Quotation of the Day

Is from Bertrand Russell in his 1932 essay 'In Praise of Idleness':

"The conception of duty, speaking historically, has been a means used by the holders of power to induce others to live for the interests of their masters rather than for their own."

Hat tip to Chris Dillow for today's quote.

Great Sentences

"In most cases, when a boring, bureaucratic job turns interesting, there’s trouble."

That's from this Vanity Fair article by Rich Cohen, describing the maple syrup industry in Quebec and the theft of some 540,000 gallons (13.4 million dollars worth) of syrup from the FPAQ (Federation of Quebec Maple Syrup Producers) reserve in 2012.

Maple syrup trades at roughly $1300 a barrel, more than 20 times the current price of crude oil.

Hat tip to Tyler Cowen for the link.

Quotation of the Day

Is from Chapter 9 of Robert M. Pirsig's novel 'Zen and the Art of Motorcycle Maintenance':

"The real purpose of scientific method is to make sure Nature hasn't misled you into thinking you know something you don't actually know."

Quotation of the Day

Is from David Henderson, blogging at EconLog:

"I would love to have politicians who are effective at protecting and increasing our freedom. But sometimes the best we can do is get politicians who are ineffective at reducing our freedom."

Quotation of the Day

"Hell! there ain’t no rules around here! We are tryin’ to accomplish somep’n!"

 - Purportedly said by Thomas Edison to Martin André Rosanoff circa 1903, first reported in the September 1932 issue of Harper's Magazine.

Quotation of the Day

Edgar Mitchell, 6th man on the moon, describing his experience of seeing the Earth from the Moon:

"You develop an instant global consciousness, a people orientation, an intense dissatisfaction with the state of the world, and a compulsion to do something about it. From out there on the moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, ‘Look at that, you son of a bitch'."

Quotation of the Day

Is from Tim Harford (AKA The Undercover Economist), blogging at timharford.com:

"...even when the myth is delightful and the truth is dull, the truth still matters."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VII, Section II, Chapter III, 'Of those Systems which make Virtue consist in Benevolence':

"Those actions which aimed at the happiness of a great community, as they demonstrated a more enlarged benevolence than those which aimed only at that of a smaller system, so were they, likewise, proportionally the more virtuous. The most virtuous of all affections, therefore, was that which embraced as its object the happiness of all intelligent beings. The least virtuous, on the contrary, of those to which the character of virtue could in any respect belong, was that which aimed no further than at the happiness of an individual, such as a son, a brother, a friend.

In directing all our actions to promote the greatest possible good, in submitting all inferior affections to the desire of the general happiness of mankind, in regarding one's self but as one of the many, whose prosperity was to be pursued no further than it was consistent with, or conducive to that of the whole, consisted the perfection of virtue."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VII, Section II, Chapter I, 'Of those Systems which make Virtue consist in Propriety':

"The principle of suicide, the principle which would teach us, upon some occasions, to consider that violent action as an object of applause and approbation, seems to be altogether a refinement of philosophy. Nature, in her sound and healthful state, seems never to prompt us to suicide. There is, indeed, a species of melancholy (a disease to which human nature, among its other calamities, is unhappily subject) which seems to be accompanied with, what one may call, an irresistible appetite for self-destruction. In circumstances often of the highest external prosperity, and sometimes too, in spite even of the most serious and deeply impressed sentiments of religion, this disease has frequently been known to drive its wretched victims to this fatal extremity. The unfortunate persons who perish in this miserable manner, are the proper objects, not of censure, but of commiseration. To attempt to punish them, when they are beyond the reach of all human punishment, is not more absurd than it is unjust. That punishment can fall only on their surviving friends and relations, who are always perfectly innocent, and to whom the loss of their friend, in this disgraceful manner, must always be alone a very heavy calamity."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VII, Section II, Chapter I, 'Of those Systems which make Virtue consist in Propriety':

"Men of letters, though, after their death, they are frequently more talked of than the greatest princes or statesmen of their times, are generally, during their life, so obscure and insignificant that their adventures are seldom recorded by co-temporary historians. Those of after-ages, in order to satisfy the public curiosity, and having no authentic documents either to support or to contradict their narratives, seem frequently to have fashioned them according to their own fancy; and almost always with a great mixture of the marvellous."

Quotation of the Day

"It is dangerous to be right in matters on which the established authorities are wrong." - Voltaire

Quotation of the Day

If from Adam Smith's Theory of Moral Sentiments, Part VII, Section II, Chapter I, 'Of those Systems which make Virtue consist in Propriety':

"Those philosophers [the stoics] endeavoured, at the same time, to show, that the greatest misfortunes to which human life was liable, might be supported more easily than was commonly imagined. They endeavoured to point out the comforts which a man might still enjoy when reduced to poverty, when driven into banishment, when exposed to the injustice of popular clamour, when labouring under blindness, under deafness, in the extremity of old age, upon the approach of death. They pointed out, too, the considerations which might contribute to support his constancy under the agonies of pain and even of torture, in sickness, in sorrow for the loss of children, for the death of friends and relations, etc. The few fragments which have come down to us of what the ancient philosophers had written upon these subjects, form, perhaps, one of the most instructive, as well as one of the most interesting remains of antiquity. The spirit and manhood of their doctrines make a wonderful contrast with the desponding, plaintive, and whining tone of some modern systems."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section III, 'Of Self Command':

"Men of merit considerably above the common level, sometimes under-rate as well as over-rate themselves. Such characters, though not very dignified, are often, in private society, far from being disagreeable. His companions all feel themselves much at their ease in the society of a man so perfectly modest and unassuming. If those companions, however, have not both more discernment and more generosity than ordinary, though they may have some kindness for him, they have seldom much respect; and the warmth of their kindness is very seldom sufficient to compensate the coldness of their respect. Men of no more than ordinary discernment never rate any person higher than he appears to rate himself. He seems doubtful himself, they say, whether he is perfectly fit for such a situation or such an office; and immediately give the preference to some impudent blockhead who entertains no doubt about his own qualifications. Though they should have discernment, yet, if they want generosity, they never fail to take advantage of his simplicity, and to assume over him an impertinent superiority which they are by no means entitled to. His good-nature may enable him to bear this for some time; but he grows weary at last, and frequently when it is too late, and when that rank, which he ought to have assumed, is lost irrecoverably, and usurped, in consequence of his own backwardness, by some of his more forward, though much less meritorious companions."

