Morning roundup

The computer begs to be rebooted. But the tabs...

• There's an underlying demand-side problem to misinformation. You can't con an honest man...


• Some days, I love our Environment Minister. Here's David Parker giving Auckland Council a deserved slap for nonsense around character designations. People who want to protect character are "entitled to do that in respect to their own property. But in other parts of their suburb, there will be areas where more intensive housing will and should be built." EXACTLY!! If only central government would fix the incentives that encourage councils to do this...


• New Zealand regime around medicinal cannabis remains a broken mess. I think it was allowed to fall into disrepair on expectation that legalisation would be coming and make it redundant. It has to be very frustrating for anyone who needs cannabis as treatment, and anyone who wants to supply it. The Newsroom column is gated today, but I think will ungate tomorrow if you pull out the /pro from the link. In addition to all the other problems, medicinal cannabis suppliers have a tough time finding banking or insurance. 


• Kate MacNamara keeps digging on the messes around Covid testing regulation. Just impossibly frustrating. You can use a LAMP test to meet the testing requirements to fly to NZ. It's way more accurate than a RAT. But they're banned in NZ. If you try begging permission to use one here just to give some added assurance before going to visit a vulnerable relative, the Government just doesn't answer. Vogons would give the MoH an award for being more Vogon than anything they'd ever come up with. 


• One problem for all the "let's base policy on happiness" people at Treasury and elsewhere: the measures are crap and you can't do anything with them. Here's Bond & Lang, JPE 2019:

  "The necessary conditions for nonparametric identification are strong and unlikely to ever be satisfied. Standard parametric approaches cannot identify this ranking unless the variances are exactly equal. If not, ordered probit findings can be reversed by lognormal transformations. For nine prominent happiness research areas, conditions for nonparametric identification are rejected and standard parametric results are reversed using plausible transformations."

  If you can just run a plausible transformation on the dependent variable to reverse a result, you've got another degree of freedom to justify whatever policy you'd wanted to rationalise. 


• National Party leader Chris Luxon says he doesn't like corporate welfare in the climate response. Good! But the ETS revenues are hypothecated. Does he support putting them back into general revenues? Or, better, would he support a carbon dividend? I like National's emphasis on an ETS led approach, but that's harder if you don't rebate ETS revenues back to households. If he's not going to, he should promise to end the hypothecation that's let Robertson have a slush fund. 
  


• Princeton no longer supports academic freedom.


• Regulatory regimes can embed fragility against shocks. NZ building materials supply, US baby formula...

Ok. I think I can reboot now. 

The Case Against Democracy

The New Yorker (!) has a great summary of some of the recent academic work showing the failings of democracy and the potential upsides of epistocracy. 

If we economists worry about negative externalities, the great big unmentionable one is the negative voter-on-voter externality caused by, well, the things Jason Brennan and Bryan Caplan worry about.

In a new book, “Against Democracy” (Princeton), Jason Brennan, a political philosopher at Georgetown, has turned Estlund’s hedging inside out to create an uninhibited argument for epistocracy. Against Estlund’s claim that universal suffrage is the default, Brennan argues that it’s entirely justifiable to limit the political power that the irrational, the ignorant, and the incompetent have over others. To counter Estlund’s concern for fairness, Brennan asserts that the public’s welfare is more important than anyone’s hurt feelings; after all, he writes, few would consider it unfair to disqualify jurors who are morally or cognitively incompetent. As for Estlund’s worry about demographic bias, Brennan waves it off. Empirical research shows that people rarely vote for their narrow self-interest; seniors favor Social Security no more strongly than the young do. Brennan suggests that since voters in an epistocracy would be more enlightened about crime and policing, “excluding the bottom 80 percent of white voters from voting might be just what poor blacks need.”

