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THE JOYFUL REDUCTION OF UNCERTAINTY

List Of Passages I Highlighted In My Copy Of Capital In The Twenty-First Century

[Original review is here. Don’t worry, people who had interesting comments on the review – I’ll try to get a comments highlights thread up eventually.]

For Ricardo, who published his Principles of Political Economy and Taxation in 1817, the chief concern was the long-term evolution of land prices and land rents. Like Malthus, he had virtually no genuine statistics at his disposal. He nevertheless had intimate knowledge of the capitalism of his time. Born into a family of Jewish financiers with Portuguese roots, he also seems to have had fewer political prejudices than Malthus, Young, or Smith. He was influenced by the Malthusian model but pushed the argument farther. He was above all interested in the following logical paradox. Once both population and output begin to grow steadily, land tends to become increasingly scarce relative to other goods. The law of supply and demand then implies that the price of land will rise continuously, as will the rents paid to landlords. The landlords will therefore claim a growing share of national income, as the share available to the rest of the population decreases, thus upsetting the social equilibrium. For Ricardo, the only logically and politically acceptable answer was to impose a steadily increasing tax on land rents.

This somber prediction proved wrong: land rents did remain high for an extended period, but in the end the value of farm land inexorably declined relative to other forms of wealth as the share of agriculture in national income decreased. Writing in the 1810s, Ricardo had no way of anticipating the importance of technological progress or industrial growth in the years ahead. Like Malthus and Young, he could not imagine that humankind would ever be totally freed from the alimentary imperative.

One underappreciated feature of Piketty is his engaging presentation of economic history. A constant feature of the theorists he discusses is that they are all brilliant thinkers, they all follow the trends of their time to their obvious conclusions in ways deeper and more insightful than their contemporaries – and they all miss complicated paradigm shifts that make the trends obsolete and totally ruin their theories. Rationalists take note.

Like Ricardo, Marx based his work on an analysis of the internal logical contradictions of the capitalist system. He therefore sought to distinguish himself from both bourgeois economists (who saw the market as a self-regulated system, that is, a system capable of achieving equilibrium on its own without major deviations, in accordance with Adam Smith’s image of “the invisible hand” and Jean-Baptiste Say’s “law” that production creates its own demand), and utopian socialists and Proudhonians, who in Marx’s view were content to denounce the misery of the working class without proposing a truly scientific analysis of the economic processes responsible for it.7 In short, Marx took the Ricardian model of the price of capital and the principle of scarcity as the basis of a more thorough analysis of the dynamics of capitalism in a world where capital was primarily industrial (machinery, plants, etc.) rather than landed property, so that in principle there was no limit to the amount of capital that could be accumulated. In fact, his principal conclusion was what one might call the “principle of infinite accumulation,” that is, the inexorable tendency for capital to accumulate and become concentrated in ever fewer hands, with no natural limit to the process. This is the basis of Marx’s prediction of an apocalyptic end to capitalism: either the rate of return on capital would steadily diminish (thereby killing the engine of accumulation and leading to violent conflict among capitalists), or capital’s share of national income would increase indefinitely (which sooner or later would unite the workers in revolt). In either case, no stable socioeconomic or political equilibrium was possible.

Marx’s dark prophecy came no closer to being realized than Ricardo’s. In the last third of the nineteenth century, wages finally began to increase: the improvement in the purchasing power of workers spread everywhere, and this changed the situation radically, even if extreme inequalities persisted and in some respects continued to increase until World War I. The communist revolution did indeed take place, but in the most backward country in Europe, Russia, where the Industrial Revolution had scarcely begun, whereas the most advanced European countries explored other, social democratic avenues—fortunately for their citizens. Like his predecessors, Marx totally neglected the possibility of durable technological progress and steadily increasing productivity, which is a force that can to some extent serve as a counterweight to the process of accumulation and concentration of private capital. He no doubt lacked the statistical data needed to refine his predictions. He probably suffered as well from having decided on his conclusions in 1848, before embarking on the research needed to justify them.

As above. I didn’t previously understand exactly what Marx meant by “capitalists digging their own grave” or why it didn’t come true. In general, I seem to have missed how recent the idea of “economic growth” was. I don’t really understand how 19th- and even some 20th- century economists could fail to understand this, though it seems like they had some complicated thoughts on this issue – see eg this article’s descriptions of Smith’s, Ricardo’s, and Mill’s ideas of the “steady state economy”. Read history of economics backwards!

(but for a contrary perspective, see this comment thread)

In any event, the data that Kuznets collected allowed him to calculate the evolution of the share of each decile, as well as of the upper centiles, of the income hierarchy in total US national income. What did he find? He noted a sharp reduction in income inequality in the United States between 1913 and 1948. More specifically, at the beginning of this period, the upper decile of the income distribution (that is, the top 10 percent of US earners) claimed 45–50 percent of annual national income. By the late 1940s, the share of the top decile had decreased to roughly 30–35 percent of national income. This decrease of nearly 10 percentage points was considerable: for example, it was equal to half the income of the poorest 50 percent of Americans.13 The reduction of inequality was clear and incontrovertible. This was news of considerable importance, and it had an enormous impact on economic debate in the postwar era in both universities and international organizations.

Malthus, Ricardo, Marx, and many others had been talking about inequalities for decades without citing any sources whatsoever or any methods for comparing one era with another or deciding between competing hypotheses. Now, for the first time, objective data were available. Although the information was not perfect, it had the merit of existing. What is more, the work of compilation was extremely well documented: the weighty volume that Kuznets published in 1953 revealed his sources and methods in the most minute detail, so that every calculation could be reproduced. And besides that, Kuznets was the bearer of good news: inequality was shrinking.

Another good rationalist lesson! If your conclusion from the stories above was “never try to just reason things out from first principles, wait until you get empirical data”, then remember the lesson of Kuznets, who got 35 years of empirical data, drew all of the most reasonable conclusions from it, but happened to be working in an atypical economic period and so got his conclusions exactly backwards.

In slowly growing economies, past wealth naturally takes on disproportionate importance, because it takes only a small flow of new savings to increase the stock of wealth steadily and substantially.

If, moreover, the rate of return on capital remains significantly above the growth rate for an extended period of time (which is more likely when the growth rate is low, though not automatic), then the risk of divergence in the distribution of wealth is very high.

This fundamental inequality, which I will write as r > g (where r stands for the average annual rate of return on capital, including profits, dividends, interest, rents, and other income from capital, expressed as a percentage of its total value, and g stands for the rate of growth of the economy, that is, the annual increase in income or output), will play a crucial role in this book. In a sense, it sums up the overall logic of my conclusions.

When the rate of return on capital significantly exceeds the growth rate of the economy (as it did through much of history until the nineteenth century and as is likely to be the case again in the twenty-first century), then it logically follows that inherited wealth grows faster than output and income.

The shortest and clearest presentation Piketty gives of his r > g inequality.

The dynamics and structure of inequality look very different in a country whose population increases by a factor of 100 compared with a country whose population merely doubles. In particular, the inheritance factor is much less important in the former than in the latter. It has been the demographic growth of the New World that has ensured that inherited wealth has always played a smaller role in the United States than in Europe. This factor also explains why the structure of inequality in the United States has always been so peculiar, and the same can be said of US representations of inequality and social class. But it also suggests that the US case is in some sense not generalizable (because it is unlikely that the population of the world will increase a hundredfold over the next two centuries) and that the French case is more typical and more pertinent for understanding the future.

Contrary to the popular consensus today, the American Dream was very real for most of America’s history. This was less due to American ideals and institutions, and more the fact that America (as a new country) had less time to accumulate a rentier class, which takes a couple generations for the fortunes to really multiply. And as a country with a very high population growth rate (remember the average colonial New England family had like 10 kids), any wealth that did get accumulated was quickly diluted over a bunch of children instead of inherited as a chunk. This was at least true in the North and frontier – the South, which inherited a lot of the worst parts of the 1600s English upper-class, got a society along the lines of the European aristocratic model with rentier plantation owners. Traditional models of labor-capital split generally fail to capture this because much Southern wealth was in the form of slaves, ie labor turned into a form of capital, which confuses the models. But as for the rest of the country, Piketty approvingly quotes Tocqueville’s description of America as “a land without capital”.

American exceptionalism lasted until the late 1800s/early 1900s. As much as people like to make fun of Horatio Alger stories, they were an exaggerated but accurate (or at least more accurate) portrayal of the society of the day. As America aged, got time to accumulate large multigenerational fortunes, and lowered its birth rate, its inequality and intergenerational-mobility became as bad as or worse than Europe’s, depending on what metrics you use.

I belong to a generation that turned eighteen in 1989, which was not only the bicentennial of the French Revolution but also the year when the Berlin Wall fell. I belong to a generation that came of age listening to news of the collapse of the Communist dictatorships and never felt the slightest affection or nostalgia for those regimes or for the Soviet Union. I was vaccinated for life against the conventional but lazy rhetoric of anticapitalism, some of which simply ignored the historic failure of Communism and much of which turned its back on the intellectual means necessary to push beyond it. I have no interest in denouncing inequality or capitalism per se—especially since social inequalities are not in themselves a problem as long as they are justified, that is, “founded only upon common utility,” as article 1 of the 1789 Declaration of the Rights of Man and the Citizen proclaims. (Although this definition of social justice is imprecise but seductive, it is rooted in history. Let us accept it for now. I will return to this point later on.) By contrast, I am interested in contributing, however modestly, to the debate about the best way to organize society and the most appropriate institutions and policies to achieve a just social order. Furthermore, I would like to see justice achieved effectively and efficiently under the rule of law, which should apply equally to all and derive from universally understood statutes subject to democratic debate.

Including this to defend Piketty against accusations that he is a communist. He’s obviously some stripe of leftist, and his writing can be infuriatingly preachy in a very specifically leftist way at times, and if you are a rightist reading him you will probably hate him for totally preventable tone-related reasons – but he is a lot more moderate than his critics give him credit for, and shares the capitalist-but-concerned-about-inequality position that I and many readers here can probably identify with.

To a first approximation, the residents of [modern First World] countries own as much in foreign real estate and financial instruments as foreigners own of theirs.

Piketty helped me better understand the anti-colonialist position. It isn’t just that the colonizers were traditionally oppressive in the sense of taking over the government and committing human rights violations (though of course many were). It’s that – and this is the part I didn’t understand even when people chanted it at me as a slogan ad nauseum – colonialism was a partly a form of capitalism. Part of what “the British colonized Africa” means is that they set up a lot of companies in Africa with British people as the shareholders. Those companies went and did company things – some evil and rights-violating, others normal and productive – but the profits all went to British shareholders. Extended forever into time, that means that if the labor-capital split in Africa is X, then X% of Africa’s production will go to forever go to Britain, and only 1-X% to Africa.

One might argue that Britain invested money in developing Africa, which can only work with the prospect of repayment on normal investment terms. And one might even argue that it’s no worse for the average African laborer to have X% of his country’s money go to British elites he doesn’t know vs. than to African elites he doesn’t know. But this would be overstating the case – the British elites spend their money primarily in Britain, further developing Britain’s economy, whereas the African elites could be expected to spend their money mostly in Africa. And since (absent appropriation) a capitalist’s ownership of capital lasts forever, the British do a one-time positive action (investing in Africa) that produces an eternal negative action (having them get to drain some of Africa’s money forever). Although it’s not provably/necessarily true, in real life this is probably worse for Africa than leaving it alone and/or letting it invite foreign investment on the much better terms it could certainly have gotten if its governments weren’t controlled by the same people it was trying to negotiate with.

This also helps me understand the “colonialism still hurts countries today” position better.

In the novels of Jane Austen and Honore de Balzac, the fact that land (like government bonds) yields roughly 5% of the amount of capital invested (or, equivalently, that the value of capital corresponds to to roughly twenty years of annual rent) is so taken for granted that it often goes unmentioned.

Piketty’s habit of supporting his statistics with quotes from Jane Austen and other period novelists is endearing. And one thing he mentions again and again is that throughout the 18th and 19th century, novelists were frank about money in a way that sounds strange to modern ears. Austen and her contemporaries would introduce a character by saying “He made such-and-such a number of pounds per year” to help their audiences understand the social class they was talking about, and sometimes devote pages to exploring a character’s finances in realistic detail to add color to their financial problems or lack thereof.

He speculates that this is because, for centuries, there was little-to-no inflation or other dramatic changes in the economy. This gave the meaning of money ample time to percolate down into the culture. Everyone knew (and had always known) that X amount of pounds meant you were well-off, and novelists were confident that if posterity read their book fifty years later, the message would still be clear.

This stasis extended to international exchange rates, which never changed. “In the nineteenth and early twentieth century, everyone knew that a pound sterling was worth about 5 dollars, 20 marks, and 25 franks.”

This is fascinating, but I’m surprised by Piketty’s theory – surely novelists don’t write mainly for posterity. If people within the next five years understand what they meant, surely that’s good enough? But why did past novelists go into so much detail about finances in a way that sounds bizarre to modern ears?

