The Humane Studies Fellowship is a non-residency fellowship program that awards $2,000-$15,000 per year to each participant, and provides individual advising and a support network to foster academic success.

Is the Humane Studies Fellowship right for me?

The fellowship is open to:
Full-time graduate students (including law students) from accredited universities anywhere in the world with research interests related to liberty in society
Who are:
Relating their work to the humanities (even if the core discipline falls outside the humanities)
Dedicated to advancing the ideas of liberty through research and teaching.

This is from the Institute for Humane Studies. If you want to know more, go here.

HT to Adam Martin.

In Rich-Hunt, philosopher Roger Donway tells the detailed story of how [Greg] Reyes ended up in this position and how little the prosecutor cared about truth, let alone justice. The result is a chilling page-turner. If you don't know much about how vague federal laws and regulations can put innocent people at risk, or if you already know but want to know more, Rich-Hunt is for you.

This is from my review of Roger Donway, Rich-Hunt: The Backdated Options Frenzy and the Ordeal of Greg Reyes, which appears in the latest issue of Regulation.

Another excerpt from my review:

Donway, who heads the Business Rights Center of the Atlas Society, makes his position clear from the outset. He sees Reyes as a hard-working, clear-thinking entrepreneurial hero. He also sees the law that Reyes was charged with violating as pernicious and vague. But even if one thinks that Reyes was not a hero, and even if one thinks that the law was a good law, Donway gives ample evidence that the legal system badly abused an innocent man. The abuse involved prosecutorial misconduct and mischievous actions by a federal judge. Another player that comes off looking very bad is the Wall Street Journal's news section, which hyped the backdating options controversy as if it was obvious that options shouldn't be backdated.

The federal judge, by the way, is Charles Breyer. People who closely followed the Ed Rosenthal trial would probably not be very surprised by his conduct.

1. Suppose you lived in a society with a massive, age-old injustice.  Think slavery.  Are you the kind of person who would staunchly oppose this injustice anyway?

2. Suppose a colorful, feel-good movement advocating a massive, new injustice suddenly became fashionable.  Think communism.  Are you the kind of person who would staunchly oppose this movement anyway?

My guess is that about 10% of people could honestly say "yes" to #1, and about 20% could honestly say "yes" to #2.  Yet it's hard to believe more than 3% honestly say "yes" to both.  Most of the people who would be righteous with respect to #1 would be gullible with respect to #2, and most of the people who would be righteous with respect to #2 would be dismissive with respect to #1.

When economists say "wage rigidity," they almost always mean downward wage rigidity.  Nominal wages almost never come down.  Yet in W. Somerset Maugham's Of Human Bondage, set in late 19th-century England, upward wage rigidity plays an interesting role in the plot.  Maugham's twist on behavioral labor econ:

He told Philip that he should demand higher wages, for notwithstanding the difficult work he was now engaged in, he received no more than the six shillings a week with which he started. But it was a ticklish matter to ask for a rise. The manager had a sardonic way of dealing with such applicants.

"Think you're worth more, do you? How much d'you think you're worth, eh?"

The assistant, with his heart in his mouth, would suggest that he thought he ought to have another two shillings a week.

"Oh, very well, if you think you're worth it. You can 'ave it." Then he paused and sometimes, with a steely eye, added: "And you can 'ave your notice too."

It was no use then to withdraw your request, you had to go. The manager's idea was that assistants who were dissatisfied did not work properly, and if they were not worth a rise it was better to sack them at once. The result was that they never asked for one unless they were prepared to leave.

Has anyone experienced this sort of upward wage rigidity first-hand?

http://www.nytimes.com/

2013/01/06/business/

despite-new-health-law-

some-see-sharp-rise-in-premiums.html

Many historians, most of the general public, and even many economists think of Herbert Hoover, the president who preceded Franklin D. Roosevelt, as a defender of laissez-faire economic policy. According to this view, Hoover's dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the 1929 stock market crash. The reality is quite different. Far from being a bystander, Hoover actively intervened in the economy, advocating and implementing polices that were quite similar to those that Franklin Roosevelt later implemented. Moreover, many of Hoover's interventions, like those of his successor, caused the Great Depression to be "great"--that is, to last a long time.

This is from Steven Horwitz, "Hoover's Economic Policies," in The Concise Encyclopedia of Economics. It just came out today.

It's a big deal. So many people, as Steve points out above, get Hoover's economic policies wrong. Russ Roberts recommended that I commission an article setting the record straight and Steve has done a stellar job.

Check out the opening quote from FDR advisor Rexford G. Tugwell:

When it was all over, I once made a list of New Deal ventures begun during Hoover's years as Secretary of Commerce and then as president. . . . The New Deal owed much to what he had begun.

