This is the bi-weekly-ish open thread. Post about anything you want, ask random questions, whatever. Also:
1. You might remember my nootropics survey from two years ago. I’m running an updated version this week with some new substances and a couple of other questions. If you use any nootropics – substances like modafinil, piracetam, and bacopa that are supposed to improve mood and cognition even outside the context of specific psychiatric illnesses – please take the survey. Results will be posted here eventually.
2. Some great discussion on the Superforecasting reviews. Just in case you missed it, we have at least two superforecasters here, Elissa and Dan M, who are happy to answer any questions you may have about their freaky otherworldly powers.
3. Comments of the week include Kyle on how specific knowledge about how GitHub works can help us better understand that study, and Jason Hoyt (the co-founder of the preprint site that hosted the study) on the risks and benefits of preprint review.
4. Also on the subject of the GitHub study: I was unusually impressed with the people who shared and debated it. Most people were suitably cautious, people avoided the “OKAY NOW THIS STUDY IS TOTALLY DISPROVEN AND 100% GARBAGE” failure mode, and a lot of the people I saw sharing and debating my analysis were women. This did more good than a bushel of studies in helping fight some of my bias and prejudice.
5. Some job listings in the community: the Center For Applied Rationality (CFAR) in Berkeley is looking for a full-time inside salesperson. And the effective altruist movement is accepting applications for the Pareto Fellowship (DEADLINE HAS BEEN EXTENDED TO 2/21)
6. LW/SSC/EA/OMG/BBQ meetups coming up in Ann Arbor on February 19th, London on February 21 and Sydney on February 21. I will probably be at the Ann Arbor one.
7. New rule for the subreddit – to keep it from getting bogged down in culture war related links, there will be one “Culture War Roundup” thread every week. If you have interesting culture war related links, please put them on that thread instead of starting a new one. I’ll trust you all to use your judgment about what is or isn’t culture war.
8. If I post something in an out-of-the-way, less-visible place like my Tumblr or deep in a comment section here, I’d prefer if people would ask permission before they repost it somewhere more visible. I know I have no right to make that request, and I’m asking it only as a favor. I am not angry with anybody and nothing has gone wrong, I just want to keep it that way.
9. Some people were very much abusing the Report Comment function, for example reporting every comment ever made by a particular person they didn’t like. Please be aware that if that happens it doesn’t mean the person gets banned, it just means I have to waste hours individually clearing each comment. The last time I logged into my comment reports panel I had almost a thousand different reports I had to go through; only about 20% could very generously be described as real problems. I will now be banning people for frivolous comment reporting. That doesn’t mean I’ll ban you if you report an ambiguously nasty comment that I finally decide doesn’t quite deserve banning, but it does mean that some people’s days of just reporting everything they see to annoy me are coming to a sharp and sudden end.
10. Thanks to Bakkot (I assume, but maybe someone else) for improving the comment highlighting function. It no longer resets every time you post a comment!
For all you tumblr users, YouGov: Emancipation Proclamation.
Does anyone know of a well-moderated political forum out there somewhere? Something like SSC comment threads, or Hackernews. It is practically impossible to find educated and well-argued opinions in any concentration. I’m not especially knowledgeable about politics and contemporary issues, but I can smell bad rhetoric and bias and I’m just repulsed by everything I find. And I never find what I’m really looking for from the better-regarded pundits… I think I’m after candid, well-founded perspectives on the overall landscape.
Thanks for any advice. I haven’t slept much and my language faculties aren’t too hot right now so apologies if this doesn’t read very well.
I mostly stopped following politics, but as of the last election, still found Jonathan Bernstein and 538 in general tolerable, but they were much more focused on explaining the mechanics of why certain electoral strategies win or lose, not taking and defending partisan policy stances.
I’ll probably have to repost this in the next OT to get anybody to see it, but I just noticed it now so here we are:
In the breastfeeding RCT that Scott linked long long ago, aren’t the results way too good?
I’d previously looked at the summary, “breastfeeding raises IQs by 6 points”, thought that that seemed plausible (especially since it predated DHA/ARA in baby formula), and went on.
Today, thanks to the topic coming up in the news, I decided to go back and read the study itself, because an obvious possible confounder occurred to me: if they were only comparing to the subset of the experimental group who took their breastfeeding advice, then they might simply be re-confirming that conscientiousness correlates with IQ and that IQ is hereditary.
What I found was more shocking: they were (properly) comparing the whole experimental group to the whole control group, and their results came despite the fact that most of the experimental group didn’t take their advice! The paper has data about what fraction of babies stopped being breastfed after 0-3, 3-6, 6-9, 9-12, and 12+ months. In the control group, the data looks like (0.4,0.239,0.117,0.13,0.114), and in the experimental group, the fractions are (.273, .229, .137, .164, .197). In other words, changing the behaviors of 13.7% of mothers gets you from the control to the experimental conditions!
So what kind of experiment increases a group IQ by 6 points solely via an effect on 13.7% of the participants? Did the affected subset get a 43+ point average IQ boost? That’s insane a priori, and more to the point it’s not at all consistent with their other results, where they do compare IQ by duration of breastfeeding and show only single-digit differences. Even if we try to take into account rounding in the most conservative way (imagine, for some reason the control group all stopped breastfeeding at 3*N+epsilon months, the experimental group at 3*N-epsilon!), that’s still only 36.6% of the group affected by the intervention, and the implied 16 point IQ difference still isn’t consistent with their within-group results.
The only other hypothesis I can imagine (while still trusting my understanding the data) comes from the one large component of the experiment that the paper reports: “the prevalence of exclusive breastfeeding (ie, no foods or liquids other than breast milk) was 7-fold higher in the experimental group as compared with the control group at 3 months (43.3% vs 6.4%, respectively)”. If 36.9% more of the control group participants are feeding their babies something IQ-depressing, then you’d still only need a 16 point depression to explain the total results, and this time there wouldn’t be anything else in the paper conflicting with that explanation. Could there simply be something wrong with the water in Belarus?
Obviously the most likely hypothesis remaining is “I’m misunderstanding the data”. I’d appreciate it if anyone can see how.
That is not an RCT. It is only cluster-randomized.
━━━━━━━━━
I’ll take the observational evidence over this: no effect on IQ.
(I’m leaving this -here- anonymously because I want to reach a large number of intelligent persons, and by the very nature of my topic, I really have no idea where to turn. I should add that I am familiar with the rationalist movement mainly indirectly.)
As I’ve questioned my assumptions and- hopefully- removed my biases, this of course has led me to be more skeptical of pat answers on the topic of religion. In particular, I’ve found myself giving even creationists a hearing.
Now, make no mistake, the majority of creationist believers seem idiots. And I’m well aware of the evidences which the scientific consensus is founded on, and on all the glaring problems all creationist theories face. I’ve been catechized in evolution all my life.
But there are some creationist theorists- Barry Setterfield comes to mind- whose views and arguments, with my lack of expertise, seem plausible to me. I can’t dispute him. Indeed, from what little I understand, à priori and devoid of my background knowledge I would assume he was right.
Of course Setterfield has been rejected by the scientific community. And of course he claims that this is only because he’s challenging the consensus, and that he’s in fact right.
The problem is that I myself can’t say that he’s not. So I must turn to scientific authority to refute him. The problem is, I can’t find it.
Of course there are a plethora of anti-creationist sites on the internet. Of course plenty of them have organized polemics. But almost all of the ones I’ve seen only really dispute the low-hanging fruit- the misconceptions of the common creationist, pointing to the well-known evidences of evolution etc. This is all fine and good. But it doesn’t help me here.
There is talk.origins. But they died years ago, and I can’t find their heir.
Talk.origins published a short piece by a specialist refuting Setterfield on a basic level. Setterfield then published a brief piece stating that they didn’t understand his argument, that they were working from his early, not recent papers, and so on. And then nothing. As far as I can tell, no further argument from anyone in the scientific community. This all happened over a decade ago.
I think the problem here is obvious. Setterfield gets to insist that he hasn’t been disproven. And for all I can tell, he’s right. And, of course, for all I can tell, he’s wrong. There’s no way for me to tell, and that’s scary.
Look, I don’t know what I’m asking for here. No, I do: I want some of those qualified to actually argue against the creationist crackpots instead of ignoring them. Yes, that’d take up so much time fighting something we very much believe is complete rubbish, that already seems dying. Yes, it gives the crackpots credibility. Yes, it’s unrealistic. I don’t pretend that it’s not or doesn’t.
But the truth is, being skeptical, I can’t just take the pat assurance that all the scary creationists are always wrong from people who have scarcely looked at them, and rest confident in my worldview.
TL;DR: Where is the anti-creationist movement that doesn’t just snipe at the low-hanging fruit?
Why do you care?
How is that any better or worse than my insisting that he has been disproven?
He can insist that his opponents don’t understand him, and they can insist that he doesn’t understand them and that their arguments apply just as much to his new work as to his old.
Work your way through the first volume of Feynman’s Lectures on Physics. Nothing more than a high school calculus is needed. By the end you should be able to find some of the many flaws Setterfield’s nonsense on your own. Plus it is time well spent regardless.
(How does one do the inset paragraph quote thing?)
@Douglas Knight:
“Why do you care?”
-Because I want to be sure that my worldview is correct, and I want to make sure that others can determine the correct worldview and be sure that it is correct, with all the security that entails.
“How is that any better or worse than my insisting that he has been disproven?”
-It is more -credible- because you haven’t- as far as I know- devoted anywhere near as much time or effort to disproving him as he has to proving himself; nor have you -as far as I know- successfully persuaded anyone that he is incorrect (that said, I don’t know of Setterfield persuading anyone without significant preexisting biases that he is correct, though I haven’t looked into the issue).
That probably sounds a bit wrong. What I mean is, there’s the appearance that Setterfield has, or very well may have, put a lot more thought into the issue than the people asserting that he is wrong. Obviously if you write a complex argument on any topic, and I, having given the appearance of reading only one section of it, pronounce it incorrect, and you say I’ve ignored large portions, to an outside observer this scarcely indicates at all who is right, but also makes it seem as though I’m incompetent.
@science2:
“Work your way through the first volume of Feynman’s Lectures on Physics. Nothing more than a high school calculus is needed. By the end you should be able to find some of the many flaws Setterfield’s nonsense on your own. Plus it is time well spent regardless.”
-Should I take this as an assertion that you have or someone you know of has 1) studied Feynman v.1; 2) studied a substantial portion of Setterfield’s corpus; & 3) concluded that Setterfield is indeed incorrect?
That said, I will take this under advisement.
There is a detailed critique of Setterfield’s speed of light decay data, written by another creationist, at:
http://www.icr.org/article/has-speed-light-decayed/
If it is correct, and it seems to be, the implication is not only that that argument is wrong but that Setterfield probably should not be trusted.
1) Yes, but to be fair only after having already studied physics. That said I’ve heard from others that came to it later in life it was a tough but rewarding introduction.
2) No, just a cursory skim
3) Yes.
I don’t want to lay out a refutation because I don’t care to get into Setterfield’s logic deeply enough to do a good job of it. It just doesn’t appeal to me. It seems like it does appeal to you.
