Thursday, 11 August 2016

Quotation of the Day

From Adam Smith's 'Theory of Moral Sentiments', Part VI: Of the Character of Virtue, Section I: Of the Character of the Individual, so far as it affects his own Happiness; or of Prudence:

"The prudent man always studies seriously and earnestly to understand whatever he professes to understand, and not merely to persuade other people that he understands it; and though his talents may not always be very brilliant, they are always perfectly genuine. He neither endeavours to impose upon you by the cunning devices of an artful impostor, nor by the arrogant airs of an assuming pedant, nor by the confident assertions of a superficial and imprudent pretender. He is not ostentatious even of the abilities which he really possesses. His conversation is simple and modest, and he is averse to all the quackish arts by which other people so frequently thrust themselves into public notice and reputation. For reputation in his profession he is naturally disposed to rely a good deal upon the solidity of his knowledge and abilities; and he does not always think of cultivating the favour of those little clubs and cabals, who, in the superior arts and sciences, so often erect themselves into the supreme judges of merit; and who make it their business to celebrate the talents and virtues of one another, and to decry whatever can come into competition with them. If he ever connects himself with any society of this kind, it is merely in self-defence, not with a view to impose upon the public, but to hinder the public from being imposed upon, to his disadvantage, by the clamours, the whispers, or the intrigues, either of that particular society, or of some other of the same kind."

Friday, 5 August 2016

Quotation of the Day

"It takes a lot more to justify regulation of other people's behaviour than your own indignation and offence about what they're doing."
That is from Richard Epstein talking to Russ Roberts on this EconTalk episode.

Friday, 24 June 2016

Brexit

Emily Skarbek offers her thoughts in the immediate aftermath of the referendum result:


"The results of the referendum are in and the UK has voted to leave the European Union. The official campaign was littered with awful arguments that play to the public's worst sentiments - and the decision was likely driven by ignorance and the older voting population. As a foreigner in the country and someone who believes passionately in free trade, open immigration, and the principles of a free society - I am nervous.
The markets have slid and there is uncertainty over what this will mean for the future of the UK and Europe. David Cameron has resigned. No one knows just how this is going to play out. The longer horizon will depend on the course that is chartered in policy negotiations and positions adopted by the UK. 
Many of the people I have discussed this with in academic and policy circles want a freer, more open society. This led some to vote remain and others leave, based on divergent predictions about which course of action would lead to a more open society. I take this as one reason for optimism amidst the fear. 
The aftermath of this vote will require a broader coalition of liberals to push for an open trade and immigration policy. Trade policy that is crafted in the next few years will be crucial to the economic impact of Brexit. Britain desperately needs policy entrepreneurs, City of London, and leaders in Parliament to craft a solution that maximises openness to counter the populist, nationalist, and collectivist sentiments that may have got us here. It is hard to see this now, having just voted to leave the EU single market.
As my friend Sam Bowman points out, the biggest reason London is a great city is due to immigration. We want more of that, not less - from Europe and everywhere else. The voices for free trade must be louder than ever."

Wednesday, 1 June 2016

Quotation of the Day

Is from Adam Smith's 'Theory of Moral Sentiments', Part IV, Chapter II: Of the beauty which the appearance of Utility bestows upon the characters and actions of men; and how far the perception of this beauty may be regarded as one of the original principles of approbation:


"What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue?  All government is but an imperfect remedy for the deficiency of these.  Whatever beauty, therefore, can belong to civil government upon account of its utility, must in a far superior degree belong to these.  On the contrary, what civil policy can be so ruinous and destructive as the vices of men?  The fatal effects of bad government arise from nothing, but that it does not sufficiently guard against the mischiefs which human wickedness gives occasion to."

Monday, 30 May 2016

The Taxpayer as Insurer

This story has popped up on my social media recently.

There’s relatively scant details in the Daily Record article, or indeed in the online petition that’s been set up by the daughter of one of the homeowners affected.

Here’s my attempt to summarise what’s happened (please feel free to get in touch and correct me if I’ve gotten any of the details wrong – all of my information here is from second and third-hand sources, so who knows what details may have gotten distorted in transit):

The council (local government) in West Dunbartonshire built a bunch of houses several decades ago.  These are what is known in the UK as ‘council houses’, i.e. low-cost housing created for people who, for whatever reasons, find it difficult to find affordable private housing to rent or buy.  Tenants of these properties rent them from the local government, typically at below-market rates.

