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On the libertarian (ish) moment (part iii prelude) – Economic Frameworks

Recap: I’m doing a series on the libertarian (ish) moment looking at why it feels like its happening, and thinking about if we can expect it to continue. Last post I checked my assumptions about the internet increasing awareness of corruption and came to inconclusive but negative leaning results.

For this post, I’m going to lay some ground work for part iii talking about economic frameworks and what situations should make us think we should shift our frameworks.

Economics does a pretty good job of describing how certain idealized actors behave in certain idealized situations and what the consequences will be in perturbing those specific situations in specific ways.

In situations of pure competition, with perfect information, and no externalities, the default outcome is provably the most efficient and any intervention will make things worse.

In situations of pure monopoly without price discrimination, the default situation is provably inefficient and price controls will probably lead to better results with higher output, lower costs, and greater total surplus.

In situations with externalities, a tax or a subsidy will make the situation better depending on the direction of the externality.

In situations with information asymmetries, the dynamics are more complicated than in the above cases, but usually some regulatory action exists that is an improvement.

The reason I run through all these scenarios (and there are more that I skipped) is that people sometimes naively say “economics tells us that…”, when in fact economics tells us wildly different things (in some cases directly opposite things) depending on the situation. Getting the economics right often amounts, in practice, to correctly diagnosing the situation and picking the right framework.

The relevance of the above, is that if a situation has changed materially, it is almost always going to be the case that the economically prescribed regulatory environment has also changed. Suppose, you like a particular regulatory regime and feel it is well tailored and effective. If the world changes in such a way as to add or remove a significant externality, add or remove a significant information asymmetry, or to substantially increase or decrease the level of competition or market diversity then you should have a strong presumption that the regulatory regime is no longer appropriate. If a regime still seems appropriate after a big change, rather than believing it is still appropriate, we should consider that we might have missed something, or succumbed to status quo bias, or may have a sentimental attachment to things past.

Scottish Independence would be the End of the World

There hasn’t been much reporting on the Scottish independence vote in the US press. What coverage there is has been rather blasé’. They point out that yes, they probably should stay in the union, but otherwise don’t hit the issue too hard. A rare exception has been Krugman , who, as usual , is the most correct person in all of mainstream media.

There is no complacency on this blog. Scottish Independence would be the End of the World. Well, that’s a slight overstatement, but Scottish independence has the potential to be really bad. So as noted, Scotland will fall into economic ruin.

Testable prediction: within 15 years, an episode of unemployment / joblessness above 20%.

It could also trigger a variety of follow on negative consequences.

Testable prediction: Greater than 10% chance of rioting / civil unrest in Scotland conditional on economic ruin.

Testable prediction: Greater than 5% chance of rioting / civil unrest due to independence movements in a region of continental Europe within 5 years of Scottish Independence.

Testable prediction: Greater than 5% chance of rioting / civil unrest due to independence movements in a region the UK within 5 years of Scottish Independence.

Scotland leaving takes a lot of the most pro EU voters out of the UK. Testable prediction: Greater than 25% chance of UK leaving the EU within 2.5 years of Scottish Independence. Further prediction: greater than 33% chance of ‘seriously messed up sh#$’ happening within 5 years of UK leaving the EU.

The UK would be diminished globally if Scotland leaves. Testable prediction: Greater than 85% chance of an international organization with the UK as a member failing to stop something awful with 5 years of Scotland leaving.

On the libertarian (ish) moment (part iib) – Putting My Google Trends Where My Mouth Is

Recap: I’m doing a series on the libertarian (ish) moment looking at why it feels like its happening, and thinking about if we can expect it to continue. Last post I hypothesized that the rise of the internet has made political corruption at all levels more visible and increased common knowledge of corruption which should reduce people’s trust in government and make them more libertarian ish.

For this post, I’m going to try a few goggle trend searches to test this theory. The test is not ideal because if people are seeing corruption in articles or shared links rather than searching for it, then it won’t show up in goggle search trends. Likewise, if people are searching with proper names of specific shady figures the general titles may not increase in frequency. Also data starts in 2005. That said, limitations aside, if the theory is true I’d expect to see some trend.

So, first off I searched for terms directly related to corruption to see if they increased over time. Results are decidedly mixed, one term goes way up, some go sideways, and many tilt gradually down.

Next I searched for a bunch of terms that are not directly corruption related but probably have unsavory associations or that people might look for while searching for shady behavior. No huge trend but its probably mostly down

Lastly, I searched for a bunch of terms related to local politics to see if the people are looking more into local officials with the net. Again seems to be a general downtrend

All in all, this seems to be evidence against my last post, although somewhat weak evidence given the limitations of the data. Also I just searched for trends in search terms I imagine people might use, if the people actually doing the searches actually use different terms then this would not detect that.

On the libertarian (ish) moment (part ii) – Corruption and the Appearance Thereof

Recap: I’m doing a series on the libertarian (ish) moment looking at why it feels like its happening, and thinking about if we can expect it to continue. Last post I looked at big issues and claimed that we couldn’t completely distinguish between a rise in the general level of knowledge about these issues and a rise in libertarian sentiment.

For this post and the next few, I’m going to try to zoom in on libertarian sentiment. The internet is a big deal. This is not a particularly novel insight, but its true. In the past, people suspected that there was corruption or undo influence at various level. Everyone “knew” Albany was a cesspool of corruption, but this was just a cultural background assumption, people didn’t see specific evidence. On the occasion people were confronted with evidence, it would have been local reporting so they wouldn’t see the collection of evidence from all sources. Now people see specific evidence for their area and for many other nearby areas also.