And here's a snippet on Hoover's wage policies:

On wages, Hoover revived the business-government conferences of his time at the Department of Commerce by summoning major business leaders to the White House several times that fall. He asked them to pledge not to reduce wages in the face of rising unemployment. Hoover believed, as did a number of intellectuals at the time, that high wages caused prosperity, even though the true causation is from capital accumulation to increased labor productivity to higher wages.

Once, when I was on a radio interview with Robert Reich, I accused him of advocating "Hoover-type wage policy." If I recall correctly, he didn't know how to handle that. Here is, I think, the link.

This article will be, I predict, quite useful for people who want a quick reference for those whom they want to inform about Hoover's policies.

UPDATE: Market monetarist Lars Christensen responds.

As these quotations from [Paul] Krugman and [Christina] Romer illustrate, many of today's proponents of Keynesian policy do not simply disagree with their critics, but go further by leading the general public to believe that only the Keynesians have scientific research on their side. This is simply not the case, as I now demonstrate.

This is from this month's Econlib Featured Article, "What Economic Research Says About Fiscal Austerity and Higher Tax Rates," by Robert P. Murphy.

Murphy, for those of who you might not have noticed, has become one of Econlib's heavy hitters. In fact, I've commissioned more articles from him in my time lining up feature articles, than from anyone else. The count is now 15. I think this is one of his most important. Besides being a nice review of the literature on the effect of tax rates on economic growth, it's an important exploration in the history of recent economic thought, specifically on the thought of Paul Krugman and Christina Romer.

On top of all that, Murphy makes a strong case for "expansionary austerity." He writes:

One implication of this line of research is that a country with a growing public debt burden could benefit from a sharp reduction in government spending, even in the short run. This phenomenon has been called "expansionary austerity."

He cites evidence from Canada and from the European Union countries.

Murphy concludes:

Contrary to the claims of some of today's proponents of both deficit spending and increases in the highest income tax rates, there is a large literature on the historical success of supply-side economics and fiscal austerity based on cuts in government spending. Although the findings of the relevant research are not unanimous, the case for Keynesian pump-priming is not as solid as some of the Keynesians claim. Indeed, in the cases of Paul Krugman and Christina Romer, their own past academic work shows why.

As a rule, I dislike shouting matches.  But I especially dislike shouting matches between people I largely agree with.  As a libertarian, this puts me in an uncomfortable position, because many libertarians seem to relish shouting matches - even, or especially, with other libertarians.

What is so bad about shouting matches?

First, they aren't persuasive to people who don't already agree with you.  In other words, they aren't persuasive at all.

Second, giving into anger makes it harder to tell truth from falsehood.

Third, as someone other than Buddha said, "Holding onto anger is like drinking poison and expecting the other person to die."  The main person who suffers when you're angry is you.

Fourth, assuming both sides share worthwhile goals, shouting matches have a clear deadweight cost.  The time you spend shouting at each other could have been spent cooperating to accomplish something good.  (Or at least independently accomplishing distinct good things).

If my assessment is correct, why do people ever engage in shouting matches?  While I can imagine someone defending shouting matches on their merits, the main excuse I hear is: "The other side started it." 

One problem with this story is that both sides usually have some reason to point fingers.  Take the recent debate on the shortage of libertarian women.  While I disagree with much of Thomas Woods' reply, this passage resonated with me:

Julie's critics can't conclude their attack without unbosoming the lasting trauma of the whole episode for them: today, because of Julie's video, they're "a little embarrassed to admit" they're libertarians. Poor babies. To my knowledge, they have not expressed any embarrassment when libertarians have (for example) gratuitously insulted the religious beliefs of tens of millions of Americans in crude and ignorant ways. I suppose that's designed to bring people into the fold?

The sensible lesson to draw, of course, would be that libertarians should stop gratuitously insulting anyone.  But if you stick to, "Who started gratuitously insulting people?," Woods could easily be correct.  (Indeed, in the past I have personally been guilty of gratuitously insulting common religious beliefs, for no good reason.  I apologize).  If you're really going to persist in a shouting match on the grounds that the other side started it, it's quite possible that detailed historical investigation will reveal that your side started it.  Worse, much depends on how you define the "sides."

In any case, if shouting matches are as counter-productive as I claim, it makes little difference who first left the path of civility.  It really does take two to tango.  If you find yourself in a shouting match, search your own words and behavior to see if you have needlessly provoked your opponents.  Perhaps an apology is in order.  If you're ambivalent, the wise err on the side of contrition.  If, after a healthy adjustment for self-serving bias, you find yourself above reproach, it still pays to turn the other cheek, to talk to your opponent as if he were your best friend.  While you'll still probably fail to persuade, you drastically increase your prospects.