Bonus Quotation of the Day

Is from Arnold Kling blogging at askblog on a recent conversation between Tyler Cowen and Steven Pinker:

"The people who proclaim their allegiance to socialism do not have to live in Venezuela."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section III, 'Of Self Command':

"The wise and virtuous man directs his principal attention to the first standard; the idea of exact propriety and perfection. There exists in the mind of every man, an idea of this kind, gradually formed from his observations upon the character and conduct both of himself and of other people. It is the slow, gradual, and progressive work of the great demigod within the breast, the great judge and arbiter of conduct. This idea is in every man more or less accurately drawn, its colouring is more or less just, its outlines are more or less exactly designed, according to the delicacy and acuteness of that sensibility, with which those observations were made, and according to the care and attention employed in making them. In the wise and virtuous man they have been made with the most acute and delicate sensibility, and the utmost care and attention have been employed in making them. Every day some feature is improved; every day some blemish is corrected. He has studied this idea more than other people, he comprehends it more distinctly, he has formed a much more correct image of it, and is much more deeply enamoured of its exquisite and divine beauty. He endeavours as well as he can, to assimilate his own character to this archetype of perfection. But he imitates the work of a divine artist, which can never be equalled. He feels the imperfect success of all his best endeavours, and sees, with grief and affliction, in how many different features the mortal copy falls short of the immortal original. He remembers, with concern and humilation, how often, from want of attention, from want of judgment, from want of temper, he has, both in words and actions, both in conduct and conversation, violated the exact rules of perfect propriety; and has so far departed from that model, according to which he wished to fashion his own character and conduct. When he directs his attention towards the second standard, indeed, that degree of excellence which his friends and acquaintances have commonly arrived at, he may be sensible of his own superiority. But, as his principal attention is always directed towards the first standard, he is necessarily much more humbled by the one comparison, than he ever can be elevated by the other. He is never so elated as to look down with insolence even upon those who are really below him. He feels so well his own imperfection, he knows so well the difficulty with which he attained his own distant approximation to rectitude, that he cannot regard with contempt the still greater imperfection of other people. Far from insulting over their inferiority, he views it with the most indulgent commiseration, and, by his advice as well as example, is at all times willing to promote their further advancement. If, in any particular qualification, they happen to be superior to him (for who is so perfect as not to have many superiors in many different qualifications?), far from envying their superiority, he, who knows how difficult it is to excel, esteems and honours their excellence, and never fails to bestow upon it the full measure of applause which it deserves. His whole mind, in short, is deeply impressed, his whole behaviour and deportment are distinctly stamped with the character of real modesty; with that of a very moderate estimation of his own merit, and, at the same time, of a full sense of the merit of other people."

Quotation of the Day

Is from Michael Rizzo (AKA wintercow20) blogging at The Unbroken Window:

"It would also be nice if folks just staked their positions out instead of trying to cloak them up. My mental model is progressives are for anything that isn’t 'scary-tale versions of capitalism' based on what some ideologue 5th grade teacher told them about World War 2 ending the Depression, FDR saving America, labor market regulations designed to help the worst off, where our prosperity comes from, the role the robber barons played, etc. and the 'right' is for anything other than what progressives seem to be about. I do not think either is actually very much principled. If they were. then at least say, 'I am for liberty in every aspect and every regard even if it produces some outcomes which may seem reprehensible, and here is why …' or 'I am for the elites running things, or I am for industrial planning, even if it has produced historical global horror stories, and here is why …' But we can’t even get that. Just a lot of dressed-up gobbledegook."

Read the whole thing.

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section III, 'Of Self Command':

"The man who acts according to the rules of perfect prudence, of strict justice, and of proper benevolence, may be said to be perfectly virtuous. But the most perfect knowledge of those rules will not alone enable him to act in this manner: his own passions are very apt to mislead him; sometimes to drive him and sometimes to seduce him to violate all the rules which he himself, in all his sober and cool hours, approves of. The most perfect knowledge, if it is not supported by the most perfect self-command, will not always enable him to do his duty."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section II, Chapter II,  'Of The Order in which Societies are by Nature Recommended to Our Beneficence':

"The man of system... is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section II, Chapter II,  'Of The Order in which Societies are by Nature Recommended to Our Beneficence':

"The man whose public spirit is prompted altogether by humanity and benevolence... When he cannot conquer the rooted prejudices of the people by reason and persuasion, he will not attempt to subdue them by force; but will religiously observe... never to use violence to his country... He will accommodate, as well as he can, his public arrangements to the confirmed habits and prejudices of the people; and will remedy as well as he can, the inconveniencies which may flow from the want of those regulations which the people are averse to submit to. When he cannot establish the right, he will not disdain to ameliorate the wrong; but like Solon, when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section II, Chapter III,  'Of Universal Benevolence':

"Though our effectual good offices can very seldom be extended to any wider society than that of our own country; our good-will is circumscribed by no boundary, but may embrace the immensity of the universe. We cannot form the idea of any innocent and sensible being, whose happiness we should not desire, or to whose misery, when distinctly brought home to the imagination, we should not have some degree of aversion."

Quotation of the Day

Is from Kevin Grier:

"Neither the Fed nor the President “runs” the economy. There is no stable, exploitable Phillips Curve / sous vide machine that lets us cook at a certain temperature."

Hat tip to Alex Tabarrok for this one.