The central UK government passed ‘right to buy’ legislation as part of the Housing Act 1980.  This entitles tenants of council houses “the legal right to buy, at a large discount, the home they are living in”.  This discount was originally very substantial, at between 33% and 50% of the valuation of the property.  The size of the discount was reduced in 1997, and some of the rules surrounding ‘right to buy’ were changed in 2005.  For example, five years tenancy is now required to qualify for ‘right to buy’ and properties purchased under the scheme since 2005 cannot be immediately placed on the open market for sale, among other restrictions.

The houses in question started out as council houses, but were subsequently bought by their tenants at well below market rates under the ‘right to buy’ scheme.

A few years ago, in 2013, “a serious roof defect was discovered” in a number of these houses.  “Some of these properties have had roofs collapse, with several so defective that they have been deemed uninhabitable, others requiring new roofs to be built and many still to be surveyed.”

I don’t know the precise nature of the building defects, but they sound pretty serious if people’s roofs are falling in and homes are being rendered uninhabitable or deemed unsafe to live in.  A few of them have even been earmarked for demolition.

The specific example given in the article is that of one Mrs Mary Goldie, a 69 year old retired headteacher, who purchased her house in 2008 for £105,000 (~$206,000).  This purchase was not made under ‘right to buy’; the property was already under private ownership prior to Mrs Goldie’s purchase of it.

Mrs Goldie’s house has been rendered uninhabitable by the defects and she’s been forced to move out.  With the help of her family, she’s taken out a mortgage on another nearby property to live in.

The council have subsequently offered to buy Mrs Goldie's house from her for just £12,000 (~$17,500).

The response of Mrs Goldie’s daughter has been to raise a petition “to request financial support from the Scottish Government for the private homeowners of flat-roofed properties in West Dunbartonshire”.

I feel bad for this woman, I really do.  Her house has been rendered almost worthless by the extent of the defects and she’s spent most of her savings on securing somewhere else to live.  It is a nightmare situation for anyone to have to go through.

But, what I don’t understand is why are taxpayers being asked to foot the bill for this?  Surely this is a matter to be dealt with between the property owners and their insurance companies?  The petition states that the “insurance companies will not pay out anything”.  I don’t understand why this would be the case.  Surely this is exactly the sort of thing people take out insurance for?! 

The responsibility for maintaining and repairing a property lies with the owner of that property.  Property owners take out insurance to protect against catastrophe, that is, to cover substantial necessary work that they wouldn’t be able to afford on their own.

If the home(s) in question are still owned by the local government, then the responsibility for repairing them lies with the local government and/or their insurer(s).

If the home(s) in question are privately owned, then the responsibility for repairing them lies with the private owner(s) and/or their insurer(s).

I would happily sign a petition that asked for the government to assist the homeowners in dealing with their insurers and to put pressure on the insurance companies to pay out.  I refuse to sign a petition that basically amounts to the taxpayer acting as a private insurer.  I never agreed to insure these properties with my taxes.  And I don't expect Mrs Goldie or her daughter to pay for any repairs I might require on my house.

Thursday, 26 May 2016

Kling on Krugman

He is scathing:

"Everything written by, for, or against Krugman over the past 15 years is a waste of time.  That includes this post as well as Adler’s.  It includes various attempts by Henderson, Cowen, and Sumner to engage with Krugman.  They try to treat him as if he had some sense of decency.  Instead, he is Joe McCarthy with a Nobel Prize."

Here.

And as pointed out by others, this is on a blog with the subtitle 'Taking the most charitable view of those who disagree'.

Ouch!

I guess this post is also a waste of time.

Monday, 23 May 2016

On Burdens of Proof

This post, like several other recent posts was inspired by Scott Alexander’s Slate Star Codex blog and some of the discussion in the comments there.

In one particular exchange there, I attempted (albeit poorly) to advocate the position that there is nothing special about the presence of an international border which changes the fundamental nature of trade.


I.
Here’s a hypothetical example:

Alice and Bill both live in Wonderland.  Alice produces apples.  Bill makes burgers.  Neither Alice nor Bill wish to live on apples or burgers alone.  So, they decide to trade with one another.  Let’s say they agree to an exchange rate of 5 apples per burger.  Each week they meet up and Alice gives Bill 35 apples; Bill, in turn, gives Alice 7 burgers.  Both are extremely satisfied with this arrangement.

