Thursday, December 21, 2017

debt and inflation vs. taxes in post-1930 American political economy

In political economy, the persistent temptations are debt or inflation to pay for govt spending. Both strategies push the costs into subtleties not likely to be seen-- or its causes/effects imagined-- by people who (reasonably) don't pay much attention to politics.

If you look at less-developed countries, they always have trouble with debt and/or inflation. In developed countries, the temptations are still there, but reasonably-effective institutions are usually in place to limit the damage. (That has a lot to do with why they're "developed"!)

In the American context, the temptations didn't really get rolling until the larger government of the 1960s. (The New Deal was far more regulatory than fiscal, with its post-Lochner ability to bury costs by imposing on businesses.) Pre-Reagan, the temptations were more inflationary. But that was greatly reduced by Reagan/Volcker monetary policy and the Reagan/Congress tax reforms [the marginal tax rate cuts (top rate reduced from 70% to 28%) and the tax simplification which also "indexed" the tax code for inflation]. Prior, govt had tremendous incentives to use inflation to raise money directly and then indirectly through "bracket creep" in the tax code. Since Reagan, therefore, the temptations have become more fiscal than monetary.

The Atlantic's nice work vs. Trump-apocalyptic and the general problem of apocalytpic among Dems

Just posted two things from The Atlantic-- on higher education (signaling vs. human capital) and an elegant solution to hazing at colleges. I've enjoyed my subscription/exposure to them so far-- very much. The first issue had a ton of TRUMP-APOCALYPTIC and there have been fragments of that since, but overall, really nice work.

More broadly, I heard Michael Medved comment that Dems are in trouble to the extent that they continue to see and/or sell the world in apocalyptic terms. This sounds correct to me. If you're going to be a false prophet, follow the environmentalists, the economy-is-burning libertarians, the more-rabid pre-millennialists, etc.-- and keep your predictions further into the future.

Tuesday, December 19, 2017

review of Hendershott's "The Politics of Deviance"

As a Christian, an economist, and a public policy analyst, this was an interesting book for me to read and review. In a word, this slender volume ably describes how categories of deviant behavior have changed in recent decades.

Hendershott opens the book by describing the “the death of deviance” within the sociology profession. The topic had been one of their most important fields into the 1960s and a popular staple in undergraduate curricula—as a set of provocative topics ranging from addiction to serial murder. But under post-modern influences, sociologists began to argue that deviance was defined by society’s dominant groups, largely for the purpose of censuring other groups. Ironically, in essence, the intelligentsia was claiming to use their power to free previously ostracized people.

In any case, today, powerful interest groups are clearly playing a dominant role in defining deviancies away—or into existence. The implications of this change have ranged from the ascendance of “political correctness” to the reformulation of cultural norms. As a result, the modern understanding of deviance often parallels the contemporary use of the term “tolerance”—i.e., in large part, those who hold to traditional norms are believed to be deviant and, ironically, their views are no longer tolerated. For example, homosexuality was almost universally considered deviant, but is now rivaled in deviancy by “homophobia”—with the latter defined in the contemporary terms of “tolerance”, where mere disapproval is cast as hatred and fear.

How does society define “normal”—both in the sense of “ordinary” (what people typically believe and how they typically act) and in terms of the “norms” that society expects individuals to meet.  Moreover, how and why do these definitions change over time? Economists tend to focus on the material incentives associated with responses to individual preferences and government institutions. But Hendershott is covering a realm in which non-material incentives are important and are determined in communal settings. Obviously, religion and beliefs about “absolute standards” can play a key role here—but other factors are also important. Take two examples. First, why did individuals behave morally in the 1950s? To what extent was their behavior driven by Christianity or other internal beliefs about morality rather than a reflexive conformity to social norms or a desire to avoid the costs of social stigma? Second, to what extent was the post-Saddam looting in Iraq due to the impact of Islam, poverty, Saddam’s dictatorship, or the absence of law enforcement. To make a more specific application: how much looting would there be in the average American city if there were no police available?

After her introduction, Hendershott turns to a variety of contemporary applications. Her first topic is the role of medicine in defining deviance—in particular, by promoting disease over decision. And beyond reducing personal culpability, what was previously considered “sin” is now often viewed as benign. In a word, many formerly deviant behaviors are now considered neutral and if the behavior is still considered unfortunate, it is also viewed as largely out of the person’s control. (She spends most of this chapter talking about various addictions, but one can also easily see this within the debate about homosexuality.) Is it “biochemical determinism” or “free will” with some inherent tendencies to behave in a certain manner? The former has always seemed a strange position for one to advocate. Where is the dignity, self-efficacy and empowerment of having absolutely no control—or at least, in making that claim? In the Christian tradition, blame-shifting goes back as far as Adam and Eve in the garden (Genesis 3:8-13). But it always seems like a high price to pay for pity and an excuse. In any case, the evidence that people do change belies the claim of the determinists.