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section II, Chapter II,  'Of The Order in which Societies are by Nature Recommended to Our Beneficence':

"Amidst the turbulence and disorder of faction, a certain spirit of system is apt to mix itself with that public spirit which is founded upon the love of humanity, upon a real fellow-feeling with the inconveniencies and distresses to which some of our fellow-citizens may be exposed. This spirit of system commonly takes the direction of that more gentle public spirit; always animates it, and often inflames it even to the madness of fanaticism. The leaders of the discontented party seldom fail to hold out some plausible plan of reformation which, they pretend, will not only remove the inconveniencies and relieve the distresses immediately complained of, but will prevent, in all time coming, any return of the like inconveniencies and distresses. They often propose, upon this account, to new-model the constitution, and to alter, in some of its most essential parts, that system of government under which the subjects of a great empire have enjoyed, perhaps, peace, security, and even glory, during the course of several centuries together. The great body of the party are commonly intoxicated with the imaginary beauty of this ideal system, of which they have no experience, but which has been represented to them in all the most dazzling colours in which the eloquence of their leaders could paint it. Those leaders themselves, though they originally may have meant nothing but their own aggrandisement, become many of them in time the dupes of their own sophistry, and are as eager for this great reformation as the weakest and foolishest of their followers. Even though the leaders should have preserved their own heads, as indeed they commonly do, free from this fanaticism, yet they dare not always disappoint the expectation of their followers; but are often obliged, though contrary to their principle and their conscience, to act as if they were under the common delusion. The violence of the party, refusing all palliatives, all temperaments, all reasonable accommodations, by requiring too much frequently obtains nothing; and those inconveniencies and distresses which, with a little moderation, might in a great measure have been removed and relieved, are left altogether without the hope of a remedy."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section II, Chapter II,  'Of The Order in which Societies are by Nature Recommended to Our Beneficence':

"...it often requires, perhaps, the highest effort of political wisdom to determine when a real patriot ought to support and endeavour to re-establish the authority of the old system, and when he ought to give way to the more daring, but often dangerous spirit of innovation."

Quotation of the Day

Is from Alberto Mingardi, writing recently on EconLog about Theresa May's Tory Party Conference Speech:

"...I find it bizarre that so many people wonder about why people feel poorer - and nobody, even among the Tories, dares to say that perhaps taxing them a bit less would be a way--which is entirely within the power of governments, without entailing bold plans for driving the market this or that way--to make people less poor. This would seem a rather obvious policy choice, for 'conservatives.' But apparently it is not."

Quotation of the Day

Is from Adam Smith's Theory of Moral Sentiments, Part VI, Section II, Chapter II, 'Of The Order in which Societies are by Nature Recommended to Our Beneficence':

"The love of our own nation often disposes us to view, with the most malignant jealousy and envy, the prosperity and aggrandisement of any other neighbouring nation. Independent and neighbouring nations, having no common superior to decide their disputes, all live in continual dread and suspicion of one another. Each sovereign, expecting little justice from his neighbours, is disposed to treat them with as little as he expects from them. The regard for the laws of nations, or for those rules which independent states profess or pretend to think themselves bound to observe in their dealings with one another, is often very little more than mere pretence and profession. From the smallest interest, upon the slightest provocation, we see those rules every day, either evaded or directly violated without shame or remorse. Each nation foresees, or imagines it foresees, its own subjugation in the increasing power and aggrandisement of any of its neighbours; and the mean principle of national prejudice is often founded upon the noble one of the love of our own country. The sentence with which the elder Cato is said to have concluded every speech which he made in the senate, whatever might be the subject, 'It is my opinion likewise that Carthage ought to be destroyed,' was the natural expression of the savage patriotism of a strong but coarse mind, enraged almost to madness against a foreign nation from which his own had suffered so much. The more humane sentence with which Scipio Nasica is said to have concluded all his speeches, 'It is my opinion likewise that Carthage ought not to be destroyed,' was the liberal expression of a more enlarged and enlightened mind, who felt no aversion to the prosperity even of an old enemy, when reduced to a state which could no longer be formidable to Rome. France and England may each of them have some reason to dread the increase of the naval and military power of the other; but for either of them to envy the internal happiness and prosperity of the other, the cultivation of its lands, the advancement of its manufactures, the increase of its commerce, the security and number of its ports and harbours, its proficiency in all the liberal arts and sciences, is surely beneath the dignity of two such great nations. These are all real improvements of the world we live in. Mankind are benefited, human nature is ennobled by them. In such improvements each nation ought, not only to endeavour itself to excel, but from the love of mankind, to promote, instead of obstructing the excellence of its neighbours. These are all proper objects of national emulation, not of national prejudice or envy."

Quotation of the Day

From Adam Smith's 'Theory of Moral Sentiments', Part VI: Of the Character of Virtue, Section I: Of the Character of the Individual, so far as it affects his own Happiness; or of Prudence:

"The prudent man always studies seriously and earnestly to understand whatever he professes to understand, and not merely to persuade other people that he understands it; and though his talents may not always be very brilliant, they are always perfectly genuine. He neither endeavours to impose upon you by the cunning devices of an artful impostor, nor by the arrogant airs of an assuming pedant, nor by the confident assertions of a superficial and imprudent pretender. He is not ostentatious even of the abilities which he really possesses. His conversation is simple and modest, and he is averse to all the quackish arts by which other people so frequently thrust themselves into public notice and reputation. For reputation in his profession he is naturally disposed to rely a good deal upon the solidity of his knowledge and abilities; and he does not always think of cultivating the favour of those little clubs and cabals, who, in the superior arts and sciences, so often erect themselves into the supreme judges of merit; and who make it their business to celebrate the talents and virtues of one another, and to decry whatever can come into competition with them. If he ever connects himself with any society of this kind, it is merely in self-defence, not with a view to impose upon the public, but to hinder the public from being imposed upon, to his disadvantage, by the clamours, the whispers, or the intrigues, either of that particular society, or of some other of the same kind."

Quotation of the Day

"It takes a lot more to justify regulation of other people's behaviour than your own indignation and offence about what they're doing."

That is from Richard Epstein talking to Russ Roberts on this EconTalk episode.

Brexit

Emily Skarbek offers her thoughts in the immediate aftermath of the referendum result:

"The results of the referendum are in and the UK has voted to leave the European Union. The official campaign was littered with awful arguments that play to the public's worst sentiments - and the decision was likely driven by ignorance and the older voting population. As a foreigner in the country and someone who believes passionately in free trade, open immigration, and the principles of a free society - I am nervous.