You might reply, "The point of the shouting match isn't to persuade the other side.  It's to persuade spectators that I shouldn't be blamed for the other side's embarrassing words."  Perhaps.  But if spectators are that easily confused, it's probably more effective to get the other side to stop embarrassing you.  If so, which sounds more effective to you?

"Stop embarrassing me, you horrible excuse for a libertarian!"

or

"Two of my opponents' seven complaints about me are fair, and I'm going to stop doing these two things."

Note that I say "more effective" not "fully effective" or even "highly effective."  As far as I know, there are no highly effective methods of persuasion in these matters.  But some remain better than others.

My claims about shouting matches are completely general.  But of course I'm most eager to end shouting matches between people close to me.  Accordingly I propose a Pax Libertaria - a Libertarian Peace.  The terms of the peace: Individual libertarians unilaterally pledge to defuse shouting matches by (a) meticulously searching their own words and actions for shortcomings, (b) erring strongly on the side of making amends for their arguable shortcomings, and (c) turning the other cheek when the other side shouts at them despite their blamelessness.  This could mean ignoring the other side, or politely responding to their substantive arguments without further comment.

To avoid misunderstanding, the Pax Libertaria certainly doesn't follow from libertarian principles.  People have every right to engage in shouting matches, no matter how destructive.  But as libertarians often say, the fact that you have a right to do X does not mean that it is right for you to do X.  The Pax Libertaria is a roadmap to peace for libertarians.  It's an attempt to increase the effectiveness of libertarian persuasion by reducing the frequency of libertarian infighting.  If the Pax Libertaria seems like it's asking a lot, I say you have nothing to lose but your anger.  Give Pax a chance.

Francis Spufford has pulled off a marvelous stunt. His book, Red Plenty, is not quite a documentary, although it's full of verified facts and actual historical figures, and not quite a novel, although it contains fictional characters. The British Sunday Telegraph called it "faction." Whatever one calls it, here's what it is: a work of art that sympathetically blows the whistle on Soviet Communism, pointing out its contradictions and its brutality, showing, gently and non-propagandistically, why it couldn't and didn't work.

Spufford, who teaches writing at Goldsmith's College in Britain, is not an economist but he has a real grasp of what economists call the "calculation problem." Early in the last century, Ludwig von Mises and later Friedrich Hayek pointed out that in a centrally planned economy, the planners lack the information they need to plan a successful economy. They argued that only a decentralized price system--i.e., the free market--can provide that information, but, of course, abolition of the price system was the essence of Communist economics. Ultimately, Mises and Hayek won the "socialist calculation debate," as even lifelong socialist Robert Heilbroner admitted in two stunning articles in the early 1990s.

Spufford weaves this lesson into a series of vignettes that track the fictional and non-fictional characters from 1938 to 1970. The last book on the economics of Communism that I enjoyed even close to as much was Scott Shane's Dismantling Utopia: How Information Ended the Soviet Union.

This is from my just-published review of Red Plenty in Regulation, Winter 2012-13.

Another excerpt, on how value was measured in the Soviet economy and how that perversely affected economic decisions:

As Spufford points out in a footnote, industrial growth "in the USSR did not carry over into general prosperity." A big part of the reason is that value was often measured by weight. One of the characters in the book doesn't want to sell a machine that another factory desperately needs because the factory that produces the new machine will be paid less than for the old inferior machine. The reason? Equipment is priced mainly according to weight. The new superior machine weighs less.

HT to Sarah Skwire for alerting me months ago to this book.

Steve Horwitz and Sarah Skwire have restarted a long-standing debate about the shortage of libertarian women.  They make a very fair point: Libertarians should have been friendlier and more respectful to women - and turn over a new leaf forthwith.  As I've argued before, this is good general advice: Libertarians should be friendlier and more respectful, period.  To quote Mark Twain, "It will gratify some people, and astonish the rest."

Still, while I share Steve and Sarah's recommendations, I'm afraid they're conflating two issues: marketing and social science.

The marketing issue: How can libertarians better sell their ideas to women?

The social science issue: Why is there a shortage of libertarian women?

It's possible that the marketing issue is the answer to the social science issue.  Maybe bad marketing fully explains the libertarian gender gap.  But then again, maybe not.  A person could embrace the perfectly sensible view that libertarians should improve their marketing, yet still doubt that the best marketing in the world would close the gap.

