Francis I whiffs on water

This part of Laudato si’ has been on my mind recently, since a friend posted it on Facebook:

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Even as the quality of available water is constantly diminishing, in some places there is a growing tendency, despite its scarcity, to privatize this resource, turning it into a commodity subject to the laws of the market. Yet access to safe drinkable water is a basic and universal human right, since it is essential to human survival and, as such, is a condition for the exercise of other human rights. Our world has a grave social debt towards the poor who lack access to drinking water, because they are denied the right to a life consistent with their inalienable dignity. This debt can be paid partly by an increase in funding to provide clean water and sanitary services among the poor. But water continues to be wasted, not only in the developed world but also in developing countries which possess it in abundance. This shows that the problem of water is partly an educational and cultural issue, since there is little awareness of the seriousness of such behaviour within a context of great inequality.

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I thought this was a great illustration of how unintuitive economics is; the many learned minds in and around the Vatican make the same kinds of mistakes that the ordinary person makes. The Econtalk podcast of March 2, 2015 covered this exact topic very well. Two brief points:

1. How much water is everybody entitled to? For what uses? When can people bathe? Should the water in the shower cut off after two minutes? Is it some kind of moral law that families should all share the same bathwater? Saying “water is a right” is fine but gives us few clues about practical implementation.

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Farmers need to use more water than the rest of us, and in general the rest of us are happy about that because we value the produce. What about marijuana growers? Are they entitled to more water in the same way that spinach farmers are? Some of us value the produce of marijuana farms and some of us do not. I believe the Pope opposes marijuana farming, but he has now set up a situation in which differing beliefs about rights conflict with essentially no resolution unless we all buy into the whole package. (We don’t.)

2. Is the public funding of the provision of water the most reliable way to ensure that water is available for everybody? There’s a decent argument that municipal-level provision of water is usually the most efficient way to do it, which I will assume here to make things easier. In this situation, should the water be priced at zero? This encourages overconsumption and makes infrastructure maintenance and expansion less likely. Why economize on the use of water when there’s no difference to you in running the tap for 10 minutes or an hour? Where do the funds come from when maintenance or expansion are needed? Should the water authorities attempt to mimic market pricing to encourage better conservation and better infrastructure? That’s remarkably like making water a commodity, isn’t it? You could compromise between the two positions and price water below market but above zero. You can’t be half pregnant, but can something be a half commodity?

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Many areas that have zero-price water have said water in the city center and little or none in the outlying areas where the poor live. They still need water to survive, and water trucks supply them with it but at many times the cost that people with access to a working tap pay. Pricing water above zero/closer to market price would help them, not hurt them, since it would allow for better (or any) infrastructure to reach them. This infrastructure funding could come from other sources, sure, but which, and what would they give up instead? How much infrastructure should be built, and to where? Ceteris paribus it is costlier to live in barren desert than in well-watered areas; who should bear these costs?

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I began by saying the Pope makes the same errors ordinary folks do when it comes to economic topics. Thinking in moral terms is valuable, I agree, but only thinking in moral terms is a poor guide to how to organize the world, especially for large, complicated, impersonal systems. In this case it’s even worse. It’s counterproductive. In the long term treating water like a commodity leads to better outcomes—from the Pope’s perspective and from mine—than otherwise.

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I leave with my favorite Rothbard quote:

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“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Seeing the world as a social scientist vs. as a nationalist