The article continues - and I'm again entirely amazed that this work is now hitting the mainstream like this:

Brennan draws ample evidence of the average American voter’s cluelessness from the legal scholar Ilya Somin’s “Democracy and Political Ignorance” (2013), which shows that American voters have remained ignorant despite decades of rising education levels. Some economists have argued that ill-informed voters, far from being lazy or self-sabotaging, should be seen as rational actors. If the odds that your vote will be decisive are minuscule—Brennan writes that “you are more likely to win Powerball a few times in a row”—then learning about politics isn’t worth even a few minutes of your time. In “The Myth of the Rational Voter” (2007), the economist Bryan Caplan suggested that ignorance may even be gratifying to voters. “Some beliefs are more emotionally appealing,” Caplan observed, so if your vote isn’t likely to do anything why not indulge yourself in what you want to believe, whether or not it’s true? Caplan argues that it’s only because of the worthlessness of an individual vote that so many voters look beyond their narrow self-interest: in the polling booth, the warm, fuzzy feeling of altruism can be had cheap.

Viewed that way, voting might seem like a form of pure self-expression. Not even, says Brennan: it’s multiple choice, so hardly expressive. “If you’re upset, write a poem,” Brennan counselled in an earlier book, “The Ethics of Voting” (2011). He was equally unimpressed by the argument that it’s one’s duty to vote. “It would be bad if no one farmed,” he wrote, “but that does not imply that everyone should farm.” In fact, he suspected, the imperative to vote might be even weaker than the imperative to farm. After all, by not voting you do your neighbor a good turn. “If I do not vote, your vote counts more,” Brennan wrote.

My old Public Choice students will be well familiar with these arguments. And so too will some of the students at Victoria University: Ilya Somin was in town last year, and we helped host a guest lecture by him at Vic, attended by at least some of my Public Finance students there.

The article even reminds people about the excellent old British institution in which the Universities had their own constituencies until 1950, where their graduates got an extra vote. If you were an Oxford grad, you got to vote in your home constituency, and for the Oxford seat.

Consequences of the current system?

The political scientist Scott Althaus has calculated that a voter with more knowledge of politics will, on balance, be less eager to go to war, less punitive about crime, more tolerant on social issues, less accepting of government control of the economy, and more willing to accept taxes in order to reduce the federal deficit. And Caplan calculates that a voter ignorant of economics will tend to be more pessimistic, more suspicious of market competition and of rises in productivity, and more wary of foreign trade and immigration.

You could argue that the current system prevents armed insurrection by the less-franchised. But you could also observe Trump hinting that his followers might do that anyway if he doesn't win.

Read the whole piece. Strongly recommended.

Morning roundup

Short notes on the worthies from the open tabs, each of which would merit a full post in an unconstrained world.

• If this high court ruling holds, expect no new policies to cover full replacement. Justice Whata ruled that Vero must cover the full costs associated with reinstating a Christchurch building, even where some of those costs are due to things like requiring deeper piles than were necessary when the policy was set. I think the insurer is right that it should not be liable for costs that are consequent to changes in Council rules; alternatively, Councils could give free money to each and every person in town by requiring that, post-quake, every house be made of gold and have platinum spouting. I also do not think that Councils should be changing the building requirements for a reasonable interval between an insured event and the completion of earthquake repairs. If the building code isn't good enough, fix it ahead of the event so that insurance pricing can incorporate a better measure of expected repair costs or so owners can insure to a higher value to allow for the higher costs.

• Remember "Shoot, shovel and shut up"? Property owners have incentive to take defensive action before a costly regulation is put in place, even if that means destroying valuable habitat. I wonder if that's what's happening in this story. A church is bulldozing two houses to put up a parking lot; the street is about to be designated as a "special character area" in the Unitary Plan. Could be that they'd have held onto the houses if they'd reckoned they'd face much much higher costs if they wanted to demolish sometime down the line. I wonder whether other areas about to come under such protections are seeing similar precautionary demolitions.

• I almost hope that San Francisco does pass a $0.24/can soda tax, just so we can estimate the effects. Prior work shows no evidence of threshold effects on caloric intake at tax levels up to about 12%; this would give evidence at higher tax levels. The costs would be borne by people in San Francisco, and I'd get some information about how the world works. 

• There'd be a billion screaming anti-tobacco activists if tobacco sponsorship of an arts festival resulted in the cancellation of some anti-smoking play. Government anti-tobacco health funding of the West Australian Opera has resulted in the cancellation of Carmen because there would have been on-stage smoking; I've seen outcry from Catallaxy and Crikey. Nothing much otherwise. 