My study of personality psychology makes me one of the doubters.  On the popular Myers-Briggs personality test, there is a huge Thinking-Feeling gap between men and women.  For men, the breakdown is roughly 60% Thinking, 40% Feeling.  For women, the breakdown is roughly 30% Thinking, 70% Feeling. 

This Thinking/Feeling disparity explains a lot about gender gaps in college major and occupation.  There's every reason to think that this disparity can help explain gender gaps in political and social views. 

To make a long story short: Thinking people tend to have "hard heads" and "hard hearts," while Feeling people have "soft heads" and "soft hearts."  Unsurprisingly, then, Feeling people tend to hold more anti-market views.  I've similarly found strong evidence that males "think more like economists."  This gender belief gap increases with education, consistent with a simple model where male and female students gradually learn more about whatever their personalities incline them to study.

The whole premise "Bleeding Heart Libertarianism," of course, is that we should unbundle the hardness of our heads and the hardness of our hearts.  Logically speaking, we can combine hard heads and soft hearts.  Empirically, though, this combination is rare.  And that's why Bleeding Heart Libertarians have their work cut out for them.  If you're trying to sell libertarianism to Feeling people, "hard head, soft heart" ideas are more persuasive than "hard head, hard heart" ideas.  But the libertarian remains at an inherent disadvantage against intellectual rivals pedaling "soft head, soft heart" ideas.

Marketing matters.  Libertarians can and should better market their ideas to women (and people, for that matter).  But marketing can only do so much.  Women really are more Feeling than men, and selling libertarianism to people with Feeling personalities is inherently difficult. 

Please don't be angry at me, I am only a messenger.

Senator Paul Douglas of Illinois was one of Johnson's more vocal critics. One afternoon LBJ beckoned me to his Senate desk with a grin. "I think I've found a way to defuse Paul Douglas. He was an economist, you know. I think he taught economics in college. Well, I'm gonna name him chairman of the Joint Committee on Economic Reports [sic]. I [he?] can't do a damn thing. Hell, a joint committee's usually as useful as tits on a bull. But it'll give Professor Douglas some papers to shuffle and a headline or two and maybe it'll keep him off my neck."

From Bobby Baker, Wheeling and Dealing: Confessions of a Capitol Hill Operator (Norton, 1978), p. 66.

A couple of comments:

1. Notice that LBJ "thinks" Douglas taught economics "in college." In fact, Douglas was a prominent economics professor at the University of Chicago and was one of the two people after whom the Cobb-Douglas production function is named.
2. Bobby Baker, the author of the book, recounts the story. Baker was a close confidant of LBJ when LBJ was Majority Leader of the U.S. Senate in the 1950s. Baker was also involved in a major scandal that revealed that LBJ had received payoffs. Life magazine was preparing a major story on this during the week that ended on November 22, 1963. The scandal was big enough that there was a good chance it would bring LBJ down, the way Nixon's VP, Spiro Agnew, was to be brought down just 10 years later. November 22 was the day, of course, that John F. Kennedy was murdered. Of course, Life dropped the story. Robert Caro tells the story in detail in his latest book on LBJ, The Years of Lyndon Johnson: The Passage of Power.

HT to Tom Hazlett.

Vipul Naik of Open Borders sent me a very insightful email on the non-pecuniary returns to education.  He's kindly given me permission to reprint it.  Vipul speaks:

---

I've been thinking more about your human capital/signaling/ability bias theories of education. It seems to me that this framework can apply to things other than just the education -> earnings link. Other possibilities are:

• Education -> Health
• Education -> Self-reported happiness, life satisfaction etc.
• Education -> Marital happiness and success
• Education -> Friend quality
• Education -> Civic virtue/tolerance/progressive social attitudes

For any Education -> X link:

The human capital theory would say that: (i) People learn and retain stuff from education, and (ii) that stuff helps with X.

Since you've essentially debunked (i), this means that the human capital theory has a strong presumption going against it for Education -> X linkages for all values of X, not just X = earnings. Thus, for most of the linkages, we have a contest between ability bias and signaling. The ability bias would say that this is purely correlation -- people who have better X also tend to get more education.

The signaling theory, in contrast, does not make sense for most values of X. For instance, I'm hard-pressed to think of a signaling theory for the Education -> Health relationship. In fact, the only areas other than earnings where I can see signaling playing a role is in mate selection/marital success and friend quality. I guess you could argue that education indirectly affects all the others through signaling via its effect on earnings, but if your view of, say, health, is Hansonian, then you're probably skeptical of earnings being causally implicated in health outcomes.

My guess is that education -> X linkages for most values of X are purely correlational (ability bias) with a very tiny amount of causation through the human capital channel. If so, your signaling theory for earnings is the exception rather than the rule in terms of education -> X linkage explanations.

