise to use the power of his office to make their lives better and to keep trying until he got it right."

It apparently did not occur to him that reality matters—that if you give the patient the wrong medicine he may die, even if you have a good story about why it is the right medicine. It apparently did not occur to him that the outcome of the policies FDR followed was the longest and worst depression in U.S. history. Which might have had something to do with the relation between FDR's story and the reality it claimed to describe.
Hence the title of this post. The blogger in question apparently does believe what some unnamed Bush official is asserted to have claimed—that one makes one's own reality. If you only have a good enough story ...  .

The Cost of Healthy Eating: Incompetence or Fraud

According to a recent article, "A new analysis shows healthy eating can really run up a grocery bill, making it tough for Americans on tight budgets to meet nutritional guidelines. The study estimates that getting the average American to the recommended target of just one nutrient, potassium, would cost an additional $380 each year." 
Anyone who believes that should Google for "potassium supplement"—priced at $9 for a 120 potassium iodide tabs of 32.5 mg each from one source for $9, 100 caplets of 99 mg of potassium gluconate for $6.87 from another, and about ten cents a pill—with calcium and magnesium thrown in for free—from a third.
The trick is quite simple. The article pretends to be about what healthy eating costs. It is actually about what people who eat healthily spend. Higher income correlates with better education, so people who spend more also, on average, spend better, nutritionally speaking. That is no evidence that good nutrition costs more—and, as a comparison between the price of spareribs and the price of pork and beans or fruit salad would demonstrate, it often does not. Precisely the same analysis could be used to show that people who spend more on rent eat better too.
It is possible, although not likely, that an author could be sufficiently clueless to make the argument and believe it. But not this author. Reading the article it is pretty obvious what axe is being ground.
And I have difficulty believing in an author who thinks that if only the prices of apricots and raisins were sufficiently subsidized, people who currently prefer Happy Meals would switch to fruit salads instead.

Obama and Taxes: If the Truth is Too Complicated ...

President Obama's rhetoric in favor of tax increases is heavy on claims that the rich fail to pay their share, light on facts. Most of it is put in terms of claims about the federal income tax. Which is strange, since the federal income tax is paid almost entirely by high income taxpayers.
For details, see the figures provided by the Congressional Budget Office. For 2007, the latest year they cover, the bottom 60% of the income distribution paid about 1% of federal individual income taxes, the top 20% paid about 86% of the total and the top 1% almost 40%—the opposite of what Obama's rhetoric implies.
These figures are, however, misleading in two different ways. The federal individual tax is heavily weighted towards high income taxpayers, but it only produces about 40% of federal tax revenue. Payroll taxes produce about the same amount and, because they are paid only up to a maximum, the top 20% of the income distribution pays a lower share of its income in that form than the quintile below it, making the combined effect considerably less graduated than the figures on the income tax alone suggest.
The second problem should be obvious to an economist but seems to be invisible to almost everyone else. It's natural to think of the size of the check I write to the IRS on April 15th as the measure of the cost to me of the income tax—natural but wrong. 
To see why, suppose that the demand for high wage workers—top surgeons, lawyers, executives—is very inelastic. High taxes on such workers reduce the number of suitably talented people willing to enter the field, with the result that customers in need of their services bid up their wages. In the limiting case of perfectly inelastic demand, the result is to transfer all of the cost of taxation from those who hand over the money to the consumers of their services.
The same issue arises for other taxpayers as well. Payroll taxes take the form of a tax "paid by" the employee and another tax "paid by" the employer, but both are actually a tax on the same transaction—hiring labor. If an employer owes a thousand dollars in wages to an employee, it is of no economic significance whether the fraction that goes to payroll taxes is taken out by the employer before he hands over the money or by the employee after.
Who bears the actual burden of taxes depends on elasticity of supply and demand. If the labor supply is elastic, if the number of people willing to work is not very sensitive to wages, the burden ends up on the employees. If the only way of getting more workers is to pay them more and employers are willing to pay whatever it takes, on the other hand, wages rise by about the amount of the tax and the burden is born by the consumers of what the workers produce. 
Similar problems arise if one tries to estimate the real effect of other sources of revenue, such as the corporate income tax. Corporations are legal people but not actual people, so taxes they "pay" end up reducing the consumption of customers, employees, or stockholders. Who bears how much is again a hard question.
The CBO attempts to take account of such issues in its calculations; its conclusion, again for 2007, is that the bottom 40% of the income distribution bears about 5% of the burden of federal taxes, the top 20% almost 70%. It finds the lowest quintile  bearing a tax burden of about 4% of its income, with the rate rising quintile to quintile to about 25% for the highest and almost 30% for the top 1%.