When mass protests against corruption and economic privation began erupting in Venezuela last year, followed by brutal police crackdowns and the disappearing and killing of protesters by government forces and government-backed militias, I naively thought the American Left might take an interest in the protesting side. After all, they were mainly young people upset at the system that was failing them, and the protests seemed to have evolved organically throughout large parts of the country. It didn’t seem to matter how the American Left had approved of Hugo Chávez, cautiously in pockets and enthusiastically in other pockets, for 15 years. After all, Chávez was dead, and it wouldn’t have lost them too much face to declare that his successor, Nicolás Maduro, had betrayed the revolution. Killing peaceful protesters is usually enough to establish bad guy status. Though Maduro was a Chávez disciple and largely continued his policies, it didn’t seem to be asking much to say that some kind of tide had turned.
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But no, where there was a reaction at all it was to point out that one of the major opposition figures, Leopoldo López, was alleged to have links with the CIA. (It is difficult to confidently pinpoint exactly what these links involved, but I am not disputing the major theme.) Thus the argument implicitly ran that what appeared to be an organic social movement was secretly being orchestrated or at least manipulated by the CIA and thus was not eligible for sympathy or support. López turned himself in to avoid being labeled as the mastermind and tarnishing the rest of the movement, and he remains incarcerated at present.
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Though my frustration with the Left continues, I should have been prepared for the disappointment. After all, this phenomenon has happened time and time again. Orwell began his essay “Notes on Nationalism” with
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Somewhere or other Byron makes use of the French word longeur, and remarks in passing that though in England we happen not to have the word, we have the thing in considerable profusion. In the same way, there is a habit of mind which is now so widespread that it affects our thinking on nearly every subject, but which has not yet been given a name. As the nearest existing equivalent I have chosen the word ‘nationalism’, but it will be seen in a moment that I am not using it in quite the ordinary sense, if only because the emotion I am speaking about does not always attach itself to what is called a nation — that is, a single race or a geographical area. It can attach itself to a church or a class, or it may work in a merely negative sense, against something or other and without the need for any positive object of loyalty.

By ‘nationalism’ I mean first of all the habit of assuming that human beings can be classified like insects and that whole blocks of millions or tens of millions of people can be confidently labelled ‘good’ or ‘bad’. But secondly — and this is much more important — I mean the habit of identifying oneself with a single nation or other unit, placing it beyond good and evil and recognising no other duty than that of advancing its interests. …

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In this case, of course, the “nationalism” I refer to is loyalty and emotional attachment to the global “progressive” movement, many of whose goals I share. Because Chávez was considered (by many) to be part of this movement and Maduro is his handpicked successor, the attachment extends to the Venezuelan government of 2014–2015, i.e. the regime that is still causing economic disaster and beating, disappearing, and killing protesters.
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But why is it that so few people seem to be capable of nuance or complexity in politics? It is entirely possible for one to believe, for example, that Chávez did a lot of bad things while with the other hand doing a lot of good things. One can also believe that the CIA is generally up to no good and hence its support of López taints him while also believing that López might locally be considered a legitimate political leader who is preferable to Maduro. This mindset makes sense to me, and it’s not unfamiliar to most people in the US, where the majority of this blog’s readers reside. Take Thomas Jefferson. Most of us can agree that (a) Jefferson had a lot of good, important, insightful ideas about how governments should be run, and at the same time that (b) his advocacy of and personal involvement in the system of chattel slavery are completely despicable, especially given that he seemed in his more lucid moments to have known better. Why is applying this framework to current events and people so uncommon?Clearance Oakley sunglasses

Ancient methods for modern times: Team suspensions in cycling

Looking back on history we find many examples of group punishment whereby an entire community could be held responsible for an infraction by one of its members. Though this seems patently unjust to modern tastes, there was a logic behind it: if the keepers of the peace are limited in their capacity to detect and/or punish crimes, group punishment incentivizes the other members of a potential offender’s community to deter breaches of the peace before they happen. After all, they are close to the potential offender and have much more influence on his behavior than a distant peacekeeping entity. I am not suggesting, of course, that this is always a good policy. Punishing a community for one member’s rebellion against a tyrant is unjust all around. But inter-community murders and another genuine crimes had to be prevented somehow, and with limited law enforcement resources group punishment was often the most efficient method. Thanks to the growth of technology and civilization it is no longer common practice, and I am glad for it, but I don’t condemn the tool for all the ways in which it was used.
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There are instances in which it may still make sense, and one of these was announced today by the Union Cycliste International, the global governing body of competitive cycling. Even people who are not fans of the sport are aware that cycling had, and possibly continues to have, a serious doping problem. (Note: this is not unique to cycling, but it was certainly a more serious problem in cycling than in most sports as far as we know, with former riders from the 1990s claiming that 60-70% of the peloton was doping in major races.)
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I should say first that even though at first I refused to believe Lance Armstrong was doping, eventually the scales fell from my eyes and I have a much more realistic view of the subject now. I recognize that it is still an issue, although I think the UCI has made great strides in reversing the decay of its product. As evidence we no longer have large, musclebound riders with time trial physiques like—to use a completely random example, alleging nothing, I assure you—Miguel Indurain absolutely crushing riders whose body types are better suited to climbs on major climbs. The record on Mont Ventoux, a legendary climb in the Tour de France, was set in the suspicious year of 2004 and has not even been approached since.