That’s why I suggested the book to you. It’s amazing how accessible special relativity is. No other physics discovery in the last 100 years can be understood with so little math. If his theory had been about quantum chromodynamics there’s no way I could make a similar recommendation.
(I assume you’ve read this T.O article on Setterfield. Note that the references to people who’ve found historical measurements of C match present measurements apply equally well to Setterfield’s arguments today. Also note the statistical incompetence displayed by Setterfield; that’s a level of fucking things up that should make you distrust future arguments. If the guy couldn’t calculate r**2 and didn’t know how to do statistical tests in the 1980s, what makes you think he gets quantum mechanics today?).
The more intelligent stuff is the same mistakes the less intelligent stuff makes, except better masked by more jargon and a better understanding of how to rationalise their position.
Looking up his webpage, Setterfield is a speed-of-light-changes guy with a weird interpretation of quantum/relativistic stuff.
So, thing the first: science is not just ‘decided by the data’ in the way Setterfield (and occasionally other creationists) is getting at, and saying that while showing off a graph with some fitted curve is evidence of crackpottery. The equivalent low-complexity mistake is the “Here’s one fossil that’s out of place, therefore your entire model is wrong” tack. You can’t just take observations, fit a curve to them, note that the fit is statistically sound, and therefore the curve and any extrapolations from it are correct. Observations only make sense in the context of a model, and there are infinitely many models that fit the data. If I wanted to claim that light has no speed and that speed of light experiments are measuring some other phenomenon, I could use a graph like Setterfield’s. If my position was a different varying lightspeed curve (maybe I wanted light to go faster over time, not slower) then I could get it via careful selection of data points and start and end dates. If I was arguing that earlier measurements of the speed of light had larger errors than more recent measures, and that the more recent measures have converged to one value, I could use a similar graph. All very different implications, all fit the observed data. As it happens, I think the last model is most likely to be correct – because of the web of other reasons to believe the constant-speed-of-light model and general aesthetics.
(sidenote: not saying that observations don’t matter or don’t decide things. Predictions that came out are very strong evidence for a model, for example. All I’m saying is that post-hoc statistical models on observations are usually bullshit, and that people who are very vocal about “DATA determines truth, not CONSENSUS!” have a tendency to be nutters.)
So, second point: aesthetics. Ockham’s Razor is part of this. The model where the speed of light is a constant but measurements have error and Setterfield has carefully selected values to draw his graph is much simpler, in any reasonable sense, than the model where one of the fundamental parameters of the universe has a suspiciously-chosen exponential decay and also all of everything else that depended on that happened to turn out to make extremely good predictions while being very wrong and quite mistaken about the fundamentals. You’ve been around this argument, you’re familiar with Last Thursdayism. Setterfield is Last Thursdayism on a grand scale, picking adjustments to physical laws that produce the reality he wants (young universe) while also being compatible with the bajillion lines of evidence that that’s not reality. The low-complexity equivalent is “God put fossils there to test our faith”, or similar. Invisible, flour-permeable dragons. You should be very skeptical of models that have obviously been chosen to accord with someone’s predetermined viewpoint, like a pharmaceutical study that hypes the shit out of positive effects in elderly Hispanic women. Such models are guaranteed to look weird, because they’re not decided on beforehand, they’re post-facto fits of the data to what somebody wants it to be. They’re ugly. The most telltale sign: no meaningful predictions. I couldn’t find any suggestions on Setterfield’s website for how to test his unique unified theory; it’s all post-hoc words about how to explain things that have already happened without any benefit over the current model.
Third point, it’s basically impossible to keep something this revolutionary out of the journals for thirty years. If this guy has fundamentally overturned modern physics and biology, why does he not have two Nobels? In this case the low-complexity and the high-complexity position is the same: “the scientific establishment is keeping me out”. Give him a search in Google Scholar, all you get are things like this, in the ‘Journal of Theoretics’, which is, shall we say, not a reputable journal (it’s not a very good paper, either; very little maths, the maths that is there is mostly reproducing the effects of GR without being GR, references to New Scientist). The scientific orthodoxy just isn’t that strong, and you can get papers published questioning consensus opinions. Notice, for example, that the MOND people and the cold fusion people all managed to publish papers, despite in the first case questioning relativity and in the second case reporting fusion events believed impossible. MOND is still published from time to time nowadays, I think. So where’s this guy’s papers in actual physics journals?
The saddest thing, ever, is the fact that they never made a sequel to Master and Commander: The Far Side of the World. An absolutely perfect movie.
We are in, a world of bullshit.
It’s actually the main reason why I support efforts towards extreme life extension – so we can get Paul Bettany and Russell Crowe back together in 50 odd years to finish the damned thing. Dunno what they’d do about Mr. Blakeney, though. CGI? That’s why we need a super-intelligence.
The first portion of this is a pretty good guide to New Media 101. Kudos.
I’m finally an Effective Altruist! I gave what I plan to be the first of several monthly donations in the following distribution:
42.6% to Givewell’s top charities,
40.9% to Animal Charity Evaluators’ top 6 + ACE itself, and
16.3% to the Machine Intelligence Research Institute.
It’s not a huge amount compared to what lots of others give, but for me it was just enough to “hurt” a little.
And I have to say, it felt good. When I was younger, I used to smoke a bunch of weed and then take a shower. Afterwards, I would get a refreshed feeling, and the sensation I have now is quite similar.
Late, I know, but will anybody be at MAGFEST in DC (well technically right outside DC) this weekend? I’m presenting Thursday and will be there all weekend. If you’ll be there give me a shout and we can have an impromptu SSC meetup. 🙂
From radical right-wing hate group, the Mises Institute come these charts which I feel should be required viewing everytime someone says something like “why can’t the US be more like Iceland”?
https://mises.org/blog/how-us-states-compare-foreign-countries-size-and-gdp
These maps are mostly driving home to me how lacking my Europa Universalis-based sense of geography is. Hungary is really only the size of Michigan?
I am surprised every time I look at Europe that the Holy Roman Empire no longer exists.
(A friend who plays CK2 insists that when he plays the HRE always breaks up, while for me it basically just sits there blobbing and w/ Elective Monarchy, an established Dynasty and low Crown Authority it is in no hurry to break up)
This one isn’t actually Europa Universalis’ fault. Hungary lost 70% of its territory after World War one.
Roses are red
Violets are blue
What’s in this thread
That’s up to you
And I don’t even write.
This is very long, but (honest question) is anyone willing to offer a justification for the capital gains tax, the corporate tax, and the progressive income tax
I’m not up for long answers tonight. If you’re going to have an income tax at all, you almost certainly need capital gains taxes and corporate income taxes to prevent people from gaming the system by hiding useful revenue streams in not-personal-income categories. If you have regressive taxes elsewhere in your economy, that’s bad and a progressive income tax can help balance it out.
The income tax and the (regressive) social security tax are so deeply embedded in the American political system that they are not going away, so deal with it.
If you’re developing a utopia from scratch, income taxes, sales taxes, and “value-added taxes” are equally disincentives to economic productivity; playing the shell game where you move around which part of the productive cycle you take out the money, doesn’t change that. Though the fact that people openly call things “value-added taxes” like it was a good thing, is very nearly proof that they don’t grok the principle that taxes are disincentives. Adding value to stuff, yeah, let’s disincentivize that above all else.
Better forms of taxation:
A – Pigovian taxes on actual negative externalities, if you aren’t going to forbid them entirely. Various forms of pollution are an obvious choice in an industrial economy.
B – Taxes tied to services. Highway construction and maintenance being funded by gasoline taxes is a good example of this. The United States Navy should be funded by import and export tariffs.
C – If that’s not enough, property taxes. Not that we specifically want to disincentivize property ownership, but relatively disincentivizing idle property over property being put to uses productive enough to cover the tax, is perhaps the best we can do if we need that much tax revenue.
It may not be likely to change any time soon, but it has the capacity to change if and when enough people get fed up with the current system.
Obviously, I endorse these. And I would prefer a government small enough only to be funded on these types of taxes, i.e. non-broad-based taxes. But this rather conflicts with what you said about eliminating the income tax being unrealistic.
No, you are misunderstanding this.
Yes, with a consumption tax you either consume now and pay the tax now, or invest and pay the tax later. But investment is not penalized relative to consumption. You don’t earn income, invest it, then pay capital gains tax on it, then have the company pay corporate tax, then pay the estate tax when you die and leave it for your children. That is Dan Mitchell’s point about “double-taxation”. See this chart again.
Relative to no taxes at all, it disincentivizes production. But relative to the current system, it’s much better.
A flat tax, a sales tax, a consumption tax, etc. all eliminate double-taxation. They are “consumption-base” taxes.
The property tax is much more distortionary than a broad-based consumption tax.
The property tax is much more distortionary than a broad-based consumption tax.
Depends on what type of property tax you are talking about. An LVT is as close to a non-distortinary tax as actually exists. And taxes on residential real estate and other non-movable property are pretty good. See, http://www.economist.com/news/finance-and-economics/21580130-governments-should-make-more-use-property-taxes-
levying-land for a good discussion of this.
The political unpopularity of property taxes comes from the idiotic way they are administered, not their economic effect. Property taxes are due in a yearly lump sum instead of monthly or withheld from payroll. Jurisdictions where property taxes get billed on shorter intervals tend to have more public support for the taxes. See, http://www.nber.org/papers/w18514.pdf
And the combined tax base that an LVT and a pigouvian system could provide is substantial and under some assumptions enough to fund a modern government without recourse to other taxes. See, http://www.masongaffney.org/publications/g1adequacy_of_land.cv.pdf
An LVT is certainly distortionary; it generally favors improvements, which is why supporters of high-density tend to like it. To see why it is distortionary, consider the impact on municipal services of a vacant 60×100 lot compared to a similar lot with a 100-unit apartment building on it.
This is very long, but (honest question) is anyone willing to offer a justification for the capital gains tax, the corporate tax, and the progressive income tax which is not based on a) malice and spite, b) the absurd view that the economy is zero-sum, and/or c) the absurd view that the economy grows by consuming more and not by producing more? I’ve been reading through some of Dan Mitchell’s blog posts on the flat tax, the Laffer curve, etc. (I don’t always agree with him, but he’s a thoughtful and yet telegenic “red tribe” libertarian guy), and though he’s just preaching to the choir in my case, I just don’t see how educated people can be so in favor of taxes on economic growth (meme courtesy of Mitchell).
In my view, the only broad-based national tax that should exist (if any) is a national retail sales tax. If that’s not politically possible, a flat income tax—with no capital gains tax—does pretty much the same thing because it does not double-tax or, like our system, triple- and quadruple-tax. (A VAT is theoretically similar but is awful because it is designed to hide the tax.) I don’t see how people who know what they’re talking about can be so against this.
First Observation: wealth that is productively invested provides only a general material benefit, not a special material benefit to its owners.
This is one of the most fundamental and most benevolent facts about a capitalist division-of-labor society. The rich, under capitalism, are not richer solely or primarily in respect of having plates piled higher and higher with caviar and wine racks filled with more and more expensive champagne. That is, though Elon Musk is many times richer than the average American, he does not consume more by the equivalent ratio. He consumes a much lower ratio of what he owns.