---

P.S. I've already made this point for the marriage premium, and shown that the effect of education on job satisfaction appears to be more than 100% due to ability bias (i.e. holding income constant, the well-educated have lower job satisfaction).  Note also that Oreopoulos and Salvanes' "Priceless" in the 2011 Journal of Economics Perspectives tries to do what Vipul suggests, though not very successfully in my view.

In that order: 

US and UK regulators will unveil the first cross-border plans to deal with failing global banks on Monday, outlining proposals to force shareholders and creditors on both sides of the Atlantic to take losses...

[U]nsecured bondholders "can expect that their claims would be written down to reflect any losses that shareholders cannot cover", which did not happen when the US and UK had to prop up their international banks in the 2008 crisis.

Pssst: Someone tell the Republicans they won.

Now that I've had time to reflect, I do have some thoughts on the tax bill that differ a lot from thoughts of others who are usually my political allies. Most of the criticisms that Scott Sumner and Steven Landsburg make are ones I share. So I'm not judging the tax bill to be good. Viewed in a political vacuum, it sucks. Viewed in the world we're in, it's actually a pretty good bill.

I put aside here my huge disappointment about the delay of the sequester. I think we could have gotten just a clean bill on taxes with no delay of the sequester. The problem on the sequester was, I think, more with Republicans than with Democrats because many of the Republicans, probably most, did not want to cut a seriously bloated Department of Defense. But the fact that all sides were willing to delay spending cuts is a serious statement about future efforts to rein in federal spending.

Back to the tax side. Think about the context. Republicans, who, since 1981 have been the anti-tax-increase party, hold only the House of Representatives. The President, who is very hostile to high-income people and very strongly in favor of double-taxing savings, was just re-elected. The Democrats hold the Senate.

Had the Republicans held out for anything like the reforms that Sumner and Landsburg wanted, the bill would have been Dead on Arrival in Harry Reid's Senate. You don't even need to bring Obama into the picture. End of story. So then taxes would have gone up dramatically for people at every income level. So what could Speaker John Boehner and Minority Leader Mitch McConnell do?

What they could do is try to raise as high as possible the threshold beyond which marginal tax rates rose. Boehner first tried that with a $1 million annual income threshold before Christmas but couldn't pass that through the House with just Republican votes. If Republicans regret that, they probably shouldn't. Harry Reid would have killed that bill also. But, with the New Year's eve agreement between Vice-President Biden and Mitch McConnell, those large increases in tax rates apply only to singles with income of over $400K and married couples with income over $450,000. That's bad, but look at what the Republicans got in return.

After years in which Democrats attacked "the Bush tax cuts," which were temporary (they were originally were set to expire in 2011) many of the Democrats, plus many Republicans, voted to make most of the tax cuts permanent. After a president who wants stiff taxes on capital just got re-elected, the top tax rate on long-term capital gains and dividends rises from 15 percent to 23.6 percent. Had the bill not passed, the top tax rate on dividends would have risen to the 43.4 percent that Obama wanted. After doing a fix almost annually on the Alternative Minimum Tax (AMT) to prevent it from catching about 25 more million households than it typically applies to, Congress and the President have now made the AMT fix permanent.

(I do have one hedge about the AMT. I wrote in a 2007 Wall Street Journal piece that the AMT had the makings of a modified flat-rate tax and that, rather than repeal it, Congress should reform it to make it closer to a flat-rate tax. Now that the fix is permanent, that's unlikely to happen. But let's face it: it was always unlikely to happen. Now it's just become a little unlikelier.)

Oh, and finally, because the Congress and President agreed, we now have a death tax (it really is a death tax: people aren't taxed on their estates until they die) that takes 40 percent of everything after a basic exemption of $5 million. Does that sound bad? Had the bill not passed, the estate tax would have taken 55 percent of everything past a basic exemption of $1 million.

One other piece of context: At a Hoover event I attended some years ago, after the Democrats had won both the House and the Senate but Bush was in his last two years as president, former Reagan Secretary of State George Shultz said that one of Bush's biggest mistakes was in not using his political capital, after his 2004 re-election while the Republicans still had both houses, to make the tax cut permanent. With some exceptions, Obama just did.

So here's the big news: the anti-tax side won. Sure, Obama would love to raise taxes even more, especially on people making between $200K and $450K. But now he has almost zero leverage to do that.

I turned on Rush Limbaugh's show this morning to see what he was saying and he was denouncing Boehner and company as people who caved. Someone ought to tell the Republicans that they won.