Whether the CBO estimates are correct, I do not know, and I doubt they do. Whether they imply that high income tax payers bear more or less of the burden than they should  depends on how you believe the burden should be distributed. But the CBO estimates, at least, do not support rhetoric implying that executives pay taxes at a lower rate than their secretaries.
And I haven't even mentioned state and local taxes...  .
Obama presumably understands all of this; if not, he surely has people working for him who can explain it to him. Explaining it to the public in the form of sound bites designed to support the policies he favors is a harder problem, but not an insoluble one. 
If the truth is too complicated ...

Schooling Compulsion, Incentives, and Literacy

There are at least two different ways of getting someone to learn something. You can offer to teach him something he wants to know, or you can compel him to learn something you want him to know. Unschooling uses the first approach, conventional schooling the second. One difference between the two is their effect on the incentives of teachers.
Consider the case of literacy. The ability to read is useful to almost everyone in a modern society, so one would like an educational system that does a good job of teaching it. It is widely believed that the current American system does not.
If the objective is to teach people to read, the obvious starting point is to ask what sorts of things those people would enjoy reading, since it is easier to get someone to do something he likes doing. The answer might be comic books, car magazines, science fiction, fantasy, soap opera summaries, or any of a wide variety of other sorts of written material, depending on the particular people being taught. 
As best I can tell, that is not the approach taken by conventional K-12 schooling. Instead, students are assigned to read books chosen on one of two criteria. Either they are books regarded as good literature—famous books from the past or current books that English professors approve of—or books believed to teach lessons that the people selecting the books want taught. That would include biblical literature in the past, patriotism—or acceptance of homosexuality, depending on the state—at present, and a wide range of other lessons, depending on current and local political fashion. While it is always possible that the books chosen would also be ones students enjoyed—I'm very fond of Kipling, some of whose stories might be assigned reading in English class—that is not what they would be chosen for, so the odds are not very good.
The ability to read is useful to almost everyone. Knowledge of and appreciation for great literature, even if we accept the educational establishment's definition of what qualifies, no doubt can enrich one's life, but on the evidence of what books people actually read it does not enrich the lives of a very large fraction of the population. That suggests that learning the former should probably have considerably higher priority than learning the latter.
In an educational environment where teachers can advise and persuade pupils but not compel them, it will, because the teachers who insist on telling their pupils to read books that the teacher likes and the pupil does not will shortly find their advice ignored. In an environment where teachers can tell students what books to read and, to at least some degree, punish those who fail to obey, on the other hand, there will be a strong temptation to assign the books that the teacher thinks the student ought to read, sacrificing the higher priority of literacy for the lower priority of literature—or, sometimes, propaganda. 
Which may explain why Johnny can't read.
I encountered a different version of the same logic a good many years ago in my own work. My Price Theory textbook was out of print.  I decided to rewrite it into a book targeted at the proverbial intelligent layman, the sort of book that gets read for the fun of it while teaching the reader the basic of an academic subject, in my case economics. My model, insofar as I had one, was The Selfish Gene, a book from which I learned quite a lot about evolutionary biology.
In the course of the project, it occurred to me that there was an important difference between the book I was starting with and the book I intended to end with; nobody would be forced to read the latter. It followed that if at any point the reader decided that it was not worth continuing, I would lose him. To deal with that problem I followed a deliberate policy of starting each chapter with a hook, a puzzle that would sufficiently engage the reader to persuade him to finish the chapter to find the solution. Economics is full of such puzzles; I don't know how hard it would be to do the same thing in another field.
The result, Hidden Order: The Economics of Everyday Life , has been by a sizable margin my most successful book. 
Incentives matter—including mine.
———
In the interest of honesty, I should add that some people are forced to read Hidden Order, because it is occasionally used as a textbook, even though that was not the purpose it was written for. But not, I think, very many people.

What Would Modern Polygamy Be Like?