Insofar as Musk reinvests his wealth and refrains from consuming it, that wealth does not materially benefit Musk at all in any special capacity. It only materially benefits him insofar as he chooses to withdraw a portion of it to consume (and, of course, in the psychological comfort he gets from knowing that he could do so).
If Musk manages to create a $20,000 electric car which is superior to a $20,000 internal-combustion car, it does not only benefit the shareholders of Tesla Motors. It benefits everyone who is now able to buy a $20,000 electric car.
Second Observation: wealth consumed is a net negative for economic growth.
Apart from the amount they need to live, every piece of wealth people consume, i.e. spend for some purpose other than making more money in the future, is a net negative for economic growth. This doesn’t mean all consumption is bad: we’re not altruists; we don’t want to sacrifice all of our own happiness for future generations.
The great observation of Bastiat and his broken window fallacy: society does not get richer through consumption of wealth. Wealth used to replace a broken window could have been used to build a new or better building with an additional window.
Spendthrifts are not “good for the economy” because they “spread the wealth around”. If anything, the poor should admire the “miserly” rich who serve them selflessly by reinvesting their capital and despise the “playboy” rich who spend wealth that could have been invested, which is a net negative for growth.
Third Observation: corporations are not people.
People on the left love to say this, and it is certainly true. Corporations are not “greedy”, they are not sentient beings, and it does not make sense to be spiteful toward them.
Even if you hate the rich and want to cut off your nose to spite them, leave corporations out of it. All they do is serve as vehicles for the productive investment of capital. All of the income of a corporation which is not sent out as dividends goes toward production, not consumption. If you want to “soak the rich”, tax the dividends as the income of the rich, or better yet tax the luxuries they spend it on.
Fourth Observation: taxing behavior tends to discourage it.
As the Philosoraptor says, we tax cigarettes to discourage smoking. That’s because we don’t like smoking.
But we like economic growth, don’t we? We like it when people work and save and invest and contribute to society and its future.
If we must discourage something, let’s discourage laziness and consumption and short-term thinking. Taxing consumption will make people more future-oriented, more willing to save, more willing to wait for two marshmallows instead of leaping for one now. Why would we deliberately tax the two-marshmallow people?
But that’s what the capital gains tax, the corporate tax, and the progressive income tax all do! The first two purely tax productive investment, and the progressive income tax taxes working hard and saving, since the more people earn, the more they usually save.
People like to have debates over how much taxing thrift discourages thrift; the “elasticity of thrift”. Who the hell cares? Any “much” is too much!
They say society grows great when old men plant trees under which they will never sit. So why do we tax those metaphorical trees?
Therefore: we ought to eliminate all other broad-based taxes and tax consumption, which we can do in a highly visible way (to prevent the government from jacking it up surreptitiously) by placing a flat percentage tax on all retail sales.
A note on the Laffer curve: we never want to be near the top of the Laffer curve. If we’ve gone to the top of the Laffer curve (where a marginal tax increase begins to produce less revenue), we’ve already majorly screwed up. What we need to maximize is the first derivative of the Laffer curve, the growth-maximizing curve or the Rahn curve.
With apologies to David Friedman, assume for the sake of argument that anarchism can’t work. Therefore, at 0% taxes we have Mad Max, and at 100% taxes nobody works at all, society collapses, and we have Mad Max. Do we want the government to tax at the rate where it gets the most money right now? No. We want it to tax at the rate that maximizes the growth of the economy. That is, the rate sufficient to fund the government mechanisms necessary to the working of capitalism at its top rate and not a cent more. You can compare the two on this graph. (Not to endorse Mr. Yarvin, but Fnargl taxes at the Rahn curve or a bit ahead of it since he keeps some gold for himself.)
If you were harvesting apples, which way would you do it? (NB: the tree on the left says “income” because Mitchell supports a flat tax for political reasons, i.e. fear the government would just have a national sales tax in addition to what we have.)
This is not even to get into benefits like no individual has to fill out a federal tax form, ever! And the government doesn’t know how much money everyone makes or threaten to audit them.
***
TL;DR: we should abolish all other broad-based taxes and replace them with a national sales tax. There is, especially, no good reason why we should have capital gains taxes, corporate taxes, or progressive income taxes.
Objections and Replies:
The Unfairness Objection
“It isn’t fair to tax consumption, because the rich spend less of their income on consumption. That makes it ‘regressive’.”
For one thing, everything is “regressive” like this in an economy where there exists any inequality of wealth at all. As you become richer, you spend a smaller proportion of your income on everything that you buy. That’s the point of being rich. If you make $100,000 a year, a Mercedes is 50% of your income; if you make $500,000 a year, the same Mercedes is 10% of your income. This isn’t a complaint about the tax system; this is a pure objection to economic inequality of any kind.
You can supplement a national sales tax with a basic income that offsets the effect of the tax on poverty-line consumption, so that people aren’t impoverished by the tax. (This is the FairTax.)
This system is not unfair. The rich pay the same percentage sales tax as everyone else. If they choose to spend less of their income, they get taxed less, which is good. That’s kind of the point, actually: the less they spend, the more they invest and the more their wealth provides a general benefit.
Administering a progressive consumption tax is tremendously more difficult. It is also much more distortionary: we don’t want people structuring their spending in weird ways like having five guys buy five sections of a yacht to stay under some threshold. If you want redistribution, you can do it in two steps: a) increase the tax, b) increase the basic income. You can get as much welfarism as you like that way; you don’t have to screw up the economy more than necessary.
The Malice and Spite Objection
“I just hate the rich. I don’t want them to own all that productively invested wealth, even though it provides a general benefit.”
This plan benefits the rich. It benefits everyone else, too. I don’t want to hurt everyone else to spite the rich.
If you do, I don’t know what to say. I disagree.
The Zero-Sum Objection
“Everything in the economy is based on zero-sum things like status. When the rich get richer, it makes the poor worse off because they feel envious.”
This is just not true. (Scott Alexander has semi-seriously endorsed it at one point, though. Someone can find the source, or I’ll do it later.) Growth is important. By just having a little more growth, we can bring millions or billions more people out of poverty into better lives. We should not eat the seed corn.
If you’re especially worried about “conspicuous consumption” and status competitions by the rich like buying the biggest yacht, guess what? This tax penalizes that sort of thing.
The Pseudo-Keynesian Objection
“We’ve got to encourage consumption because we’ve got to BOOST DEMAND! PaRaDoX of ThRiFt!”
The paradox of thrift is supposed to be the phenomenon where everyone spends less and saves more during a depression, causing aggregate spending to fall. This is…good and what is supposed to happen in a depression, as people cut back on living beyond their means. But according to Keynesianism, some prices (mainly wages) are “sticky” and don’t fall along with spending (i.e. Keynes denies Say’s Law, that aggregate demand is determined by aggregate supply), leading to unemployment, less income, and therefore less total saving overall—since people save less when their incomes drop.
There are many objections to this. I’m not going to get into them because it doesn’t matter if it’s all true.
Because the paradox of thrift is a cyclical phenomenon! Even if we’re die-hard Keynesians, we don’t want to “boost demand” all the time! The point of Keynesianism is that government policy is counter-cyclical: you boost demand in the recession and lower it during the boom.
And guess what? You can boost demand in a recession just by lowering the national sales tax. No need for government spending increases! How about if it if we tried no taxes during the next recession? How do you pay for this? You borrow money and repay it by raising taxes in the boom time.
I don’t even endorse Keynesianism in any comprehensive way. The point is that Keynesianism does not refute it. Even Keynesianism does not endorse the suggestion that we get richer by consuming wealth instead of producing it.
The Plutocracy Objection
The more sophisticated version of the malice and spite objection: “We have to stop the rich from accumulating so much capital, even though it provides a general benefit, because the Koch brothers will use it to undermine democracy.”
I wrote out a long response to this one. Then I realized it was totally unnecessary.
If you’ve just got to soak the rich, just keep increasing the sales tax and the basic income. You don’t have to tax capital for this. And if you’ve got to break out the super-soaker, you can use the progressive consumption tax, despite it being a bad idea. It’s not as bad as what we have.
Moreover, I should add that if your goal is to “fight plutocracy” at all costs, a high progressive income tax is the last thing you should want. What does a progressive income tax do? It makes it harder to get rich but not harder to stay rich. If you’ve already got your “old money”, it doesn’t hurt you that much. What is stops you from doing is accumulating lots of “new money” in a short period of time. So if you want to “fight plutocracy”, go with the progressive consumption tax or even the Picketty wealth tax (but seriously, don’t do that one).
DISCLAIMER: I don’t know much about economics and everything I write below is very naive.
Well, taxes don’t have to be, if we decide we don’t want them to be.
It seems pretty reasonable to dislike economic inequality. You seem to be saying, “suck it up!” But why shouldn’t we use taxes to reduce it?
I want some level of wealth redistribution, and I think a lot of people agree (though a lot of people don’t), and I think a progressive income tax seems like a reasonable way to do it.
Sounds roughly equivalent to progressive income taxation?
Anyway, I’m not sure how the numbers come out, but I thought we couldn’t afford a very good basic income? With welfare targeted at the poorest people, we can afford to spend more per needy person.
—-
The taxes you are complaining about discourage investment. But the only point of investment is to allow more consumption in the future. What’s wrong with preferring more consumption now?
If consumption is bad and investment is good, shouldn’t we increase the consumption tax to finance a negative tax on investments?
I don’t think it’s reasonable at all to dislike economic inequality. That is the whole point about how the wealth of the rich benefits everyone, insofar as it is productively invested.
The only special benefit the rich get from their wealth is insofar as they consume it. So if you want a progressive tax because you just think they should arbitrarily pay a higher rate than everyone else, have a progressive consumption tax.
That way, Warren Buffet who lives a minimalistic lifestyle is not taxed any more than your average guy. But Mr. Spendthrift Playboy is taxed at a much higher rate.
For the reason I explained above, it is not the same at all. It taxes consumption, not capital. So if you only invest and consume no more than the average person, you get taxed the same amount as the average person.
Perhaps “basic income” is misleading. The FairTax people called it a “prebate”: like a tax rebate, except you don’t have to fill out any forms. It is a minimal amount of money. Basically, you calculate the amount in taxes that a household would spend on poverty-level consumption. Then you give them that much money. It’s like $200 a month.
I am not really even in favor of this, but it’s a concession to “fairness”.
There may be an argument to be made for that (it is a better idea than most government spending to “encourage growth”).
But I think the government interference in the economy should be as minimal as possible, and where it is targeted, it should be as harmless as possible. I think it is reasonable to want to cut consumption now in order to have a lot more consumption in the future. If we could increase the amount of growth by just 1-2%, that would be an enormous amount more growth.
Think about where China would be today if they had had growth at only 1% a year, rather than the rapid growth they have actually had.
Another important concern is that taxing consumption decreases the urge to waste money on government spending, precisely because people feel it now and not later. It’s the same reason people rack up too much credit-card debt: not because they rationally planned it out, but because it’s very tempting to overindulge today and suffer the consequences tomorrow.
