Thursday, May 24, 2018

fascinating Freakonomics on CSR

Corporate Social Responsibility...

And then the next episode with a focus on the pharmaceutical industry (interviewing the CSR rep at Pfizer)

Wednesday, May 23, 2018

Insights about politics and public policy from James Scott’s Seeing Like a State

Scott’s project started with trying to understand government attempts to make society “legible”—to classify and organize the population and simplify taxation and protection against internal and external threats. He began to see legibility as a key problem for governance.
The issue? “The pre-modern state was, in many crucial respects, particularly blind; it knew precious little about its subjects, their wealth, their landholdings and yields, their location, their very identity. It lacked anything like a detailed ‘map’ of its terrain and its people…As a result, its interventions were often crude and self-defeating.” (2)
How did the State make society more legible? Scott noted that a wide range of processes—from the creation of permanent last names and population registers to the standardization of weights, measures, language and legal terms—were all useful as efforts to increase legibility.
This knowledge is necessary for “effective” governance, whether benign or corrupt. If corrupt, political agents cannot maximize their own goals without such knowledge. If benign but lacking knowledge, government can only achieve success through blind luck—or more often, find failure even with the best of intentions.
How the State Can Lead to Profound Evil
But Scott’s work evolved as he considered brutal outcomes in the history of governance. In his words: “It is not so difficult, alas, to understand why so many human lives have been destroyed by mobilized violence between ethnic groups, religious sects, or linguistic communities. But it is harder to grasp why so many well-intended schemes to improve the human condition have gone so tragically awry.” (4) He hoped “to provide a convincing account of the logic behind the failure of some of the great utopian social engineering schemes of the twentieth century.” (4)
Scott argues that “a pernicious combination” of four conditions is required (4-5, 88-89). First is his original topic of study: “the administrative ordering of nature and society” as detailed above. “By themselves, they are the unremarkable tools of modern statecraft; they are as vital to the maintenance of our welfare and freedom as they are to the designs of a would-be modern despot…”
Second is “a high-modernist ideology”—strong confidence about progress through science and technology, growing dominion over nature and human nature, and the rational design of governance to promote an effective society.
Third is an authoritarian state that is willing to use the weight of its monopoly on legitimate force to bring their designs to life. Combining the first two with the third is when governance can easily become lethal.
As a fourth condition, Scott notes that a weakened civil society (family, religion, and civil organizations) is helpful for the state that wishes to implement its plans. Taken as a set, “the legibility of a society provides the capacity for large-scale social engineering, high-modernist ideology provides the desire, the authoritarian state provides the determination to act on that desire, and an incapacitated civil society provides the leveled social terrain on which to build…”
Observations and Clarifications on “Modernist” Faith
Scott develops the idea of “modernism” in chapter 3 and discusses it throughout the book. He notes that faith in “high-modernist ideology” started in the West, following its remarkable successes in science, production, and technological advance. But this emphasis on science should not be confused with Science or ideal scientific practice. The ideology is more blind faith and optimism about “progress” than a careful understanding of how science and government work in practice.
Second, the emergence of this ideology aligns with the Progressive Era in the United States—with its faith in progress, science, and elites aggressively governing society. The means to those ends ranged widely—from regulation of business to America’s leading role in the eugenics movement.[1]
Third, this ideology can be captured by self-interests. Businesses want to restrict competition and pursue “state action to realize their plans…There [is], to put it mildly, an elective affinity between high modernism and the interests of many state officials.” (5) Progressive regulatory efforts were often captured by industry in ways that bolstered market power and profits.[2]
Fourth, high-modernism is “no respecter of traditional political boundaries; it could be found across the political spectrum from left to right.” The key: the desire to “use state power to bring about huge, utopian changes in people's work habits, living patterns, moral conduct, and worldview.” (5) In our sloppy contemporary political rhetoric, it is common to refer to “liberals” as those who prefer more government activism. Of course, most self-styled conservatives (and certainly most Republicans) prefer their types of optimistic activism as well.
Fifth, Scott avers that this utopian vision [is not] dangerous in and of itself. “Where it animated plans in liberal parliamentary societies and where the planners therefore had to negotiate with organized citizens, it could spur reform.” (6) But Scott is certainly concerned with any form of State-based idolatry—whether economic or social, whether driven by nationalism or moral concerns.
An Illiberal Irony
Liberals are also said to value choice and freedom—and to focus on individuals (particularly the vulnerable) and to defend the rights of individuals (at least those who have been marginalized). But government activism, by construction, is necessarily illiberal in fundamental ways.
One of the ironies of historical and contemporary Progressivism is its low view of the people they seek to govern. Of course, in contrast, the elites are capable—and far more capable than those they want to help. “What is perhaps most striking about high-modernist schemes, despite their quite genuine egalitarian and often socialist impulses, is how little confidence they repose in the skills, intelligence, and experience of ordinary people.” (345)
The calculus behind efforts to govern are “necessarily abstract, ignoring citizens as individuals.” (346) One can govern based on an individual or some “average” individual, but this is inherently reductionistic and flawed. More likely, policymakers aim at abstract groups of individuals. A “planned social order is necessarily schematic; it always ignores essential features of any real, functioning social order.” (6)  “The lack of context and particularity is not an oversight; it is the necessary first premise of any large-scale planning exercise.” (346) Moreover, as population size and diversity increase, such aggregations are increasingly ineffective and illiberal.
In contrast, economists and policymakers should strive to understand what models and statistics say—and don’t say. They are always—merely—proxies for the state of the world they purport to describe and measure. Taking them too seriously, too literally, too far, will likely lead to various errors—or even, evils.[3]
Implications for Public Policy
Scott warns that his arguments should not be misunderstood as a defense of all voluntary efforts or an argument against all government activity. He wants to “plead innocent to two charges”—“uncritically admiring of the local, the traditional, and the customary” and “an anarchist case.” (7) Likewise, “I am emphatically not making a blanket case against either bureaucratic planning or high-modernist ideology.” (6) One might disagree with Scott on the extent of the ethical arguments for government’s use of force as a means to various ends. But anyone can appreciate his closing points about pragmatic “rules of thumb” for better policy prescriptions—or at the least, to “make development planning less prone to disaster.” In his words (345):
1.     Take small steps. In an experimental approach to social change, presume that we cannot know the consequences of our interventions in advance. Given this postulate of ignorance, prefer wherever possible to take a small step, stand back, observe, and then plan the next small move...
2.     Favor reversibility. Prefer interventions that can easily be undone if they turn out to be mistakes.
3.     Plan on surprises. Choose plans that allow the largest accommodation to the unforeseen...
4.     Plan on human inventiveness. Always plan under the assumption that those who become involved in the project later will have or will develop the experience and insight to improve on the design.
Knowledge and humility, foresight and flexibility, modest proposals and sunset clauses. Outside of those who pursue power for its own sake or see Statism as a desirable end, who could disagree with Scott’s concerns about the State, utopian impulses, and government’s proclivity for dangerous policy blunders?