Responses on G+ to some of what I posted on polygamy raise an interesting consequentialist argument against it—that wealthy men would "buy up" too many wives, leaving a surplus of unmarried single men likely to cause social problems such as increased levels of crime.
The argument takes it for granted that polygamy mostly means polygyny, multiple wives rather than multiple husbands. Historically that has been the pattern. Monogamy is the most common marital arrangement, polygyny next, polyandry rare. But it raises the question of why that pattern existed and whether it would persist in a modern society where polygamy was legal and common enough to have a significant effect on the marriage market.
One answer is that men, for reasons probably hardwired by evolution, want to know which children are theirs in order that they can avoid spending their scarce resources on other men's children. Prior to modern times, maternity was an observed fact, paternity a conjecture. The obvious way of strengthening the conjecture was to arrange matters so that a woman had sex with only one man, a condition satisfied by monogamy and polygyny but not by polyandry. Modern paternity testing, which I like to refer to as the stealth reproductive technology, changed that. It no longer requires a wise child to know his father, merely a properly equipped lab.
A second possible answer is that under pre-modern conditions, with high rates of both infant mortality and death in childbirth, one woman could not be counted on to produce as many children as several husbands would want. That again has changed. In a world where infant mortality is close to zero, a fertile woman who enjoys producing and rearing children, supported by the income of multiple husbands, should be able to produce enough offspring for all of them. And it is worth noting that a second function of marriage is sex, and women are less limited in that regard than men.
All of which suggests that, in a modern context, polyandry might turn out to be as common as, or more common than, polygyny, in which case the objection vanishes or even reverses, becomes an argument in favor of polygamy rather than an argument against it.
How could one find  data to test the theory? One possibility would be to study modern polygamy not in contexts such as the FLDS, where it represents the survival of old marital patterns, but in the context of  polyamory, where it appears as the growth of new ones. I do not know if anyone has attempted a census of polyamorous households—there are obvious difficulties, since many have reasons to keep a low profile— but the results would be interesting.

The Real News

Reading Google News, I am struck by the degree to which dramatic stories crowd out arguably more important material. The top of the page is dominated by the current U.S. debt limit crisis. It is an entertaining example of the game of Chicken as played by politicians but of limited importance otherwise, since both sides are focused not on how to deal with the long term debt problem but on the terms on which they will agree to postpone dealing with it. 
Meanwhile there are at least two other stories getting considerably less play but arguably of more real importance.
Modern Turkey is the successor state to the Ottoman Empire, one of the more successful polities of the past thousand years or so. It was also, arguably, the first Muslim state to succeed in fitting itself into the modern world, thanks to the system established by Kemal Ataturk after World War I. The central feature of that system was secular democracy guaranteed by the threat of a military coup against any attempt to transform Turkey back into some version of a religious state, a guarantee that has been gradually eroded by the increasing political strength of Islamicist parties. 
Recent charges by the government that a considerable number of officers are involved in a conspiracy can be interpreted either as a defense against a real threat or as a preemptive counter coup by the government against its own military. They have now led to the resignation of the four top officers of the Turkish military. 
That could mean that Turkey has become a real democracy with no need for a synthetic military backbone. It could  mean that Ataturk's experiment is finally collapsing, that in not very long the count of successful Islamic secular states will drop from one to zero. Either way, the outcome is likely to be more important for the rest of the world than whether the U.S. government does or does not find it necessary to pay its employees with IOU's for a week or two, or auction some spectrum, or sell some land, or play short term accounting games, or in any of a variety of other ways buy time while politicians haggle.
On the other side of the world, something else is happening that could be even more important. The collapse of the Soviet Union left the world with two polities still committed, at least in theory, to communism, while Hugo Chavez' rise to power looked very much like the gradual creation of a third.
That experiment may now have been recognized as a failure by its chief supporters. The latest news from Venezuela shows Chavez backing off from socialist rhetoric, saying good things about small business and the middle class, claiming to have an improved vision for his country—possibly inspired by conversations with one or both of the Castros during his cancer treatment in Cuba. It is possible—not perhaps likely, but possible—that the news of how to make a country richer has finally gotten through to the last holdouts.
Or at least, the last but one.