In the classic novels of the nineteenth century, wealth is everywhere, and no matter how large or small the capital, or who owns it, it generally takes one of two forms: land or government bonds.

The 19th-century aristocrat living off his estates is a well-known figure in the popular imagination, but I was surprised to learn of his equally-common contemporary, the person living off government bonds. The UK government issued so many bonds to pay for the Napoleonic Wars that it created an entire class of bond tycoons who lived off the interest for generations. To its credit (and inconceivably to modern ears), the British government just plodded along paying its debt slowly but surely, and finally finished sometime around 1900!

This system worked because interest on government bonds was about 4% to 5% – much higher than today. Piketty doesn’t really explain why the rate of return changed. It also worked because nobody realized inflation was even a thing. After inflation started – and especially after a few bouts of hyperinflation – people quickly stopped living off government bonds except as part of a diversified portfolio.

This historical record is fundamental for a number of reasons. First, it enables us to understand why nineteenth-century socialists, beginning with Marx, were so wary of public debts, which they saw – not without a certain perspicacity – as a tool of private capital.

In today’s climate where the left gets accused of tax-and-spend and the right of cruel austerity, it’s interesting to learn that the 19th-century debate was exactly the opposite, and public debt was viewed as taking money from the people (in the form of taxation) to give to the rich (in the form of interest). I think this change might also be an effect of interest rates going down, plus more money going to social programs, plus more taxes coming from the rich, plus an optimism that inflation will eventually destroy the debt so there’s less reason to worry.

Piketty seems uncertain that the left remains correct in its about-face: “This ‘progressive’ view of public debt retains its hold on many minds today, even though inflation has long since declined to a rate not much above the nineteenth century’s, and the distributional effects are relatively obscure.”

Many traditional aristocratic societies were based on the principle of primogeniture: the eldest son inherited all (or at any rate a disproportionately large share) of the family property so as to avoid fragmentation and to preserve or increase the family’s wealth. The eldest son’s privilege concerned the family’s primary estate in particular and often placed heavy constraints on the property: the heir was not allowed to diminish its value and was obliged to live on the income from the capital, which was then conveyed in turn to the next heir in the line of succession, usually the eldest grandson. In British law this was the system of “entails” (the equivalent in French law being the system of substitution hereditaire under the Ancien Regime)…

The inheritance law that derived from the French Revolution and the Civil Code that followed rested on two main pillars: the abolition of substitution hereditaires and priomgeniture, and the adoption of the principle of equal division of property among brothers and sisters (equipartition). This principle has been applied strictly and consistently since 1804: in France, the quotite disponible (that is, the share of the estate that parents are free to dispose of as they wish) is only a quarter of total wealth for parents with three or more children, and exemption is granted only in extreme circumstances (for example, if the children murder their stepmother). It is important to understand that the new law was based not only on a principle of equality (younger children were valued as much as the eldest and protected from the whims of the parents) but also on a principle of liberty and economic efficiency. In particular, the abolition of entails, which Adam Smith disliked and Voltaire, Rousseau, and Montesquieu abhorred, rested on a simple idea: this abolition allowed the free circulation of goods and the possibility of reallocating property to the best possible use in the judgment of the living generation, despite what dead ancestors may have thought.

Primogeniture make sense in a perverse way. If Family X gives everything to the eldest children, but Family Y splits it equally, then a few generations down Family X will retain a line of nobles with vast wealth, whereas Family Y will be much poorer and maybe removed from the decision-making process. I’m not sure why you would enshrine into law that everyone has to do this, though – surely the winning move is to enforce primogeniture in your own family but hope your rivals are dumb enough to split their fortunes equally. Maybe the goal is to bind your own great-grandson, over whom you are otherwise powerless.

I’m surprised that great lords didn’t have the right to sell their capital. I guess I never hear about this, but it seems surprising that people were around to stop them.

The last paragraph is one of the few good arguments I’ve heard for constraining inheritance. I always get angry when I hear about rich people who clearly wanted one good child (or someone who wasn’t a child at all) to get their fortune, only to have this contested by a bunch of ungrateful children the rich person hated who believe they’re entitled to the money by birth. But Piketty makes an argument for a compelling social reason this might be enforced (although of course you could solve this just by saying rich people have to split their money at least n ways, and your ungrateful children who you hate don’t have to be one of those n).

I wonder if there is any history of noble families deliberately having only one child to avoid forced splitting of their fortune.

Several generations grew up [under conditions of inheritance barely mattering at all], in particular the baby boom generation, born in the late 1940s and early 1950s, many of whom are still alive today, and it was natural for them to assume that this was the “new normal”.

Conversely, younger people, in particular those born in the 1970s and 1980s, have already experienced (to a certain extent) the important role that inheritance will once again play in their lives and the lives of their relatives and friends. For this group, for example, whether or not a child receives gifts from parents can have a major impact in deciding who will own property and who will not.

I am part of the generation born in the 1970s and 1980s, and though my parents have been very helpful to me in many ways, inheritance as such has not mattered to me or any of my friends at all, because our parents are still alive.

People are living longer today than they did in the golden age of inheritance, and if 19th century nobles could expect to come into the family fortune in their 30s or 40s, modern people have to wait until their 50s and 60s. I have a few patients in this position, and what it usually means is that there are a few months of constant legal crisis as they fight with siblings and tax assessors, and sort through hundreds of old boxes, and try to prepare a house for sale, and when everything’s done with and the lawyers have taken their share, they get a decent but not game-changing amount to add to their retirement savings.

Because this happens so late, nobody can really say “I’m not going to go to school and pursue a career; after all, I’m going to inherit a fortune soon enough”. They can’t even avoid saving for retirement: both my parents have reached retirement age, but both my grandmothers are still alive and well.

I wonder if, as inheritance becomes more important, some market for solutions to this kind of problem will come up. Imagine an “inheritance insurance” company, which gives people with well-off parents (let’s say) enough to make a down payment on a house in their 20s/30s in exchange for a much larger amount from their inheritance later on, with some kind of built-in agreement not to worry if their parents’ house burns down the next day and they’re left with nothing. My guess is there are too many ordinary risks and moral risks here for this to work, but it’s interesting to think about.

Concretely, Harvard currently spends nearly $100 million a year to manage its endowment.

Part of Piketty’s section on how the super-rich (including colleges) get higher returns to their investment than everyone else. A good reminder that you should not donate to colleges.

The situation has been very different since the 1980s: with per capita income growth of just over 1 percent a year, no one wants large and steady tax increases, which would mean even slower if not negative income growth.

Another part of Piketty’s macroeconomic-history explanation of political trends: just after WWII, catch-up growth was so intense that everyone had more than they expected and it was easy to convince people to put some of it into the construction of a social welfare state (easier in Europe and Japan, which were most devastated by the war, than in the US and UK). As growth slowed down, people were no longer willing to give the government so much money. Countries with large welfare states mostly maintained them due to the ratchet effect, but expanding the welfare state further has become a much harder sell (I think I am understanding this right).

This is an interesting counterclaim to the intuitive story that the welfare state grows in bad times because more people need/want welfare. I don’t know if research has been done to see which of these is true. Plausibly sudden crises are conducive to welfare expansion, but a long run of predictably poor growth is bad for it?

This suggests we should see very little welfare state expansion in the near future, which does fit current data, although it’s hard to square with the sudden attractiveness of pro-welfare-state-expansion candidates like Bernie Sanders and Jeremy Corbyn.

Recent research has shown that the decline in government receipts in the poorest countries in 1980 – 1990 was due to a large extent to a decrease in custom duties, which had brought in revenue equivalent to about 5% of national income in the 1970s. Trade liberalization is not necessarily a bad thing, but only if it is not peremptorily imposed and only if the lost revenue can gradually be replaced by a strong tax authority capable of collecting new taxes and other substitute sources of revenue.

The claim being that developing countries, who may not be good at collecting income taxes, were hard-hit by trade liberalization because of direct revenue costs. I hadn’t heard this argument before and I wonder if anyone has calculated whether this effect outweighs any positive economic effects that liberalization could have. I know that about 100% of economists who are not working for the Trump administration at this exact moment are against tariffs, but I don’t know if maybe that’s just from the First World perspective.

It was the United States that was the first country to try [tax] rates above 70%, first on income in 1919-1922 and then on estates in 1937 – 1939. When a government taxes a certain level of income or inheritance at a rate of 70 or 80 percent, the primary goal is obviously not to raise additional revenue (because these very high brackets never yield much). It is rather to put an end to such incomes and large estates, which lawmakers have for one reason or another come to regard as socially unacceptable and economically unproductive – or if not to end them, then at least to make it extremely costly to sustain them and strongly discourage their perpetuation. Yet there is no absolute prohibition or expropriation. The progressive tax is thus a relatively liberal method for reducing inequality, in the sense that free competition and private property are respected while private incentives are modified in potentially radical ways, but always according to rules thrashed out in democratic debate…according to our estimates, the optimal top tax rate in the developed countries is probably above 80 percent.

This resolves some of my confusion about how it was possible to have 70% – 80% tax rates on the rich – it was never expected to work in terms of revenue collection, it was just a gentler way of setting a maximum wage.

I’m confused because Piketty seems to treat this as very effective and a big part of the reason why inequality was lower during the period it existed, whereas other sources I have read say it was constantly loopholed around and basically had no effect on anyone. Given that there were a lot of very rich people in the US around that time, it seems like loopholes must have been a big part of the picture.

How can public debt be reduced to zero? One solution would be to privatize all public assets. According to the national accounts of the various European countries, the proceeds from selling all public buildings, schools, universities, hospitals, police stations, infrastructure, and so on would be roughly sufficient to pay off all outstanding public debt. Instead of holding public debt via their financial investments, the wealthiest European households would become the direct owners of schools, hospitals, police stations, and so on. Everyone else would then have to pay rent to use these assets and continue to produce the associated public services. This solution, which some very serious people actually advocate, should to my mind be dismissed out of hand. If the European social state is to fulfill its mission adequately and durably, especially in the areas of education, health, and security, it must continue to own the related public assets.

It is nevertheless important to understand that as things now stand, governments must pay heavy interest (rather than rent) on their outstanding public debt, so the situation is not all that different from paying rent to use the same assets, since these interest payments weigh just as heavily on the public exchequer.

Piketty continues to have an unclassifiable position on debt, more nuanced than I have heard from anyone else. Here he seems to say that the government going into debt to create government services is similar in ways to privatizing those services, since either way rich people are getting paid for those services with everyone else’s money (though presumably debt is still much better, since taxation is much more progressive). He favors raising taxes so that services can be provided without creating any debt, and using large one-time taxes on wealth to clear existing public debt: “A flat tax of 15% on private wealth would yield nearly a year’s worth of national income and thus allow for immediate reimbursement of all public debt”. Sounds like an extreme moral hazard unless matched with something like a balanced budget amendment, though.

Interestingly, nineteenth-century novelists were not content simply to describe precisely the income and wealth hierarchies that existed in their time. They often give a very concrete and intimate account of how people lived and what different levels of income meant in terms of the realities of everyday life. Sometimes this went along with a certain justification of extreme inequality of wealth, in the sense that one can read between the lines an argument that without such inequality it would have been impossible for a very small elite to concern themselves with something other than subsistence:
extreme inequality is almost a condition of civilization.

In particular, Jane Austen minutely describes daily life in the early nineteenth century: she tells us what it cost to eat, to buy furniture and clothing, and to travel about. And indeed, in the absence of modern technology, everything is very costly and takes time and above all staff. Servants are needed to gather and prepare food (which cannot easily be preserved). Clothing costs money: even the most minimal fancy dress might cost several months’ or even years’ income. Travel was also expensive. It required horses, carriages, servants to take care of them, feed for the animals, and so on.

The reader is made to see that life would have been objectively quite difficult for a person with only 3–5 times the average income, because it would then have been necessary to spend most of one’s time attending to the needs of daily life. If you wanted books or musical instruments or jewelry or ball gowns, then there was no choice but to have an income 20–30 times the average of the day.

This reminds me of those headlines like “MANHATTAN SOCIALITE COMPLAINS THAT IT’S IMPOSSIBLE TO HAVE A DECENT STANDARD OF LIVING ON LESS THAN $1 MILLION A YEAR”, except much more sympathetic because they were plausibly right. It gives me profound gratitude for our past few hundred years of economic growth, and inspires some hope for the future.

Book Review: Capital In The Twenty-First Century

[Epistemic status: I am not an economist. Many people who are economists have reviewed this book already. I review it only because if I had to slog through reading this thing I at least want to get a blog post out of it. If anything in my review contradicts that of real economists, trust them instead of me.]

I.

Thomas Piketty’s Capital In The Twenty-First Century isn’t just a book on inequality. It’s a book about quantitative macroeconomic history. This is much more interesting than it sounds.