Here are some recent local scandals: Cuomo, Christie, more Christie, a bunch of random guys in Albany. And for a general summary there’s the Wikipedia list of scandals. [note: these links are just provided as examples, you don’t actually need to read them (other than maybe the Coumo piece if you haven’t read it yet)].

Reporting provides a near real time view of the operation of corruption. Here is a great and very interesting report on how existing auto incumbents are paying state legislators to write bad laws to reduce competition and keep Tesla out of the market.[note: this is a very interesting story and worth reading]

In addition to reporting, the internet empowers individuals to do some digging of their own. A while back I read this article on a conflict over a bridge on the Canadian border. Using the internet I was able to check director and officer positions at several involved companies and incorporated charities, ownership of some of the involved properties, and campaign contributions to some of the involved political figures. The news story isn’t about corruption, but someone with an internet connection can find it from what’s in the story.

All this will inevitably lead to more anti-government sentiment. When you know an institution is crooked, you are less inclined to vest it with power. Even if, on balance, the government is less corrupt now than it was in the past (may or may not be true) it is seen to be more corrupt now and so will be trusted less. Absent some significant crackdowns and good governance initiatives, it seems unlikely this trend will reverse.

On the libertarian (ish) moment (part i) – Easy Issues and information

One reason I think the world seems more libertarian than it did in the past was that a number of issues which previously divided libertarians from conservatives have been / are currently being publicly resolved in the direction of libertarians. The obvious big one is plant legalization. To a lesser extent, some subgroups of libertarians did not support institutionalized governmental discrimination against gay people. On these issues the world in 5 years from now will look a lot more like the libertarian view than it will look like the status quo of 15 years ago.

Will this trend continue on other issues and does it tell us anything about libertarianism? I think the answer to both is probably “not really but, eh maybe?”. A first point that’s relevant is that although plant legalization was considered a ‘libertarian’ issue, it has probably long been the case that the absolute number of democrats in favor and the absolute number of republicans in favor were both far higher (probably by orders of magnitude) than the absolute number of libertarians in favor. The distinction is that libertarian party leadership was for it, and that a higher percentage of libertarians were for it. How you explain those facts is going to impact your view on what the trend on this issue means.

One key characteristic of the issue is that it’s a really easy question. Some policy questions are hard and complicated and involve contentious value judgments and difficult tradeoffs. Some are layups. The two main causal reasons someone could oppose plant legalization are ignorance on the subject or financial conflict (e.g. they are an alcohol company, or take advertising money from one, or are receiving payments in the form of donations or consulting fees from one). Everyone (by everyone I mean most people) who makes an effort to be informed and acts in good faith gets the same answer and this has been true since at least the 70s.

As for the large numbers of democrats and republicans not financially conflicted but opposed, most were probably not that knowledgeable on the question. Very few people randomly go out of their way to research some question of policy unless its made salient by some leader or public debate. So to see if its really a ‘libertarian’ issue, you would want to see how does P(pro plant | libertarian & well informed & not financially conflicted) compare to P(pro plant | democrat & well informed & not financially conflicted) and P(pro plant | republican & well informed & not financially conflicted) and how do all three compare to the base rate of P(pro plant | well informed & not financially conflicted). I don’t have the data on this*, but I would bet they are all close enough and that the differences between parties on this issue probably stem mainly from the percentage of party members that are well informed. Libertarian party members were probably strongly selected for being knowledgeable about plants. Likewise leadership of parties that actually win elections is probably strongly selected for being finically conflicted.

If you buy into this model, than seeing a big social swing on these issues could just as easily be caused by an increase in well informed people or a decrease in financial conflict without any change in ‘libertarianism’. So, what’s the answer? I don’t know, I suspect an increase in ‘well informed’nes but its hard to say for sure. Usage trends point that way. The medical trend probably produced and distributed a lot of educational materials. And possibly the rise of the internet should make us think people should on balance be better informed than the past..?

On the libertarian (ish) moment (intro)

A while back the times had a piece called Has the Libertarian Moment Finally Arrived.

It turns out that a lot of the stats in the article seem to be somewhat shaky.

But nonetheless, I previously had and still retain the subjective sense that something was going on and I think a lot of people had that sense, which is what motivated the article in the first place. For several posts I’m going to think somewhat casually about what is causing this sense and what if anything it means.

Fear mongering

h/t from ADL http://www.motherjones.com/environment/2014/03/tritan-certichem-eastman-bpa-free-plastic-safe my joking title aside, scary stuff

One Tupperware to rule them all

- I had a lot of old Tupperware that was plastic and wanted to make sure I was not being exposed to chemicals. So I looked into both new plastic and glass Tupperware.
- Here’s what I got:

- Points in its favor. Its glass so it’s as chemical free and biologically inactive as home storage gets. Its versatile being freezer safe, microwave safe, and even oven safe (may be obvious but don’t go direct from freezer to oven). The snaplock technology with silicone gaskets also gives a very solid watertight seal that can work even if you turn them upside down and shake vigorously. They are great. If you need new home storage containers for food in the next year or so you should get these.

Research and affiliate links

Those of you on my email distribution list know I do a lot of research before deciding on products. Maybe less than ADL, but still a whole lot of research. So rather than sending all my research to your inboxes, I’m going to paste the outcome of my research here.
I may provide a quick review, but to keep it low stress for myself it’s mostly just going to be in this format:
- Here’s the subject I looked at
- Here’s what I got “affiliate link goes here”
- Here is a very brief summary of why. For things that I bought a while ago, this line may be a summary of my user experience rather than a summary of my research.

Hopefully your inboxes will thank me for replacing emails with blog posts that won’t clog your inbox and are easy to follow with an RSS feed.

Take that Economists!

Found $10 on the street this morning. Picked it up. Take that Economists!