The Unfairness Objection is, IMO, a strawman.
Don’t get me wrong: I think that a flat tax system would indeed be unfair, but not for the reasons you state.
As I see it, the Government is not some sort of an extraterrestrial oppressive entity; instead, it’s basically a giant institution that provides certain services. In order to provide these services, it needs money, just like any private corporation. If you want to use more services, generally you have to pay more money (to use a simple example, ten burgers at McDonald’s would cost you about 10x as much as one burger).
Giant corporations, as well as individual rich people who are “value creators”, use a lot more of the government’s services than poor people. A poor person might take advantage of a couple roads, health care services, educational services, etc. A megacorporation requires international highway networks, mass literacy, the RF spectrum, and a sizable percentage of the national justice system, just to name a few things (and I’m not even talking about negative externalities like pollution).
Rich entities use more services than poor ones, and not just proportionally. If VoxCo employs 100 people, it uses more than 100x the services used by one average person. Thus, VoxCo should pay a larger percentage of the tax.
This may seem unfair, but we don’t have any good alternatives. Sure, if we had some sort of an omniscient oracle AI, it could use microtransactions to charge everyone exactly the right amount for every little thing that they do; but we don’t have such an AI. A progressive taxation scheme is a viable compromise.
Nonsense.
For one, as I said, corporations aren’t people. So comparing a corporation to an individual person is a category error.
But the main point is that rich people do not at all consume more government services than poor people. For instance, take criminals or anyone who goes to public school instead of private school.
The costs of providing things like roads, RF spectrum (the government doesn’t even really provide this), and even corporate law are minimal compared to the bulk of government expenses. And mass literacy—and education in general—is not really a public good: each individual gets a lot of good out of it as well. You might as well argue that all productive activity is a public good, since it has net benefits.
To the extent that they do consume more services—such as in corporate welfare—I am against it.
“The Zero-Sum Objection”
As far as I can tell, wealth really only increases or stagnates. But money, purchasing power, is zero-sum.
It may be wrong to say that wealth benefits the rich as that wealth is in investments, but the argument is that not enough of that investment is money circulated to poor people so they can circulate it back to the rich.
Consumption tax seems interesting though. And may address that issue in the big picture. Also education. Poor people are really, really bad at managing money even when they do get it.
Or I may be missing something.
The argument is not that (as the caricature goes) some of the money “trickles down” to the poor.
The argument is that greater investment lowers the price of the goods the poor buy, so that they are better off despite having the same (or smaller) amount of money relative to the rich.
I can see both sides of this here. It’s definitely true that retail consumer goods have gotten much cheaper, but American markets for housing, education, and healthcare are so hopelessly jacked up for reasons unrelated to whether tax policy promotes supply-side or demand-side growth that the most important things that would improve the lives of the poor and their descendants in the long run haven’t gotten cheaper.
This isn’t really a failure of the theory of supply-side growth promotion, but it means making the kind of progress that would be good for and satisfy people requires a lot more than just more investment activity. There’s already been plenty of that, not just from the wealthy becoming even more wealthy and having more to invest, but central banks and pension funds, both public and private, have flooded debt markets in the last 30 years, making business capital really cheap. Of course, I don’t think the Bernie Sanders platform would do it, either, and would almost certainly do more harm than good. A real problem is the entire spectrum of what’s politically feasible is likely to not work.
@ Adam:
Sure, I agree. Lack of investment is not the only problem.
You say “taxing behavior tends to discourage it”, but why do you want to discourage consumption? Consumption is great, I love consumption. Also, I hate earning an income, so I’m pretty ok with taxing that? Consumption is where all the good stuff is, as you can see by the fact that we pay money for it, whereas work sucks which is why we have to be paid to do it.
“Aha,” you may say, “but where are you going to get the money to consume if you do not have an income?” And you’re right, and that’s why “taxing behavior tends to discourage it” is an oversimplified perspective. Tax incidence is like, really really hard to figure out. When you tax something, it’s not always clear what you’re discouraging, and it’s certainly not always the valorem the tax is ad.
That said, it’s true that if something avoids your sales tax, it will be encouraged. In countries that have a large sales tax, there is a lot of effort that goes into structuring transactions to minimize it; if you want to crank up your sales tax high enough to actually replace all other taxes and fund a generous National Income on top of it, you will find tax minimization to be a huge distortion.
I don’t want to discourage consumption any more than is ostensibly necessary to produce the income necessary to perform the growth-maximizing level of government services.
That is the point of the apply tree analogy. We have to harvest some apples (again, if the state is necessary). But is it better to pick them from the tree while leaving the branches alone, or to saw off some of the branches so that the tree now produces fewer apples?
A flat income tax with no capital gains tax is very similar to a consumption tax. Exactly the same if it is a Hall-Rabushka flat tax where you get to deduct all investment. The point is that you want a tax that says: a) consume and get taxed now, or b) save and get taxed the same amount later. You don’t want a tax that says: save and get taxed now then again and again and again. (That is the meaning of “double-taxation”). The latter penalizes capital and reduces growth.
This is a legitimate objection, but the current system is already very distortionary. The distortions can perhaps be decreased with a VAT, but the major disadvantage is that the tax is less visable.
Also, the distortions are not really bad: this was one of the arguments given by the Founding Fathers in favor of taxes on sales and imports: if they are too high, they won’t be enforceable. Therefore, the government is pressured to lower spending, which is what I want it to do. I want the government at a level where the taxes necessary to fund it would not be very distortionary.
Yes, ok, if you want the government to be small enough that it can be funded by a 5% sales tax that might work, but to want that is insane, and it certainly conflicts with your earlier suggestions that the plan could be made government-size-neutral and redistribution-neutral.
Beyond a certain level of redistribution, a national sales tax would not be enough, yes. But then you can simply have, as I said, a flat tax where you deduct all investment. It does the same thing (but is more costly/burdensome to enforce).
And, uh, I don’t agree that to want a government small enough to be funded by a 5% sales tax is “insane”.
Certainly, I think that one of the major advantages of a national sales tax is that beyond a certain point it is unenforceable. That’s why I advocate it as opposed to a flat tax. But either one is way better than a progressive income tax. Even a VAT is better.
Then, to answer your original question, my objection is that I want a functioning, modern government with substantial redistribution.
@ suntzuanime:
Then you should still favor some other form of consumption tax.
I don’t know why this isn’t getting through.
Yes, I think the tax rate should be low enough that we can use solely a national sales tax. But the larger point is that (to quote the TL;DR): “There is, especially, no good reason why we should have capital gains taxes, corporate taxes, or progressive income taxes.”
Also, I am genuinely unsure what people of your political persuasion think a “modern” government is supposed to do that costs so much money. Redistribution? Drug War? Foreign wars? All three?
Your argument is “If you want redistribution, you can do it in two steps: a) increase the tax, b) increase the basic income. You can get as much welfarism as you like that way.” This conflicts with your admission that there is a level at which the tax does not work. Have you done the math as to how high a sales tax we’d need to replace income tax as it stands and then fund a progressive-taxation-neutral National Income?
@ suntzuanime:
Okay, maybe I was imprecise. Moreover, I did clearly say that at some outrageous point, it wouldn’t work anymore, and you would have to switch to a progressive consumption tax.
I don’t know why you continue to nitpick this. I’ve already conceded that, yes, after a certain point it would be unenforceable. I view that as a feature, not a bug. But if you view it as a bug, there are other means.
I have not. However, back when it was semi-viable politically, the FairTax people did. The number they got was 30%. (23% if you calculate it inclusively, the way the income tax rate is calculated.) I’m not sure that’s really too high to be enforced at all, although there would certainly be major evasion.
Anyway, I would not personally support a tax that high. I would argue that it should not be revenue neutral but rather cut revenue significantly.
If you do think it is too high to be enforced, then you can support a flat tax that deducts investment instead.
No, the “FairTax” plan is NOT fucking progressive-taxation-neutral give me a FUCKING break.
@ suntzuanime:
Evidence?
Anyway, I couldn’t care less if it is revenue-neutral or not.
This whole issue is irrelevant to my basic point.
“Evidence?”??!?!? Come the fuck on. There’s no way you can think that a rebate of the sales tax up to the poverty level is sufficient to replicate the progressive structure of our current tax system. You’re just totally clueless.
@suntzuanime: I happen to agree with you, but just saying “you’re clueless” is not much of an argument, you know…
I properly laid out an argument, “you’re just totally clueless” was more by way of a closing salutation.
@ suntzuanime:
Sorry, I thought you meant revenue-neutral, as compared to progressive taxation.
You meant to say that it is not neutral with respect to regressivity. Well, of course not. That’s half the fucking point. What the hell made you even think I was arguing that it was?
Even when I misunderstood you, I clearly indicated that the point you didn’t provide evidence for was whether it is revenue-neutral.
If half the fucking point is to do away with progressive taxation, then, to answer your initial question, that’s my objection.
@ suntzuanime:
Jesus Christ, it’s like arguing with a brick wall.
It’s half the point of the FairTax.
Not necessarily of consumption taxes in general. Though personally, I do support eliminating progressive taxation in general, the point of my post was not primarily to argue for that.
I imagine that your proposed alternative to the “FairTax”, a “flat tax that deducts investment”, is going to run into the same issue.
You say in your TLDR “there is, especially, no good reason why we should have … progressive income taxes”, so I feel like I was licensed to attribute an opposition to progressive income taxes as part of your point.
@ suntzuanime:
It can be as progressive as you want.
Would I support that? No.
Are you one of those accelerationist http://pastebin.com/ksMBrmB3 who wants capitalism to devour humanity and become a God? Like, you talk about how the government should tax to maximize growth and “not a penny more”. I would like a penny more. I would like several pennies worth of nice things actually. The economy serves man, not man the economy.
No, I am not an “accelerationist” like Land. However, I do believe that we could use a lot more economic growth to, you know, eliminate poverty and many other problems.
As I see it, the only justifiable reason that we have a government is that it is necessary to provide some services, to keep the economy and society from collapsing. For example, national defense.
I want the government to collect the optimal amount of money to perform its necessary functions, but not a penny more. That is the growth-maximizing level of taxation. Any less, and the government starts to become dysfunctional, unable to keep the peace, etc. And more, and the government starts to hurt growth more than it helps.
(It may be that the growth-maximizing amount is zero. In that case, David Friedman is right and we have anarcho-capitalism.)
Exactly. So all the other pennies I want to keep out of the government’s hands and leave them in the hands of the market.
I don’t think you’d find anyone who would disagree with this statement; but I think you will find a lot of people who disagree with your definition of “necessary functions”. For example, I personally think that the following functions — just to name a few — are all quite necessary: investments in basic scientific research (as opposed to engineering); public health (including but not limited to vaccinations); infrastructure maintenance (roads, bridges, power grids); law enforcement (police, FBI, gun control); environmental enforcement (FDA, EPA); basic education (public schools, libraries, public colleges). But I have a feeling that you might disagree…
I certainly do disagree with many of those.
But it doesn’t matter. Even if you think the growth-maximizing tax rate is 70%, you should still support taxing consumption spending, not investment.
