Monday, March 13, 2017

Good old days?

Whenever someone evokes "the good old days," I answer with two words: "medical science." The ailments that we have experienced (or will experience) are best treated by today's (or tomorrow's) medical science, not that of 10, 20, 30, 50 years ago.  The long run longevity improvement trends are clear.

The other trend I celebrate is the rise in interracial and interfaith marriage. It and the mixed heritage offspring are the best antidote to ancient tribalisms that are our heritage -- and often our plague.

I'll take this year over any other.

But the arc of human progress is not easy to fathom up close. Numerous declinist essays and arguments have been floated in recent years. Nicholas Eberstadt writes about "Our Miserable 21st Century: From work to income to health to social mobility, the year 2000 marked the beginning of what has become  a distressing era for the U.S." in the recent Commentary.

Tyler Cowen makes similar arguments in his widely reviewed and well received The Complacent Class. To be sure, Cowen tempers his pessimism. 

Re Ebertstadt, be careful suggesting a uniquely U.S. predicament. Has not most of Europe also experienced a productivity and economic growth slowdown? Do not both, the U.S. and Europe, have to cope with an aging population that works and invents less? Are not both afflicted with sclerotic politics and bureaucracy?  Have not both gone through a financial crisis brought on by a concocted housing boom? Is not catch-up growth (unlike China's) no longer an option for both?

Re Cowen, its more complicated.  He cites similar outcomes as Eberstadt but he devotes his argument to the idea that Americans have lost the adventurousness that characterizes their history.  Thus the title of the book. How and why did mass complacency happen? "Ultimately America decided it didn't want a redo of the turmoil of the 1960s and 1970s, and it did what was needed to stop that from happening" (p. 11). Cowen believes in cycles.  Economic models that include demographics will give you cycles but the models are not so useful when it comes to the specifics of durations and amplitudes.

One of the many recent U.S. trends that Cowen studies involves improved matching capabilities and opportunities (including "assortative mating" which has a been written about a lot). These are mixed blessings. The author elaborates in Chapter 3 of the book, "The Reemergence of Segregation".  "Reemergence" does no suggest Jim Crow forced segregation -- and the painful efforts to overcome it; it is not I-have-a-dream integration but it is not Jim Crow either. Consider a recent LA Times report about Leimert Park, a middle-class mainly black LA neighborhood. There is apparently a backlash against "too many" white families moving in. Not that many years ago, few would have thought that any integration would be protested by blacks. The fact that people, like many in Leimert Park, prefer voluntary segregation may be an unpleasant surprise for 1960s freedom riders. Improved matching opportunities makes sorting (and segregation) in many activities easier. Mixed blessings.

My other caveat re Cowen is over his treatment of upward mobility. He writes that it has been been "outsourced": most of it is now by the immigrants. "Any country with a lot of immigration will have much more upward mobility than its published numbers indicate" (p.150). Of course. The original status of immigrants is by definition absent form the data that mobility researchers rely on. But you can also put this in the good news column. Ambitious people (to the extent that they can get here) have the U.S. as a place to go and thrive.  We get external benefits -- and economic growth prospects. Much has been written about the entrepreneurial spirit of immigrants -- high tech as well as low tech. Cowen would like to see more upward mobility by the U.S.-born. While we wait for that, the more that can come here, the more upward mobility in the U.S. (however measured) and the world.

We cannot have open borders but we can work to discover how to do better vetting to reduce the Type I and Type II errors. Make that a priority. Let more people in and get more of that "outsourced" upward mobility.  This may seem like a stretch but so are Cowen's favorite fixes (p. 194-196).

Back to Eberstadt who makes much of the shock that many felt at the Trump win in November. Many blue-state residents were indeed comfortable inside their own bubble -- from which they could not grasp the world view of the left-behind. Eight years of Obama-Clinton elitist moralizing hardly assured these people. But (pace Middlebury College hoodlums) Charles Murray deserves all the credit here. He did great work in his Coming Apart -- and the "bubble test" he included. All this was written well before the Trump election. Murray showed that most of us spend too much time inside comfortable bubbles.  Murray wants us to get out more -- even beyond our comfort zone(s).

Diversity of thoughts and ideas, amicably and thoughtfully exchanged, are the ideals. All three of the cited writers want that.  Many more of us, including  "The resistance", ought to take up the banner.

Wednesday, March 08, 2017

Sausage factory rules

Conor Dougherty writes abut NYC street traffic in today's NY Times. "Self-Driving Cars Can't Cure Traffic but Economics Can."  There is congestion because there is no pricing. Take one rationing method off the table and another becomes the default. This has been the relevant economic insight for as many years as economists have looked at the problem. While textbooks speak of congestion as a "market failure," the failure to price is actually a failing of policy makers and politicians.  Transactions costs have been removed as an obstacle by modern technology and the arrival of easy, fast and cheap scanning and billing.  These have been implemented and tested in various parts of the world, in particular where there are bottlenecks such as at bridges and tunnels.  The remaining objection has been over the regressivity ("fairness") of pricing. But Uber's "surge pricing" has been seen as entirely sensible by most people.  Matinee pricing, early bird specials and similar time-of-day or season-of-the year demand-responsive pricing have been around for a long time. It's when prices emerge via the political sausage factory that the predictable positions are wheeled out.

Sausage factory rules also explain why the regressivity of taxing people (often via sales taxes) to pay for enormously expensive and often underused subways and similar transit is usually ignored.