Politics is the Mind-Killer. Are Dark Arts the Solution?

Politics tends to make people much dumber, or at least much worse at discovering the truth.  There is a good reason for this, and Eliezer Yudkowsky said it well:

Politics is an extension of war by other means.  Arguments are soldiers.  Once you know which side you’re on, you must support all arguments of that side, and attack all arguments that appear to favor the enemy side; otherwise it’s like stabbing your soldiers in the back – providing aid and comfort to the enemy.

This is one of the reasons that politics is not about policy.  I wish politics were really all about figuring out what policies are best for everyone and implementing them.  But in reality people are not strongly attached to policies.  It is fun to see everyone change positions on the merits of the filibuster when there is a new majority party in the Senate.  Recently we have been treated to the spectacle of the Heritage Foundation and Mitt Romney disavowing the health reform that strongly resembles the policies they advocated and implemented, because this one was passed by Evil Democrats.  Similarly, all the Democrats who claimed to feel very strongly about the Wars on Afghanistan, Iraq and Terror when the Big Bad Republicans were doing it forgot all about this once their guy was elected and continued the same policies.  Sociologist Fabio Rojas found that attendance by Democrats at anti-war demonstrations fell by more than half after Obama was elected; ironically, this is when the protests may have actually had a better chance at changing policy.

Glenn Greenwald (the currently-ignored conscience of the Democratic Party, or indeed the US) made some great points in this vein recently in a controversial (1700+ comments) article:

Then there’s the inability and/or refusal to recognize that a political discussion might exist independent of the Red v. Blue Cage Match. Thus, any critique of the President’s exercise of vast power (an adversarial check on which our political system depends) immediately prompts bafflement (I don’t understand the point: would Rick Perry be any better?) or grievance (you’re helping Mitt Romney by talking about this!!). The premise takes hold for a full 18 months — increasing each day in intensity until Election Day — that every discussion of the President’s actions must be driven solely by one’s preference for election outcomes (if you support the President’s re-election, then why criticize him?).

You should probably just read the whole Greenwald article, it is a better version of this post.  Anyway, I’ve been thinking about this a lot as we start election season in the US.  How can we be involved in both truth-seeking and politics when they don’t naturally mix?

Two great public intellectuals, Paul Krugman and Tyler Cowen, have been openly discussing the merits of their very different rhetorical strategies.  Krugman has a more political style, implying and often outright saying that people who disagree with him must be idiots.  Cowen is more intellectual and abstract.  Cowen implies that Krugman’s style lacks virtue and integrity:

“The issue is not that Krugman changed his mind (I’ve done that plenty, Alex too).  The issue is that Krugman a) regularly demonizes his opponents, including those who hold Krugman’s old positions, and b) doesn’t work very hard to produce the strongest possible case against his arguments….. There is a kind of hallelujah chorus for Krugman on some of the left-wing economics blogs.  The funny thing is, it’s hurting Krugman most of all”

This is a new chapter in an ancient debate; it reminds me of Socrates calling out the Sophists.  Socrates was a purist who thought we should seek truth and the good, while the Sophists realized that their rhetorical Dark Arts could win them money and influence.  Indeed, Krugman’s response is essentially that his style brings him influence, and you can’t argue with success:

I realized that I also wanted to say something in response to the concern trolling, the “if you were more moderate you’d have more influence” stuff. Again, this amounts to wishing that we lived in a different world. First, there is no such thing in modern America as a pundit respected by both sides. Second, there are people writing about economic issues who are a lot less confrontational than I am; how often do you hear about them? This is not a game, and it is also not a dinner party; you have to be clear and forceful to get heard at all.

Basically, Krugman is saying “If only you knew the Power of the Dark Side”.  But is this strategy really so powerful?  I may not be representative, but it certainly loses me.  I can help but notice how Krugman is trying to reframe the debate (and distort Cowen’s argument) in almost every sentence.  Cowen isn’t concern trolling because he practices what he is preaching; and he advocates a moderate tone, not moderate positions.  Krugman sets up false dichotmies: being civil means you aren’t clear and forceful, you can only be respected by one of two sides.  This last may be the most crucial: Krugman assumes that all discussion takes place where there are opposing sides (and only two of them!) and no respect across them.  This puts him squarely in the arguments-are-soldiers camp.