See my comment (far) above, but basically, I believe that if you engage in investment, you are implicitly (or sometimes, even explicitly) taking advantage of several government services that non-investors don’t use. Since you are using these services, you should pay for them. No free lunch, as they say…
@ Bugmaster:
What services?
The SEC? The cost of actually making the regulations and enforcing them is minimal. The cost to the economy of such regulations is in wasted time and expense, imposed by the government.
Right, so even if you’re not actually building any factories or hiring any engineers, etc., but merely investing your finances, then you still use some additional services:
* Financial enforcement. Just like the regular police force keeps track of people who break into house and steal other people’s jewelry, someone needs to keep track of people like you to make sure they aren’t defrauding anyone. I understand that you, personally, are a 100% law-abiding citizen, but… well..
* Contract enforcement. Similar to the above, but rather than protecting other people from you, this protects you from them — ensuring that they actually deliver whatever it is they promised you in exchange for your investment.
* Laws. Someone has to pay the salaries of all those politicians who are coming up with non-violent ways for you to say, “I invested all this money and I all I got was a lousy T-shirt, I want my money back”.
* Education. You indirectly benefit from the existence of a pool of people who are educated in some of the financial skills that you require in order to perform all of those transactions. Some of them went to public schools and public colleges, and since their skills are useless to everyone but people like you, well…
These are just off the top of my head, I’m sure there are more…
@ Bugmaster:
Financial enforcement: minimal cost.
Contract enforcement: minimal cost.
Creating laws: minimal cost.
Education: private good.
What percentage of government revenue goes toward the first three uses? What percentage of tax revenue do the rich pay?
Firstly, “minimal cost” is not the same thing as “no cost”. All these minimal costs add up. Secondly, why do you say that education is a “private good” ?
Secondly, I wasn’t talking about rich people in general, but about investors specifically. If you and I both have the same amount of money; but you invest yours whereas I do not; then you should pay some amount of tax on each investment transaction, due to the reasons I stated. If you are generally much richer than me, then chances are very good that you do a lot of other stuff that would cause you to pay more taxes. As I said, itemizing all of that is a very difficult task (for us non-Singularity humans, that is); and thus a progressive tax is a reasonable approximation.
If I “indirectly benefit” from other people being educated, I am also “indirectly harmed” by the fact that other people need to pay taxes to provide free educations, and paying those taxes makes them a bit poorer and therefore marginally less likely to be useful to me.
You could try to argue that the net result is a benefit, but when you compare the total benefit to the total harm, you get the same amount of benefit and harm that you’d get if everyone paid for their own education and imposed no obligations whatsoever on others. Since the current scenario is a redistributed version of that scenario, you can’t end up with everyone having obligations in the current scenario.
Also, if other people’s education benefits you, by the same reasoning your education benefits other people. The tiny benefits to a large number of people add to the same thing as the tiny percentages of the benefit provided by each other person to you, so it balances out even just considering the benefit and not the harm.
I think most people who favour government spending money on radio and television broadcasting, support for opera and theatre, statues and monuments, public fireworks displays, and the like believe those to be nice things to have, but not necessary government functions.
@ Bugmaster:
Yes, the costs add up, but they don’t add up to very much. It costs very little, relatively speaking, to pay all the Congressmen and Senators, even with their staff, and to fund a room full of bureaucrats making regulations. And the costs of things like the SEC and even the court system are largely recouped by user fees.
I don’t have the exact numbers of how much these things cost, but it’s a small fraction of the budget. The “cost” of regulation is not the cost of paying the guys to write them, but the cost everyone else has to pay in complying with them.
On education: what Jiro said. Just because the government pays for it, doesn’t mean it’s actually a public good.
No, there’s no reason you should pay any taxes on that money until you actually consume it. You pay the same rate either way. But taxing investment and consumption penalizes investment relative to consumption.
The rich already pay more: even a flat tax covers a percentage of income. It’s not a flat sum.
Now, I’m not convinced that’s even really “fair”. I do not actually think the average rich person uses more government services than the average poor person; I think it’s the other way around.
But even under a flat tax, if you make ten times as much, you pay ten times the amount in tax. That seems more than “fair” to me.
Now, a consumption tax is “regressive” with respect to income, but flat with respect to consumption. And since the only special benefit the rich get from their wealth is insofar as they consume it, if they are taxed the same percentage on their consumption, this seems perfectly “fair”. Taxing their investment as well as their consumption means that the investment is penalized and taxed twice.
Anyway, progressive taxation has absolutely nothing to do with taxing rich people for their “fair share”. It exists because a) they can get away with it, as the rich are a minority, b) the rich have a lot of money, so they’re a good target for governments seeking revenue, and c) it appeals to class resentment.
It’s the same reason people rob banks: “that’s where the money is”.
And 50 years ago, you may have had a point. Now, you do not:
http://www.pewsocialtrends.org/2012/08/22/the-lost-decade-of-the-middle-class/
In another thread someone made reference to treating society as a game of SimCity; a better pejorative, I think, would be treating people as numbers in a spreadsheet. Total wealth increases, but it is increasingly the case that it is exclusively captured by the managerial class (most would expect “those with the capital,” but that’s not entirely correct.
Those clamoring for a growing economy – which, to be perfectly honest, sound more and more like evangelism than sound theorizing – only care that GDP goes up; they don’t realize that median wealth isn’t increasing, and I’m not sure they can. See the earlier comment mocking voters for not realizing wages are going up in sync with inflation, which isn’t true at all, unless you average out income across all individuals, but that’s the same incorrect reasoning behind the “wage gap” that takes claims of average wages and insists this applies in each individual case.
This is not a winning deal for Americans not connected enough to capitalize on economic growth; in other words, the vast majority. Point-of-fact, it’s going to wreck them. I know you, and libertarians of this ilk, like to clamor that you feel no obligation to them; my question to you all is: what, exactly, do you think is going to happen when they all finally figure out the game is rigged, and you’re going to fuck them over for a quick buck?
When I talk about “increasing economic growth”, I do not mean “GDP going up”. There are many problems with just going by GDP. I mean falling real prices for the goods and services that people buy.
There are many hypotheses about why this might not be occurring. For instance:
a) Prices are falling, but this is being obscured by quality improvements, which are hard to measure.
b) Overall, the world economy is growing (and quite rapidly; the decline in global poverty since the 1970s is enormous), but investment in the American domestic economy is relatively hampered by growing levels of government regulation and restriction, making investment elsewhere more appealing. Solution: ease these restrictions and make America more competitive.
c) Actually, real income is rising, but inflation is being overstated, making this rise appear smaller.
d) This one is probably most important: as the government hampers the productivity of capital, you have to invest more to keep making the same amount. As a result, business and “Wall Street” take up a greater share of the economy just to keep turning out the same products as before. So we have GDP growth with no real growth. It’s the same as how the Soviet Union had half the GDP of America but far lower living standards: sure they had half the GDP, but most of it was tied up in useless, barely-productive investments (despite spending much more than us on “heavy industry” as compared to consumer goods).
Anyway, the strong version of the “Great Stagnation”—that real median income hasn’t risen at all since the 70s—is false. The weak version—that it hasn’t risen “enough”—is true, as I see. And the reason is that we haven’t had enough growth.
What exactly do you want to do? Take all the money from the rich and redistribute it? Not only is that merely a one-time boost (and not even a particularly large one), it comes at the cost of destroying our future productivity. The vast majority of the wealth of the rich is held in the form of productive capital, not consumption goods.
Taking the capital and redistributing it so that it can be consumed does not help anyone. It is just eating the seed corn of the economy. If a farmer eats his seed corn, he’ll have a lot in the short run, but he’ll have nothing to plant with.
Taking the consumption goods away from the rich would not be as harmful—except that these consumption goods are the incentive they have to become and stay wealthy, i.e. to produce the goods that are demanded by the consumers on the market.
I think living standards ought to be rising much more. And I think the way to do that is to eliminate barriers to investment and production. That means, first of all, ceasing to double-tax investment. It also means abolishing regulations, restrictive zoning laws, and occupational licenses that hamper the economy, as well as easing immigration restrictions.
A huge amount of the stagnation in real living standards comes from the fact that two sectors—health and education—which are effectively taken over by the government, have grown in cost without any proportion or limit. That’s why I support a free market in healthcare and a free market in education, abolishing the extremely pervasive government regulations and subsidies that are responsible for running up the cost.
I don’t think the answer is to “soak the rich”. I think that would do the opposite of helping. The productive investments on the part of the rich are the major factor keeping growth from being lower than it now is.
If “the people” should get so angry at things that they decide to hang the rich from the lampposts, that would be an enormous tragedy. Not only in the human suffering, but because the rich were actually the ones on their side. The people they ought to hang from the lampposts are politicians and bureaucrats hampering the economy with restrictive laws.
Huh, so uttering that very word is now a ban-worthy offence ? That’s… disheartening.
It’s not bannable. It just gets your post removed by the spam filter.
I don’t mind the bans, but I hate the damn spam filter.
On the one hand, consumption tax is probably the most efficient in terms of minimizing deadweight losses. On the other hand, to fund the entire government out of them they’d have to be absolutely huge. We’re talking in excess of 50%. The impact it would have on poor people would be immense, we’re talking serious civil unrest. Not even remotely plausible in reality.
That said, there are simple improvements that can be made without major upsets to the current income distribution. Removing corporate taxation would be great, there’s an absurd number of distortionary measures that are based on it.
If you think the necessary tax burden is that high, then you can support a progressive consumption tax.
It’s not what I support because I don’t want government revenue to be that high. But the implementation is simple:
a) Create an income tax, with tax brackets as normal.
b) Set them to whatever you want.
c) Allow people to deduct all investment from their income tax.
Sales tax has well-known enforcement issues. VAT has many fewer problems with this. So it seems like VAT+UBI (or other aggressive social spending) + a few Pigovian taxes would be a good approach from my generally left POV. Tax visibility concerns are also not as big a deal to a liberal type. I’d also want to insert additional progressivity into the system one way or another (UBI doesn’t cut it), mainly because of the diminishing marginal utility of money, but also because of the status-competition effect and the plutocracy effect which you attempted to refute, not very convincingly in my mind. (May post on that later.)
I suspect if you and I were party leaders in Congress we could work out a deal that we both think is a huge improvement on the current system, after which we would promptly be booted from office in disgrace and our plan buried because it would be incredibly unpopular with seniors.
Judging from the rest of the thread you probably realize this by now, but you would have been much better off if you’d cleanly separated out your case against tax progressivity from your case for taxing consumption.
I genuinely don’t see how a highly progressive consumption tax couldn’t deal with the “status-competition effect” or the “plutocracy effect”. I mean, I don’t see those as genuine problems, but I think they could be dealt with.
Maybe so, but I did want to argue both because the actual plan that I do support is a national sales tax. You’re absolutely right that it has distracted from the main point, though.
I don’t mind the actual arguments for a progressive tax. I just mind the “Fuck you! I want a progressive fucking tax, not this bullshit.”