Piketty spent decades combing through primary sources trying to get good statistics for what the economies of various Western countries have been doing over the past 250 years. Armed with these data, he tries to put together a theory of the very-long-term forces at work in economic change. His results touch on almost every big question in politics and economics, and are able to propose sweeping theories where other people resort to parochial speculation. While more knowledgeable people than I are probably already familiar with much of this, I used him as an Econ History 101 textbook and was not at all disappointed in the results.

The most important thing I learned from Piketty is that since the Industrial Revolution, normal economic growth has always been (and maybe always will be) between 1% and 1.5% per year. This came as news to me, since I often hear about countries and eras with much higher growth rates. But Piketty says all such situations are abnormal in one of a few ways.

First, they can have high population growth. Population growth will increase GDP, and it will look like a high economic growth rate. But it doesn’t increase GDP per capita and it shouldn’t be considered the same as normal economic growth, which is always between 1% and 1.5% per year.

Second, they can have temporary bubbles. This definitely happens, but after the inevitable bust, the whole period will eventually average out to 1% to 1.5% per year.

Third, they can have “catch-up growth”. This is a broad category covering any period when a country that was previously underperforming its fundamentals gets a chance to catch up. This can happen after a long war in which a devastated country gets a chance to rebuild. Or it can happen after dropping communism or some other inefficient economic system, as the country transitions to a more practical form of production. Or it can happen when a Third World country globalizes and gets the benefits of First World technology and organization. But if a country is at peace and on the “technological frontier” (ie one of the highest-tech countries that has to invent its own advances and can’t get them by osmosis from somewhere else), it will always have growth of 1% to 1.5% per year.

For most of the 20th century, one or another of those conditions has been true in most places. Whether it was the Baby Boom in the US causing high population growth, or the dot-com boom, or Germany and Japan’s decades of miraculous economic recovery after World War II, or China’s catch-up growth after Deng Xiaoping’s liberalization, people have gotten growth of more than 1% to 1.5% per year and learned to expect it. In the Third World, which continues to experience good catch-up growth, their expectations will probably be met. In developed countries, they are bound to be disappointed.

I was happy to learn this, because the graph above has always haunted me. It seems to say that no matter our policies, no matter our good or bad decisions, no matter our triumphs and defeats – the US GDP per capita will always grow at the same rate. How can that be true, when some countries have such high GDP growth sometimes, and others such low growth? How can it be true when in 1870, the US was in the same kind of Gilded Age rapidly-industrializing business climate that China is today? How can it be true when I remember so many years of 5% growth in the US, and so many other negative-growth recessions? But Thomas Piketty is right and common sense is wrong. The US grows at 1% to 1.5% per year, forever, just like everyone else outside a few special circumstances.

Piketty uses this point to construct a super-ambitious zoomed-out version of 20th century history. Everything was going normally until the two World Wars, which devastated Europe and Japan, but set the US back only slightly. The US and Britain had the Baby Boom and minor catch-up growth, meaning a pretty great 1950s. Continental Europe had the whole process of rebuilding their economy from the (sometimes literal) ashes, a period the French called the Trente Glorieuses (Thirty Glorious Years) of near-constant economic boom. Around the 1970s, the US and Britain realized that Continental Europe and Japan were doing much better than they were, what with their near-constant economic boom, freaked out, and decided their economies were somehow rotten; this led to Thatcher and Reagan getting elected on a platform of cleaning up the economy. Around the same time, Europe recovered fully from its devastation and went back to normal economic growth; Japan, which had been a bit more devastated, took another few years but then had its own bust and went back to normal (or subnormal) growth. The US and Britain, seeing that they were now “caught up” to their Continental and Japanese competitors, declared “mission accomplished” and gave Thatcher and Reagan the credit. Since then it’s mostly been smooth sailing, with the normal 1%-1.5% + population growth (which works out to a little bit more in the US and a little bit less in Japan, given these countries’ high and low fertility rates respectively).

I don’t fully understand this theory. It proposes a very long time for Europe to get over World War II, which doesn’t really match graphs that show the GDP rebounding basically immediately even in the hardest-hit countries (maybe it would be more revealing if I had a log graph like the US one above, so I could do more than try to eyeball the trend). It also suggests that Americans judge the state of their economy by comparing it to Europe (or at least did in the 1970s), which doesn’t really match how most people I know think. In particular, in 1990 they would have had to have said “Our economy is now equal or better to the Europeans, we’re happy now” when this was entirely a function of Europe cooling down and didn’t involve any improvement in the US economy at all. Still, this is a persuasive model and one of the only ones I know that makes sense of the straight line graph above.

II.

All this is just exposition. Piketty’s main focus is inequality between labor and capital, and he starts with the idea of the rentier.

A rentier – an old word I’m surprised we don’t have a better-known modern equivalent for – is something like the strict sense of “capitalist”: a person who lives off the interest on savings instead of working. Trust-fund kids who live off dividends from investments, landlords who live off literal rents from their properties, and aristocrats who lived off the profits from their estates are all rentiers.

It’s fitting that Piketty uses an old word, because rentiers were more common and more important in the old world than they are today. Although he presents tables of statistics proving this is the case, Piketty also urges us to consider Jane Austen novels for a more intuitive sense of the situation. Few of her characters work honest jobs besides occasionally some sort of vague “managing investments”. They’re all obsessed with their dowries and their families’ endowments. That’s because they live off the interest of their principal, which usually stays the same throughout their life and which often comes from a dowry. Some of these people are titled aristocrats, others are “gentry”, others might not have qualified for either role – but they all live off interest.

Piketty (himself a Frenchman) also cites this passage on 19th-century French novelist Honore de Balzac’s Pere Goriot:

The darkest moment in the novel, when the social and moral dilemmas [Eugène de] Rastignac faces are rawest and clearest, comes at the midpoint, when the shady character Vautrin offers him a lesson about his future prospects. Vautrin, who resides in the same shabby boardinghouse as Rastignac and Goriot, is a glib talker and seducer who is concealing a dark past as a convict, much like Edmond Dantès in Le Comte de Monte-Cristo or Jean Valjean in Les Misérables. In contrast to those two characters, who are on the whole worthy fellows, Vautrin is deeply wicked and cynical. He attempts to lure Rastignac into committing a murder in order to lay hands on a large legacy. Before that, Vautrin offers Rastignac an extremely lurid, detailed lesson about the different fates that might befall a young man in the French society of the day.

In substance, Vautrin explains to Rastignac that it is illusory to think that social success can be achieved through study, talent, and effort. He paints a detailed portrait of the various possible careers that await his young friend if he pursues studies in law or medicine, fields in which professional competence counts more than inherited wealth. In particular, Vautrin explains very clearly to Rastignac what yearly income he can aspire to in each of these professions. The verdict is clear: even if he ranks at the top of his class and quickly achieves a brilliant career in law, which will require many compromises, he will still have to get by on a mediocre income and give up all hope of becoming truly wealthy:

“By the age of thirty, you will be a judge making 1,200 francs a year, if you haven’t yet tossed away your robes. When you reach forty, you will marry a miller’s daughter with an income of around 6,000 livres. Thank you very much. If you’re lucky enough to find a patron, you will become a royal prosecutor at thirty, with compensation of a thousand écus [5,000 francs], and you will marry the mayor’s daughter. If you’re willing to do a little political dirty work, you will be a prosecutor-general by the time you’re forty.… It is my privilege to point out to you, however, that there are only twenty prosecutors-general in France, while 20,000 of you aspire to the position, and among them are a few clowns who would sell their families to move up a rung. If this profession disgusts you, consider another. Would Baron de Rastignac like to be a lawyer? Very well then! You will need to suffer ten years of misery, spend a thousand francs a month, acquire a library and an office, frequent society, kiss the hem of a clerk to get cases, and lick the courthouse floor with your tongue. If the profession led anywhere, I wouldn’t advise you against it. But can you name five lawyers in Paris who earn more than 50,000 francs a year at the age of fifty?”

By contrast, the strategy for social success that Vautrin proposes to Rastignac is quite a bit more efficient. By marrying Mademoiselle Victorine, a shy young woman who lives in the boardinghouse and has eyes only for the handsome Eugène, he will immediately lay hands on a fortune of a million francs. This will enable him to draw at age twenty an annual income of 50,000 francs (5 percent of the capital) and thus immediately achieve ten times the level of comfort to which he could hope to aspire only years later on a royal prosecutor’s salary (and as much as the most prosperous Parisian lawyers of the day earned at age fifty after years of effort and intrigue).

The conclusion is clear: he must lose no time in marrying young Victorine, ignoring the fact that she is neither very pretty nor very appealing. Eugène eagerly heeds Vautrin’s lesson right up to the ultimate coup de grâce: if the illegitimate child Victorine is to be recognized by her wealthy father and become the heiress of the million francs Vautrin has mentioned, her brother must first be killed. The ex-convict is ready to take on this task in exchange for a commission. This is too much for Rastignac: although he is quite amenable to Vautrin’s arguments concerning the merits of inheritance over study, he is not prepared to commit murder.

What is most frightening about Vautrin’s lecture is that his brisk portrait of Restoration society contains such precise figures. As I will soon show, the structure of the income and wealth hierarchies in nineteenth-century France was such that the standard of living the wealthiest French people could attain greatly exceeded that to which one could aspire on the basis of income from labor alone. Under such conditions, why work? And why behave morally at all? Since social inequality was in itself immoral and unjustified, why not be thoroughly immoral and appropriate capital by whatever means are available?

Piketty’s figures show that rentiers became more and more powerful from the 1700s all the way until the Belle Epoque (early 1900s), then declined precipitously around the period of the World Wars. What happened?

This is where he brings in his famous inequality (no pun intended) r > g – that is, the rate of return from capital is greater than the growth rate.

Rentiers’ money grows with the rate of return on capital. As they get profits/dividends/rent/interest on their capital, they consume some fixed fraction of it and add the rest back to their principal. As their principal grows, so does their yearly income. If they have enough money (and most of them do), the amount they consume even in a very luxurious lifestyle will be trivial, so we can approximate this by saying their income grows at the rate of return.

(One of the few checks on this process is population growth among the rentier class – if a rentier has five children, he may have to consider splitting his fortune five ways, which would mean that the fortune of each individual rentier decreases by a factor of five each generation. This means the growth of rentier power is strongly influenced by population growth, which will become important later.)

Laborers are assumed to have few savings and live a hand-to-mouth existence. Their income grows whenever they get a raise. So the growth of their income is approximated by the GDP per capita growth rate.

In ordinary times, the rate of return on capital always averages about 4% – 5% per year, and the GDP per capita growth rate always averages about 1% to 1.5% per year. So in ordinary times, rentiers’ yearly incomes should always be pushing further and further ahead of laborers’, and inequality should always increase. This is exactly what happened between the 1700s and 1914.

During crises – especially wars and economic busts – the situation reverses. If a rentier invests all his money in a factory, and the enemy bombs that factory, the rentier is broke. The laborers in the factory are also pretty unhappy, but they have the opportunity to get a job in a new factory when the war ends, in a way that the rentier – whose family might have spent several generations accumulating their capital – might not. The same is true of hyperinflation: laborers will get paid hyperinflated wages to spend on hyperinflated goods – but rentiers, who might have their money in currency-denominated investments like government bonds, can lose decades of careful fortune-gathering. Finally, if the government decides to respond to the crisis with confiscation of resources, or wealth taxes, or any interference in the economy, it’s likely to be the rentiers who are hardest-hit. Because rentiers’ wealth takes decades or generations to accumulate, but laborers live hand-to-mouth, a crisis lasting five years will give laborers a bad five years (after which they’re in the same position as pre-crisis), but can ruin rentiers completely. The period 1914 to 1945 – containing two World Wars and the Great Depression – was an unprecedented prolonged multi-crisis that caused “the collapse of the rentier world”.

When the dust settled, a big chunk of the multi-generational fortunes that were dominating Europe had been destroyed or “haircut” down to more manageable levels. This was both a cause and an effect of immediately-post-war governments imposing rentier-unfriendly policies like high top-bracket tax rates that essentially prevented the rentier class from re-forming. And with the post-war Baby Boom increasing demographic growth, the conditions for rentiers (who do best when they don’t need to split their inheritance among too many children) got even worse. The period around the World Wars was the only one in history where g effectively outperformed r, leading to conditions where laborers win and rentiers lose out.

As a result, the point in the income distribution where people switch from mostly-laborers to mostly-rentiers used to be when you got into the top 1% in 1900. Today you have to go all the way to the top 0.1%.

On the other hand, since World War II the First World has had fifty-plus years of relative peace and prosperity. The last few decades have seen decreasing population growth and tax cuts for the upper class. These are the perfect conditions for the rentier class to make a return, and this is exactly what the data show.

…sort of. If you measure in capital/income ratio, rentiers are doing pretty well. If you look at inequality, it’s pretty high. If you look at various comparisons of share given to capital vs. labor, capital is coming out on top. But then where are the rentiers? Aside from occasional jokes about trust-fund kids, you rarely hear about them. And Piketty’s own data confirm that only the top 0.1% of the population makes most of their income from capital, compared to the entire top 1% back during the Belle Epoque.