But is Krugman’s strategy effective in general?  He certainly has a large audience, which is valuable (in terms of income and status).  It is hard to say whether this results in much influence on policy though.  It is hard in general to determine the effect of individuals on policy, but I can’t think of a single issue where Krugman was a leader in getting a policy changed.  Cowen previously argued that most intellectuals, including Krugman (and himself), have little real influence.

Can we become more influential through the use of Dark Arts in general, and ridiculing the other side in particular?  I think the jury is still out here.  Milton Friedman was influential while being unfailingly civil and assuming the best of his opponents, and I think that this helps his work stand the test of time.  It is easier for people to adopt your position if this doesn’t mean they were being idiots before; as Brad Delong said (ironically, since he is guilty of the same vice) “No, Paul, No! You Don’t Slaughter the Returning Prodigal Son, You Slaughter the Fatted Calf!!”  The easiest way to convince people is not to change their mind, but to convince them they agreed with you all along; this is easier if you don’t call them names.

Even if the Dark Arts do confer the power to influence and persuade, it is likely that they erode the ability to find the truth.  In theory you could have a persuading public persona and a truth-seeking private persona with different beliefs.  But to reduce cognitive dissonance people must start believing their own propaganda.  Further, the best way to learn is often through open, honest debate that cuts to the heart of the issues; you don’t learn by beating up strawmen.  The power of the real Dark Arts, just as in so much literature and mythology, comes with a great cost.

Update: One big thing I missed in this post is the need to know your audience; there is no one form of argument that is most convincing to everyone.  My implicit assumption (and that of Kantoos, who made me realize this) is that you should target the median reader out there, just as politicians should target the median voter.  But of course, in primary season you do not target the median of the whole electorate.  Krugman is in a perpetual primary season.  He is not trying to convince the average reader that his “side” is better, but to educate, entertain and radicalize those already on his “side”, by noting that the other side is not even worth considering.  This should have been obvious since he named his book and blog “Conscience of a Liberal”, but I do catch on eventually.

The Fed Can Commit

I have heard otherwise-intelligent people insist that the Federal Reserve is incapable of making believable commitments to take certain actions in the future.  For instance, Angus keeps saying things like

“Please repeat after me:

THE FED HAS NO MECHANISM TO BIND ITSELF TO LIVE UP TO ANY ARBITRARY PROMISES IT MAY MAKE TODAY ABOUT THE FUTURE!!!

Promises to act against one’s preferences in the future that are made without any commitment mechanism are simply cheap talk and are extremely unlikely to shape agent’s expectations or actions.”

It is obviously wrong to say that the Fed has no commitment mechanism.  The Fed makes believable commitments every day.  It does not need to resort to Schelling-style special tricks like having its employees make contracts with 3rd-parties to lose lots of money if the inflation target is missed (though of course these tricks are available and potentially useful).  The real commitment mechanism is that your reputation is itself a valuable thing, and the Fed’s leaders know this and have less-than-infinite discount rates.  Ben Bernanke has carefully developed a reputation for keeping his word; he is not going to throw this durable good away in 2012, because he will still find it useful in 2013, and he values his 2013-utility a significant positive amount.  Because Bernanke knows the importance of the expectations channel, he knows his reputation is more important than just about any one-time action.  Ben will not sell his birthright for a mess of pottage.

We don’t even need to delve into the complexities of monetary policy to establish the obvious truth that the Fed can make commitments.  Just consider the fact that thousands of Fed employees feel almost certain that the Fed will give them their next paycheck as promised.  Surely the Fed would benefit in the short term by not paying them; it could get them to keep working for a few weeks at least by insisting there was some technical problem with the payroll system.  Why doesn’t the Fed try this?  Because the leaders of the Fed know that their reputation for doing what they say [eg paying people, even if they promised too high a salary] is far more valuable than any short-term savings.  Their employees know this too, making it much easier for the Fed to manage their own labor market; for instance, no one is demanding payment up front, because they trust they will be paid later.  Similarly, the FOMC announces their meeting dates months ahead of time.  Somehow they always manage to meet when they said they would, even if everyone attending realizes at the last minute it is not a great time; they value their reputation more than a one-time inconvenience.  That’s some magical stuff right there people!