What I wrote was that I’d want to inject additional progressivity into the system. I’d consider doing it through a progressive consumption tax, but as you point out that creates more complexity; I’m not sure there’s not a better way and I don’t feel like thinking about it at the moment.
@Vox:
1) I’m not clear if you are arguing for some optimal tax strategy if it could be imposed from on high or not. If not, then one clear answer is that new policy has to take existing policy into account. Lots of decisions have been made based on existing policy. An economy the size of ours will not turn on a dime without things breaking.
2) It’s all well and good to decide that “investment” shouldn’t be taxed, but it ignores that people have choices in how they structure compensation. If you give people a place to hide their money from taxation, they will do everything possible to make sure their money gets hidden.
3) Investment is a bet on future consumption. Your entire analysis seems to ignore this. In other words, people who invested in the past damn sure want their to be consumption happening now.
4) No mention of marginal utility? I wouldn’t have expected that from you.
1) Yes, I’m arguing for what we should move toward, not what should be put in tomorrow.
2) That is the precise virtue of a simple, well-defined consumption tax or flat tax. There are no deductions, no special ways to hide your taxable income.
3) Not necessarily all of it. Quite often, they want to leave a substantial amount for their children. But sure, you can argue that it would be unfair to have a high consumption tax on retired people, after they’ve already paid income taxes and capital gains taxes. That can be handled by staging it in, or by having a substantial tax rebate for them.
4) I don’t think it’s really relevant, unlike some people. The vast majority of the wealth of the rich goes into investment, so that has nothing to do with diminishing marginal utility. And the very fact of diminishing marginal utility is what encourages them to spend less of a percentage of income on consumption. I don’t see why they should be further discouraged with a high marginal rate on top of that.
@Vox:
3) You completely missed my point. If I invest, why does the invested money generate a rate of return? Because it either:
a) Became debt for someone else, which they used to consume
b) Bought a resource to be consumed later which I hope will become more valuable in the interim
c) Was used to create a product, turning raw goods into a finished product of some sort, and that product was consumed.
In other words, investment depends on consumption. Trying to say investment is “good” and consumption is “bad” ignores the fact that investment and consumption are inextricably linked.
4) If we have to fund government services (which benefit society as a whole) from somewhere, leaning more on the dollars with the least marginal value to the individual makes sense. You are leaning heavily on “consumption bad, investment good” to make your argument here, which really just goes back to point 3.
3) Obviously, the only purpose of investment is to have consumption in the future. The point is that, if we invest now, we can have more consumption in the future than we have if we don’t invest and consume now.
Investment creates more consumption in the future. That’s why it’s good. If all we cared about were the most indefinite future, then we only consume the bare minimum and invest everything else continually. But of course I don’t think we should do that.
And really, the proposal I have doesn’t favor investment over consumption. It just ceases to disfavor it by eliminating double-taxation. Favoring it would mean a negative tax on investment; there might be some argument for that, but it’s not what I support.
4) Perhaps, but if they earned those dollars it doesn’t seem fair to me that they ought to pay a higher rate on them. And moreover, you are decreasing the incentive to invest and accumulate wealth, since, as you say, the only purpose of investment is to consume. Why work twice as hard to get rich if your consumption is going to be taxed at twice the rate?
@Vox:
I think you are trying to have your cake and eat it too. If everyone has the idea that they should invest everything they have past subsistence then the rate of return on investment will be very, very low. Investment depends on consumption, consumption depends on investment. It’s a virtuous cycle.
Arguably, the largest incentive to invest is the existence of a market for your goods. No market, no investment.
And investment (capital gains) is already taxed at a far lower rate than income. You keep conflating accumulated wealth (which isn’t taxed until death and then with a huge write-off), capital gains, and income, as if they are all the same thing.
And you are ignoring the fact that we already have what amounts to a fairly flat total tax rate. Yes, the federal income tax is progressive, but the total taxes paid at the federal, state, and local level tend to be far flatter in actuality. The federal income tax is not the only tax out there.
The super majority of federal dollars go to Social Security (paid for by a flat tax that phases out), Medicare/Medicaid (paid for by a flat tax), the military, and debt service. I’d argue that the military and debt service are of greater benefit to the wealthy, but there may be valid counter-arguments.
As to the “why should people work twice as hard to be wealthy” argument, that really just boils down to a Laffer curve argument, and our taxation levels aren’t that high.
All of that said, plenty of progressive governments fund themselves through VAT taxes. I really don’t have an objection to them in principal, but, for example, all of those people who invested in ROTH IRAs would be pissed.
“Arguably, the largest incentive to invest is the existence of a market for your goods. No market, no investment.”
Investment in building factories is just as much a market for goods as consumption would be–the factories need steel and concrete and furniture and machine tools and … .
“And investment (capital gains) is already taxed at a far lower rate than income.”
True when the inflation rate is low. But the tax is on nominal capital gains, not real capital gains, so when there is significant inflation much of the tax on gains that don’t really exist.
@David Friedman:
“Investment in building factories”
That is merely kicking the can down the road. The factory you want to sell to is not buying if they don’t have consumers. They aren’t increasing their demand if there aren’t more consumers.
At the tail end of every supply chain is a consumer.
I find that extremely surprising coming from you David. What am I missing here?
@HeelBearCub
Presumably the consumers are the people who made and sold you the steel and chairs and machine tools.
@ HeelBearCub:
If we were all robots who just wanted economic growth for consumption in the indefinite future, we would have factories producing machine tools to make more factories to make more machine tools, and so on without any end to it. That is what the Soviet Union was theoretically doing with “building heavy industry”.
And you can obviously see how this would create the highest future prosperity. The problem with the Soviets is that their economy was so inefficient and the returns on investment so low, that they had to devote 50% of their spending toward investment just to keep the same amount of factories that they already had from falling apart.
Investment “depends on” consumption in the sense that consumption is the motive behind investment. If you didn’t know that you or your children would be able to consume those investments in the future, you wouldn’t make them. Unless you were a robot or a perfect altruist.
But investment does not “depend on” consumption in the sense of providing the means. Investment could go on perfectly well without any ultimate consumption. The means of investment are natural resources, labor, and capital goods—which are the same as the means of consumption. The question is how much consumption you want, versus how much investment. It can be 100% in either direction.
Of course, if we had 100% consumption, the quantity of consumption would quickly fall to a terribly low rate, since that which was consumed would not be replaced.
If we had 100%, investment, our descendants would be very rich in the future, but it wouldn’t do us much good now.
Ultimately, the balance is determined by people’s time preference, which is the same thing that determines the rate of profit.
I don’t see how the military provides special benefit to the rich at all. They are the ones most able simply to move if the country gets invaded. If you mean military cronyism, well maybe, but I’m simply against that.
Debt service doesn’t make sense at all. Borrowing money is not a source of net income for the government. What they borrow, they have to pay back. At best, it’s robbing Peter to pay Paul.
I don’t think we’re past the peak of the Laffer curve. But that’s irrelevant because we should never be anywhere near there.
I do think we are significantly past the growth-maximizing point on the Laffer curve, i.e. the peak of the first derivative of the Laffer curve, i.e. the Rahn curve.
It’s probably worth recusing myself in any discussion of capital gains tax, but we should note it’s only lower than labor income if it’s long-term capital gains.
Also not gonna say it’s super common, but at least some forms of investment actually create new consumption markets.
Tax is a means of redistributing power – where people are buying necessities, sales tax reduces their power as consumers, but it does nothing to redistribute power at the top of society.
We tax the rich, not because we want to reduce their consumption, but because we wish to redistribute the power to steer society.
Little naive me thought the reason we taxed the rich was to get money to fund the government.
Snark aside, government is a means of redistributing power. Using tax to promote virtue and prevent vice is just a sneaky/inefficient/diplomatic/you make the call method of governing. Or tool of governance, if you prefer.
Also, a government which can create money does not need to tax anyone to fund its operations. In such a case, some argue, taxation is more of a means to control how much of the economy the government uses than to generate revenue.
A government which tried to fund itself solely on the basis of printing money would quickly find its money became worthless.
And if you force people to use U.S. dollars while inflating them, you are essentially just imposing the Picketty wealth tax: transferring purchasing power from every dollar holder to the government.
Anyway, of course I’m not denying that the tax code is used for social manipulation. But not only do I think it shouldn’t be the purpose, I genuinely don’t think it’s even the primary purpose. The primary purpose is to get revenue for what people perceive to be necessary government functions. Hell, otherwise we’d probably only have taxes on the rich and abolish all the other ones because they’d be politically unpopular.
There is a nasty trend abroad of conflating the value of things with money. If I own a million dollars of stocks, I don’t have a million dollars. I think it’s fairly uncontroversial that the money itself is a form of information technology organized by a private-public hybrid of banks (the deposits of which constitute the main stock and supply of money) and the government (whose debt and tax revenues underpin the banking system, and whose tax demands/granting of banking licenses/legal tender laws, ensure the value of the money the banks create).
So it really would be more accurate to say that we tax in order for the rich to be able to have money.
Anyway, let’s forget about that, and say that I am the king and I have decided that I want to build a giant statue of myself. The economy is running at full capacity, there are no unemployed people, we use a rare form of pebble as our money. So, what I do is tax all the poor people, get the pebbles, they can buy one less bun each day, some bun makers become unemployed and then I give them the pebbles and tell them to make my statue. Cool.
Now let’s say that I’m the king, but that there are a load of nobles in my kingdom, who own all the land and use the pebbles they get paid in rent to pay people to agitate against me. If I use the same tax strategy as above, is there any way for me to stop them from doing this? Preventing the poor from eating buns isn’t going to stop the rich from agitating, unless I tax the poor, give the money to the rich in order to get them on side with my regime and… oh wow… that *is* how it works, isn’t it….?
Obviously, money is not the same as wealth.
That does not mean that money is a conspiracy invented by the
Jewsrich to get one over everybody else.If the government got out of the currency business altogether, do you think we just wouldn’t have money? Well, you would be wrong.
Yes, taxes are a way for the government to force people to pay for things they don’t want to pay for.
Uh, do you realize that all you are saying here is “suppose the king doesn’t have the power to tax the nobles”? Then he would have to co-opt them.
If the king had the power to tax the rich, he would take the pebbles from the rich, which they collect in rent, and redistribute them to the poor, who would ally with him so that they could buy more buns.
Any analogy you are trying to draw between either of these situations and our current one is very tenuous and misleading.
@vox
“That does not mean that money is a conspiracy invented by the rich to get one over everybody else”
The basic structure of our current monetary system was invented by the (mercantile) rich when they became the government. Not so much a conspiracy, more a reflection of the realities of power. (The broader based elite was certainly more successful in mobilizing resources, especially for war, than the previous system.)
“If the government got out of the currency business altogether, do you think we just wouldn’t have money?”
The type of money we have is determined by the kind of society we live in – there are many ways in which these things could be organized, but if we are talking about taxation *now* we should be mainly concerned with the *current* monetary/social system.
“Uh, do you realize that all you are saying here is “suppose the king doesn’t have the power to tax the nobles”? Then he would have to co-opt them.”
I was suggesting that the reason why we might want to tax profits/ the rich is that we might not like what the rich are doing with society. Reducing the consumption of the poor certainly won’t achieve change in that direction.