• The Canterbury Earthquake Recovery Agency stole land from Christchurch land-owners under compulsory acquisition. They haven't even bothered paying some of the owners. And people criticise the government for having left the recovery to 'the market'. You can't steal land from its rightful owners under market-based approaches. If this kind of thing happened under a Labour government, National would be standing up for property rights. Under Brownlee, well, it won't happen.

• Addiction is something most addicts grow out of. I love this quote: 

  So why do so many people still see addiction as hopeless? One reason is a phenomenon known as “the clinician’s error,” which could also be known as the “journalist’s error” because it is so frequently replicated in reporting on drugs. That is, journalists and rehabs tend to see the extremes: Given the expensive and often harsh nature of treatment, if you can quit on your own you probably will. And it will be hard for journalists or treatment providers to find you.

  Similarly, if your only knowledge of alcohol came from working in an ER on Saturday nights, you might start thinking that prohibition is a good idea. All you would see are overdoses, DTs, or car crash, rape or assault victims. You wouldn’t be aware of the patients whose alcohol use wasn’t causing problems. And so, although the overwhelming majority of alcohol users drink responsibly, your “clinical” picture of what the drug does would be distorted by the source of your sample of drinkers.

  
  

  Bryan Caplan has similar thoughts. 

  
  
  
• Political ignorance remains a major source of political failure. How can we get things right where voters fundamentally fail to understand the basics on the composition of federal spending?

Libertarian migration [updated]

Ilya Somin correctly notes that broad immigration patterns favour free places over less free ones.

Eric Crampton is right that New Zealand may be freer than the United States right now, and that few libertarians value the difference enough to move there. But I don’t think that proves that libertarianism is just “cheap talk.” The difference in economic freedom between New Zealand (82.3 on the Heritage scale) and the United States (77.8) is relatively small. Moreover, it has often been smaller still in past years, and could easily shrink again in the future. The difference in noneconomic freedom is probably also minor, and in some areas (especially freedom of speech and gun control) may cut in favor of the US.

The real test of whether libertarians (or anyone else) are willing to move to secure greater freedom is the pattern of migration when people have a choice between jurisdictions where the difference in freedom is substantial. Here, there is plenty of evidence that people tend to “vote with their feet” for societies with greater economic freedom.

I will quibble with Ilya on personal freedoms: campaign finance is restrictive, but we have nothing like the thousands of pages of FEC regulations. South Park and HBO series air, unedited, on broadcast. Gun laws here are more restrictive than the best US states but less restrictive than the worst. And I put a whole lot of weight on that there's zero chance here that the armed offenders squad (our SWAT team) will bust down my door in a wrong-address no-knock raid and point guns at my kids, or that I'd be shot by the cops for goofing around on my lawn with a water hose. But folks put different weights on different aspects of personal freedom. The police state stuff weighs heavily for me, less for others.

I'm not particularly puzzled by that folks in general don't move to New Zealand: we're poorer, it's an expensive place to live, and it's awfully far from family. I'm a bit surprised that more US libertarians - the really high demanders - don't move. But the costs aren't trivial.

But why do so many American libertarians choose to live in less-free states?

I took a quick flip through the contributors to Block's libertarian autobiographies. When I could match a contributor to a US state of residence through a Google search, I did. Of the 56 I think I've placed correctly, ten lived in California (Mercatus score -0.413), eight in Virginia (0.275), six in New York (-0.784), six in Texas (0.346), four in Arizona (0.279), four in Alabama (0.092), and others elsewhere. The median freedom score enjoyed by this set of libertarians is 0.019. None seemed to live in the four most-free states: New Hampshire (0.432), Colorado (0.421), South Dakota (0.392), and Idaho (0.356). Lots lived in the least free state: New York.

The median (I'm sticking with medians in the likely case I miscategorized some of the 56) libertarian lives in a state like North Carolina (0.019) while the median American lives in a state like Delaware (-0.008). At least the difference is in the right direction; I'd feared that the median libertarian would be in a less free state than the median American because of the number of academic jobs in the Cal State and New York systems.