I’m not sure about this, and for a point which is kind of the center of his entire argument, Piketty doesn’t seem too sure either:

We need to understand the reasons for this long-term change, which are not obvious at first glance, since I showed in Part Two that the capital / income ratio has lately returned to Belle Epoque levels. The collapse of the rentier between 1914 and 1945 is the obvious part of the story. Exactly why rentiers have not come back is the more complex and in some ways more important and interesting part. Among the structural factors that may have limited the concentration of wealth since World War II and to to this day have helped prevent the resurrection of a society of rentiers as extreme as that which existed on the eve of World War I, we can obviously cite the creation of highly progressive taxes on income and inheritances (which for the most part did not exist prior to 1920). But other factors may also have played a significant and important role.

If I understand Piketty right – and reading a bit between the lines – I think there are at least three things going on.

First, there’s more of a middle class these days. The middle class doesn’t entirely live off capital, but they have some savings and investment. Instead of 1% of people making all their money off capital, we have 30% of people saving for retirement and living off the profits of their nest egg.

Second, there are more super-rich “laborers”, for a broad definition of laborer that includes CEOs of big corporations. If we’re talking about how far in the income distribution you have to go before you get to rentiers, having a bunch of super-rich laborers screws up that statistic. I don’t think Piketty presents the more interesting statistic of what percent of people are rentiers, and I’m not sure why not. These people not only muddle the statistics, they also get much more media attention. When we talk about rich people, we talk about Bill Gates and Jeff Bezos, not the nth-generation scion of the Rockefeller family.

Third, capital is increasingly owned by institutions. There are hundreds of billions of dollars tied up in the endowments of top universities, and trillions tied up in the sovereign wealth funds of oil countries like Norway and Saudi Arabia. These don’t look like a particular individual walking around in a top hat and monocle, but they still distort the flow of money away from people who work for it and toward the people lucky enough to be part of the relevant institutions.

But if Piketty is right, if there’s no crisis then rentiers’ share of the pie will continue to increase. Either it will eventually overwhelm these considerations, and we’ll wake up one morning and notice we have an idle hereditary nobility again. Or it won’t overwhelm these considerations, and more and more of the pie will go invisibly to people other than average laborers, without any conspicuous signs of what’s happening.

III.

Along with rentier-vs-laborer inequality, Piketty touches on income inequality among labor (remember, “labor” includes anyone who works a job, including CEOs).

He confirms what everyone already knows: the share of the top 10% (especially top 1%) has been increasing for decades now. This is most pronounced in the Anglosphere, but still happening somewhat in Continental Europe and Japan.

More things everyone already knows confirmed: most of the people benefiting from this are top executives at major corporations. Their average salaries have increased by orders of magnitude over the past few decades.

He addresses an argument made by supporters of high CEO salaries: might there not be a good economic justification for paying these people a lot? Suppose that having the best candidate (rather than the second-best candidate) as CEO increases your company’s profits by 1% – surely a plausible number. And suppose your company makes $10 billion/year. Then having the best CEO would increase your profits by $100 million. So two companies in a bidding war for the best CEO ought to be willing to offer them a salary of up to $100 million/year to join.

Piketty isn’t buying it. This isn’t really his area of interest, so he doesn’t throw the same overwhelming level of statistical artillery at it that he does at some other things, and I don’t consider him to have proven it beyond doubt in the same way as some of his other conclusions – but he makes a few strong arguments. First, there are no signs that this situation is more true in the past few decades or in the Anglophone world, but these are the only places where CEOs get paid so much. Second, with appropriate caveats and controls there are no signs that good CEOs get paid more than bad CEOs. Third, CEO pay seems to clearly increase because of some factors outside of CEOs’ control, for example in an economic boom (though wouldn’t this increase company profits, and so be consistent with the 1% scenario above?)

He thinks that executive salaries have increased because – basically – corporate governance isn’t good enough to prevent executives from giving themselves very high salaries. Why didn’t executives give themselves such high salaries before? Because before the 1980s the US had a top tax rate of 80% to 90%. As theory predicts, people become less interested in making money when the government’s going to take 90% of it, so executives didn’t bother pulling the strings it would take to have stratospheric salaries. Once the top tax rate was decreased, it became worth executives’ time to figure out how to game the system, so they did. This is less common outside the Anglosphere because other countries have different forms of corporate governance and taxation that discourage this kind of thing.

This matters not just because it produces income inequality, but because today’s income inequality is tomorrow’s rentier-vs-laborer inequality. A CEO who earns $5 million per year can make $50 million, retire, invest the money, and pass the fortune on to their children. The more giant fortunes like this are around, the more rentiers there are in the next generation and the more inequality perpetuates itself.

Piketty is especially afraid of very large fortunes because of his fascinating data showing that these grow more quickly than other fortunes. Using the Forbes rich list, he calculates that Bill Gates et al must have grown their fortunes at rates approaching 8% – 10% per year – far higher than the 4% – 5% rate of return on capital Piketty usually uses. Forbes is a pretty sketchy data set, but he finds the same thing with the largest college endowments. The richest colleges, like Harvard and Yale, see their endowments grow at 10.2% yearly. Somewhat rich colleges (= $1 billion) grow at 8.8%, medium-rich colleges (= $500 million) at 7.8%, middling colleges (= $100 million) at 7.1%, and the poorest colleges (= $100 million) at 6.2%. And all of these do better than the average person saving for retirement, who – again – gets about 4% to 5%.

Piketty suggests this is because the richer you are, the more economy of scale you have in hiring really good financial planners. I am a little confused how this interacts with the conventional wisdom that experts are crap and you should invest in index funds, but I think the financial planners Piketty talks about aren’t people who are very good at picking which stocks will go up, but more like people who know a guy who knows a guy in Singapore who can use your money to fund an unlisted Burmese mining project nobody else in the West has ever heard of.

I’m still confused why there isn’t a mutual fund that lets retirees pool together their money to give it to one of these people. Part of the answer must be “there are only so many unlisted Burmese mining projects”, but then how do economies of scale help exactly? Piketty doesn’t answer, almost as if he is more interested in explaining the dynamics of inequality than in providing me personally with investment advice.

IV.

Taken together, all of this suggests a gloomy conclusion.

Income inequality can be expected to remain high. This will produce further rentier-vs-labor inequality, which conditions are already right to exacerbate. Not only will rich people separate from poor people, but the super-rich will separate much faster from poor people and even from other rich people. As more and more fortunes accumulate, we will get either the sort of rentier society typical of Europe in the 19th century, or a covert version of the same where the profits of rent go invisibly to various people connected to rentier institutions.

Piketty suggests the obvious direct solution: a global tax on wealth. He is okay with having this be merely nominal on fortunes up to hundreds of thousands of dollars, but he wants it to be significant on larger fortunes, and punitive on the largest fortunes. This will help prevent these from growing exponentially at the rate of return and prevent the rebirth of rentier society.

He is pessimistic about this ever working, because if any country does it unilaterally, rentiers can just move their wealth to another country. He suggest an EU-wide tax, but I do not entirely understand his reasoning for why Europeans wouldn’t then just move their wealth to the Cayman Islands or one of the many other perfectly good banking systems that are not in Europe.

He does give measured praise to the US system, including the FATCA laws, which place penalties on any country that don’t report the details the US needs to tax American citizens’ holdings in those countries. I think he hopes Europe could pass a law like this, but stronger.

I agree with his pessimism. Absent a World War level crisis that would make for a cure worse than the disease, it’s hard to imagine everyone coming together to solve the sorts of problems Piketty brings up. I believe his predictions are likely to come true, with little chance of governments having the will to push a solution.

If a wealth tax itself is impossible, there are other things that might help a little. I can’t help but note that solving the housing crisis would be a big help here. Rents go directly out of the pockets of laborers and into the pockets of landlords, and are probably the biggest such transfer in today’s economy. Anything that lowers them has a big effect on the rentier-vs-laborer balance.

College is another big way that laborers get into debt. Although much of the debt is low-interest and government-owned, not all of it is, and even when it is this is scant consolation to the people who have to pay it.

Finally, one of the historically most important ways to decrease the power of rentiers is to increase birth rates, so they are forced to split their fortunes many ways every generation. Right now the birth rate of the rich is at historic lows. This might offer a point of agreement between rentier-fighting liberals and conservatives, who are already concerned about declining birth rates. Unfortunately, the main proposed solution to low population growth – giving workers better maternity leave – is likely to miss the rentier class entirely. I’m not sure what kind of policies might better target them.

So as not to end on a completely pessimistic note, I want to mention three causes for optimism I found in Piketty.

First, if we believe Piketty’s data, there is no Great Stagnation, at least not in economic growth. Piketty argues that (outside of special circumstances) economies always grow at 1% – 1.5% per year, and First World economies are currently growing at 1% – 1.5% per year. If we expected them to grow more, it’s because we’re not adjusting for falling birth rates, or getting too excited by passing booms and busts, or comparing them to catch-up-growth like in China. Whatever our sins in terms of decreased innovation and efficiency, they have not yet hit the economic growth rate.

Second, catch-up growth provides a powerful force for reducing inequality between nations. Given enough time, the US economy will keep growing at 1% to 1.5% per year, and sub-Saharan African economies will keep growing at 3% to 8% per year. Will this continue until the latter have caught up entirely? Unclear. Reviewers of this post have mentioned Acemoglu’s theory of entrenched inequality due to poor institutions, Sachs’ theory of entrenched inequality due to disease burden, and Jones’ theory of “hive mind” style entrenched inequality, as reasons why full catch-up might be hard. But all of these factors can potentially be improved with a growing economy, so they are not causes for total defeatism. Capital In The Twenty-First Century has overall made me more optimistic about the prospects for Third World catch-up.

The third thing that impressed me about the book is that we can talk about these kinds of things at all. Reading Piketty feels closer to reading real science – the type where there are universal laws that make clear predictions – than most economics or social science I’ve read. Marx liked to say he had discovered the universal laws that govern history; Piketty’s claims are only slightly more modest, but much more believable. They make the actions of individuals seem very small – one recurring theme is some faction taking credit for improving the economy or fighting inequality when economic fundamentals meant things had to change then regardless of what anybody did.

But they also suggest points of leverage. I don’t know if good economists knew all this stuff already. But I didn’t, and learning it makes me more optimistic that we might one day find a way to solve the problems Piketty talks about. Even if his wealth tax doesn’t work, he has good explanations of all the other factors that contribute to inequality and what would happen if we changed each. Now it’s just a matter of political will.

And although that’s a pretty big “just”, I hope that maybe the move to a society of rentiers will change the political calculus enough to make people take these problems more seriously. I complain about attacks on “meritocracy”; maybe we can see how much people like hereditary rent-seeking, and whether getting rid of that makes a better rallying cry. Maybe “everyone productive vs the idle rich” will make for less toxic politics than “people who earn more vs. people who earn less”. I can always dream.

EDIT: Commenters add that there have been some compelling criticisms of Piketty, especially by Matthew Rognlie (paper, summary) and Phillip Magness (paper, comment)

Cost Disease In Medicine: The Practical Perspective

Sometimes I imagine quitting my job and declaring war on cost disease in medicine.

I would set up a practice with a name like Cheap-O Psychiatry. The corny name would be important. It would be a statement of values. It would weed out the people who would say things like “How dare you try to put a dollar value on the health of a human being!” Those people are how we got into this mess, and they would be welcome to keep dealing with the unaffordable health system they helped create. Cheap-O Psychiatry would be for everyone else.

Cheap-O Psychiatry wouldn’t have an office, because offices cost money. You would Skype, from your house to mine. It wouldn’t have a receptionist, because receptionists cost money. You would book a slot in my Google Calendar. It wouldn’t have a billing department, because billing departments cost money. You would PayPal me the cost of the appointment afterwards – or, to be really #aesthetic, use cryptocurrency.

The Cheap-O website would include a library of great resources on every subject. How To Eat Right. How To Get Good Sleep. How To Find A Good Therapist. The Cognitive Behavioral Therapy Workbook. The Meditation Relaxation Tape. But the flip side would be that Cheap-O appointments would be brutally efficient. If you had problems with sleep, I would evaluate you for any relevant diseases, give you any medications that might be indicated, then tell you to read the How To Get Good Sleep guide on the website. Boom, done. Small talk would be absolutely banned.

How little could Cheap-O charge? Suppose I wanted to earn an average psychiatrist salary of about $200K – the whole point of cost disease is that we should be able to lower prices without anyone having to take a pay cut. And suppose I work a 40 hour week, 50 weeks a year, each appointment takes 15 minutes, and 75% of my workday is patient appointments. That’s 6000 appointments per year. So to make my $200K I would need to charge about $35 per appointment. There would be a few added costs – malpractice insurance would probably run about $10K per year – but this is the best-case scenario.

$35 per appointment isn’t bad. Most existing cash-only psychiatry practices charge at least $150 per (thirty minute) appointment, so we would be less than a quarter of the going rate. I think a lot of insurances charge a $40 copay per psychiatrist visit, so even uninsured Cheap-O patients would be paying less cash than insured patients anywhere else. Create Cheap-O style psychiatry offices, primary care offices, etc, all around the country, and maybe (aside from catastrophe insurance, which should be cheap) having health insurance would no longer be such a big deal.