Now, let’s change the example slightly:

Alice lives in Wonderland.  Humpty Dumpty lives in Mirrorland.  Alice produces apples.  Humpty makes burgers.  Neither Alice nor Humpty wish to live on apples or burgers alone.  So, they decide to trade with one another.  Let’s say they agree to an exchange rate of 4 apples per burger.  Each week they meet up and Alice gives Humpty 28 apples; Humpty Dumpty, in turn, gives Alice 7 burgers.  Both are extremely satisfied with this arrangement.

The question that must be answered by advocates of protectionism, in it’s various forms, is:

What about the fact that Humpty Dumpty resides in Mirrorland, rather than in Wonderland, changes the fundamental nature of the above trade?

Or, asked another way:

What is it about the fact that Humpty Dumpty resides in Mirrorland that makes the trade between Alice and Humpty different from the trade between Alice and Bill in a way that justifies placing certain restrictions on the former, but not placing the same restrictions on the latter?

These questions are not rhetorical.  And despite the lighthearted appearance of my examples, they are serious questions that require serious answers by advocates of protectionism.

In numerous discussions of these issues with advocates of protectionism, I have not yet received satisfactory answers to such questions.  I find this somewhat baffling.


II.
In one such exchange, I asserted that, as the ones proposing that the government actively intervenes by imposing trade restrictions – thereby restricting the freedom of individuals and businesses to conduct peaceful, mutually beneficial exchange – the burden of proof falls on advocates of protectionism to back-up their calls for such trade restrictions with evidence that they are either necessary or desirable.

One response I got to this was that my appeals to ‘burden of proof’ were a red herring.

In one sense, this is quite correct.

The protectionist claims: ‘There is a substantive difference between intranational and international trade that justifies the imposition of certain restrictions on the latter that do not apply to the former.’

The free-marketeer claims: ‘There is no substantive difference between intranational and international trade that justifies the imposition of certain restrictions on the latter that do not apply to the former.’

This is analogous to Matt Dillahunty’s jar of gumballs example.

The protectionist is claiming the number of gumballs is even.
The free-marketeer is claiming the number of gumballs is odd.

In both cases, we have two equal and opposite – and mutually exclusive – claims being made.

As explained on Wikipedia [emphasis added]:
“Either claim could be explored separately; however, both claims represent the same proposition and do in fact ask the same question.  Odd in this case means ‘not even’ and could be described as a negative claim. 

Before we have any information about the number of gumballs, we have no means of checking either of the two claims.  When we have no evidence to resolve the proposition, we may suspend judgment.  From a cognitive sense, when no personal preference toward opposing claims exists, one may be either skeptical of both claims or ambivalent of both claims. 

If there is a claim proposed and that claim is disputed, the burden of proof falls onto the proponent of the claim.”

So, the sense in which ‘burden of proof’ being a red herring is correct is:

If a protectionist wants to claim there is a substantive difference between intranational and international trade that justifies the imposition of certain restrictions on the latter that do not apply to the former, they ought to be able to back-up such a claim with some kind of evidence.

Of course, this is symetrical.  If a free-marketeer wants to claim there is not a substantive difference between intranational and international trade that would justify the imposition of certain restrictions on the latter, but not on the former, they also ought to be able to back-up such a claim with some kind of evidence.

In short, advocates of either position ought to be able to back up their position with evidence and reasoning.  Appeals to ‘burden of proof’ (i.e. pointing to the lack of evidence for the opposing position) are not sufficient and are kind of a cop-out.  Just because the evidence for the opposing position is weak or nonexistent doesn’t mean the evidence for your position is any better.


III.
In another sense, however, I don’t think the ‘burden of proof’ is entirely a red herring.  Maybe it’s only an orange herring?  That is to say, I think it may at least hint at something important.

In order to convince someone who doesn’t agree with me, I have to show her such-and-such evidence according to her standards.  If she wants to convince me, she has to show me such-and-such evidence according to my standards.  This is the philosophic burden of proof that we’ve been discussing thus far.

But what if we're discussing the passing of legislation?

Consider the example of drunk driving.  Driving whilst intoxicated is a crime in the vast majority of countries around the World.  Why?  What’s the moral justification for outlawing drunk driving?  I think it has something to do with there being a general consensus that the benefits that society gets from not having lots of drunk people driving around, causing chaos on the roads, getting into car accidents and killing lots of people, outweighs the costs to potential drunk drivers of not being able to drive home from the pub, having to catch a lift or have a designated driver with them, take a taxi or public transport home, or not have that second pint with dinner.