Now with the obligatory defensive stuff out of the way I can get to the meat of the post. The UCI announced many changes to its doping procedures, but the one that caught my eye the most was this:

Team Suspension

The UCI has adopted new measures relating to teams and their responsibilities:

Team Suspension
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If two riders within a team have an ADRV [= anti-doping rule violation – RFM3], the team shall be suspended from participation in any international event for a period determined by the UCI Disciplinary Commission. The suspension will be between 15 days and 45 days.

If there is a third ADRV, the team shall be suspended for between 15 days and 12 months.

Fine for UCI WorldTeams and Pro Continental Teams

In addition to the suspension above, UCI WorldTeams and Pro Continental Teams shall pay a fine if two of their riders have ADRVs within a twelve-month period. The fine will be 5% of the annual Team budget.

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For much of the golden age of doping the process was a team effort. Occasionally individual riders would dope on the sly, but to use the most famous example Lance Armstrong’s US Postal team was said to have an organized team doping effort involving not only the riders themselves but the management and support staff as well, and the overall pattern of violations and confessions confirms that they were not alone.

The standard procedure when a rider flew too close to the sun and got burned in doping controls was for the rest of the team to deny they had any knowledge of it and to say it was the rider’s own poor individual decision. As we have learned, this was usually a bold-faced lie. But the value of group punishment holds even if it had normally been the truth. The fact is that doping can be very hard to detect. The reason it became so widespread was that the doping technology was several years ahead of the testing technology. Even today smarter dopers can minimize their risk with well-known methods.
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The UCI has been slowly ramping up the punishments for doping but so far they have all applied only to the riders themselves, although certainly teams do not like the negative publicity they get when the media and fans rightly assume that the incident is probably not isolated. It has had some success (as evidenced by the above link to Mont Ventoux times) but it is not quite enough. There were several cases in the 2014 season that did further damage to the image of the sport.
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Given that it was rare after the early or mid-1990s for doping to be an isolated event on a team, and that teams were all to often incentivized not only to shield their riders but to actively promote doping, as they suffered no severe penalties as an organization for doing so and often won great accolades and bigger sponsorships, this should have been implemented many years ago. Teams are in a much better position to deter doping than the limited amount of doping controls the various agencies that govern the sport nationally and internationally are able to perform. To use this capacity for a result that the consumers of the product prefer is a wise move. It is much more efficient for teams that are already constantly in contact with riders to monitor them at almost no extra cost than for the UCI to do so with far less success and at much greater cost. Sure, it was fun to see record after record broken twenty and fifteen and ten years ago, but the consumers (i.e. fans) of cycling have generally come to a consensus about the product they demand, and it does not include doping.

Is there a pendulum of low-skilled workplace satisfaction?

One of the reasons given for why we see minimum wage increases leading to smaller drops in the quantity of labor demanded than we’d expect from a simple supply-and-demand graph is that employers don’t like to fire people. It’s easy to imagine that this argument has some merit. How would you feel breaking the news to somebody that he doesn’t have a job anymore, especially a low-skilled worker who was performing acceptably before the increase, especially knowing that you’ll be the one blamed for it? I think this effect is probably weak—the people who would be long-run managers would end up being the kinds of people who accept having to do their unpleasant duties—but it could have some non-negligible effects at the margin.
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A complementary argument is that employers adjust to MW increases by working employees harder to get more value out of them once they have to pay them more. (I also think this is an important puzzle piece.) Putting together the first and the second arguments, it seems like there’d be an important consequence of MW increases in low-skilled environments: more workplace tension. This is hard to measure, of course, but not impossible. Perhaps some workplaces already do this. If this idea holds water, periodic employee surveys, including managers, over a long enough timeline could show periods of increasing dissatisfaction and returns to stable levels of satisfaction. This would help fill in some of the details about labor force adjustments that many researchers are currently grasping at. Again, I don’t expect to see large changes, but they might be big enough to observe.
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Readers, I’m not wedded to this idea but I think it’s interesting to consider. What do you think?where to buy oakley sunglasses