My job is great and I love it, so I’m only slightly tempted to do this myself. The reason I bring it up is: why doesn’t anyone else do it? And if it’s possible to provide cheap health care like this, then how does health care still cost so much? What am I missing?

I don’t know. I’ve never run a business and it’s probably much harder and more expensive than I think. One of the reasons for my Cheap-O fantasy is so that I could find out. But here are some speculations.

Part of the reason might be because there’s a shortage of doctor-entrepreneurs, and the few existing doctor-entrepreneurs are busy finding new ways to make ultra-boutique-super-premium clinics that they charge rich people $500/hour for the privilege of entering. And they’re doing that because it pays way more than $200K/year. $200K/year is the standard salary for an average psychiatrist who wants a zero-risk job in the current system, and the privilege of never having to worry about the business side of things.

Another part might be that insurance is squatting in the mid-range market. Even in America, most people are insured. So unless your cost can beat the insurance co-pay – which even Cheap-O barely does under ideal conditions – most people will go to standard insurance-accepting practices unless you give them a good reason not to. And the best reason not to will be that you’re claiming to be better than insurance-accepting clinics – which means you’re aiming at the high-end market. And insurance-accepting practices can’t lower prices because insurances make you follow lots of rules before they’ll work with you, plus you need a small city worth of administrators to deal with the insurance companies.

(also, seeing a patient every fifteen minutes is exhausting; one of the advantages of hour-long appointments is that most people don’t need an hour and so you can take the last twenty minutes to write notes or answer messages or work on blog posts)

Right now the only way I can imagine the niche getting filled is somebody doing it for the lulz as an act of political protest. Imagine if someone started Cheap-O Psychiatry and it worked. All of this stuff I’m saying about how socialized health care might be better than our current system but isn’t the real answer, how it’s just locking in entrenched cost disease and a truly free market could find better alternatives – instead of vaguely gesturing at it, there would finally be some evidence.

(well, there’s already the Surgery Center of Oklahoma, which does exactly this and costs about a fifth as much as surgery anywhere else. But maybe if there’s more evidence, people will stop ignoring it.)

Contra Caplan On Arbitrary Deploring

Last year, Bryan Caplan wrote about what he called The Unbearable Arbitrariness Of Deploring:

Let’s start with the latest scandal. People all over the country – indeed, the world – have recently discovered that many celebrities are habitual sexual harassers. Each new expose leads to public outrage and professional ostracism. Why does this confuse me? Because many celebrities do many comparably bad things other than sexual harassment, and virtually no one cares.

Suppose, for example, that a major celebrity is extremely emotionally abusive to all his subordinates. He screams at them all the time. He calls them the cruelest names he can devise. He habitually makes impossible demands. He threatens to fire them out of sheer sadistic pleasure. But the abuse is never sexual (or ethnic); the celebrity limits himself to attacking subordinates’ intelligence, character, pride, and hope for the future. I daresay the average employee would far prefer to work for a boss who occasionally pressured them for a date. But if the tabloids ran a negative profile on the Asexual Boss from Hell, the public wouldn’t get very mad and Hollywood almost certainly wouldn’t ostracize the offender […]

Or to take a far more gruesome case: When the Syrian government last used poison gas, killing roughly a hundred people, the U.S. angrily deployed retaliatory bombers, to bipartisan acclaim. But when the Syrian government murdered vastly more with conventional weapons, the U.S. government and its citizenry barely peeped. The unbearable arbitrariness of deploring!

In the past, I’ve made similar observations about Jim Crow versus immigration laws, and My Lai versus Hiroshima. In each case, I can understand why people would have strong negative feelings about both evils. I can understand why people would have strong negative feelings about neither. I can understand why people would have strong negative feelings about the greater evil, but not the lesser evil. But I can’t understand why people would have strong negative feelings about the lesser evil, but care little about the greater evil. Or why they would have strong negative feelings about one evil, but yawn in the face of a comparable evil.

He concludes people are just biased by dramatic stories and like jumping on bandwagons. Everyone else is getting upset about the chemical weapon attack, and people are sheep, so they join in.

I have a different theory: people get upset over the violation of already-settled bright-line norms, because this is the correct action if you want to use limited enforcement resources efficiently.

Imagine a town with ten police officers, who can each solve one crime per day. Left to their own devices, the town’s criminals would commit thirty muggings and thirty burglaries per day (for the purposes of this hypothetical, both crimes are equally bad). They also require different skills; burglars can’t become muggers or vice versa without a lot of retraining. Criminals will commit their crime only if the odds are against them getting caught – but since there are 60 crimes a day and the police can only solve ten, the odds are in their favor.

Now imagine that the police get extra resources for a month, and they use them to crack down on mugging. For a month, every mugging in town gets solved instantly. Muggers realize this is going to happen and give up.

At the end of the month, the police lose their extra resources. But the police chief publicly commits that from now on, he’s going to prioritize solving muggings over solving burglaries, even if the burglaries are equally bad or worse. He’ll put an absurd amount of effort into solving even the smallest mugging; this is the hill he’s going to die on.

Suppose you’re a mugger, deciding whether or not to commit the first new mugging in town. If you’re the first guy to violate the no-mugging taboo, every police officer in town is going to be on your case; you’re nearly certain to get caught. You give up and do honest work. Every other mugger in town faces the same choice and makes the same decision. In theory a well-coordinated group of muggers could all start mugging on the same day and break the system, but muggers aren’t really that well-coordinated.

The police chief’s public commitment solves mugging without devoting a single officer’s time to the problem, allowing all officers to concentrate on burglaries. A worst-crime-first enforcement regime has 60 crimes per day and solves 10; a mugging-first regime has 30 crimes per day and solves 10.

But this only works if the police chief keeps his commitment. If someone tests the limits and commits a mugging, the police need to crack down with what looks like a disproportionate amount of effort – the more disproportionate, the better. Fail, and muggers realize the commitment was fake, and then you’re back to having 60 crimes a day.

This looks to me like what’s happening with chemical weapons. The relevant difference between chemical weapons and conventional weapons is that the international community made a credible commitment to punish chemical weapons use, and so far it’s mostly worked. People with chemical weapons expect to be punished for using them, so they rarely get used. If there are some forms of atrocity that are easier with chemical weapons than with conventional ones – ie a dictator with a limited arms budget can kill more people with a choice between chemical and conventional weapons than they can when restricted to conventional weapons alone – then the taboo against chemical weapons saves lives. And so when a dictator tests the limits by trying a chemical weapon, it’s worth responding to that more forcefully than if they used conventional weapons to commit the same massacre. You’re not just preventing the one attack, you’re also acting to enforce the taboo.

The sexual harassment situation seems like the same dynamic. We can’t credibly demand our elites are never jerks to their subordinates – jerkishness is too vague a concept, there’s too much of it around, and it’s just not really an enforceable norm. But we have sort of credibly demanded our elites don’t sexually harass their subordinates, and it seems like we might be getting enough of a coalition together to enforce this in a lot of cases. If we can solidify this into an actual social norm, such that the average elite expects to be punished for sexual harassment, then elites will stop sexually harassing their subordinates and we won’t have to keep calling the whole coalition together all the time to enforce the punishment. A fixed amount of public outrage per news cycle is the same kind of “limited enforcement resource” as only having ten police officers; commit to using it to disproportionately enforce existing taboos, and you’ll have more of it left over later on.

This is my long-winded answer to a question several people asked on the last links post – why should we prioritize responding to China’s mass incarceration of the Uighurs? Aren’t there other equally bad things going on elsewhere in the world, like malaria?

Yes. But I had optimistically thought we had mostly established a strong norm around “don’t put minorities in concentration camps”. Resources devoted to enforcing that norm won’t just solve the immediate problem in China, they’ll also help maintain a credible taboo against this kind of thing so it’s less likely to happen the next time.

The GATTACA Trilogy

[Few people realize that the 1997 cult hit GATTACA was actually just the first film in a three-movie trilogy. The final two movies, directed by the legendary Moira LeQuivalence, were flops which only stayed in theaters a few weeks and have since become almost impossible to find. In the interest of making them available to the general public, I’ve written summaries of some key scenes below. Thanks to user Begferdeth from the subreddit for the idea.]

GATTACA II: EPI-GATTACA

“Congratulations, Vincent”, said the supervisor, eyes never looking up from his clipboard. “You passed them all. The orbital mechanics test. The flight simulator. All the fitness tests. More than passed. Some of the highest scores we’ve ever seen, frankly. You’re going to be an astronaut.”

Vincent’s heart leapt in his chest.

“Pending, of course, the results of the final test. But this will be easy. I’m sure a fine specimen like you will have no trouble.”

“The…the final test, sir?”

“Well, you know how things are. We want to make sure we get only the healthiest, most on-point individuals for our program. We used to do genetic testing, make sure that people’s DNA was pre-selected for success. But after the incident with the Gattaca Corporation and that movie they made about the whole thing, public opinion just wasn’t on board, and Congress nixed the whole enterprise. Things were really touch-and-go for a while, but then we came up with a suitably non-invasive replacement. Epigenetics!”

“Epi…genetics?” asked Vincent. He hoped he wasn’t sounding too implausibly naive – he had, after all, just aced a whole battery of science tests. But surely there were some brilliant astronomers who didn’t know anything about biology. He would pretend to be one of those.

The supervisor raised an eyebrow, but he went on. “Yes, epigenetics. According to studies, stressful experiences – anything from starvation to social marginalization – change the methylation pattern of your genes. And not just your genes. Some people say that these methylation patterns can transfer to your children, and your children’s children, and so on, setting them back in life before they’re even born. Of course, it would be illegal for us to take a sample and check your methylation directly – but who needs that! In this day and age, everybody’s left a trail online. We can just check your ancestors’ life experiences directly, and come up with a projection of your methylation profile good enough to predict everything from whether you’ll have a heart attack to whether you’ll choke under pressure at a crucial moment. I’ll just need to see your genealogy, so we can run it through this computer here…you did bring it like we asked you, right? Of course you did! A superior individual like you, probably no major family traumas going back five, six generations – I bet you’ve got it all ready for me.”

Vincent reached into his briefcase, took out a slim blue binder. Here goes nothing, he thought.


Two weeks earlier, he had thrown a wad of cash down on a granite table in a downtown apartment.

The man across from him leaned forward in his wheelchair, extended a trembling arm to slowly take the cash.

“You’re, uh, sure you want to do this?” asked Vincent, suddenly feeling a pang of conscience.

“Yes,” rasped Jerome. “You’re young. You still have your whole life ahead of you. You can still make something of yourself. Me, I’m done.”

“Look,” said Vincent, despite his better judgment, “just because you’re partly paralyzed doesn’t mean you can’t…do anything, really. Write a book. Travel the world.”

“You want to know how this happened?” Jerome asked. “I did it to myself. I used to be the best swimmer in the state, maybe in the country. I was going to the Olympics. With a spotless family history like mine, there were no limits. Then it happened. I had a fluke defeat. Lost the Olympics qualifier by a hairbreadth to a guy I’d beaten twenty times before. After that, why go on?”

“But…couldn’t you have just tried again four years later?”

“You still don’t get it. It wasn’t the loss. That loss stressed me out, Vincent. It made me feel bad about myself. I experienced lowering of my social status. With my methylation profile that screwed, it wasn’t just my own body I had ruined. It was my future children too. How was I ever going to marry when I would have to look my wife in the eyes and tell her our kids would be epigenetically tainted forever? So I did the only thing I could. I threw myself in front of a car. Couldn’t even kill myself properly, that’s what happens when your methylation profile is ruined. So here I am.”

“I’m so sorry,” said Vincent, who was starting to regret ever having come. “We can help you. We can find some way to…”

“No,” said Jerome, and he put the cash in his pocket. “What’s done is done.” He took a slim blue binder, slid it over the table to Vincent. “My geneaology. Absolutely perfect. Not a single microaggression against any of my ancestors since the Mayflower.”

Vincent considered saying something, but finally just nodded. “I won’t let you down. I’ll use the gift you’ve given me in a way that would make you proud.”


He’d been so close. And now, this…whatever it was.

“It’s not a problem with you,” said the supervisor, though he looked haggard and did not exactly inspire confidence. “It’s just…there’s been an incident. We’re interviewing everybody.”

It was two days before launch. Everything had been set up. Now, as the supervisor ushered him into a sterile-looking interview room, he could already imagine the headlines. MAN BUYS FALSIFIED GENEAOLOGY, TRIES TO HIDE EPIGENETIC INFERIORITY. Or, FRAUD DECEIVES EPIGATTACA CORPORATION, MISSION CALLED OFF.

He was so busy generating worst-case scenarios that he didn’t even notice the identity of the detective seated across from him until the door had closed and they were alone together.

“Anton?”

“Vincent?”