That is, laws that prohibit drunk driving pass some sort of cost-benefit test.

Sure, we can quibble about the finer details of some of the exact costs and benefits.  Maybe you could argue that the optimal level to set the drink-drive limit at should be 0.06% BAC (Blood Alcohol Content) instead of 0.05% or 0.08% BAC.  I don’t know precisely what the optimal limit is, viewed in terms of its total costs vs. its total benefits to society.

Some countries take a zero tolerance approach* – any amount of alcohol detected in your breath/blood/urine will be met with sanctions of some sort – this is probably too strict.  On the other hand, there are a handful of countries** that don’t appear to have any limit on how much alcohol you can drink before getting behind the wheel and this is almost certainly too permissive.

What I don’t think is in much doubt, is that it makes sense to have some sort of limit.

Asking what the appropriate limit is, is partly an empirical question and partly a values question.  There is no objectively ‘right’ answer, there is only a range of broadly socially tolerable answers.

This is similar to the example used by Steven Landsburg in one of his books*** when he asks what the optimal level of pollution is?  The answer depends on your values and on how you define ‘optimal’, but is almost certainly not zero.


IV.
In English common law – which forms the underlying basis for much of the English speaking world's legal codes – there is a presumption in favour of individual freedom.  That is, anything not expressly prohibited by law is permitted.

So, for example, driving drunk wasn’t illegal in the UK until 1967 when the Road Safety Act was passed, prohibiting it.

It may be a red herring to talk about burden of proof in a philosophical sense, but in order to enact legislation that restricts individual freedom it should be incumbent on advocates of that legislation to prove – to themselves at least as much as anyone else – that that legislation is worthwhile having.

If someone advocates a certain policy, call it ‘X’, that person should be able to provide some sort of justification for their belief that policy ‘X’ is either necessary or desirable.

It seems crazy to me that anyone would advocate for any particular policy without also holding the belief that said policy is necessary or desirable.  And presumably they have reasons for holding those particular beliefs.  And if I ask them ‘what are your reasons for holding those particular beliefs?’ and they can’t articulate an answer to me.  And they instead respond with ‘well, what are your reasons for NOT holding these particular beliefs?’ that’s not very helpful, nor is it conducive to productive discourse.

Part of my reasons for not holding those particular beliefs may be because no-one has ever been able to present to me any strong evidence or articulate any good reasons for doing so.



* These are mostly majority Muslim countries where there are strong social norms against alcohol consumption and alcohol is typically more strictly controlled.  e.g. Afghanistan, Azerbaijan, Comoros, Indonesia, Iran, Libya, Turkmenistan, and the UAE.  Although the Czech Republic, Hungary, Nepal, Paraguay, Romania, and Slovakia all also take a zero tolerance approach.
The list gets even longer when one takes into account countries that take a zero tolerance approach for certain types of drivers (but not all drivers), such as learners or newly qualified drivers, commercial and professional drivers.  This includes Australia, Germany, Macedonia, New Zealand, Palau, Serbia, Slovenia, Tanzania, and Thailand.
This list is by no means complete or definitive.

** I’m looking at you Guatemala, Kenya, Niger, Togo, and The Gambia.

*** It was either ‘The Armchair Economist’, ‘More Sex is Safer Sex’ or ‘The Big Questions’, I can’t remember which, but read them all, they’re all excellent.

Monday, 16 May 2016

I disagree, therefore you are stupid scum

When discussing politics, there is an almost ubiquitous tendency for people to characterise those with viewpoints which differ from their own as ignorant, stupid, or even just downright evil.  This phenomenon seems to be particularly prevalent on Facebook and other social media platforms.

It is, of course, far easier to characterise those whose political viewpoints with which you disagree as ignorant, stupid and/or evil than it is to acknowledge that those people may have a point.  That their ideas may have some merit to them.  That their objections and criticisms of your views, even if not entirely accurate or fair, may carry some element of truth.  That your views are not as infallible as you would like to think they are and those of your political adversaries may not be as flawed as you would like to think they are.

We are all prone to bias and self-serving after-the-fact rationalisation.  Remain aware of this and recognise that virtually all political views have some merit to them, but none are perfect, all have their own flaws and weaknesses.  Remember that you are not your beliefs and you are free to change your beliefs in the face of new information, despite what your ego and your pride tell you.