GKC, Liberal Toleration, and the FLDS

A serious political ideology, at least as held by sophisticated supporters, is a complicated set of ideas. But an ideology also has a sort of sketch version seen by both supporters and critics as outlining, in simplified form, its essential nature. One part of the sketch version of modern liberalism is tolerance of cultural diversity, sometimes put as moral relativism. We would not want to put our grandparents on an ice floe and shove them out to sea, but if that is how  Inuit deal with the problems of their society, who are we to object? It is not as if we have some proof that our values are right and theirs are wrong.
The best critique of this position I have come across, from a psychological more than a philosophical point of view, is one of G.K. Chesterton's Father Brown stories, "The Chief Mourner of Marne." Readers who would prefer to read it themselves without spoilers from me should do so now.
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The story centers on James and Maurice, cousins, close friends, almost brothers. Maurice dies, supposedly of a chill caught at the seaside, and James is so afflicted by his death that he becomes a sort of hermit, unwilling to meet even with past friends, encouraged by "the priests" in a sort of religious melancholia.
As the story continues, Father Brown succeeds in getting from an eye witness a more plausible version of the story. Maurice did not die of a chill. The two men became rivals in love, fought a duel,  and James killed his best friend and has mourned him ever since. 
The response of  a friend of the woman both men were in love with:
"You mean to live him to this living death of moping and going made in a ruin!" cried Lady Outram, in a voice that shook a little. "And all because he had the bad luck to shoot a man in a duel more than a quarter of a century ago. Is that what you call Christian charity."
"Yes," answered the priest stolidly, "that is what I call Christian charity."
"It's about all the Christian charity you'll ever get out of these priests," cried Cockspur bitterly. "That's their only idea of pardoning a poor fellow for a piece of folly; to wall him up alive and starve him to death with fasts and penances and pictures of hell-fire. And all because a bullet went wrong."
"Really, Father brown," said General Outram, "do you honestly think he deserves this? Is that your Christianity?"
"Surely the true Christianity," pleaded his wife more gently, is that which knows all and pardons all; the love that can remember—and forget."
And then we discover what really happened—and why the winner of the duel fled the country for years and then went into seclusion. 
 ----------
The surviving cousin is not  James but Maurice. Knowing his friend was the better shot, he dropped to the ground just before James fired. James, struck with remorse, ran over to his fallen cousin, who shot him dead. Not a duel but cold blooded murder. 
"Are you sure of this?" asked Sir John at last, in a thick voice.
"I am sure of it," said Father Brown, "and now I leave Maurice Mair, the present Marquis of Marne, to your Christian charity. You have told me something today about Christian charity. You seemed to me to give it almost too large a place; but how fortunate it is for poor sinners like this man that you err so much on the side of mercy, and are ready to be reconciled to all mankind."
"Hang it all," exploded the general; "if you think I'm going to be reconciled to a filthy viper like that, I tell you I wouldn't say a word to save him from hell. I said I could pardon a regular decent duel, but of all the treacherous assassins——"
"He ought to be lynched," cried Cockspur excitedly. "He ought to burn alive like a nigger in the States. And if there is such a thing as burning for ever, he jolly well——"
"I wouldn't touch him with a barge - pole myself," said Mallow.
"There is a limit to human charity," said Lady Outram, trembling all over.
"There is," said Father Brown dryly; "and that is the real difference between human charity and Christian charity. You must forgive me if I was not altogether crushed by your contempt for my uncharitableness today; or by the lectures you read me about pardon for every sinner. For it seems to me that you only pardon the sins that you don't really think sinful. You only forgive criminals when they commit what you don't regard as crimes, but rather as conventions. So you tolerate a conventional duel, just as you tolerate a conventional divorce. You forgive because there isn't anything to be forgiven."
"But, hang it all," cried Mallow, "you don't expect us to be able to pardon a vile thing like this?"
"No," said the priest; "but we have to be able to pardon it."
Which brings us back to moral relativism and the FLDS. What Warren Jeffs is charged with was normal and acceptable behavior in a society, Old Testament Judaism, a great deal closer to ours than the Inuit. It remained accepted throughout the diaspora until, if I remember correctly, about a thousand years ago. It remained accepted in parts of the diaspora, North African and Arabic Jewish communities, up until modern times. 
When the Israeli rabbis decided to raise the age of consent from twelve and a half to something more in tune with modern views, their justification was the claim that early pregnancy was more dangerous in the 20th century than it had been two thousand years earlier, a factual claim it is difficult to imagine anyone taking seriously, given the medical progress over the intervening interval.
I have yet to see  commentary by anyone identifying himself as a liberal defending Jeffs, or the FLDS more generally, on grounds of moral relativism. As Chesterton points out, it is easy to forgive people for doing things you don't really disapprove of. 
Harder when you do.
To be fair, what I am criticizing is the sketch version of liberalism. No doubt someone holding a more detailed and sophisticated version could come up with a justification for making and enforcing the laws that the FLDS is accused of breaking. Making such as a justification consistent with the rhetoric of moral relativism might be a more difficult project.
[I should probably add, to avoid any possible confusion, that I am an atheist not a Catholic. That does not prevent me from admiring Chesterton's writing, including his sometimes brilliant defenses of his religious views.]

Should King David and Solomon be in Jail?

The polygamist FLDS is again in the news, although the current assault is a good deal less outrageous than the activities of the Texas child protective authorities a few years back, which I covered extensively here.
But it does occur to me that it raises a serious issue for both American Christians and Jews, at least ones who take their religion fairly literally. It is clear from the Old Testament that God's chosen people practiced extensive polygamy. It is clear from what we know of Jewish law that marriage and sex were legal at ages well below those at which they are currently illegal in most of the U.S.; as best I recall, a woman was a legal adult at twelve, provided she had shown some sign of menarch. By those standards, nothing that Warren Jeffs is charged with, at least so far as I know—I haven't actually followed the case—should be illegal.
Yet I would be surprised if any large fraction of modern American Christians and Jews actually defended Jeffs. What is their basis for not doing so? Should King David and Solomon be in jail?