“Um…yeah…” was the best Vincent could think of to say to his older brother.

They’d been in touch, sure. But Vincent had thought it prudent not to mention his exact job description, lest his brother start asking the wrong questions. He’d just said he worked for the Epigattaca corporation, letting Anton infer that he was sweeping floors or validating parking tickets or something else suitable to someone with his inadequate histone pattern. Finally he put himself together and spoke.

“What are you doing here?”

“There’s been a death. One of the executives. Foul play suspected. I’m a detective, so…”

Then it had nothing to do with him. Or, at least, it hadn’t. Now…

“Okay, Anton. Before you ask, yeah. I admit it. I faked my epigenome. There’s a black market in geneaologies. I found a guy willing to sell his identity. I saved up, bought it from him, gave it to the suits here. They think I haven’t had a microaggression in my family line since the Mayflower. And they’re going to do it. They’re going to let me go to space.”

“But why, Vincent? You were always such a good kid!”

“Of course you wouldn’t understand,” said Vincent.

It was true. Anton was five years older. He’d been born perfect, the product of the latest eu-epigenics program. Female infants with good epigenes were sent to live a sheltered existence in Denmark, the most equitable country in the world, and kept drugged on heroic doses of beta-blockers to prevent them from feeling any trauma or anxiety. They were raised in special houses by caretakers who denied them nothing, then sent to special schools where it was impossible to fail or feel inadequate. Then, when they reached puberty, they were artificially fertilized – no way the program was going to let them deal with something as stressful as sexual relationships – until they pumped out five or ten kids each. The most innocent were brought back to the shelters to restart the cycle.

It had all gone so well with Anton. But a year after he was born, everything had changed. One of the nurses had gotten sick, and an untrained nurse was brought in to cover. She had told Anton’s mother that she was looking “a little chubby”. Faced with this sudden awareness of patriarchal beauty standards and devaluing from a human being to a sex object, her histones had wilted instantly, her precious DNA inundated with methyl groups. When the scientists found out, they discharged her from the breeding program, she married a similarly damaged man, and the result, a few years later, had been Vincent.

“You’re right,” said Anton. “I can never understand what you go through. But I’m going to clear you. Right now. No conditions.”

Vincent could barely believe he’d heard correctly. “What?”

“It’s…my son. Your nephew. I never told you this, but a few years ago, he broke his leg biking. We got it treated by a black-market doctor, covered it up, no trace of it in any of the records, but – I can’t help worry about him. He remembers what happened. He’s going to need role models to look up to when he grows older, people who overcame epigenetic determinism and succeeded despite the changes our experiences impose on our DNA. He’s going to need someone like you. And besides, we’re brothers. I’ve already figured out who committed the murder – it was another executive whose department would profit by delaying the launch. I’m going to report that you’re innocent. And I’m also going to report that I didn’t discover anything else of note about you. Nothing that should delay this week’s launch.”

“You…you’d really do that for me?”

“Good luck in space, bro.”

Vincent walked out of the office in a daze. By the time he reached his desk, the email was already on the screen “Detective has said you’re good to go – launch is still on for Wednesday”. He read it three times, lost in thought.

He had always wanted to be an astronaut. Now he realized why – it was to escape his own epigenome. More than that – it was to escape a world that held epigenetics in such high regard that his epigenome mattered. He would still go to space. He would do it for Anton’s son, and for all the other individuals with a history of personal or family trauma. But he no longer felt like there was nothing for him on Earth. There were people who would judge him as a full human being, not just a methylation pattern shaped by familial disadvantage. And someday – he vowed – everyone would be able to say the same.


GATTACA III: EDU-GATTACA

“Congratulations, Vincent”, said the supervisor, eyes never looking up from his clipboard. “You passed them all. The astrogation test. The crisis simulation. All the physicals and health panels. More than passed. Some of the highest scores we’ve ever seen, frankly. You’re going to be an astronaut…”

Vincent broke out into a giant smile.

“…pending, of course, the results of the final test. But this will be easy. I’m sure a fine specimen like you will have no trouble.”

“The…the final test, sir?”

“Well, you know how things are. We want to make sure we get only the strongest, most intelligent individuals for our program. We used to do genetic testing, make sure that people’s DNA was pre-selected for success. But after the incident with the Gattaca Corporation and that movie they made about the whole thing, public opinion just wasn’t on board, and Congress nixed the whole enterprise. Then we tried epigenetics, but it turned out they made a movie about that one too. Really, our luck in all of this has been terrible. But this time, we’ve really got it! This time, we know how to identify truly superior human beings who deserve to be astronauts, no creepy biology involved. We’re going to base our decision on…what institution you spent four years in during your teens and early twenties!”

“Oh, come on,” said Vincent. “Can’t you just give up already and judge people on their merit?”

The supervisor pounded the desk. “Never! So-called meritocracy is a sham designed to justify inequality. No, we’ve made our choice, and we’re going to judge you by which university accepted you at age 17 based on a combination of illegibly-inflated grades, recommendations by people who barely knew you, and how much money your parents were willing to donate. You can complain all you want, but that’s just how we roll, here at the…” He pointed out the window, to the gleaming sign outside “…at the PhDMSMABSBA corporation.”

“How do you even expect people to pronounce that?” asked Vincent.

“Irrelevant! Now tell us what college you went to, so we can figure out what Greek letter to assign you on your application.”

“Greek letter?”

“Just an internal company code we use. We got tired of saying ‘top-tier institution’, ‘second-tier institution’, and so on, so now you’re Alphas, Betas, Gammas, Deltas, and Epsilons. The Alphas get positions like executive or astronaut. The Betas get positions in middle management. The Gammas and Deltas have jobs like clerks and call center reps. And the Epsilons do the really dirty work, the stuff nobody else will touch.”

“That’s terrible!” said Vincent.

“That’s what everybody does,” the supervisor corrected. “The only difference is we use Greek letters. Is your moral system so fragile that its results depend on whether you refer to something with Greek letters or not?”

“Wow,” said Vincent, “this conversation has taken a disturbing turn.”

“That’s right. So why don’t you just show us your college degree, and we can get your application going?”

Vincent reached into his briefcase, took out a slim red binder. Here goes nothing, he thought.


Two weeks earlier, he had thrown a wad of cash down on a marble table in a suburban apartment.

The man across from him leaned forward in his wheelchair, extended a trembling arm to slowly take the cash.

“You’re, uh, sure you want to do this?” asked Vincent, suddenly feeling a pang of conscience.

“Yes,” rasped Jerome. “You’re young. You still have your whole life ahead of you. You can still make something of yourself. Me, I’m done.”

“Look,” said Vincent, despite his better judgment, “just because you’ve got some kind of condition doesn’t mean you can’t…do anything, really. Write a book. Travel the world.”

“You want to know how this happened?” Jerome asked. “I did it to myself. I used to be the best football player in the state. Maybe the country. Got accepted to Harvard on a football scholarship. Then I learned that college football causes so many concussions that it increases your risk of chronic traumatic encephalopathy. I didn’t know what to do. Stick around, and I risked degenerating into the condition you see me in now. Leave, and I’d lose my scholarship, never get a degree, and have to go to community college. I’d never be anything higher than a Delta.”

“A Delta?”

“Some new corporate jargon people are using.” Jerome shrugged. “So I kept it up and got my degree. Now I can barely walk, and half the time I can’t remember my own name. So here I am.”

“I’m so sorry,” said Vincent, who was starting to regret ever having come. “We can help you. We can find some way to…”

“No,” said Jerome, and he put the cash in his pocket. “What’s done is done.” He took a slim red binder, slid it over the table to Vincent. “My Harvard degree. Top-tier institution, absolutely Alpha quality. With this, every single door in the world will be open to you.”

Vincent considered saying something, but finally just nodded. “I won’t let you down. I’ll use the gift you’ve given me in a way that would make you proud.”


He’d been so close. And now, this…whatever it was.

“It’s not a problem with you,” said the supervisor, though he looked haggard and did not exactly inspire confidence. “It’s just…there’s been an incident. We’re interviewing everybody.”

It was two days before launch. Everything had been set up. Now, as the supervisor ushered him into a sterile-looking interview room, he could already imagine the headlines. MAN BUYS FAKE DEGREE, TRIES TO HIDE EDUCATIONAL INFERIORITY. Or, FRAUD DECEIVES PHDMSMABSBA CORPORATION, MISSION CALLED OFF.

He was so busy generating worst-case scenarios that he didn’t even notice the identity of the detective seated across from him until the door had closed and they were alone together.

“Anton?”

“Vincent?”

“Um…yeah…” was the best Vincent could think of to say to his younger brother.

They’d been in touch, sure. But Vincent had thought it prudent not to mention his exact job description, lest his brother start asking the wrong questions. He’d just said he worked for the PhDMSMABSBA corporation, letting Anton infer that he was sweeping floors or validating parking tickets or something else suitable to someone with his educational background. Finally he put himself together and spoke.

“What are you doing here?”

“There’s been a death. One of the executives. Foul play suspected. I’m a detective, so…”

Then it had nothing to do with him. Or, at least, it hadn’t. Now…

“Okay, Anton. Before you ask, yeah. I admit it. I faked my degree. I found a guy willing to sell his identity. I saved up, bought it from him, gave it to the suits here. They think I’m a Harvard alum. And they’re going to do it. They’re going to let me go to space.”

“But why, Vincent? You were always such a good kid!”

“Of course you wouldn’t understand,” said Vincent.

It was true. Vincent had spent years working ten-hour days after school teaching the saxophone to underprivileged children to build his resume, but the Admissions Departments hadn’t been impressed. Anton had learned from his mistake, hired an admissions coach, and with her guidance had founded the country’s first Klingon-language suicide prevention hotline; the Ivy League had eaten it up. Vincent had ended up with a degree from a Gamma-level state institution; Anton had gone to Yale.

“You’re right,” said Anton. “I can never understand what you go through. But I’m going to clear you. Right now. No conditions.”

Vincent could barely believe he’d heard correctly. “What?”

“It’s…my son. Your nephew. You remember how he started a synchronized underwater molecular gastronomy team at his high school? Apparently all the other kids have been going to the Third World and starting synchronized underwater molecular gastronomy teams there, and we never knew about it. Now there’s no way he’s going to be competitive. I can’t help worry about him. He’s going to need role models to look up to when he grows older, people who overcame going to a low-tier college and succeeded anyway. He’s going to need someone like you. And besides, we’re brothers. I’ve already figured out who committed the murder – it was another executive whose department would profit by delaying the launch. I’m going to report that you’re innocent. And I’m also going to report that I didn’t discover anything else of note about you. Nothing that should delay this week’s launch.”

“You…you’d really do that for me?”

“Good luck in space, bro.”

Vincent walked out of the office in a daze. By the time he reached his desk, the email was already on the screen “Detective has said you’re good to go – launch is still on for Wednesday”. He read it three times, lost in thought.

He had always wanted to be an astronaut. Now he realized why – it was to escape his own low-tier college degree. More than that – it was to escape a world that held degrees in such high regard that the college he went to mattered. He would still go to space. He would do it for Anton’s son, and for all the other individuals with a subpar secondary education. But he no longer felt like there was nothing for him on Earth. There were people who would judge him as a full human being, not just a set of letters after his name. And someday – he vowed – everyone would be able to say the same.

Posted in Uncategorized | Tagged | 134 Comments

OT104: Antelopen Thread

This is the bi-weekly visible open thread (there are also hidden open threads twice a week you can reach through the Open Thread tab on the top of the page). Post about anything you want, ask random questions, whatever. You can also talk at the SSC subreddit or the SSC Discord server. Also:

1. I’ve added an entry to my Mistakes page regarding my post about hallucinogen persisting perceptual disorder. Based on some of the comments, I think I was wrong to favor a cell death based explanation and think that an aberrant learning explanation is at least equally likely. I was especially convinced by the comparison to mal de debarquement (THAT WAS A REALLY FUN TIME READING THAT LINK WHILE I WAS ON A SHIP-BASED VACATION, LET ME TELL YOU), which seems similar but doesn’t naturally lend itself to a cell death angle. The aberrant learning idea raises more questions than it solves, but does seem to fit a variety of phenomena better.

2. New sidebar ad for Throne, a social media site for personalized chat rooms.

Posted in Uncategorized | Tagged | 588 Comments

Links 6/18: Linkonberry Jam

Scientists Share The Worst Stock Photos Of Their Jobs.

A subreddit for somnivexillology, the study of flags that appear in dreams.

In 1962, a pair of con artists claimed to be representatives of the Incan gods and used their charisma to enslave a small Mexican village. Then things got weird. Needing a fake Inca goddess to bedazzle the locals, they hired a nearby prostitute to show herself at the appropriate moment. But the prostitute got too into her role, became convinced she really was the Aztec goddess Coatlicue, took over the cult, took over the village, killed everyone who opposed her leadership, and led a string of grisly human sacrifices until the whole thing was finally broken up by police. The story of Magdalena Solis.