Berkeley Students Are So Conservative

They, like most people, are small-c Burkean conservatives about life in general.  They have a strong status quo bias, but rather than admit this like Edmund Burke, they feel compelled to invent reasons why status quo things are good.  Berkeley psychology prof Seth Roberts said ”Most of my students, for better or worse, were very conformist. My conclusion…. is that the reasons we give for our beliefs have roughly zero correlation with the actual reasons and shouldn’t be taken seriously (e.g., argued with).”  Robin Hanson said the same about George Mason students:

• Ask random colleges student random policy questions and they will feel compelled to come up with opinions.
• Ask them for reasons for those opinions and they’ll feel compelled to come up with such reasons.
• Such opinions strongly tend to support the status quo – mostly whatever is, is assumed good.

I am thinking along similar lines today after discussing organ markets with my students.  Students say that legal markets in human organs would be bad mainly because it would lead to organ theft.  Even supposing there would be more organ thefts, it is hard to imagine there would be enough to outweigh the deaths of 9000 Americans every year caused by our current ban on organ sales.  If people were used to a functioning market in organs, I have to think they would be horrified by someone saying we should ban organ sales and consign thousands to death in order to reduce theft, just as it would seem crazy to ban day-laboring to protect laborers from employers who stiff them after a day’s work (stealing is already illegal!).  It is easier to think there must be a good reason for the status quo, that we live in the best of all possible worlds and aren’t doing something horrible.  Indeed, there is more right with the world than wrong with it; there is a reason status-quo-biased people continue to survive and thrive.  Further, it is dangerous to think that those who disagree with you must do so out of some ignorant bias; call this the “bias bias”.

In general though, if we are trying to figure out the truth, we have to fight pro-status-quo bias more often than its opposite.  The reason for this is wired into our brains: our dominant trait is to rationalize, not reason.  One part of our brain is dedicated to coming up with a reason for anything, whether it makes sense or not.  In extreme cases, paralyzed people can come up with all sorts of reasons to explain why they aren’t really paralyzed; their brain is acting as an apologist for what is done, not a reasoned truth-seeker (Seriously, check out that link- it is way more interesting than my post, even if you have heard of the phenomenon before).

I am optimistic about getting people who think of themselves as non-conformist or politically liberal to consider new ideas by telling them they are being conservative conformists.  Put name-calling to good use!

How to care about Equality

Like many utilitarians and economists, I have a hard time caring about inequality for its own sake, even though many people seem to think it is very important.  Making poor people richer is good on standard utilitarian grounds, but it is hard to imagine wanting to make rich people poorer just to make everyone feel more equal.  How can utilitarians support wealth equality, and redistribution, without putting any value on equality itself?

One reason is as old as utilitarianism itself- the diminishing marginal utility of money.  If rich people don’t value $1000 as much as poor people, in theory we can increase total utility by taking from the rich and giving to the poor.  Wolfers’ finding that happiness rises with the natural log of income supports this.  Of course in practice this leads to incentive problems and an efficiency/equality tradeoff; this lowers the optimal amount of redistribution but gives us no reason to think it is zero.

Second is the fully general trump card against utilitarians (I hope a philosopher can tell me how to get out of this): other people say equality will increase their utility, and you say you want to increase utility, so you should support their desire for equality.

I think one version of this is influential in practice.  An economist like Greg Mankiw might not care about inequality himself, but everyone around him talks about it, so he thinks of more constructive things to say than “your values are silly”.

Another version is the “realpolitik” concern.  Bismark invented the welfare state not because he cared about equality or happiness but to stave off revolution.  Similarly, we might care only about happiness, but realize that voters may be more supportive of happiness-enhancing pro-market policies when inequality is small.  Look at the Economic Freedom of the World Index- Northern European countries like Denmark have high levels of redistribution but are otherwise very free markets.  Denmark is often rated the happiest country in the world.  I would like to see a poli-sci paper on this, or write one if none exists.  If you count the Republicans as the pro-market party (iffy), I have written a paper finding this for the US.  But one should look internationally, as well as looking at survey data on opinion in addition to actual outcomes.

There is one more utilitarian argument for redistribution that I don’t recall hearing, though I am sure it has been made.  Economists like to emphasize that the price system is an amazingly efficient mechanism for allocating resources to their highest valued use.  A common response to this point is that the system is inefficient and unfair, because a poor person who will get 10 utils from a good can be outbid by a rich person who makes 4 times as much money and gets 5 utils from the good.  Somewhere, a rich kid is ignoring or complaining about a toy that a poor kid would love to have but can’t afford.  What I have yet to hear is the obvious corollary of this criticism: the more equal incomes get, the more efficient, fair and utility-enhancing the price system becomes.  The price system more efficiently allocates resources in Denmark than in Mexico.  Perhaps Danish voters are more willing to let prices work because they actually work better in the more equal country of Denmark.