I've often heard people dismiss my dear friend and colleague Robin Hanson for his "Aspergers," his blindness to the way that most human beings feel and think.  They're not entirely wrong, but Robin's latest post, a review of a Peter Singer review, shows how psychologically perceptive and grounded Robin can be.

Singer:

The idea that utilitarianism leads to extremely demanding obligations to help those in great need was counter-intuitive in the affluent world, but is not in the broken world. So too was the view that it would be wrong for a sheriff to hang one innocent person if that is the only way to save several innocent people from being killed by rioters. ... Those same utilitarians who said that we have extremely demanding obligations to the poor could also have pointed out that we have extremely demanding obligations to those who will exist in future.

Robin:

I find the above pretty laughable as futurism. As described in this review, this book presents the morality and politics of future folk as overwhelmingly focused on what their ancestors (us) should have been doing for them, namely lots more.

But we have known lots of poor cultures around the world and through history, and their morality and politics has almost never focused on complaining that their ancestors did too little to help them. Most politics and morality has instead been focused on how people alive who interact often should treat each other. Which makes a lot of functional sense.

Wars have consistently caused vast destruction of resources could have gone to building roads, cities, canals, irrigation, etc. And most ancestors severely neglected innovation. Most everywhere in the globe, had ancestors prevented more wars and encouraged more innovation, their descendants would be richer. But almost no one complains about that today. Most discussion today of ancestors celebrates relative wins that suggest some of us are better than others of us, and to lament our ancestors' backwardness, so we can feel superior by comparison.

The morality of our non-affluent descendants will likely also focus mostly on how they should treat each other, not on how we treated them. To the extent that they talk about us at all, they'll mostly mention wins that suggest that some of them are better than others of them, and ways in which we seem backward, making them seem forward by comparison. And morality will probably return to be more like that of traditional farmers, relative to that we rich forager-feeling industrialists of today.

Rule of thumb: While Robin is occasionally led astray by an elegant theory, he is a keen observer of human nature whenever he specifically focuses on the question, "Yes, but what would flesh and blood humans actually do?"

My open borders autobiography is now a guest post at Open Borders.  Since I strove to truthfully and unstrategically describe my intellectual evolution, even my harshest critics may enjoy it.  Highlights:

Until I was seventeen, my views on immigration were completely conventional. In 11^th grade, I wrote a paper defending the "moderate" view that (a) contemporary levels of immigration were good for America, but (b) immigrants should have to learn English. As far as I remember, I didn't discuss illegal immigration one way or the other. If you asked me about illegal immigration, I probably would have reflexively said, "I'm against it," perhaps adding, "Well, illegals do a lot of jobs that Americans won't."

And:

By the time I started my undergraduate education as UC Berkeley, then, I was a staunch yet shallow devotee of free immigration. I simply lacked the knowledge base to understand the magnitude of the issue. My subsequent coursework did nothing to alleviate my ignorance.

And:

After I joined EconLog in 2005, I suddenly had an ideal forum to share my views on immigration. Many such posts were based on my lectures or lunch table arguments with my colleagues. Take "How Everyone Can Get Richer As Per-Capita GDP Falls," blogged in March, 2005. [Open Borders note: Arguments of this sort are discussed at the compositional effects page on this website]. If I sent this piece to an economics journal, I doubt the editor would even send it to referees. Why not? Because the argument is "obvious" and "informal." Yet if I wrote this piece as an op-ed, I'd just as surely be rejected. Why? Because the argument is "abstract" and "academic."

Also:

Once I became a professor at George Mason, however, I came to personally know many victims of U.S. immigration law. None of this affected the substance of my views, but it probably increased the intensity. The United States really does have the effrontery to brand good people as criminals for performing honest labor without government permission.

If you like the piece, thank Vipul Naik, who urged me to write it.

When an individual owes three times his annual income, we think it questionable: Okay for recent home-buyers, but probably a bad idea.  But when a government owes 300% of GDP in peacetime, we think it blatantly irresponsible.  I've often been puzzled by the disparity.  Why do so many freak out about U.S. government debt as soon as it exceeds 50% of GDP?

Only today, though, did I realize that these two private versus public debt figures are not comparable.  The right comparison is government debt relative to annual tax revenue.  By this correct measure, the U.S. is indeed in irresponsible territory.  Take 2011: With government debt at 67.7% of GDP, and government revenue at 15.4% of GDP, the U.S. debt/income ratio was already about 440%.

Today Jeff Sachs wrote:

Yet the two parties just ran the most populist campaigns this side of a banana republic, and I do a grave disservice to banana republics these days to say so.

My initial reaction was to dismiss it as hyperbole.  Now I'm actually worried.

Update: Scott Sumner responds.