The specter of neoliberalism

When I talk about international economic policy with my students, one of the models they use to analyze it is a bizarre potpourri concept known as “neoliberalism”. I understand the appeal of the framework to non-specialists: there are good guys and bad guys, and because it’s so broad your pet concept probably always fits in. The problems, as I see them, are that it has good guys and bad guys, and it’s so broad that your pet concept probably always fits in. While it’s valuable to have some moral lens to see the world through, it’s crucially important for intellectually responsible people to separate questions of fact from questions of values.
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It’s sobering to have to remind people that Pinochet, Thatcher, and Reagan were not economic theorists, they were political leaders. In light of what we know from public choice theory it should be no surprise that political leaders sometimes do Bad Things. But ideas about how societies should go about seeing resources distributed and the limits of human ability to engineer broad-based solutions to social problems don’t depend on anything these politicians did.
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Most people are not familiar with the history of economic thought, and don’t understand how the failures of the orthodox Keynesian theory that dominated the West after World War II became so apparent that the intellectual tides changed in the economics profession long before any real policy changes resulted. It was because of these failures that new theories came to the fore, ultimately becoming accepted enough even to have some small influence on policy. (Small because public choice problems never went away.) If Jimmy Carter had won the 1980 US presidential election, he would have done many of the same things that Reagan did, because that’s what his economic advisers would have advised, because that’s what people who studied the topic had come to agree on. In fact, airline deregulation happened under Carter, not because Carter wanted to unleash the rich and powerful on all of us poor saps, but because that’s what the technical consensus had come to. We hardly even think about it anymore, but without that policy change many of us might never have been on planes before, much less been on planes enough to have routines for how we spend our time on flights. Lowering at least some barriers to trade was an idea whose time had come.
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For people unfamiliar with the history of economic thought it was a tale of certain people rising to the top and using their power to make massive and very bad policy changes. If you think that the top-down theories that had dominated policy prior to the change were the obviously right ones, then the only thing that makes sense is that people consciously torpedoed them, and probably people who were ill-intentioned. But that doesn’t hold up entirely. It wasn’t Reagan and Thatcher who killed orthodox Keynesianism. As a technical paradigm it was dead when they arrived. That they did many other things people still don’t like is beside the point.
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It’s tempting to succumb to a moralistic framework. It has a very primal appeal. But it makes me think of 1 Corinthians 13:11: “When I was a child, I used to talk as a child, think as a child, reason as a child; when I became a man, I put aside childish things.” Many of the things people get emotional about are really technical issues, and it’s the responsibility of academics and analysts to treat them that way, especially in front of non-specialist company.

Emergent meta-order

The Constitution and By-Laws of the Hopi Tribe went into effect on December 16, 1936. Prior to this, the tribe was in a constant state of chaos and mayhem for a thousand years.
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No, actually, the tribe was governed peaceably and well by customary law, including customary constitutional law. That is, there were always rules that governed interactions between people and among groups of people within the Hopi tribe, and there were always higher-order rules about how rules would be adopted or modified. They were often tied into the Hopi religious system. They may not have been written down, but they were as real a force in Hopi life as the written constitution of 1936 is today.
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One of the major motivations for a written constitution was that the United States government had gradually taken over the land around them (and around the Navajos, whose present-day reservation encircles Hopi land) and they were also beginning to be absorbed into the US economy. They were increasingly interacting with the expanding US—sometimes voluntarily, but not always so—a novel situation to the tribe and therefore not part of its constitutional and legal system. For exapmle, the distribution of land had previously been handled by customary law, with land owned by clans and assigned to members of clans; new land began to be cultivated and passed down in accordance with US law, which required updating the Hopi legal system.
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The law & economics fields deals largely with emergent law, but the constitutional political economy field seems mainly to focus on what features would make for good constitutional design. Granted, it is much harder to study implicit constitutions, and in the modern era we think of constitutions as something a single entity creates consciously. Also, the field of constitutional political economy has been concentrated in and on the United States, where a written constitution is in force. But Britain, for example, has an implicit constitution, not created but emergent. By better understanding emergent constitutions the field would be better able to cross-pollinate with fields like development. If our logic is good—and it is—we can take it far.Discount Oakley sunglasses