[1]  Indiana was the first state to implement a eugenics law in 1907. (See: “Hoosier Eugenics: When It’s Bad to Be First,” The Indiana Policy Review, Winter 2017: 24-27.) For a broader look at Progressivism, social policy, and economic policy, see: Thomas Leonard’s Illiberal Reformers (2016) and my review of it, “Exposing the Paradoxes of Progressivism," Journal of Markets & Morality 19 # 2, Fall 2016: 357-371.
[2] See: Gabriel Kolko’s The Triumph of Conservatism (1963) and “A Centennial Anniversary for the Bull Moose 'Progressives’,” The Indiana Policy Review, Fall 2012: 19-22.
[3] Scott notes that “the discipline of economics achieves its formidable resolving power by transforming what might otherwise be considered qualitative matters into quantitative issues with a single metric and, as it were, a bottom line: profit or loss. Providing one understands the heroic assumptions required to achieve this precision and the questions that it cannot answer, the single metric is an invaluable tool. Problems arise only when it becomes hegemonic.” (346)

Immigration and High School Graduations

In some ways, immigration is not all that difficult to analyze. The first key is an opening concept from the first course in Microeconomics. When immigrants come here to buy and sell, to work for employers and own businesses, to borrow and invest, and so on, they engage in a wide variety of voluntary, mutually beneficial trades that are good for them and good for society.

Of course, there's more to life than economics. For example, we want immigrants to be good citizens too: no crime, terrorism, etc. Or if we’re concerned about language and culture, we can look at the assimilation of the first, second, and third-generation immigrants—along with policy and civil society’s efforts to make this easier. Is America more like a melting pot or a wild salad?

In contrast, when immigrants come here and stay on welfare, then monies are taken from taxpayers and given to immigrants. Government coercion replaces voluntary activity—and one party now benefits at the expense of another. 

This is a net drain on society in efficiency terms. Of course, there's more to life than efficiency. (But we shouldn't imagine that inefficiency is efficient either!) Maybe we should help (some) immigrants even when they’re a drain on the economy—for example, political refugees.

But did you catch that all of the above can be said about natives as well? Are we productive or not? Are we good citizens or not? Are we a drain on society? The issue isn't really immigrants vs. natives. (Besides, we’re all immigrants or descendants of immigrants!) Really, the question is whether any given person is a productive member of society.

Another issue is the extent to which immigrants provide competition in certain labor markets. If we allow a bunch of foreign economists to come into the country, this is good for the country, but tougher on me. If we get more foreign doctors, then health care costs would be reduced, but doctors would face more competition. If we permit more unskilled labor to immigrate into America, then it becomes more difficult for natives to make a living if they have fewer skills.

Such immigrants are good for the country as a whole, but the increased competition can make things more difficult for certain workers. Even so, working immigrants are good for consumers and the economy overall. They help to lower costs and thus prices. They provide more choices in goods and services. And their penchant for hard work and entrepreneurship is a welcome addition to economy and society.

As we come to a season of high school graduations, here’s a useful way to think about immigration: It’s akin to the difference between accepting vs. deporting the Class of 2018. Sending these graduates away would have some obvious benefits—in particular, less labor market competition and the ability to get rid of a few deadbeats. But on net, even with some yahoos and sluggards in this year’s graduating class, on net, it's lovely that they join us in the workplace and in society. 

Congratulations to the Class of 2018 and welcome to adulthood!

pay teachers more?

Tom Coburn thinks so. What to think?
Paying science, math and special ed teachers more would probably be a net improvement (to alleviate the persistent shortages caused by the current approach to compensation), but teacher cartels don't want this.

It's generally not a high priority for teachers to be paid more. This is obvious since they are so passionate about having the government as a primary employer with tremendous monopoly power over them-- as their cartel wars against the charters and vouchers that would make their labor markets more competitive.
It's not at all clear that paying (all) teachers more would be a net improvement. Murray makes this point thru a thought experiment in his great book "In Pursuit of Happiness and Good Govt": if you pay teachers too much, you attract people to the profession for the wrong reasons. At the margin, who do you want teaching: those in it for the money or those who love to teach?