The latest exciting breakthrough drug for PTSD is…an unnecessary patent-protecting modification of cyclobenzaprine – ie it might be that cyclobenzaprine is an effective PTSD-sleep-disturbance drug for people who can’t tolerate prazosin. Link sent to me by a friend who reports unexpected dramatic improvement in PTSD nightmares when taking cyclobenzaprine for a muscle problem.

Some context for last month’s link on rare earths: China Can’t Control The Market In Rare Earth Elements Because They Aren’t All That Rare

In “primitive DNS hijacking” incident, Chicago man files change of address notice at the post office to change UPS corporate headquarters to his apartment, receives all their stuff and money.

Researchers claim that conventional statistics showing the War On Poverty didn’t significantly decrease poverty are calculated wrong, present alternative measurement methods suggesting US anti-poverty programs have been very successful.

New birth order study using Swedish records: “Firstborn children are more likely to be managers and to be in occupations requiring leadership ability, social ability, and Big Five personality traits.” Likely explanation is higher parental investment; not super-compatible with zero role for shared environment.

Volokh Conspiracy on good guys with guns: “Data from the FBI’s Active Shooter Incidents in the United States in 2016 and 2017 report [shows] legal civilian gun carriers tried to intervene in 6 out of 50 [mass shooting] incidents, and apparently succeeded in 3 or 4 of them.”

Gwern summarizes the idea of commoditizing your complement. This helped a lot of things about business snap into place for me.

Fun rabbit hole: “personality tests” that claim to be able to determine what neurotransmitters are dominant in your system, eg whether you’re a “dopamine type” or a “serotonin type”. See eg the Braverman Test and Brown et al. These show every sign of being about as accurate as their four-humors predecessors, even though in theory something like this ought to work. My guess is that there are so many different neurotransmitters, receptors, and brain regions where they can act that anything this broad is going to be able to explain a fraction of a percent of variance at best.

And while we’re talking crazy out-there psych hypotheses, Dual-gender macrochimeric tissue discordance is predicted to be a significant cause of human homosexuality and transgenderism.

Article on the tendency of places to play classical music to repel the unwanted. The default hypothesis would be that homeless people don’t want to sleep (and groups of ruffians don’t want to hang out and chat) in places with loud music, but the article seems to think (without really giving evidence) that there’s something more specific going on, where classical music’s high-class connotation has a specific anti-welcoming effect on poor people.

This week: Trump calls for elimination of all tariffs, endorses marijuana legalization, says he will talk to kneeling NFL players about pardoning the unjustly imprisoned. Next week: Trump defects from US, becomes President of Mexico, converts to Islam.

This article claims that a quirk of 1970s tax policy killed off smaller fiction genres. But see this comment, which casts doubt on some aspects of the story and clarifies a few things.

In Missouri, the beef industry is pushing a bill making it illegal to describe vegetarian meat alternatives like the Impossible Burger as meat. Opponents argue that misleading labeling is already illegal, so this would mostly ban people from using terms like “plant-based meat” that clearly state the nature of the product. Philosophical dispute about whether the category “meat” refers to things that taste a certain way vs. things that were produced by a certain process mirrors other categorization debates.

Kim Jong-un reported to have said that he hopes for “Vietnam-style reforms”.

China is forcing hundreds of thousands of Uighurs into mass internment camps, where they are subjected to brutal re-education. “Hour upon hour, day upon day, Omir Bekali and other detainees in far western China’s new indoctrination camps had to disavow their Islamic beliefs, criticize themselves and their loved ones and give thanks to the ruling Communist Party. When Bekali, a Kazakh Muslim, refused to follow orders each day, he was forced to stand at a wall for five hours at a time. A week later, he was sent to solitary confinement, where he was deprived of food for 24 hours. After 20 days in the heavily guarded camp, he wanted to kill himself.” It’s hard to know what to do about something so terrible and so under-discussed, but ChinaFile suggests that one starting point might be sanctioning Xinjiang officials under the Human Rights Accountability Act.

Somehow I never learned about Abscam, maybe the biggest federal corruption incident since Watergate. The FBI got some con artists to pretend to be Arab sheiks and try to bribe Congressmen to do various things. Most of the Congressmen agreed and took the bribes, and six were convicted and sent to prison – including John Jenrette, who when offered the bribe answered “I’ve got larceny in my blood. I’d take it in a goddamn minute.”

Very competent and well-funded German team tests the seemingly physics-defying EM Drive more precisely than previous experiments. Preliminary results suggest that its thrust comes from some of the electronics interacting with the Earth’s magnetic field, that there are no novel physics involved, and that it would not work in space.

Buddhist sources are silent on which direction the Wheel Of Samsara turns, but the evidence from salvia users who have weird visions of it (1, 2, 3) universally suggests it’s counterclockwise.

A post on the Effective Altruism forum discusses how funding vs. talent gaps are different for different charitable causes. Helped clear up some of my permanent confusion on what it would mean for causes to “not have funding gaps”.

You can now buy explicit placebo pills on Amazon. Professional-looking, very well branded, kind of convincing-seeming placebo pills, no less.

Popehat on free speech: courts will likely rule in favor of government employee fired for posting anti-Trump messages on Facebook on her own time.

A correction to my basic income post: some states will help financially support you if you are taking care of elderly or disabled relatives.

This week in headlines that would have sounded crazy just a few years ago: marijuana-based cryptocurrency PotCoin sponsors Dennis Rodman’s trip to join the summit between President Donald Trump and Kim Jong-un.

Our World In Data shows The Effect Of Life Events On Life Satisfaction over time. Especially interesting since they start their time series a few years before the events. For example, men’s life is terrible the five years before a divorce, but immediately becomes better starting the year the divorce happens. I’ve been showing some of these graphs to my patients to help convince them there’s life on the other side of [personal catastrophe]. Also, the unemployment graph seems to confirm claim that it’s uniquely hard to habituate to in a way that’s not just a function of pre-unemployment problems.

In some traditional Chinese and Korean families, the founder of the family chooses a poem, and the nth generation of his descendants will always have names starting with the nth syllable of the poem.

Some people will like this essay as object-level social commentary, others as a window into the anthropology of weird inter-left disputes, but here’s a very strong take on the disability activists vs. Democratic Socialists of America argument/scandal/clusterf**k.

A list of the latest ICE scandals and atrocities, in case you’re having trouble keeping track. But see also this correction to the “1500 kids missing” story.

Washington Post on the truck driver shortage and why few want an $80,000 job. Mostly because it doesn’t actually pay $80,000 unless you get lucky / accept unreasonably awful conditions.

Interested to know what people think of this: Labour vote in England closely matches historic presence of coal mining.

New big paper on intelligence by Gail Davis and co-authors including Ian Deary and Stuart Ritchie, finds more genes for cognitive function, able to predict 4.3% of variance with polygenic score. But the fun part here is the genetic correlations, which note among other things that the genes for higher intelligence also seem correlated with poor eyesight, eg the “smart people wear glasses” effect. This is really interesting because I was under the impression that people had done some really good work showing the glasses-intelligence correlation was mostly due to smart people staying inside reading and not getting enough UV light for their eyes to develop properly. Either I totally screwed up my analysis of that one, or this is an unusually good example of a multifactorial trend. I hope this paragraph was good enough to avoid ending up in Stuart’s Hall of Shame for how this paper has been covered in the media.

Jacob of Putanumonit has an article on outgroups in Quillete that uses a really interesting concentric circles model I hadn’t thought of before.

DeepMind publishes a paper theorizing that the human prefrontal cortex is involved in “meta-reinforcement learning” and claiming to have created machine learning agents that can duplicate it. I haven’t been able to wrap my head around this yet; grateful to anyone who wants to explain it to me.

Related: Eliezer Yudkowsky asks believers in an upcoming new AI winter what sort of resolveable claims (suitable for bets) their hypothesis would entail.

And Eliezer (vs. David Chapman, sort of) on Toolbox Thinking And Law Thinking.

The latest in the DashCon / FyreFestival / etc genre of “fan conventions collapsing disastrously” is the marginalized-fan-community-centered Universal FanCon. I first read about this on Siderea’s blog and then found my way to this longer article. An interesting detective story / rationality practice to sort through the competing accounts and try to figure out what happened, and how so many seemingly trustworthy and well-intentioned people ended up running something that looks so much like a scam. Also possibly a good test for how paranoid vs. trusting you are, or how willing to resort to bad actor vs. institutions-are-hard explanations. Something like an answer (if you believe it) about what happened here

Giussepe Conte chosen as new Italian PM, ending months of standoff (and settling my prediction about whether a “far-right” party would take power in a major European country). Of interest here – the ruling Five Star Movement has a campaign promise to institute a basic income of 780 euros/month, even though this is even less financially realistic in Italy than it would be elsewhere. Related: populist anti-immigrant party with anti-Semitic links retakes power in Slovenia.

Bloom’s Two Sigma Problem: children given private tutoring will do two sigmas better than average (ie the average tutored student will be in the 98th percentile of nontutored students). But see here for some argument that the real value is lower, maybe more like 0.4 sigma. Some further discussion on the subreddit asks the right question – can we simulate this with some kind of clever computer-guided learning? – and gives the right answer – apparently no. TracingWoodgrains has a great comment. Especially interested in their discussion of Direct Instruction: “One of the few schools to use it as the basis of their program for math and English, a libertarian private school in North Carolina called Thales Academy, is reporting results exactly in line with the two-sigma bar: 98-99th percentile average accomplishment on the IOWA test. Their admissions process requires an interview at the elementary level, but no sorting other than that, so it’s not a case of only selecting the highest-level students.” (though note that IOWA is nationally normed, and Thales is in the well-off Research Triangle area). On the other hand, it costs half of what public schools do, so file this under “cost disease” too.

Find out where your hometown would have been on Pangaea.

Study on the political impact of immigration: when more high-skilled immigrants move to an area, the native voters shift more Democratic; when more low-skilled immigrants move to an area, the native voters shift more Republican. Effect is not dependent on immigrants’ country of origin.

England used to have free college tuition. In 1998, they decided it wasn’t working, got rid of it, and their colleges now cost more than the US. A team from the Brookings Institution discusses the English experience and what it can teach Americans, including the surprising role of English progressives in the anti-free-college fight.

A one parameter equation that can exactly fit any scatter plot. Though see the comment thread starting with Slocum on Marginal Revolution for discussion of whether this is as interesting as it sounds. Another commenter correctly brings up Tupper’s self-referential formula.

New study finds that, contra popular myth, people who believe in the genetic determination of human traits are more progressive, more tolerant of vulnerable individuals, and less racist. Likely just because more educated people are more likely to be aware of genetics, but still useful in slapping down a whole class of terrible arguments.

Related: in good news for progressivism and tolerance of vulnerable individuals, new study finds that some trait differences among Asians, Europeans, and Africans have significant genetic contributions. Genetic role was found for height, waist-hip-ratio, and schizophrenia risk; was not found for cholesterol, diabetes, or educational attainment.

Remember the mystery illness afflicting US diplomats in Cuba, possibly caused by some kind of weird infrasonic weapon? Now it’s happening to US diplomats in China too.

You’ve probably seen the graph showing that even as US productivity increases, US worker wages do not. A new study finds that productivity and worker pay continue to be correlated, suggesting it’s not so much that productivity doesn’t help as that some other force is keeping pay down despite the productivity effects. This might be beyond my pay grade, so interested in hearing if anyone has a good interpretation of this.

Zero HP Lovecraft: The Gig Economy

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HPPD And The Specter Of Permanent Side Effects

I recently worked with a man who took LSD once in college and never stopped hallucinating. It’s been ten years now and it’s still going. We can control it with medication, but take the meds away and it starts right back up again.

This is a real disease – hallucinogen persisting perception disorder. Most descriptions of the condition emphasize that it’s just some of the visual effects and doesn’t involve distorted reality perception. I’m not sure I believe this – my patient has some weird thoughts sometimes, and 65% of HPPD patient have panic attacks related to their symptoms. Maybe if you can see the walls bubbling, you’re going to be having a bad time whether you believe it’s “really true” or not.

Estimates of prevalence vary. It seems more common on LSD and synthetic cannabinoids, less common (maybe entirely absent) on psilocybin and peyote. Some people say about 1-4% of LSD users will get some form of this, which seems shockingly high to me – why don’t we hear about this more often? If I were a drug warrior or DARE instructor, I would never shut up about this. But if most people just get some mild visual issues – by all accounts the most common form of the condition – maybe they never tell anybody. Maybe 1-4% of people who have tried LSD are walking around with slightly distorted perception all the time.

There’s a lot to say about this from an epidemiological or cultural perspective. But I want to talk about the pharmacology. How can this happen? Why should a drug with a half-life of a few hours have permanent effects on your psyche?

It can’t be that the LSD sticks around. That doesn’t make metabolic sense. And a study discussed here using radio-labeled LSD definitively finds that although a few molecules might stay in the body up to a week or so, there’s no reason to think the drug can last longer than this. I like this study, both for its elegant design and because it implies that somewhere someone got a consent form saying “we’re going to give you radioactive LSD” and thought “sure, why not?”