The markets have slid and there is uncertainty over what this will mean for the future of the UK and Europe. David Cameron has resigned. No one knows just how this is going to play out. The longer horizon will depend on the course that is chartered in policy negotiations and positions adopted by the UK. 

Many of the people I have discussed this with in academic and policy circles want a freer, more open society. This led some to vote remain and others leave, based on divergent predictions about which course of action would lead to a more open society. I take this as one reason for optimism amidst the fear. 

The aftermath of this vote will require a broader coalition of liberals to push for an open trade and immigration policy. Trade policy that is crafted in the next few years will be crucial to the economic impact of Brexit. Britain desperately needs policy entrepreneurs, City of London, and leaders in Parliament to craft a solution that maximises openness to counter the populist, nationalist, and collectivist sentiments that may have got us here. It is hard to see this now, having just voted to leave the EU single market.

As my friend Sam Bowman points out, the biggest reason London is a great city is due to immigration. We want more of that, not less - from Europe and everywhere else. The voices for free trade must be louder than ever."

Mango Fever

1960s China:

"The workers had chartered a plane to fly a single mango to a factory in Shanghai."

"One dentist in a small village, who dared to compare a touring mango to a sweet potato was put on trial for malicious slander and executed."

(Hat tip to Scott Alexander.)

Quotation of the Day

Is from Adam Smith's 'Theory of Moral Sentiments', Part IV, Chapter II: Of the beauty which the appearance of Utility bestows upon the characters and actions of men; and how far the perception of this beauty may be regarded as one of the original principles of approbation:

"What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue?  All government is but an imperfect remedy for the deficiency of these.  Whatever beauty, therefore, can belong to civil government upon account of its utility, must in a far superior degree belong to these.  On the contrary, what civil policy can be so ruinous and destructive as the vices of men?  The fatal effects of bad government arise from nothing, but that it does not sufficiently guard against the mischiefs which human wickedness gives occasion to."

The Taxpayer as Insurer

This story has popped up on my social media recently.

There’s relatively scant details in the Daily Record article, or indeed in the online petition that’s been set up by the daughter of one of the homeowners affected.

Here’s my attempt to summarise what’s happened (please feel free to get in touch and correct me if I’ve gotten any of the details wrong – all of my information here is from second and third-hand sources, so who knows what details may have gotten distorted in transit):

The council (local government) in West Dunbartonshire built a bunch of houses several decades ago.  These are what is known in the UK as ‘council houses’, i.e. low-cost housing created for people who, for whatever reasons, find it difficult to find affordable private housing to rent or buy.  Tenants of these properties rent them from the local government, typically at below-market rates.

The central UK government passed ‘right to buy’ legislation as part of the Housing Act 1980.  This entitles tenants of council houses “the legal right to buy, at a large discount, the home they are living in”.  This discount was originally very substantial, at between 33% and 50% of the valuation of the property.  The size of the discount was reduced in 1997, and some of the rules surrounding ‘right to buy’ were changed in 2005.  For example, five years tenancy is now required to qualify for ‘right to buy’ and properties purchased under the scheme since 2005 cannot be immediately placed on the open market for sale, among other restrictions.

The houses in question started out as council houses, but were subsequently bought by their tenants at well below market rates under the ‘right to buy’ scheme.

A few years ago, in 2013, “a serious roof defect was discovered” in a number of these houses.  “Some of these properties have had roofs collapse, with several so defective that they have been deemed uninhabitable, others requiring new roofs to be built and many still to be surveyed.”

I don’t know the precise nature of the building defects, but they sound pretty serious if people’s roofs are falling in and homes are being rendered uninhabitable or deemed unsafe to live in.  A few of them have even been earmarked for demolition.

The specific example given in the article is that of one Mrs Mary Goldie, a 69 year old retired headteacher, who purchased her house in 2008 for £105,000 (~$206,000).  This purchase was not made under ‘right to buy’; the property was already under private ownership prior to Mrs Goldie’s purchase of it.

Mrs Goldie’s house has been rendered uninhabitable by the defects and she’s been forced to move out.  With the help of her family, she’s taken out a mortgage on another nearby property to live in.

The council have subsequently offered to buy Mrs Goldie's house from her for just £12,000 (~$17,500).

The response of Mrs Goldie’s daughter has been to raise a petition “to request financial support from the Scottish Government for the private homeowners of flat-roofed properties in West Dunbartonshire”.

I feel bad for this woman, I really do.  Her house has been rendered almost worthless by the extent of the defects and she’s spent most of her savings on securing somewhere else to live.  It is a nightmare situation for anyone to have to go through.

But, what I don’t understand is why are taxpayers being asked to foot the bill for this?  Surely this is a matter to be dealt with between the property owners and their insurance companies?  The petition states that the “insurance companies will not pay out anything”.  I don’t understand why this would be the case.  Surely this is exactly the sort of thing people take out insurance for?! 

The responsibility for maintaining and repairing a property lies with the owner of that property.  Property owners take out insurance to protect against catastrophe, that is, to cover substantial necessary work that they wouldn’t be able to afford on their own.

If the home(s) in question are still owned by the local government, then the responsibility for repairing them lies with the local government and/or their insurer(s).

If the home(s) in question are privately owned, then the responsibility for repairing them lies with the private owner(s) and/or their insurer(s).

I would happily sign a petition that asked for the government to assist the homeowners in dealing with their insurers and to put pressure on the insurance companies to pay out.  I refuse to sign a petition that basically amounts to the taxpayer acting as a private insurer.  I never agreed to insure these properties with my taxes.  And I don't expect Mrs Goldie or her daughter to pay for any repairs I might require on my house.

Kling on Krugman

He is scathing:

"Everything written by, for, or against Krugman over the past 15 years is a waste of time.  That includes this post as well as Adler’s.  It includes various attempts by Henderson, Cowen, and Sumner to engage with Krugman.  They try to treat him as if he had some sense of decency.  Instead, he is Joe McCarthy with a Nobel Prize."

Here.

And as pointed out by others, this is on a blog with the subtitle 'Taking the most charitable view of those who disagree'.