The Strong Dollar

I have heard many people say that the Keynesian counter-recession policies of easy money from the Fed and deficits from Washington have been rendering the dollar worthless.  I know inflation has actually been below-trend (so the dollar’s purchasing power remains strong domestically), but today I finally got around to looking up the international strength of the dollar:That’s right, the dollar has barely declined since the beginning of the recession, despite the big increases in deficits and the monetary base.  It is much stronger than we would predict from the pre-recession trend.  People “know” that the dollar must be weaker because of what the Fed and Obama are doing; it seems so obvious that they don’t feel the need to look up the numbers, which show otherwise.

Of course, a strong dollar is not necessarily good; I believe the main reason people think it is a good thing is because it has the word “strong” attached.  Sometimes a strong dollar is about as desirable as a case of strong influenza.  Given our apparent aggregate demand shortfall, this seems to be one of those times.  Since I am not doing much importing, exporting, or international travel, I don’t have much of a personal dog in the fight; but it seems the country could do with an even weaker dollar.

Remembering Adam Smith Efficiently

Adam Smith is usually remembered as the father of economics and laissez-faire, for the metaphor of the invisible hand, and for its meaning that people acting in their self-interest promote the public good.  A vocal minority likes to point out that Adam Smith was much more complex than this, and in particular that his thoughts on businessmen and the role of government are very different from those of many people who claim to love Smith.  However, I believe that the naive picture of Smith that most people have is in fact efficient, in the same way that peoples’ ignorance of politics is efficient.

Smith was in fact quite complex.  He is thought of as a champion of capitalists and businessmen, but he said they are “an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it” and that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

He is thought to have said that people are only motivated by rational self-interest, but he was no Gary Becker.  He recognized that people want to do good, saying: “We are pleased, not only with praise, but with having done what is praise-worthy” and “ To prevent, therefore, this paltry misfortune to himself, would a man of humanity be willing to sacrifice the lives of a hundred millions of his brethren, provided he had never seen them? Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it”.  He also recognized that people are far from rational, saying “self-deceit, this fatal weakness of mankind, is the source of half the disorders of human life” and “The chance of gain is by every man more or less over-valued”.

Smith is thought to have called for laissez-faire small government, but in fact he suggested several large roles for government, such as putting a ceiling on interest rates to curtail risky investments, progressive taxation, and public education to counter the bad effect of the division of labor: “He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become…. in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.”

For a supposed apologist for propertied classes, he sometimes sounds a lot like an anarcho-communist, saying: “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed” (of course, all the classical economists hated landlords, even if they loved capitalists), and “The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security.”

Smith takes his message to the streets

Given all this, how can I say that Smith is remembered efficiently as promoting self-interest, capitalism, and small government?  There are two main reasons.  One is simply that Smith said a lot of things, and it is easy to distort his main message with selective quotes.  As Jacob Viner said, “Traces of every conceivable sort of doctrine are to be found in that most catholic book, and an economist must have peculiar theories indeed who cannot quote from the Wealth of Nations to support his special purposes”.    Smith made no strong effort at self-consistency; again as Viner said, “The one personal characteristic which all of his biographers agree in attributing to him is absent-mindedness, and his general principle of natural liberty seems to have been one of the things he was most absent-minded about.”

In the main, Adam Smith’s message was that markets worked well and that mercantilist calls for government to restrict trade should be opposed.  The usual quotes used to show Smith’s support of self-interest and laissez-faire are in fact more representative of his work as a whole than the quotes I used above to show his nuance.  The most popular such quotes are probably: “it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest” and “he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention…. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”  He can’t have believed much in the power of altruism as he said “The late resolution of the Quakers in Pennsylvania to set at liberty all their negro slaves,  may satisfy us that their number cannot be very great. Had they made any considerable part of their property, such a resolution could never have been agreed to.”  The list of government policies supported by Smith is very small compared to what modern governments do, though it would not make all libertarians happy.

The main reason I say Adam Smith has been remembered efficiently is that his ideas about self-interest and the invisible hand were what set him apart at the time and what inspired later economists.  People like me who are interested in history and Adam Smith for their own sake should know about the complexities.  But many people before Smith had criticized the conspiracies of business, advocated for government regulations, and recognized that people have many motivations.  What made Smith different, and what later economists built on, was his focus on self-interest and how to maximize happiness.  Adam Smith was not Gary Becker, but his works had the seeds of modern economics in a way that previous thinkers did not, and it makes sense to focus on the parts of his work that would later bear so much fruit.