If the purpose of government policy is to stop the poor from buying certain things and giving them other things that we think might be better for them (and that is not an idea I necessarily disagree with) then by all means stop them buying their buns.
If the purpose is to stop the rich driving society off a cliff, then stopping poor people buying buns isn’t going to work.
@ Mark:
That sounds like the “malice and spite objection” to me. What exactly are the rich doing to drive us off a cliff?
Since I’m the one arguing for the maintenance of the status-quo, I’m not sure that is a question I can answer.
Edit: I’ll answer anyway.
It’s not so much what the rich are likely to do, (as in the rich will waste all their money on statues) it’s more to do with the system itself. That’s vague because I actually think the current system is kicking along fairly well – and I don’t see any reason to believe that trying to concentrate more power in the hands of the wealthy is likely to make things better.
Aha, I see the problem.
My first thought was to point out that for wealth to be equivalent to power, the wealthy must spend that wealth, at which point it would be taxed.
But then I realized that for this to be true, bribes, campaign contributions, and other payments to government officials would have to count as consumption.
Suddenly I understand why Vox’s plan will never fly, no matter how much I like it in principle.
I think power is a big problem about redistribution. People who like redistribution seem to like it because they don’t want rich people to have a lot of power, especially power to influence the government.
They leave out that government is the dominant power in a region. That’s what makes it a government. Giving it more money means giving it more power. That power can be used to do things which are probably useful, like a highway system, or doing some enforcement against crime, or giving money to prevent destitution, but any little mistake (like about nutrition) gets wildly amplified. Give the government more money, and how do you know it won’t just imprison more people? Or have badly structured charity which keeps people poor?
I’ve talked with pro-redistribution people, and they seem utterly blind to this issue. They have a strong belief that rich people=trouble and money for the government=benevolence.
If they supported actual redistribution (more money taken from rich people is assigned to benevolent projects and/or a basic income) I wouldn’t be so frustrated with them.
Well, I suppose the libertarian perspective is like this: the government doesn’t serve the “class interest” of anybody except perhaps professional politicians, and the “false consciousness” is in thinking that most of the functions it performs are necessary.
The leftist perspective is: the government serves the “class interest” of the rich, and the “false consciousness” is on the part of the poor and middle-class who don’t want to turn it around to serve to serve their “class interest”.
One side thinks the interests of rich and poor are naturally in harmony, while the other side thinks they are naturally opposed.
One good argument I’ve heard against a consumption tax is that either it introduces distortions in favor of importation or it’s incompatible with free trade. If there are no tariffs, then I can buy goods abroad and dodge the sales tax, and if there are tariffs, they bring their own distortions.
The least distortionary tax is the poll tax, because there’s nothing you can do to change the amount you pay except move out of the country, but it’s so regressive that even conservatives won’t go for it. But it would be interesting to combine it with a basic income.
I am not extremely against the poll tax. I would be against it if it were anywhere near high enough to pay for the current level of spending. Also, it’s unconstitutional.
As for tariffs, if imports are taxed the same as domestic goods, there is no distortion. You probably wouldn’t be able to eliminate the incentive to drive to Canada and buy a pack of sodas, but that’s pretty minor.
Following the text of the Constitution, it’s only unconstitutional to make payment of poll taxes a prerequisite for voting in federal elections. The Supreme Court extended that to state elections. But that doesn’t seem to ban them in general.
Two points.
One: the argument for soaking the rich doesn’t need to involve fears of democracy being undermined, concerns about status, or malice. All you need is declining marginal utility of income. If you can have the government tax away half the income of the richest half of the nation, squander 80% of it, and give the rest to the poorest half, you might still increase the national utile count.
Two: if you can work but have no property, what you want is for the property owners to have an insatiable desire for stuff that needs work to produce. What you definitely don’t want is for them to decide that they’ve got pretty much everything they want and are happy to keep their property to themselves without having it put to any more productive use. Mindless consumption is a bad thing in a poor laborer, a good thing (from the laborer’s perspective) in a rich capitalist.
Except that the vast majority of the wealth of the rich consists in productive investments that provide a general benefit to everyone.
No, this is completely wrong.
Mindless consumption by the rich is a terrible thing from the laborer’s point of view. When the rich guy buys a Ferrari, the net result is that the economy is down a Ferrari. It’s the broken window fallacy. Buying Ferraris you don’t need is no different from just breaking windows.
When you talk about the rich “not putting their property to productive use”, I’m not even sure what you mean. You mean they buy factories and just don’t run them? That doesn’t happen. If it did, it would be a type of “mindless consumption”. There is no difference, economically, between buying a factory to burn it down versus buying all the produce of that factory for the purpose of consuming it.
The way the rich put their property to use is by saving and investing their wealth.
Re: argument 1: yes. But so what? Think through what would happen if you actually did soak the rich: steal all their wealth, which as you say is in the form of shares and so on rather than consumables, and hand it all out to the poor. As far as I can tell, those shares end up getting sold to roughly the richest people you didn’t rob, and the money the poor get in return is spent by them instead of by the people who bought the shares, who would have spent it otherwise. End result: more equality, possibly higher national utile count. I am not very confident that this is correct, and obviously it is not a thorough analysis, so please tell me where you disagree, if you do disagree.
Re: argument 2: I agree that breaking windows means less useful work gets done. But if you’re running a window repair business, a spate of smashed windows is certainly good from your perspective, even if not from everyone else’s. For someone who has no productive resources but does have the ability to turn stuff into other stuff, the owners of the stuff deciding they like their stuff how it is is something to be concerned about.
I do disagree.
What happens in this scenario is exactly the same as if there were a sudden, massive increase in time preference. When the poor divest themselves of the stock, they sell them in order to spend more on consumption right now. The price of consumption goods rises, while the price of capital goods falls. Resources are allocated away from investment for the future and toward present consumption.
You’re right that eventually, things would even out and there would be a new class of rich people. But in the meantime, the percentage of the economy that is directed toward investment would plummet. The result is that standards of living would increase greatly—for a very short time—until the goods being consumed stopped being replaced.
As I alluded to in another post, we can imagine all the natural resources, labor, and capital goods in the economy being allocated anywhere from 100% consumption to 100% investment.
The usual analogy for 100% consumption is “eating the seed corn”. If the farmer eats the seeds which he is supposed to plant for the future, he will have more to eat temporarily, but then he will starve.
100% investment would be a society of robots building factories just to make more factories.
It is necessary that the percentage directed toward investment is at least at the replacement rate. The seed analogy is helpful here. If each plant produces only two seeds, then in order to have the same amount of plants next year, you can only eat half the seeds. If you actually want to have more plants next year, you have to eat less than half.
Now suppose we increase the yield, so that each plant produces three seeds. Then you can plant one seed and eat two. Or plant two and eat one, so that you’ll have double the number of plants next year without eating less. Time preference is the difference between (on one extreme) eating none and planting all three, and (on the other) eating all three and planting none.
Anyway, if you transferred all stocks and bank accounts to everyone equally, the percentage of investment would drop well below the replacement rate. If consumption is above the replacement rate, the economy shrinks and next year you have less to consume. If this keeps going, eventually you don’t have any.
Sure, it’s good for the windowmaker’s perspective.
But the whole fallacy is thinking that, because it’s good from his perspective, it’s a net good for the economy.
If windows became indestructible and we never needed new ones, there would be a temporary dislocation as the windowmakers found other jobs. But they would do something else; their skills and the resources they use would be put to more productive use.
If the rich decided to halve the amount they spend on consumption and double the amount they invest, the Ferrari company might regret that, and so would its workers. But this is completely balanced out by the gains to the steel producers and construction companies who build the new factories or office buildings. In fact, more than balanced out, since the factories or office buildings are involved in the production of more wealth, while a Ferrari does not produce more wealth.
You need a *little* bit more than declining marginal utility: you also need the auxiliary assumption that different people’s marginal utility curves are similar (in level, not just in shape). Without that, you can’t get from “A’s ten-millionth dollar is worth less to him than his ten-thousandth” to “B’s ten-millionth dollar is worth less to him than A’s ten-thousandth dollar is to A.” The auxiliary assumption seems like an open question to me, seeing that some Bs make more strenuous efforts to get that ten-millionth dollar than some As do to get their ten-thousandth, and we have a whole pejorative vocabulary for people who act like their marginal-utility curves for money are too much higher than the norm.
To expand on that …
If you assume that everyone has the same utility function for income but different abilities to get income, then declining marginal utility of income implies that the richer you are, the lower your marginal utility of income.
If you assume that everyone has the same ability to get income by trading leisure for it and the same (declining marginal) utility function for leisure but different utility functions for income, then the richer you are, the higher your marginal utility of income.
“If you can have the government tax away half the income of the richest half of the nation, squander 80% of it, and give the rest to the poorest half, you might still increase the national utile count.”
This presumes that the government will use the bidding power better than the rich. What do the rich do with the money they don’t spend on vacation homes and yachts? They save and invest it–in stocks, bonds, currencies, etc. In other words, it goes to the companies and institutions which fund managers and the like deem likely to be profitable. When fund managers guess right they might end up supporting the next Apple or Chipotle–that is, supporting companies which ultimately employ thousands.
As seen with Solyndra and the like, the government is not a very good investor. As Vox says, the least socially useful thing the rich can do with their money is buy yachts and the like. Of course, the government doesn’t “invest” most of its tax revenue, though they like to call it that; rather, they spend it on social security, medicare, and the military. These things may be more utile-producing (well, the military is questionable) than the yachts, but they don’t do anything to grow the economy’s productive capacity.
The thing is, people think of the wealth of the wealthy as being like this big pit of magic productive forces that can be put to work making things better if only the rich can be forced to stop sitting on it. That isn’t how it works. Money is just bidding power. The amount of stuff and labor power remains the same; the question is who has the bidding power, i. e. who is directing how the land, labor, and capital get arranged. I think entrepreneurs are far better at directing these to the uses which serve the ultimate goal of consumer satisfaction, so I want the government in charge of as little bidding power as possible.
The notion that an economy can be sustained or even grow by the power of a circular flow of increasing demand for stuff which thereby calls stuff into being is well, fallacious. Just wanting stuff doesn’t make it appear at a price you can afford. Savings and investment are necessary to make the economy produce more, better goods and services at lower prices, and you get more savings and investment precisely through deferring consumption.
You’re lucky if the government just squanders money. There’s a reasonable chance it will hurt the people who can’t defend themselves against the government.
Yeah, I am actually giving government apologists the benefit of the doubt by assuming that the government will do mostly harmless or mildly beneficial things with their bidding power. I actually think that most of what they do with it is actively harmful in the long run.
The year is 1234, and you’re born inside some farm off in Eastern Germany or somesuch. Your dad, like most people in your age, happens to be a farmer, and you spend the first sixteen years of your life growing coarse rye, beets and cabbages to pay taxes, fight off starvation and feed your growing number of siblings. Once you do become sixteen, your parents tell you that it really may be better if you try your luck elsewhere, and so you try to move off to some place where they might need someone who’s willing to work hard and knows how to farm.