Ouch!

I guess this post is also a waste of time.

On Burdens of Proof

This post, like several other recent posts was inspired by Scott Alexander’s Slate Star Codex blog and some of the discussion in the comments there.

In one particular exchange there, I attempted (albeit poorly) to advocate the position that there is nothing special about the presence of an international border which changes the fundamental nature of trade.


I.
Here’s a hypothetical example:

Alice and Bill both live in Wonderland.  Alice produces apples.  Bill makes burgers.  Neither Alice nor Bill wish to live on apples or burgers alone.  So, they decide to trade with one another.  Let’s say they agree to an exchange rate of 5 apples per burger.  Each week they meet up and Alice gives Bill 35 apples; Bill, in turn, gives Alice 7 burgers.  Both are extremely satisfied with this arrangement.

Now, let’s change the example slightly:

Alice lives in Wonderland.  Humpty Dumpty lives in Mirrorland.  Alice produces apples.  Humpty makes burgers.  Neither Alice nor Humpty wish to live on apples or burgers alone.  So, they decide to trade with one another.  Let’s say they agree to an exchange rate of 4 apples per burger.  Each week they meet up and Alice gives Humpty 28 apples; Humpty Dumpty, in turn, gives Alice 7 burgers.  Both are extremely satisfied with this arrangement.

The question that must be answered by advocates of protectionism, in it’s various forms, is:

What about the fact that Humpty Dumpty resides in Mirrorland, rather than in Wonderland, changes the fundamental nature of the above trade?

Or, asked another way:

What is it about the fact that Humpty Dumpty resides in Mirrorland that makes the trade between Alice and Humpty different from the trade between Alice and Bill in a way that justifies placing certain restrictions on the former, but not placing the same restrictions on the latter?

These questions are not rhetorical.  And despite the lighthearted appearance of my examples, they are serious questions that require serious answers by advocates of protectionism.

In numerous discussions of these issues with advocates of protectionism, I have not yet received satisfactory answers to such questions.  I find this somewhat baffling.


II.
In one such exchange, I asserted that, as the ones proposing that the government actively intervenes by imposing trade restrictions – thereby restricting the freedom of individuals and businesses to conduct peaceful, mutually beneficial exchange – the burden of proof falls on advocates of protectionism to back-up their calls for such trade restrictions with evidence that they are either necessary or desirable.

One response I got to this was that my appeals to ‘burden of proof’ were a red herring.

In one sense, this is quite correct.

The protectionist claims: ‘There is a substantive difference between intranational and international trade that justifies the imposition of certain restrictions on the latter that do not apply to the former.’

The free-marketeer claims: ‘There is no substantive difference between intranational and international trade that justifies the imposition of certain restrictions on the latter that do not apply to the former.’

This is analogous to Matt Dillahunty’s jar of gumballs example.

The protectionist is claiming the number of gumballs is even.
The free-marketeer is claiming the number of gumballs is odd.

In both cases, we have two equal and opposite – and mutually exclusive – claims being made.

As explained on Wikipedia [emphasis added]:

“Either claim could be explored separately; however, both claims represent the same proposition and do in fact ask the same question.  Odd in this case means ‘not even’ and could be described as a negative claim. 

Before we have any information about the number of gumballs, we have no means of checking either of the two claims.  When we have no evidence to resolve the proposition, we may suspend judgment.  From a cognitive sense, when no personal preference toward opposing claims exists, one may be either skeptical of both claims or ambivalent of both claims. 

If there is a claim proposed and that claim is disputed, the burden of proof falls onto the proponent of the claim.”

So, the sense in which ‘burden of proof’ being a red herring is correct is:

If a protectionist wants to claim there is a substantive difference between intranational and international trade that justifies the imposition of certain restrictions on the latter that do not apply to the former, they ought to be able to back-up such a claim with some kind of evidence.

Of course, this is symetrical.  If a free-marketeer wants to claim there is not a substantive difference between intranational and international trade that would justify the imposition of certain restrictions on the latter, but not on the former, they also ought to be able to back-up such a claim with some kind of evidence.

In short, advocates of either position ought to be able to back up their position with evidence and reasoning.  Appeals to ‘burden of proof’ (i.e. pointing to the lack of evidence for the opposing position) are not sufficient and are kind of a cop-out.  Just because the evidence for the opposing position is weak or nonexistent doesn’t mean the evidence for your position is any better.


III.
In another sense, however, I don’t think the ‘burden of proof’ is entirely a red herring.  Maybe it’s only an orange herring?  That is to say, I think it may at least hint at something important.

In order to convince someone who doesn’t agree with me, I have to show her such-and-such evidence according to her standards.  If she wants to convince me, she has to show me such-and-such evidence according to my standards.  This is the philosophic burden of proof that we’ve been discussing thus far.

But what if we're discussing the passing of legislation?

Consider the example of drunk driving.  Driving whilst intoxicated is a crime in the vast majority of countries around the World.  Why?  What’s the moral justification for outlawing drunk driving?  I think it has something to do with there being a general consensus that the benefits that society gets from not having lots of drunk people driving around, causing chaos on the roads, getting into car accidents and killing lots of people, outweighs the costs to potential drunk drivers of not being able to drive home from the pub, having to catch a lift or have a designated driver with them, take a taxi or public transport home, or not have that second pint with dinner.

That is, laws that prohibit drunk driving pass some sort of cost-benefit test.

Sure, we can quibble about the finer details of some of the exact costs and benefits.  Maybe you could argue that the optimal level to set the drink-drive limit at should be 0.06% BAC (Blood Alcohol Content) instead of 0.05% or 0.08% BAC.  I don’t know precisely what the optimal limit is, viewed in terms of its total costs vs. its total benefits to society.

Some countries take a zero tolerance approach* – any amount of alcohol detected in your breath/blood/urine will be met with sanctions of some sort – this is probably too strict.  On the other hand, there are a handful of countries** that don’t appear to have any limit on how much alcohol you can drink before getting behind the wheel and this is almost certainly too permissive.