But then why does it have permanent effects? I know very few other situations where this happens, aside from obvious stuff like “it gives you a stroke and then you’re permanently minus one lobe of your brain”. The only other open-and-shut case 100% accepted by every textbook is a movement disorder called tardive dyskinesia. If you take too many antipsychotics for too long, you can get involuntary tremors and gyrations that never go away, even off the antipsychotic. Although traditionally associated with very-long-term antipsychotic use, in a few very rare cases you can get it from a single dose. On the other hand, most people can take antipsychotics for decades without developing any problems.

Some other possibilities are controversial but plausible. The sexual side effects of SSRIs almost always stop within a few months of stopping the medication, but a few people have reported cases where they can last years or decades. Psychedelics may permanently increase openness and hypnotizability, though it’s unclear if this is biochemical or just that drug trips are a life-changing experience – see my discussion here for more. Also, for every drug that has a mild week-long withdrawal syndrome in the average population, you can find a handful of people who claim to have had a five-year protracted nightmare of withdrawal symptoms that never go away.

So, again, how does this happen?

Every discussion of HPPD etiology I’ve seen is speculative and admits it doesn’t know what it’s talking about. Also, most of them are in gated papers I can’t access. But a few papers seem to gesture at a theory where LSD kills an undetectably small number of very important neurons. Hermle et al talk about “the excitotoxic destruction of inhibitory interneurons that carry serotonergic and GABAergic receptors on their cell bodies and terminals, respectively”. Martinotti seems to be drawing from the same inaccessible source in mentioning “an LSD-generated intense current that may determine the destruction or dysfunction of cortical serotonergic inhibitory interneurons with gamma-Aminobutyric acid (GABAergic) outputs, implicated in sensory filtering mechanisms of unnecessary stimuli”.

This would require some extra work to explain the coincidence of why the effects of HPPD are so similar to the effects of an LSD trip itself. In particular, if we’re talking excitotoxicity, shouldn’t the neurons be stimulated (ie more active) in the tripper, but dead (ie less active) in the HPPD patient? Maybe the tripper’s neurons are just so overwhelmed that they temporarily stop working? Or maybe you could interpret the comments above to be about LSD exciting some base population of neurons, the relevant inhibitory neurons having to work impossibly hard to inhibit them, and then the inhibitory neurons die of exhaustion/excitotoxicity.

Against cell death based explanations, some people seem to recover from HPPD after a while. But this could just be the same kind of brain plasticity that eventually lets people recover from strokes that kill off whole brain regions. The body is usually pretty good at routing around damage if you give it long enough.

What about tardive dyskinesia? When I was in medical school, I was told that the drugs “permanently hypersensitized dopamine receptors”, which is kind of a cop-out – why do they permanently hypersensitize receptors? How come all the other drugs don’t permanently hypersensitize the receptors they antagonize? Apparently now the story is more nuanced. From here:

The pathophysiology of TD is complex and remains unclear. Multiple models have been proposed to explain this unpleasant and sometimes disabling side-effect. One of the first widespread and popular explanations was the theory of dopamine-receptor hypersensitivity. It was suggested in 1970; however, it cannot completely explain the clinical findings, because TS does not generally appear among all dopamine receptor-blocking drugs users.

To date, several neurochemical hypotheses have been proposed for the explanation of TD development. These theories include: (i) a disturbed balance between dopamine and cholinergic systems; (ii) noradrenergic dysfunction; (iii) dysfunctions of striatonigral, γ-aminobutyric acid (GABA)ergic neurons; and (iv) excitotoxicity. Recently, the role of oxidative stress and structural abnormality in the pathophysiology of TD has gained impetus. Induction of free radicals by neuroleptic drugs leading to oxidative stress and resultant structural abnormality could be the key factor in the pathogenesis of TD. The studies by Lerner et al. and Libov et al. support the neurotoxicity hypothesis. This hypothesis has also been supported by reports that chronic neuroleptic treatment increases free radical production and causes structural damage. In 2005, Tan et al. reported that a brain-derived neurotrophic factor appears to exert a protective effect in the nervous system against TD in patients with schizophrenia. There is solid evidence of a genetic predisposition to TD. A study performed by Souza et al. suggests that GSK-3B polymorphism may play a role in the genetic vulnerability to TD manifestation in individuals with schizophrenia.

There also seems to be some sort of role of acetylcholine:

Several studies in animals have reported that cholinergic cells (or the marker enzyme choline acetyl transferase) in the striatum are lost or reduced in amount after prolonged regimes of haloperidol and fluphenazine (49,50). Recently, Grimm and others showed that prolonged haloperidol treatment in rats led to cholinergic cell loss in the specific areas of the striatum related to oral movements (51). This result may provide an animal model to explain why TD in humans is most commonly a motor disorder of orofacial musculature. Proton magnetic resonance spectroscopy provides supporting evidence for the cholinergic hypothesis. This method allows quantification of choline, the precursor of acetylcholine, in specific brain structures. Choline reuptake leads to the accumulation of choline in cholinergic neurons before its conversion to the transmitter; an excess of choline in brain tissue will signify a loss of cholinergic neurons. Using this method, investigators have shown that, in schizophrenia, choline levels in the basal ganglia are greater than normal (52). Ando and others produced further results with this method (53), implying that choline levels in the lenticular nucleus are higher in schizophrenia patients with TD than in those without the syndrome.

Apart from such methods for assessing cholinergic processes in the striatum, clinical trials with cholinergic agents in patients with TD could provide indirect evidence related to the cholinergic hypothesis (44). Caroff and colleagues showed that the anticholinesterase donepezil was effective against the symptoms of TD (54,55). Since choline, the precursor of acetylcholine, was not effective, Caroff and others regarded their evidence as support for the hypothesis of Miller and Chouinard. However, a recent metaanalysis concluded that trials of cholinergic agents in the treatment of TD conducted to date have insufficient statistical power to reach a firm conclusion about the drugs’ effectiveness (56). This area of research may be clarified when cholinergic agents effective against specific muscarinic receptors are tested in patients with TD.

So apparently it’s a conflict between a receptor hypersensitivity hypothesis and a killing-off-interneurons hypothesis that resembles some of the work around HPPD?

I’m biased in favor of killing-off-neurons hypotheses because they’re comfortable and they make sense. Of course if a drug kills something, it’s going to permanently impair function. This makes the idea of “drugs with permanent side effects” a little bit less scary, restores us to the “some medications cause strokes and then you’re screwed” realm of everyday life.

The alternative is thinking of the body as a chaotic system which settles into various attractors. Take the wrong drug and you can push yourself into a different attractor state, which will persist until something shifts it. This definitely seems true of some things, and is one of the ways I think about depressive episodes – which can last months or years, and which can be precipitated by some sort of obvious stressor (getting fired, breaking up, being bullied) but last long after the stressor is gone. If this explains permanent drug side effects, it seems somehow scarier to me than the other option. It’s not just that you have to make sure not to accidentally kill any cells. It’s more that nobody has any idea what the underlying mechanisms look like, anything can happen, and you just have to hope you don’t screw up.

OT103: The Curse Of Tutancomment

This is the bi-weekly visible open thread (there are also hidden open threads twice a week you can reach through the Open Thread tab on the top of the page). Post about anything you want, ask random questions, whatever. You can also talk at the SSC subreddit or the SSC Discord server. Also:

1. I’m on vacation for the next few weeks. I might schedule a few drafts to auto-post just so things won’t be totally quiet, but don’t expect to hear much from me until late June.

2. I’ve gotten a few comments and emails from people who are visiting the Bay Area and want to know how to meet the rationalist community there. Your best bet is to check the schedule for the community center and show up there when something interesting is happening (or just drop by whenever and hope for the best). If you’re really interested, you can stay in their guest rooms for a few days. You can also see bayrationality.com for (slightly) more information and event dates, or check the LW meetups page for more on meetups in San Francisco, San Jose, etc. I would like for there to eventually be a better and longer-term solution to this problem, but this’ll have to do for now.

3. Some people have complained that they like an SSC post and want to send it to their friends, but some of the comments are so bad that they’d be embarrassed for their friend to see them. Evan recently reminded me that there’s a Link Without Comments button at the bottom of every post.

4. Comment of the week is Aurel presenting some evidence against the lead-crime connection. Any thoughts?

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In Search Of Missing US Suicides

[Content warning: suicide. Thanks to someone on Twitter I forget for alerting me to this question]

Among US states, there’s a clear relationship between gun ownership rates and suicide rates, but not between gun ownership rates and homicide rates:

You might conclude guns increase suicides but not homicides. Then you might predict that the gun-loving US would be an international outlier in suicides but not homicides. In fact, it’s the opposite:

Why should this be?

We’ve already discussed why US homicide rates are so high. But why isn’t the suicide rate elevated?

One possibility: suicide methods are fungible. If guns are easily available, you might use a gun; if not, you might overdose, hang yourself, or junp off a bridge. So getting rid of one suicide method or another doesn’t do much.

This sounds plausible, but it’s the opposite of scientific consensus on the subject. See for example Controlling Access To Suicide Means, which says that “restrictions of access to common means of suicide has lead to lower overall suicide rates, particularly regarding suicide by firearms in USA, detoxification of domestic and motor vehicle gas in England and other countries, toxic pesticides in rural areas, barriers at jumping sites and hanging…” This is particularly brought up in the context of US gun control – see eg Suicide, Guns, and Public Policy, which describes “strong empirical evidence that restriction of access to firearms reduces suicides”.

The state-level data from above support this view – taking guns away from a state does decrease its suicide rate. And then there’s this graph, from Armed With Reason:

…which shows that adding more guns to a state does not decrease its nonfirearm suicide rate.

But if suicide methods aren’t fungible, then why doesn’t the US have higher suicide rates? Here’s another way of asking this question:

The US has fewer nongun suicides than anywhere else. The seemingly obvious explanation is that guns are so common that everyone who wants to commit suicide is using guns, decreasing the non-gun rate. But that contradicts all the nonfungibility evidence above. So the other possibility is that the US ought to have an very low suicide rate, and it’s just all our guns that are bringing us back up to average.

Of all US states, Massachusetts, New Jersey, and Hawaii have the fewest guns. Unsurprisingly, suicides in these states are less likely than average to be committed with firearms. In MA, the rate is 22%; in NJ 24%; in HI, 20%. Their suicide rates are 8.8, 7.2, and 12.1, respectively. Hawaii has an unusual ethnic composition – 40% Asian and 20% Native Hawaiian, both groups with high suicide rates (see eg the suicide rate for Japan above). So it might be worth taking Massachusetts and New Jersey as examples to look at in more detail.

Either state, if it were independent, would be among the lowest-suicide-rate developed nations. And both still have more guns than our comparison countries. If we did a really simple linear extrapolation from New Jersey-level gun control to imagine a state where firearms were as restricted as in Britain, we would expect it to have a suicide rate of around 5 or 6 – which is around the current level of non-gun US suicides. This is much lower than any of the large comparison countries in the graph above, but there are two developed countries currently around this level – Italy and Israel. I think it makes sense to suppose that the US might have a low Italy/Israel-style base rate of suicides.

For one thing, it’s unusually religious for a developed country. Religion is one of the strongest protective factors against suicide. This also seems like a good explanation for Italy and Israel.

For another, it’s culturally similar to Britain, which also has a low suicide rate somewhere in the 7s. Other British colonies don’t seem to have kept this effect – Australia and Canada are both higher – but maybe the US did.

And for another, it’s unusually ethnically diverse. Blacks and Hispanics have only about half the suicide rate of whites; which means you would expect the US to be less suicidal than Europe. I previously believed this was because whites had more guns, but this doesn’t seem to be true: Riddell et al find that whites have higher non-firearm suicide rates too. So this could be an additional factor driving US rates down.

(another conclusion from the graphs above: US whites – who have most of the guns – do have an anomalously high suicide rate compared to other countries)

A confounding factor – the US has lots of different cultures, and Massachusetts and New Jersey represent only one of them. But if anything I would expect Southern and Midwestern culture, which are more religious, to have a lower base suicide rate; the South also has a lower percent white, another reason to expect their rate to be lower. And there is no evidence of these states having a higher non-firearm suicide rate, which we might expect if they were unusually suicidal.

So I think the simplest explanation is true. A gun-free US would have one of the lowest suicide rates in the developed world, maybe 5 or 6 people per hundred thousand. The US’ average-seeming suicide rate is an artifact caused by combining the low base with the distorting effects of high gun availability. The lack of a relative suicide crisis in the US doesn’t indicate that easy firearm access isn’t causing thousands of preventable suicides per year.

This is maybe not the most pressing question we’re facing right now, but I take it as a warning against gotcha-style debating. A simple bar graph comparing national suicide and homicide rates would be a compelling, elegant, and easily-digested argument that guns increased homicides but not suicides. It would also be totally wrong.

[EDIT: Commenters point out this paper by Alex Tabarrok on how there is some, but less-than-perfect, substitutability of suicide methods.]