J.S. Mill (1848) on the Financial Crisis of 2007-8

In his 1848 Principles of Political Economy, John Stuart Mill gives what sounds to me like a description of the “global savings glut” and subsequent financial crisis of the 2000′s:

By the time a few years have passed over without a crisis, so much additional capital has been accumulated, that it is no longer possible to invest it at the accustomed profit: all public securities rise to a high price, the rate of interest on the best mercantile security falls very low, and the complaint is general among persons in business that no money is to be made…. the diminished scale of all safe gains inclines persons to give a ready ear to any projects which hold out, though at the risk of loss, the hope of a higher rate of profit; and speculations ensue, which, with the subsequent revulsions, destroy, or transfer to foreigners, a considerable amount of capital, produce a temporary rise of interest and profit, make room for fresh accumulations, and the same round is recommenced.

A global savings glut lead to low yields on safe investments like US Treasuries.  Investors chasing high yields turned to riskier investments, especially those which could be packaged as safe- like securitized subprime mortgages.  When the risks were realized, the crisis occurred.  Score one for Mill.

A Paradox of Sustainability

When discussing Malthus, I said that we don’t need to worry about “overpopulation”, because there are no global food shortages in the foreseeable future.  A natural response to this is that we may be able to feed more people, but they would consume other resources and pollute in an unsustainable fashion.  I have previously expressed several reservations about the idea of sustainability, and I stand by those.  Most environmental problems are not necessary results of overpopulation or a high discount rate that undervalues future generations.  I cannot think of an environmental problem that is not caused by externalities or a lack of property rights, and thus could not be solved by the proper application of Pigouvian taxes or property rights.  Many of these solutions would work fast enough to be worth it to current people at current discount rates; we should have higher gas taxes and property rights in fish regardless of “sustainability”.

Of course, even with these fixes, there will still be increasing amounts of some pollution.  Part of this is due to discounting  the future, which could be reduced in an non-distortionary way by lowering taxes on saving and investment.  Even at a zero discount rate, though, we may still leave the world more polluted than we found it, for instance with more carbon dioxide.  Would this be “unsustainable”?

One definition of sustainability is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.  In economics terms, this means we should have no time rate of preference (we should care about the future as much as the present); in Rawlsian terms, we should arrange society as we would if we didn’t know which generation we would be born in.  I have previously argued that high pollution and consumption can be sustainable because future generations will probably be richer and we aren’t sure how much they will value our actions.  In finance terms, this is like taking out loans instead of saving because you think your income will be higher in the future and because investments are risky.   Such an individual would take out loans even if they value their present and future selves equally.

All of these criticisms simply reduce the scope of sustainability; but it is still reasonable to reduce some pollution and consumption if you think future generations will be poorer than us and you have a good idea of what they will value (though I think they will be much richer than us).  The actual contradiction comes when we consider “overpopulation”.  It is often said that people today should have fewer kids because a higher population is not “sustainable”.  If we have fewer kids, there will be more resources per person; each person in the future will be able to pollute and consume more.  How is this a problem?

Robert Solow pointed out one contradiction of sustainability (though he was kind enough to call it a “paradox”) when he said (page 7, it is worth reading all 9):

“I want to mention what strikes me as a sort of paradox- as a difficulty with a concept of sustainability.  I said, I kind of insisted, that you should think about it as a matter of equity…. how productive capacity should be shared between us and them, them being the future.  Once you think about it that way you are almost forced logically to think about not between periods of time but equity right now…. the paradox arises because if you are concerned about people who are currently poor, it will turn out that your concern for them will translate to an increase in [current] consumption”

This is one contradiction, that we want equity across generations, and we achieve it by worsening current inequality.  We tell poor Brazilians not to clear land for their farms, poor Chinese not to burn coal to light their homes, poor Africans not to use DDT to protect their health; all so people in the future can enjoy more species and a stable climate.  This seems to be a transfer from poor to rich in the name of equity.  But Solow, right after pointing out one contradiction, stumbles into another, saying “control of population growth would probably be the best available policy on behalf of sustainability”.

This creates another kind of inequality.  Say a future generation can safely consume and pollute 10 units, spreading this over 10 people, so each person gets one unit of “exhaustible GDP”.  Are we being equitable if instead we control population so that there are only 5 people and they can each have 2 units of goods?  No, we are making the rich (who get to experience life) richer with an extra good per person, while the 5 “poor” don’t get to exist at all or consume anything.