What I don’t think is in much doubt, is that it makes sense to have some sort of limit.

Asking what the appropriate limit is, is partly an empirical question and partly a values question.  There is no objectively ‘right’ answer, there is only a range of broadly socially tolerable answers.

This is similar to the example used by Steven Landsburg in one of his books*** when he asks what the optimal level of pollution is?  The answer depends on your values and on how you define ‘optimal’, but is almost certainly not zero.


IV.
In English common law – which forms the underlying basis for much of the English speaking world's legal codes – there is a presumption in favour of individual freedom.  That is, anything not expressly prohibited by law is permitted.

So, for example, driving drunk wasn’t illegal in the UK until 1967 when the Road Safety Act was passed, prohibiting it.

It may be a red herring to talk about burden of proof in a philosophical sense, but in order to enact legislation that restricts individual freedom it should be incumbent on advocates of that legislation to prove – to themselves at least as much as anyone else – that that legislation is worthwhile having.

If someone advocates a certain policy, call it ‘X’, that person should be able to provide some sort of justification for their belief that policy ‘X’ is either necessary or desirable.

It seems crazy to me that anyone would advocate for any particular policy without also holding the belief that said policy is necessary or desirable.  And presumably they have reasons for holding those particular beliefs.  And if I ask them ‘what are your reasons for holding those particular beliefs?’ and they can’t articulate an answer to me.  And they instead respond with ‘well, what are your reasons for NOT holding these particular beliefs?’ that’s not very helpful, nor is it conducive to productive discourse.

Part of my reasons for not holding those particular beliefs may be because no-one has ever been able to present to me any strong evidence or articulate any good reasons for doing so.



* These are mostly majority Muslim countries where there are strong social norms against alcohol consumption and alcohol is typically more strictly controlled.  e.g. Afghanistan, Azerbaijan, Comoros, Indonesia, Iran, Libya, Turkmenistan, and the UAE.  Although the Czech Republic, Hungary, Nepal, Paraguay, Romania, and Slovakia all also take a zero tolerance approach.
The list gets even longer when one takes into account countries that take a zero tolerance approach for certain types of drivers (but not all drivers), such as learners or newly qualified drivers, commercial and professional drivers.  This includes Australia, Germany, Macedonia, New Zealand, Palau, Serbia, Slovenia, Tanzania, and Thailand.
This list is by no means complete or definitive.

** I’m looking at you Guatemala, Kenya, Niger, Togo, and The Gambia.

*** It was either ‘The Armchair Economist’, ‘More Sex is Safer Sex’ or ‘The Big Questions’, I can’t remember which, but read them all, they’re all excellent.

I disagree, therefore you are stupid scum

When discussing politics, there is an almost ubiquitous tendency for people to characterise those with viewpoints which differ from their own as ignorant, stupid, or even just downright evil.  This phenomenon seems to be particularly prevalent on Facebook and other social media platforms.

It is, of course, far easier to characterise those whose political viewpoints with which you disagree as ignorant, stupid and/or evil than it is to acknowledge that those people may have a point.  That their ideas may have some merit to them.  That their objections and criticisms of your views, even if not entirely accurate or fair, may carry some element of truth.  That your views are not as infallible as you would like to think they are and those of your political adversaries may not be as flawed as you would like to think they are.

We are all prone to bias and self-serving after-the-fact rationalisation.  Remain aware of this and recognise that virtually all political views have some merit to them, but none are perfect, all have their own flaws and weaknesses.  Remember that you are not your beliefs and you are free to change your beliefs in the face of new information, despite what your ego and your pride tell you.

Above all, remember that just because someone disagrees with you politically does not mean that person is necessarily ignorant, or stupid, or evil.  Most people are reasonably intelligent and, most of the time, well meaning.  They may just see the World in a slightly different way, which is no more or less valid than how you see the World.  Or they may just have different values or priorities than you do.  Ultimately, most political issues boil down to a moral judgement, and we have no way of making moral judgements objectively.

This means that no-one can ever be ‘right’ or ‘wrong’ on political matters, unless one is acting on or judging a situation based on incorrect or false information.  So, by all means, discuss, debate, argue, and attempt to persuade others of the superiority of your positions.  Present the facts and arguments which led you to your conclusions and dissect those of others’ to attempt to arrive at a more complete and sophisticated understanding of things.

But don’t call someone ‘an idiot’ or ‘scum’ just because they happen to disagree with you.  It’s a disrespectful, intellectually lazy, ad hominem and does nothing to further your arguments or strengthen your position.  If someone's ‘facts’ are wrong, or arguments are shoddy, attack the incorrect facts and the shoddy arguments, not the person making them, who in all likelihood genuinely believes them, is neither an idiot nor Satan incarnate, and is acting in good faith, just like you.

No Nicola, the SNP did not get the support of almost 50% of the population of Scotland.

In the aftermath of the recent Scottish Parliamentary election, a comment made by re-elected incumbent First Minister, Nicola Sturgeon, reminds one of a recent post I made here emphasising the difference between INPUTS and OUTCOMES.

The comment comes from this story, where Ms Sturgeon is reported as confirming her intention to relaunch her party's campaign in favour of Scottish secession from the UK.  Fair enough; I don't think either Ms Sturgeon's or the SNP's position on Scottish independence comes as a surprise to anyone, and if she/they want to try and convince more people it's a good idea they should be perfectly free to do so.

But don't go about it by spreading blatant lies.

The lie to which I refer is this howler:

"When asked if Scotland can put an independence referendum to bed for the next five years, Ms Sturgeon said: 'No, the position I put forward in the SNP manifesto got the support of almost 50% of the population.'"

This is demonstrably false and so far off the mark as to be laughable.

The position put forward in the SNP manifesto did not get the support of almost 50% of the population.

The population of Scotland, according to the 2011 census, is 5,313,600.

The SNP received 1,059,897 constituency votes in the 2016 Scottish Parliamentary election.

1,059,897 divided by 5,313,600 is not even 20% of the population of Scotland.

Of course, not all of those 5,313,600 people are eligible to vote.  Many of them are children, for example.  The BBC reports the electorate of Scotland, for this election, as 4,099,407.