Hendershott continues by talking about the “normalization” and de-institutionalization of the mentally ill. She notes that, by normalizing mental illness, the definition was prone to expand. As a result, we find assault redefined as “rage”, temporary insanity copped as a plea, and ADHD and Ritalin taking the place of character flaws in children and parents. Today, more than six million children are defined as mentally ill, with parents now even requesting the diagnosis. Noting that doctors wrote nearly 100 million prescriptions for anti-depressants in 2001, she concludes soberly that “the practice of medicalizing deviance has encouraged the dangerous fantasy that life’s every passing imperfection can be clinically diagnosed and alleviated, if not eliminated, by pharmacological intervention through push-button remedies.”

Hendershott also discusses sexual abuse by Catholic priests—and how it relates to pedophilia, homosexuality, celibacy, and the sometimes contradictory agendas of the tolerance-mongers. The media have been reluctant to identify most of these incidents with homosexuality, instead focusing on pedophilia and trying to connect the abuse to celibacy. Of course, celibacy (for priests and other singles) is now largely viewed as deviant, having been replaced by a social norm of promiscuity. At the same time, some within psychiatry have been seeking to normalize pedophilia. (She cites an article the APA Psychology Bulletin and notes that in 1994, the DSM was revised to say that pedophilia by itself was not sufficient to “be indicative of psychological disorder”.)

One of the strengths of Hendershott’s work is her use of contemporary cultural and political examples to illustrate her points. She points to the influence of One Flew over the Cuckoo’s Nest in de-stigmatizing mental illness. She critiques A Beautiful Mind, but she would have better served in complementing it, at least in contrast to As Good as It Gets. While the love and long-suffering of John Nash’s wife are essential to his recovery, love and “tolerance” are not portrayed as sufficient. Nash also emphasizes the importance of his “diet of the mind”— abstaining from certain destructive thoughts. In addition, Hendershott points to the late Senator Patrick Moynihan’s warning about “defining deviancy down” in the early 1990s as the catalyst for the popular reconsideration of deviancy as a doctrine—focusing on illegitimate births, welfare dependency, sexual promiscuity. She argues that the election of Rudolph Guiliani in New York City signaled a recovery in traditional understandings of deviance. And she also discusses the role of 9/11 in redefining and solidifying traditional moral judgments.

Finally, all of this begs some separate but related questions. Which “deviant” behaviors should we allow people the freedom to engage in? To the extent that we allow such freedoms, how does society continue to indicate that the behavior is, in fact, deviant? I agree with Hendershott that cultural change largely determines legal change. Drunk driving, cigarettes, sexual harassment, and date rape have all been stigmatized in recent years—and within more traditional moralities this is a good thing. In the movies of the 1930s, drunkenness, adultery, and wife-beating were all glorified—but over time, the culture has stigmatized them all. Although law may serve some role, the long and slow but ultimately more successful approach is to emphasize cultural change—one life, one family, one community at a time.

Friday, December 15, 2017

on cause/effect

"The very fact that I am saved by faith and that nothing at all is demanded from me should in itself cause me to strive." -- Kierkegaard (See also: Paul in Ephesians 2:8-10.)

The cosmological argument can take you to the existence of a creator god/God as the ultimate "First Cause". Cause/effect is a crucial feature of life in general and science in particular-- and a subject of confusion and controversy.

Likewise, we all have a basic choice to make (and controversy to resolve) about cause/effect in religious terms. Do your ("good") works cause salvation? Or does grace (and your faith in that grace) cause salvation-- which then causes good works?

Kierkegaard again: "Good works are like a child giving his parents a present, purchased, however, with what the child has received from his parents. All the pretentiousness which otherwise is associated with giving a present disappears when the child understands that he has received from his parents the gift which he gives to them."

Drop the pretentiousness, embrace the grace, give gifts from the wealth you have received.

Tuesday, December 12, 2017

potential racial bias in Louisville police searches

The CJ writer misses the most important number: the rate of successful searches by race. (Here's the link to the study.)

If search rates differ but success rates are the same, bias is much less likely. (An even stronger example: loan default rates by borrowers vs. loan rejection rates by lenders. If default rates are higher for those in group X vs. Y, then group X is getting too many loans.)

In this case, searches on whites yielded greater success than on blacks, which leads a (weak) inference that blacks are searched too often relative to whites. (Why a weak inference? There are other variables in play.)

Saturday, December 2, 2017

Econ202: on the Laffer Curve and "Supply-Side" economics

Such things are difficult to measure in Macro, but the evidence seems to indicate that the Reagan tax cuts did increase tax revenues. Then again, he was cutting the top marginal tax rate (MTR) from 70% to 28%. (See also: JFK cutting the top MTR from 91% to 70%. For probably counterexamples, see the various MTR changes since then by every president since Reagan.)

The stats/graph/concept here is usually described as "the Laffer Curve"-- the necessarily upside-down-U-shaped relation between tax revenues and MTR's. It's impossible in Macro to discern the exact location of the top of the curve. But clearly, there are tax rate levels where lower MTR's get you higher revenues.

The relevant econ principles here are called "supply-side economics"-- the idea that lower MTR's necessarily increase incentives on the "supply-side" (labor, capital, entrepreneurial activity, etc.)

The extent to which incentives translate into behavior is, as always, an important practical/statistical consideration. But the econ/logic behind the Laffer Curve and the point about incentives are as solid and obvious as gravity.