Sometime in the next 24 or so hours, I'll give my thoughts on the latest tax and budget deal between Congress and President Obama. I find that one's first thoughts are not typically one's best. There's a lot to digest. What I can say at this point, though, is that, given the constellation of political forces, it was not a bad deal except for the delaying of the sequester, the one serious attempt we've had in the last few years to cut discretionary spending.

I can also say that I'm not as critical of the deal as Scott Sumner or Steven Landsburg.

There is one item in Scott Sumner's post, though, that I think is way off and that I want to comment on. Scott writes:

Have you ever noticed that many ultra-conservative southern states have steeply progressive state income taxes, whereas Massachusetts has a 5.3% flat tax, and liberal Washington State has no income tax at all. Watch what they do, not what they say.

I don't know enough about Washington state. But I do know about Scott's state of Massachusetts. What Scott doesn't seem to realize is that Massachusetts' flat tax rate is mainly the result of political forces 200 years ago, not political forces today. The flat tax rate is due to the Massachusetts Constitution. I wrote about this briefly in 1997. Here's the relevant part:

Article XLIV. Full power and authority are hereby given and granted to the general court to impose and levy a tax on income in the manner hereinafter provided. Such tax may be at different rates upon income derived from different classes of property, but shall be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property. The general court may tax income not derived from property at a lower rate than income derived from property, and may grant reasonable exemptions and abatements.

In other words, Massachusetts has a flat tax rate on income because the Constitution requires that any tax rate be a flat rate.

But the desire to take more from "the rich" is strong in Massachusetts as elsewhere. How does the Massachusetts legislature get around this limit? By having a much higher tax rate--12 percent--on short-term capital gains. The rate, as required by the Constitution, is the same for people at all income levels. But who do you think gets a disproportionately high share of their income in the form of short-term capital gains? That's right: high-income people.

The bottom line: the Massachusetts Constitution, not the legislature of Massachusetts, should get credit for Massachusetts' flat-rate tax.

The Singaporean blog TR Emeritus recently reprinted my "How I See Singapore," prompting critical response.  The main complaint is that I ignorantly claim that Singapore is a democracy. 

I understand the pushback.  Singapore gets mediocre scores on international democracy ratings like Polity IV and Freedom House.  My post affirms a very different conclusion with no real explanation. 

In my defense, the point of the post was to describe my personal reaction to Singapore, not to justify it.  But my "Two Paradoxes of Singaporean Political Economy" (a longer version of my essay for Ethos) defends Singapore's democratic credentials at length.  Here goes:

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The "Singapore as a thinly-veiled dictatorship" theory coheres neatly with Western stereotypes about the city-state, and elegantly resolves my two puzzles.  Unfortunately, the dictatorship thesis ignores three basic facts.

First, Singapore has several legal opposition parties, including the Workers' Party of Singapore, the Singapore Democratic Alliance, and the Singapore Malays National Organization.[1]  The only illegal party is the Communist Party of Malaya.[2]  As Mauzy and Milne observe:[3]

The Singapore government has not committed any serious violations of civil rights.  There have been no extrajudicial killings or political disappearances, and there are currently no political detainees.

The worst that Freedom House can say about Singapore's democracy is that: "[T]he opposition is hamstrung by a ban on political films and television programs, the threat of libel suits, strict regulations on political associations, and the PAP's influence on the media and the courts."[4]  Activists in opposition parties face many minor indignities, but hardly live in mortal fear of the PAP.[5] 

At the margin, of course, PAP pressure deters some political talent from joining opposition parties.  But this is a feeble explanation for the opposition's near-total failure to gain political office.  After all, there are many countries that have vigorous electoral competition even though their opposition candidates face great dangers.  In Pakistan, for example, the reins of power have repeatedly changed hands via electoral channels even though opposition candidates have frequently faced arrest, execution, and assassination. 

Second, while the PAP does place unusual restrictions on political expression, these restrictions shield people from criticism, not policies.  Opposition candidates who avoid personal attacks against PAP politicians can and do freely attack PAP policies as ineffective or unfair.  An opposition candidate could safely campaign on a platform to abolish Electronic Road Pricing or slash immigration.  Indeed, an opposition candidate could safely campaign on a platform to rein in politically-motivated defamation suits.  In the Median Voter Model, embracing these positions would quickly usher opposition politicians into power - assuming, of course, that the median voter genuinely wants the changes in question.