1,059,897 divided by 4,099,407 is 25.9% of the electorate.

I think what Ms Sturgeon meant to say, was that the position put forward in the SNP manifesto got the support of almost 50% of those who voted.

This is, at least, a more reasonable interpretation of events.  Turnout for this election was around 56% of the electorate.  There were a total of 2,279,153 valid constituency votes and 2,285,752 valid regional votes cast.

Of these, the SNP won 1,059,897 constituency votes and 953,987 regional votes, or 46.5% and 41.7% respectively.

However, there is an issue even with this statement.  That is that people vote for a particular candidate or political party for a wide variety of different reasons and considering a broad range of issues.  It's not possible to know for certain how many of those 1,059,897 people support Ms Sturgeons position on a second referendum.  Maybe some of them voted for SNP candidates due to their position on healthcare, or education or taxes, or defence, or any number of other issues or combinations of issues, or because they have a particularly good local MSP.

Pick any random person off the street and any random political party's manifesto and you are likely to be able to find some things in it which they agree with and some things in it which they disagree with.  Just because a person has voted for a particular party doesn't mean they support everything in that party's manifesto.  All it means is that, on balance, they support more of that party's stated aims, objectives and values, than that of the other parties/candidates.  Often times it's a case of picking the lesser of several evils.

In this particular case, I think it's pretty likely that most people backing the SNP are in favour of Scottish independence, but it is simply not possible to know that from the number of votes alone.

To determine that you have to have a referendum.  Which we did, in 2014.  And in which we found that 1,617,989 people, or less than one third of the population of Scotland, were in favour of independence at that time (to use Ms Sturgeon's favoured way of expressing these statistics).

If she hasn't already, I think Ms Sturgeon should be obliged to make a full retraction of this statement and go on record to correct any misunderstanding that may have resulted.

Good post on the costs of the US healthcare system by Wintercow over at The Unbroken Window.

Some quotes:

"Follow the goods, not the money."

"How would you measure how costly the U.S. medical system is? Would you look at how many dollar bills are spent? Or would you examine what real resources are used up in order to deliver said outcomes? Good economics suggests the latter."

Or, more generally speaking:

How would you measure how costly X is? Would you look at how many dollar bills are spent? Or would you examine what real resources are used up in order to deliver said outcomes? Good economics suggests the latter.

Self-serving Bias: Confusing Inputs & Outcomes Since 1967

This post was borne out of a small debate I recently got into online with a couple of people, which highlighted to me what I think is quite a common cognitive error.  I have no data to back up my view that this error is particularly prevalent, this is entirely conjecture based on personal experience.

The error is this:
Confusing outcomes with inputs.

Or perhaps it would be better thought of as:
Disregarding the process(es) used to take us from inputs to outcomes.

This came up in the context of discussing elections and election results.  Specifically, I had two people independently assert to me something along the lines of:

“At the last election, country X voted overwhelmingly for party Y.”

I challenged this statement as highly misleading*, on the basis that party Y, whilst winning an overwhelming majority of parliamentary seats, did not win an outright majority of votes, rather the party won only a plurality of votes.**

Party Y actually received slightly less than 50% of the votes cast in the election in question.

I suggested that it is far more accurate to categorise this level of support as a ‘pretty even split’ than as ‘overwhelming support’.

The response I got from both of my online adversaries was (paraphrasing):

“They won almost all of the seats.  I’d call that overwhelming.”

And:

“They received more than twice as many votes as the 2nd placed party.  And they received more votes than the 2nd, 3rd and 4th placed parties put together.  Looks pretty overwhelming to me.”

Both of these responses have two things in common:

The factual statements made in them are entirely accurate.
The factual statements made in them are entirely irrelevant.

Both of these people have completely missed my point.  They have both made the mistake of confusing outcomes with inputs, or of disregarding the process(es) used to take us from inputs to outcomes.

I do not disagree that winning almost all of the available seats in an election is rightfully considered an overwhelming victory for any party.

However, this is a very different thing from the party in question having ‘overwhelming support’ or the electorate ‘voting overwhelmingly for’ them.

“The electorate of Country X voted overwhelmingly for Party Y.” is a statement about the INPUT to the election.

“Party Y won an overwhelming victory, taking almost all of the seats in Country X’s Parliament.” is a statement about the OUTCOME of the election.

These statement are talking about two very different things.  It is entirely possible for either one of these statements to be true and the other false simultaneously.

Statements about INPUTS do not directly translate into equivalent statements about OUTCOMES and vice-versa.

The link between INPUTS and OUTCOMES are PROCESSES.  In this case, the process is the particular voting system used: how people cast their ballots, how votes are counted, how the electorate is divided into constituencies, etc.

It’s not possible to turn INPUTS into OUTCOMES without PROCESSES.  Similarly, it’s not possible to turn a statement about INPUTS into a statement about OUTCOMES (or vice-versa) without considering the particular PROCESS(ES) that took us from those INPUTS to those OUTCOMES.

As an example, if a political party wins 100% of the seats, without receiving any votes (e.g. in an absolute dictatorship), it is correct to say that such a party has overwhelming power or authority, but an error to say that it has overwhelming support.

The reverse is also true.  If a political party doesn’t win any seats, despite receiving 99% of the votes, due to extreme gerrymandering or a rigged election say, most people wouldn’t argue against the notion that such a party has overwhelming support, but it would be an error to say that it had won an overwhelming electoral victory.

These examples are extreme to illustrate my point.  In modern democracies, things are rarely so one-sided.  This is probably for the best.

I think in these cases this error is a manifestation of self-serving bias.  The people I was discussing this with were clearly supporters of Party Y.  They like to think – as do we all – that other people mostly see the World the way they do (or would, if only the ignorant fools were better informed) and are broadly supportive of the same things, that their ideas are popular and that ‘their team’ is ‘winning’.