Unless already living in one of the most free states, it's hard to imagine anything a libertarian can do to increase the level of freedom he enjoys that is more effective than moving.

Some bottom lines:

• Libertarians regularly choose to be less free than they could be in exchange for better job opportunities, more income, better amenities, or a host of other gross substitutes. But it's not like we didn't already know that.
• There is nothing wrong with being a pluralist and putting weight on a whole bundle of things besides liberty.
• Rights-based libertarians who take a hard line, or at least it's been my experience in various barroom arguments, will say that where efficiency and liberty diverge, we have to pick liberty.* I tend to think that blackboard economics has overestimated the extent to which we can increase efficiency by treading on liberty, but there surely are some policies that fit the bill. I'm just not sure it squares well to claim always to prefer liberty to efficiency while, for example, living in New York rather than commuting in from New Jersey or Pennsylvania.
• Walter Block's list has some of the most committed libertarians. If many of them choose to live in New York and California and none choose to live in New Hampshire (Free State promises aside), the potential for "Going Galt" just might be overstated. Fortunately, Seasteading's initial business model, as I understand it, will rely more on temporary visits, medical tourists, and specialized research rather than on a bunch of libertarians actually being willing to make a high cost move.
• A very good counterargument is that freedom is heterogeneous and that you're living in California because access to medical marijuana dispensaries outweighs the other nonsense.
• If you've moved to a less free state because it has better amenities/job opportunities, and then complain about the regulations and policies, how different is that from moving next to a pig barn (because the land prices are cheap) and then complaining about the smell? In the latter case, it might be worth your while to go and chat with the neighbors to see if you could pool your money to pay the pig farmer to reduce emissions - just like it might be worth your while in the former case to point out the real world costs of the regulations and policies and hope you can help coordinate folks around a change most will prefer. But if the neighbors say that the smell doesn't bother them, why spend so much time being angry about the stench instead of just moving? And if the difference in price between the stench-house and one a ways farther down the road was $5000, and you chose the stench-house, we can probably put some bounds on how offensive the smell really is.

I agree with Ilya that it's important to look at overall migration patterns. Those do demonstrate an average preference for liberty among those making the moves, though there will be some confounding.

It's just surprising that seemingly few ideological libertarians are the ones making the move, and why I found Walter Block's choice of title, "I Chose Freedom", a bit fun. "I Would Have Chosen Liberty But The Academic Job Market Was Thin The Year I Went Out and The Weather Here Is Nice And Who Wants To Live In Flyover Country Anyway" would be cumbersome.

*I'm a pluralist: if the efficiency gains are big enough relative to the loss of freedom, I'll sign on. How could I not? If I put that much value on freedom, I'd be out living in the bush somewhere instead of South Brighton where the swimming pool inspectors hassle me.

Update: Ilya comments further; I'd like to make a couple of clarifications. First, I left DC folks out of the measures entirely: DC isn't ranked in the Mercatus study (or maybe I missed it), and it's too hard without home addresses to tell if DC folks live there (horribly anti-free place), in Virginia (decent), or Maryland (also horrible). If we put the DC folks back in as DC, the median would move a bit, but not much. That's the nice thing about the median - it's robust to my screwing a few things up. The difference between "libertarian-chosen" and the American median is trivial. The median American lives in a state two spots worse in terms of freedom than the median libertarian (by the measure above). If we put the two DC folks in as being in DC, it would be a one state rank order difference. That's trivial in a small sample.

I'd mentioned a couple of pro-freedom things about NZ. What impressed me most when I interviewed here? First, the safety nuts hadn't taken over. Cavestream had one minor warning sign. Back in the States, there would have been someone with a rifle ready to kill (for his own good) anybody who tried doing it without five permits and a guide. All kinds of crazy dangerous roads had no safety rails. I wouldn't mind safety barriers on our dodgy roads, but it was a signal of a place where the safety nuts were kept in line. Second, political discourse seemed far more free. On an evening news programme, a sitting MP told the interviewer to "stop shooting rapid fire questions at her like some 15 year old premature ejaculator." A bit more fun than C-SPAN.