Third, there is virtually no evidence that Singapore's elections are corrupt.  Indeed, international observers have consistently rated its government as one of the least corrupt in the world.  The World Bank's Governance Matters data set, for example, gives Singapore stellar scores in "Rule of Law" and "Control of Corruption."[6]  Despite Freedom House's negative assessment of political freedom in Singapore, it grants that "elections are free from irregularities and vote rigging."[7]  The Global Barometer country report for Singapore finds that 86% of Singaporeans believe that their country is either "a full democracy" or "a democracy, but with minor problems."[8]  The same percentage agrees that the last election was either "completely free and fair," or "free and fair, but with minor problems."[9]  Yes, decades of one-party electoral dominance is normally is a strong symptom of electoral corruption, but not in Singapore.[10]

Evidence from the World Values Survey, administered in Singapore in 2002, reinforces this conclusion.  18.7% of Singaporeans were "very satisfied" with "the way the people now in national office are handling the country's affairs" and another 72.7% were "fairly satisfied"; the comparable numbers for the United States in 1999 (the survey year closest to 2002) were 6.9% and 60.2%.[11] Similarly, when asked whether their country "is run by a few big interests looking out for themselves," or "for the benefit of all the people," only 20.4% in Singapore say, "a few big interests," versus 63.3% for the U.S.[12]  International observers may say that the United States is much more democratic than Singapore, but Americans are markedly less likely than Singaporeans to feel like their government delivers the results the public wants.

I do not mean to deny the many peculiarities of Singaporean politics.  In most democracies, leading members of the opposition have successful careers and a serious chance of winning.  In most democracies, the members of the ruling party respond to their opponents' verbal abuse with more verbal abuse - not lawsuits.   The government of Singapore partially owns the main newspapers and television stations, and practices a moderate form of censorship.[13]  My point, though, is that these peculiarities are largely irrelevant as far as the Median Voter Model is concerned.  In Singapore, voters are free to vote for opposition candidates, and opposition candidates can safely advocate the elimination of unpopular policies.  In the Median Voter Model, this is all you need for the will of the people to prevail.

San Jose State University economist Jeffrey Rogers Hummel sent the following capsule review of David A. Moss, When All Else Fails: Government as the Ultimate Risk Manager (Cambridge: Harvard University Press, 2000). Jeff writes:

Limited liability remains a subject of slight controversy among libertarians. Some free-market advocates believe that it played a role in the excessive risk undertaken by investment banks prior to the financial crisis. So I want to recommend a book that contains a fascinating, informative chapter on the origins of limited liability within the U.S.

By David A. Moss of the Harvard Business School, it is an economic history entitled WHEN ALL ELSE FAILS: GOVERNMENT AS THE ULTIMATE RISK MANAGER (Cambridge: Harvard University Press, 2000). Moss is definitely not a libertarian and applauds government intervention, but he provides a historically informed discussion of the development of limited liability, bankruptcy, deposit insurance, workers' compensation, and the myriad other ways that national and state governments attempt to mitigate risk.

Some highlights from Chapter 3 on limited liability: Early state chartered corporations did not usually enjoy limited liability: joint and several liability (where each shareholder was individually liable for the corporation's entire debt), proportional unlimited liability, and double liability were all instituted at one time or another. New York was the first state to institute limited liability for manufacturing firms only in its general incorporation law of 1811, the first in the country, but the state courts fifteen years later reinterpreted the act as requiring double liability. Meanwhile other northeastern states embraced limited liability, with Massachusetts finally falling into line in 1830 over concerns about capital flight to other states, but again with limited liability for manufacturing corporations exclusively. In subsequent years, a large number of states instituted general incorporation with limited liability and extended the coverage to a widening circle of economic enterprises. California in 1931 (yes, 1931) became the last state to adopt limited liability.

Britain itself did not copy limited liability from the U.S. until 1855. The editors of The Economist opposed its adoption as "of little practical importance," because shareholders could achieve the same protection through contract. Moss provides an economically sophisticated discussion of this argument and of the current work of several legal scholars who oppose limited liability, along with accounts of the pro and con debates over the issue that occurred in various U.S. states. Some lawmakers were quite explicit about limited liability providing protection from involuntary (tort) creditors, although Moss finds this to have been a minor motivation. He concludes his theoretical analysis by stating that "there is no way to know for sure exactly why limited liability law was necessary. The existing historical record offers but scant clues about the failure of private solutions to emerge on their own. But the record is abundantly clear on one point: something was standing in the way." He seems to gravitate toward a Coasian-Posnerian (or possibly a behavioral Thaler-Sunstein) explanation where the legal default makes an enormous difference. Whatever your own views on limited liability, you will find his chapter enlightening.

For those interested in free banking, Moss's chapter on money includes a detailed discussion of pre-Civil War banking in New York. Although he accepts some of the standard myths about antebellum banking, his account is still valuable.