This was illustrated when I brought up another vote on which one of my debating partners was on the ‘losing team’ by a relatively narrow margin.  They were unwilling to characterise this as ‘overwhelming opposition’ to their position.  The lack of symmetry is striking.  They are happy to characterise a mite under 50% support for their position as ‘overwhelming support’, but refuse to refer to 55% opposition to their position as ‘overwhelming opposition’.  The cognitive dissonance is immediately obvious to anyone not emotionally invested in their ‘team’.

I knew I’d won the argument when I got a response to this point that began:

“Whatever…”


* Put aside for now the fact that a country, as a collective, has no agency or ‘will’ of it’s own and so cannot be said to vote for/against anything (unless the vote is unanimous, and even then there are caveats), as if the views and opinions and wishes of the entire populace were homogenous.  For our purposes here ‘Country X’ is convenient shorthand for ‘The electorate of Country X’.

** I’d go further than that and say that even if a party wins 50% + 1 votes, it’s still highly misleading to describe this as ‘overwhelming’ support.  However, reasonable people can and will disagree about exactly where to draw the line between what constitutes ‘overwhelming support’ and merely ‘support’.  Some people may draw that line at 66.7%, some at 75%, some maybe at 90%, or even higher.  However, something I do not think is at doubt is that the point at which something can be considered to have ‘overwhelming support’ is definitely somewhere north of 50% (i.e. at minimum has a majority behind it).

The Price of Steel in India

This is a follow up blog post to this one here, summarising some more thoughts I’ve had on Scott Alexander’s ‘The Price of Glee in China’ post and inspired by some of the discussion in the comments there.

I know this is a conversation from a month ago, so is now ancient history in blogging terms.  This is why I’m not a very good blogger.

There’s a comment in the middle of my post that I sort of regret making because it was poorly worded and it’s not really crucial to the point I was trying to make, but lots of people who are presumably sympathetic to protectionist arguments seem to have fixated on it.

The phrase in question is this one: “there is nothing economically or morally relevant about political boundaries”

I have to apologise for the extremely poor wording on my part here.  This phrase is not what I intended to say at all.  That was sloppy.  Sorry.

As pointed out by several other commenters on Scott’s post, politics does have a substantial effect on the economics of a country.  In the most obvious ways, politics and politicians influence tax (and subsidy) rates and hiring practices / regulations (e.g. occupational licensing, minimum wage laws, the EU working time directive, etc. etc.).  They also have a less direct influence through things such as health and education policy.

I don’t debate any of this.  If someone got the wrong end of the stick from my previous post, I can totally understand why and again can only apologise for my sloppy phrasing.

Anyway, this all detracts from the main point I was trying to make in response to Scott’s post.  So let me try to make that point again, hopefully in a clearer and more succinct way:

Scott summed up his argument as:

“If we were to actively try to keep the Indians from industrializing, that would be pretty awful. But that’s not the argument at hand here. The argument at hand is ‘are we morally required to sacrifice our own economy in order to help the Indians industrialize?”

My response to that is:

But that is the argument at hand here.

Put aside for the moment whether protectionist policies are generally a net positive or a net negative for the population (as a whole) of the country that enacts them.  Put aside also whether protectionist policies are, in general, even effective at bringing about their stated aims.  These are debates for another day.

Let’s assume, for the sake of argument, that tariffs imposed by the US Government on imports of Indian steel helps American steelworkers, with no offsetting cost to any other Americans whatsoever.  In other words, the tariffs are a net positive if we consider only the welfare of Americans.

The cost of this policy is paid entirely by Indian steel companies, who now find it more difficult to compete in the American market.

What is this policy if not an active intervention by the US Government which retards industry in India and harms the Indian economy?

Paul Krugman on Trade

Writing in 2016:

"But it’s also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven’t done any of that; I think I’ve always been clear that the gains from globalization aren’t all that (here’s a back-of-the-envelope on the gains from hyperglobalization — only part of which can be attributed to policy — that is less than 5 percent of world GDP over a generation); and I think I’ve never assumed away the income distribution effects.
...
So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don’t know exactly what form it’s taking.
...
But it is fair to say that the case for more trade agreements — including TPP, which hasn’t happened yet — is very, very weak. And if a progressive makes it to the White House, she should devote no political capital whatsoever to such things."


Writing in 1995:

"I believe that if the rhetoric that portrays international trade as a struggle continues to dominate the discourse, then policy debate will in the end be dominated by men like [James] Goldsmith, who are willing to take that rhetoric to its logical conclusion.  That is, trade will be treated as war, and the current system of relatively open world markets will disintegrate because nobody but a few professors believes in the ideology of free trade.

And that will be a shame, because for all their faults the professors are right.  The conflict among nations that so many policy intellectuals imagines prevails is an illusion; but it is an illusion that can destroy the reality of mutual gains from trade."

And in 1994:

"Most worrisome of all is the prospect that disguised protectionism will eventually give way to cruder, more open trade barriers.  For example, Robert Kuttner has long argued that all world trade should be run along the lines of the Multi-Fiber Agreement, which fixes market shares for textile and apparel. In effect, he wants the cartelization of all world markets.  Proposals like that are still outside the range of serious policy discussion, but when respectable voices lend credence to the wholly implausible idea that the Third World is responsible for the First World’s problems, they prepare the way for that kind of heavy-handed interference in world trade.

We are not talking about narrow economic issues.  If the West throws up barriers to imports out of a misguided belief that they will protect Western living standards, the effect could be to destroy the most promising aspect of today’s world economy: the beginning of widespread economic development, of hopes for a decent living standard for hundreds of millions, even billions, of human beings.  Economic growth in the Third World is an opportunity, not a threat; it is our fear of Third World success, not that success itself, that is the real danger to the world economy."

And these two from 1993:

"What is true in the Washington view, at least in broad terms, is the belief in the virtues of free markets and the evils of protectionism.  There are qualifications to that view, but they are minor compared with the essential correctness of this position."

"One of the most popular, enduring misconceptions of practical men is that countries are in competition with each other in the same way that companies in the same business are in competition.  Ricardo already knew better in 1817.  An introductory economics course should drive home to students the point that international trade is not about competition, it is about mutually beneficial exchange."


Emphasis added.

Hat tips to Don Boudreaux and Scott Alexander/Noah Smith for the quotes/links.