Above all, remember that just because someone disagrees with you politically does not mean that person is necessarily ignorant, or stupid, or evil.  Most people are reasonably intelligent and, most of the time, well meaning.  They may just see the World in a slightly different way, which is no more or less valid than how you see the World.  Or they may just have different values or priorities than you do.  Ultimately, most political issues boil down to a moral judgement, and we have no way of making moral judgements objectively.

This means that no-one can ever be ‘right’ or ‘wrong’ on political matters, unless one is acting on or judging a situation based on incorrect or false information.  So, by all means, discuss, debate, argue, and attempt to persuade others of the superiority of your positions.  Present the facts and arguments which led you to your conclusions and dissect those of others’ to attempt to arrive at a more complete and sophisticated understanding of things.

But don’t call someone ‘an idiot’ or ‘scum’ just because they happen to disagree with you.  It’s a disrespectful, intellectually lazy, ad hominem and does nothing to further your arguments or strengthen your position.  If someone's ‘facts’ are wrong, or arguments are shoddy, attack the incorrect facts and the shoddy arguments, not the person making them, who in all likelihood genuinely believes them, is neither an idiot nor Satan incarnate, and is acting in good faith, just like you.

Wednesday, 11 May 2016

No Nicola, the SNP did not get the support of almost 50% of the population of Scotland.

In the aftermath of the recent Scottish Parliamentary election, a comment made by re-elected incumbent First Minister, Nicola Sturgeon, reminds one of a recent post I made here emphasising the difference between INPUTS and OUTCOMES.

The comment comes from this story, where Ms Sturgeon is reported as confirming her intention to relaunch her party's campaign in favour of Scottish secession from the UK.  Fair enough; I don't think either Ms Sturgeon's or the SNP's position on Scottish independence comes as a surprise to anyone, and if she/they want to try and convince more people it's a good idea they should be perfectly free to do so.

But don't go about it by spreading blatant lies.

The lie to which I refer is this howler:
"When asked if Scotland can put an independence referendum to bed for the next five years, Ms Sturgeon said: 'No, the position I put forward in the SNP manifesto got the support of almost 50% of the population.'"
This is demonstrably false and so far off the mark as to be laughable.

The position put forward in the SNP manifesto did not get the support of almost 50% of the population.

The population of Scotland, according to the 2011 census, is 5,313,600.

The SNP received 1,059,897 constituency votes in the 2016 Scottish Parliamentary election.

1,059,897 divided by 5,313,600 is not even 20% of the population of Scotland.

Of course, not all of those 5,313,600 people are eligible to vote.  Many of them are children, for example.  The BBC reports the electorate of Scotland, for this election, as 4,099,407.

1,059,897 divided by 4,099,407 is 25.9% of the electorate.

I think what Ms Sturgeon meant to say, was that the position put forward in the SNP manifesto got the support of almost 50% of those who voted.

This is, at least, a more reasonable interpretation of events.  Turnout for this election was around 56% of the electorate.  There were a total of 2,279,153 valid constituency votes and 2,285,752 valid regional votes cast.

Of these, the SNP won 1,059,897 constituency votes and 953,987 regional votes, or 46.5% and 41.7% respectively.

However, there is an issue even with this statement.  That is that people vote for a particular candidate or political party for a wide variety of different reasons and considering a broad range of issues.  It's not possible to know for certain how many of those 1,059,897 people support Ms Sturgeons position on a second referendum.  Maybe some of them voted for SNP candidates due to their position on healthcare, or education or taxes, or defence, or any number of other issues or combinations of issues, or because they have a particularly good local MSP.

Pick any random person off the street and any random political party's manifesto and you are likely to be able to find some things in it which they agree with and some things in it which they disagree with.  Just because a person has voted for a particular party doesn't mean they support everything in that party's manifesto.  All it means is that, on balance, they support more of that party's stated aims, objectives and values, than that of the other parties/candidates.  Often times it's a case of picking the lesser of several evils.

In this particular case, I think it's pretty likely that most people backing the SNP are in favour of Scottish independence, but it is simply not possible to know that from the number of votes alone.

To determine that you have to have a referendum.  Which we did, in 2014.  And in which we found that 1,617,989 people, or less than one third of the population of Scotland, were in favour of independence at that time (to use Ms Sturgeon's favoured way of expressing these statistics).

If she hasn't already, I think Ms Sturgeon should be obliged to make a full retraction of this statement and go on record to correct any misunderstanding that may have resulted.