Further, the only ways to explain away the problem are blocked by the logic of sustainability itself.  One could say that the people who don’t exist shouldn’t be counted; but the whole point of sustainability is to speak up for future generations who don’t yet exist and so can’t speak for themselves.  One could say that a life that is allowed little pollution or consumption of exhaustible resources is not worth living; but the whole strategy of sustainability is to tell people that life is still good when you pollute little, consume little, and draw enjoyment from things besides consumerism and materialism.

So an argument that we should have fewer kids to be sustainable and equitable is really an argument for increasing inequality in the future.  It does not make sense on equity grounds; sustainability needs to drop the idea of population control to be logically consistent (except insofar as it does prevent famine and musicals).  The new growth theory and a host of empirical work have also established that it doesn’t make sense on efficiency grounds, since the externality of a marginal child is positive.

There are lots of good reasons not to have kids, but a worry about sustainability is not one of them.

Malthus was right, but he would want you to have kids

Mr. Malthus- central Propositions correct, indeed obviously so- Misinterpretations by modern critics and supporters- The importance of certain technological developments

Thomas Malthus is famous for his 1798 Essay on the Principle of Population, which argued that population will always quickly rise to the limit that the food supply allows, meaning many people will always live in poverty and near-starvation.  Ever since its publication, people of all kinds have been eager to attack the ideas and their author.  I have to admit I always found it hard to take Malthus seriously- mostly because the last 200 years of increasing population without world famine seem to prove him wrong; also because of the silliness of the “arithmetic vs. geometric growth” thing.  However, when you look closely at what Malthus said, he was mostly correct, and when wrong it was not for the reasons most people came up with.

Malthus’ main ideas can be summarized: 1) people need food to live  2) there is only so much land to grow food on 3) Given that the “passion between the sexes” is a part of human nature, people just keep having kids 4) given 1-3, population will increase until it hits the food-limit imposed by nature and is kept in check by starvation

He notes that when people encounter “new” land, as in America, their population will double as quickly as every 25 years and quickly fill it up; people everywhere would like to have enough kids that population increases in this way.  It is hard to imagine agricultural productivity doubling every 25 years to enable the same population growth on a set amount of land.  Certainly adding more workers to a given farm quickly hits diminishing returns.  Further, it is hard to imagine even now- and must have been very hard in 1798- to imagine that new techniques, crops and machines could double output every 25 years.

Malthus describes many ways in which population is kept in check short of famine.  There are other ways the death rate is increased- war, disease, infanticide- and he argues these become more common when food is short.  There are ways the birth rate is decreased- abstinence and late marriage.  His economic analysis is excellent for its time.  He describes how price signals enable individuals to make decisions that avoid famine.  As population gets close to the food limit, food prices increase, so kids become more expensive to feed, and people try to have fewer of them.  When many people are nearing the subsistence level, the price of labor will be low.  When labor is cheap and food expensive, farmers will have a bigger incentive to produce more food.  Prices enable population to fluctuate less violently around the equilibrium level.

Malthus’ main descriptive proposition, that population will quickly catch up to any increase in potential food production, was true for essentially all human history until about 1880, when the demographic transition began in earnest and children per woman began its long decline while agricultural productivity expanded rapidly.  But what policy conclusions did Malthus draw from his idea?  This is where things get weird.

Malthus’ idea has been adopted by leftist environmentalists to argue that people in general should have fewer kids.  This is probably why I thought Malthus must be wrong when I heard about him as a college freshman.  But Malthus himself didn’t argue this at all.  In fact, Malthus thinks that having kids is great as long as you can afford to feed them with your own money.  He likes kids; he doesn’t like it when they starve; he doesn’t like it when people have to turn to welfare or adoption to get their kids fed.  He really didn’t like welfare:

“The poor-laws of England tend to depress the general condition of the poor…. increase the population without increasing the food for its support…. create the poor which they maintain…. diminishes the shares that would otherwise belong to more industrious and worthy members… dependent poverty ought to be held disgraceful.” p 38-9 Norton 2nd ed

Malthus’ main policy conclusion is that the poor laws (the welfare of his day) should be abolished.  His secondary conclusion is to support agricultural productivity, by encouraging “tillage above grazing” (thus producing more calories per acre), opening new farmland, and encouraging agriculture above manufacturing and cities.  This will increase the number of people the land of England can support.

His main advice to individuals is not to have kids if they are likely to starve or have to go on the public dole.  If welfare is abolished as he would like, this is simplified to: don’t have kids if they are likely to starve.  This is why I feel confident that Malthus wouldn’t mind if you (I assume those likely to read this could afford to feed kids) have kids.

So what did Malthus get wrong?  He didn’t foresee effective birth control or the explosive, endogenous growth of agricultural technology.  He assumed that having fewer kids would always mean misery (abstinence) or vice (infanticide), both of which are hard to do.  If he had known about condoms or the pill, he may have called them “vice”, but he would recognize them to be easier than abstinence and more moral than infanticide.  Birth control, when people are rich and educated enough to use it, is itself enough to evade the Malthusian trap, as below-replacement birthrates in many countries now attest.  Malthus saw technology as something that developed slowly and randomly, so he didn’t consider that it could avoid the trap, and didn’t include research as a way to encourage agriculture.  In fact, agricultural technology has grown “geometrically” (exponentially).  It has not done so randomly, but instead is largely due to factors Malthus ignored- like government-sponsored research- or spurned as pulling workers away from agriculture, such as cities (where most inventions and discoveries take place, even in agriculture) and manufacturing (which makes tractors, et c).

On the whole, though, I was surprised by how rational Malthus’ writing is and how much modern economics he knew in 1798.  His work has not been rendered completely irrelevant by technology and birth control; much of the world does still live on or near the Malthusian frontier.  It is unclear to me whether it is helpful to give food aid to such regions, either through private charity or government food subsidies as with Indian rice.  Personally I think giving to education in poor countries is a better bet, and the fact that it does not aggravate a potential Malthusian trap is one reason why.

To get back to kids though, there are lots of good reasons you may not want them, but one reason you shouldn’t have is that “the world is overpopulated and Thomas Malthus would be sad”.

The Strategy of Conflict

The Strategy of Conflict is a book by econ Nobelist and game theorist Thomas Schelling.  The book reminds me of Milton Friedman’s book Capitalism and Freedom (which I reviewed here), since both are books from the early 1960′s that have been popular and influential and yet still seem ahead of their time in many ways.  Schelling explains the basics of game theory in a way that is accessible to those with no background in math or economics.  There are many tables, and parts 3 and 4 have some equations, but I plan to recommend parts 1 and 2 to ambitious Principles of Economics students who express interest in game theory.  The book is so easy to understand because it is full of short, down-to-earth examples, many applied to everyday life and many others to the US-Soviet conflict.

One key idea of the book is that in bargaining, “weakness” is often a strength.  One side can benefit by reducing their own ability to communicate, or make choices, or benefit from certain choices.  Another key idea is what would later be called the “Schelling point”, the focal point of players’ expectations that may have more to do with idiosyncrasies of the players or superficial aspects of the game than with the usual abstract, mathematical, rational method of solving games.  This explains the importance in practice of ideas and slogans like “a slippery slope”, “a line in the sand”, or “Fifty-four Forty or Fight!“.

The major reason I say the book is ahead of its time is Schelling’s insistence on applying game theory to real life, and changing game theory so that it can be more usefully applied to real life.  He reviews some experimental tests of game theory and proposes many more; I don’t know the literature well but I believe many of these proposals have yet to be carried out.  He demonstrates the importance of the details of games that most game theorists would still ignore, for instance asking:

Another set of questions, also pertinent to problems of limited war, international or other, would be whether a stable, efficient outcome is more likely when the connotations of the game -the names and interpretations that are overtly attached to the moves and pieces and objects on the board — are familiar and recognizable or when they are quite novel, unfamiliar, and unlikely to inspire similar notions in the two players. Is it — to speak of the game in a particular extensive form — more likely that rational players can keep a war limited in Southeast Asia, using conventional and atomic weapons, or in a battle against an unknown adversary on the surface of the moon, using strange bacterial weapons? These are important questions; they are at the very center of game theory; and they are questions that cannot possibly be given a confident answer without empirical evidence. And there is no arguing that rational players have the intellectual capacity to rise above these details of the game and ignore them; the importance of the details is that they can be supremely helpful to both players and that rational players know that they may be dependent on using these details as props in the course of their mutual accommodation.

I recommend the book to anyone interested in game theory, foreign policy, bargaining, economics, cooperation… life.