You travel by foot for a few days, and entering some other part of the land, the local lord tells you that sure, you can go and cultivate his land; all you need to do is give him half of your produce in tax. Sure, it’s a lot to pay, and he wishes it could go otherwise, but you wouldn’t want your farm to get overrun by bandits, do you? You agree, but since you think that’s a very high tax rate to pay, you move on.
A month later, you learn that every time you move along, the same sort of deal seems to apply: yes, you can work my land, but it belongs to me and I will charge you a lot of your labour to get to work here because that’s how much I think my security is valued. If you don’t like it, that’s okay, you can move off to some other place, I won’t stop you.
…
How does libertarianism stop this from happening?
I’ve read before that there’s many libertarians who argue society ought to have something along the lines of security companies rather than a police force. Similarly, there’s the arguments about free exit and immigration rights, people get to work where they wish to. Libertarianism also advocates strong respect for property rights, be it in the arguments against low taxes or against government authority in general. I realise my analogy isn’t perfect at all, but framing medieval Europe as a place where everyone was free to come and go as they pleased, the property rights of those who actually had any to their name were respected, and you could ‘buy’ the security of anyone you wished isn’t strictly wrong.
I suppose you could view libertarianism as a movement more than as a total ideology: the argument that there’s an X level of government that’s good and we’re way beyond that probably isn’t even wrong. What I put into question is that putting our security into the hands of companies is going to work very well.
Also, I really like the commentariat here, so please keep things level-headed if at all possible. An explanation for how a libertarian world might avoid the problem I mentioned would probably explain why our modern world isn’t a feudal one as well, since you could make a very similar argument along those sorts of lines.
Object level question – your third son (neither the heir nor the spare) – did his father not pay a sharecropping tax? Is this whole concept new to TS?
Object level query – how did feudalism work in (random principality of) what is now Germany? My understanding (which might be flawed) of the English version is that a non-trivial number of the peasantry was actually born to the land, and needed the lord’s permission to move, marry, etc. (Also had a greater call on the lord’s table in times of need, but that was thin soup at best.)
More to the point of your question: Libertarian would reduce the burden of the king/prince on his lesser nobles, and from the earl to the baron, and the baron to the knight, so that the knight didn’t have to use the surplus of ten farms to feed and house his family, smithy, and warhorse, and so would allow the individual lord room to offer better deals – say, 4/10 of the produce – to select wandering third sons.
You can’t have a feudal system with all its inefficiencies at the top, and expect freedom on the bottom.
That’s right; around 90% of the peasant population in medieval England held some sort of nonfree tenure. It would have been difficult for landlords to chase down many runaway tenants — medieval nobility didn’t have the resources to do much policing — but since moving to a new manor usually took consent on the parts of both your old lord and your new one, and since these were Dunbar-sized groups or not much above, we could expect a fairly effective level of soft enforcement.
On the other hand, it wasn’t uncommon, and was to some extent accepted in law, for serfs to flee to larger towns (distinct from villages and not governed in the same way; most got their revenue from import/export duties, often levied at the walls) and try to find work there. That had its own problems; medieval towns were deathtraps, with so much disease, violence, and opportunity for accident floating around that many of them experienced negative population growth. But people did do it, so we can safely assume that they had motive to. Just not enough motive for it to be super common.
Feudalism anywhere rather varied in its nature, but the exact historical details are neither here nor there. In the late middle ages especially, urbanisation ended up in many laws binding serfs to their lords becoming practically unenforcable. That said, in eastern Germany especially, serfdom was particularly nasty and lasting.
If I understand your proper response correctly, you’re saying something along the lines of ‘the king can stop relying on people’, which sounds like telling me this is a mere coordination problem. I’m not sure if that follows when you could simply have a larger percentage of military sorts and retain the same problem.
Competition for customers. Security firms can be expected to behave competitively because they will not get any customers if they don’t.
This is true in our world too. Governments tend to want to make their country relatively pleasant and free because doing so is how you maximize your nation’s wealth. Nations don’t have to compete for citizens to anywhere near the extent that ancap security firms would have to compete for customers; it is a lot easier to imprison someone when you own their whole country. So this would be far more true for competitive security firms.
The fact that productive ability these days comes almost entirely from humans rather than resources is crucial to this. If things change and this becomes no longer true, I don’t think begging for a Basic Income will work, because the only reason your government currently cares about you is because you are a productive resource for it to exploit. Lose that, and those with the power to coerce will no longer care about winning your favor.
EDIT: as for why you don’t see anarcho-capitalism existing in the world already, remember that coordination is crucial. If there is an area of land which contains ten territorial sovereigns and one non-territorial ancap agency that has committed to defending its customers, wherever they are, and nobody else, wherever they are, the territorial powers’ views of who owns what are aligned with one another, but not with the ancap agency. Each territorial power gets on with nine of its fellow powers and fights continuously with one. The lone ancap agency fights with all ten rival powers. Obviously it is totally unsustainable.
But reverse the rules and the reverse is true. An area of land that contains ten ancap agencies, each committed to defending its customers and nobody else, irrespective of location, and one group that claims sovereignty over a part of the land, will see the ten ancap agencies getting on fine with one another and each only having disputes with the territorial group, while that territorial group will have constant disputes with everyone else. You can see how either system is stable against a gradual change toward the other.
It strikes me as possible that territorial sovereigns are just a much more natural Schelling point than the non-territorial, customer-based idea of anarcho-capitalism. Which would provide a possible explanation for why it is so rare.
“The lone ancap agency fights with all ten rival powers. Obviously it is totally unsustainable.”
I agree it’s probably not stable under most circumstances, but perhaps not for a single reason as simple as obviously falling into fights with all ten rival powers. (It seems to me that the relationship between the Catholic Church and local sovereigns had some recognizable similarities to this for many centuries, and remained reasonably stable — at least not enormously more unstable than the relationships between adjacent territorial sovereigns, or internal struggles within territories.)
The Catholic church is not a security agency, has not contracted with its followers to defend some particular set of rights against anyone who violates them in exchange for payment.
My argument is not that territorial and non territorial organisations cannot coexist at all. Of course they can. But when they are making claims of ownership of the same kinds of thing, you will inevitably get conflicts, because their structures do not fit together at all.
All of this hinges on security organisations being entirely uninterested in acquiring more land and/or less competitors. I’m not sure this is an assumption that’s safe to make.
I’m sure they would like both of those things. But it seems unlikely they would like them enough to be willing to incur the costs involved with waging war in order to try to get them.
This seems to be at odds with the history of security organizations.
Security organizations have seemed quite willing to go to war to prevent competition on their own turf or expand territory.
On the other hand, we currently live in a world in which there are a large number of territorial monopoly powers. Most of them are not at war, most of the time.
And note that waging war in order to get customers is much harder than waging war in order to get land. Land can’t run away.
Most of them are not at war directly most of the time, because of the deterrent effect of nuclear weapons. Indirect wars are another matter. Currently, nearly ever major world power and pretty much every regional power in the Middle East is involved in a proxy war in Syria and Iraq, as they have been for the past several years. A similar though much smaller scale proxy war happened in Ukraine 2 years ago, and of course there were too many of these sorts of proxy wars to count during the Cold War.
Prior to the invention of nuclear weapons, direct wars between territorial monopoly powers were very common, the 2 world wars being only the most famous examples.
Smaller scale territorial monopoly powers tend to be, if anything, even more warlike, as demonstrated by the frequent gang wars in American inner cities and throughout Latin America.
Drug gangs wage war with each other to get customers all the time. This is mostly done by using force and intimidation to establish monopolies in the territory where customers live, so the distinction between wars over land and wars over customers isn’t always so clear-cut.
@NN
That’s true, but in that situation, what is being fought over is control over territory, not control over individual customers. You can see how the latter would be much more difficult, no?
As I said above, a situation in which all powers are staking claims on territories is in equilibrium. A situation in which all powers are staking claims on their individual customers is also in equilibrium. You can imagine others – for example, a situation in which powers stake claims, not on a small area of land for an indefinite time, but on a large area of land for a fixed time. To an extent, this is how a democracy works. It isn’t possible for someone to appoint himself king of a small part of a democratic nation, because the rights he claims are in direct conflict with the rights claimed by the party currently in power – to rule the entire nation for the duration of their term.
Although there might be temptations to invade, you do not get similar problems with one country being ruled in one way and a neighboring country being ruled in another, because the rights being claimed do not conflict.
And yet every mob and gang has turf.
When you have ten competing ancap protection agencies, that isn’t stable either. Organizations that, in the end, are required to protect their members from violence by “the other” have to have territorial integrity. Those ten competing protection agencies will simply end up by a monopoly. Because who is going to stop them?
What makes you so sure that territorial integrity is so vital? Other businesses don’t need territorial integrity. We get on perfectly fine with multiple different grocery stores operating in the same town.
As I said – territory based organization is obvious and easy to think of, while non territorial organization is kind of weird and obscure. And it’s difficult to shift from one to the other unless you do it all at once. So I’m not surprised that gangs tend to be territorial. I don’t think that means it’s clearly the only way things can be, though.
Because defense is inherently territorial.
One of the jobs of a security organization is to protect you from other security organizations. Really tough to do that when you don’t have territorial integrity.
Why would a security firm have any interest in attacking a customer of a competing security firm? Remember that violent disputes are expensive, and any security firm that does not want to waste its resources and be driven out of business will be inclined to avoid them as far as possible.
And being close enough to your customers to send someone out to help them does not require total control over the territory they are in.
Why would a security firm have any interest in attacking a customer of a competing security firm?
Customers of security firms will have an interest in attacking customers of competing security firms. The security firms will be obligated to back them up. This will be expensive, but it will also not be solved by polite negotiation at the retail level. At the wholesale level, the efficient negotiation between security firms will be for geographic territories and promises not to extend protection to residents of the other firm’s territory.
Bob, Ted, and Alice are in a love triangle. Bob’s security firm, ‘X’, acknowledges that if a man finds his wife in bed with another man it is normal that he’s going to kill them both and that should be the end of it, anyone tries to turn that into a feud and they’re feuding with Bob’s firm. Alice’s security firm ‘Y’ holds that domestic disputes are never to be resolved by violence and promises to protect Alice. Ted’s very expensive security firm ‘Z’ promises that Ted is always right, thus attacking Ted is always wrong and will always be avenged.
Bob comes home to find Ted and Alice in bed. Wackiness ensues. Firm ‘X’ notices that most of its customers are in Redville, where women know that getting caught fooling around is a death sentence and so the issue never comes up, but the tiny handful of customers they have in licentious Blue City are getting them in lots of bloody expensive feuds. ‘X’ stops offering policies that cover Blue City. And tells ‘Y’ that the Redville women who insist on buying their policies are causing so much trouble that it will be easier for ‘X’ to run them out of town en masse than fight the battles one at a time. ‘Y’ decides to pull out of Redville rather than fight. ‘Z’ is probably in merger talks by this point, hoping that either ‘X’ or ‘Y’ can sell their clients on a two-tier system if the price is right.
Different security companies offering substantially different protection policies in the same geographic area, is highly unlikely to be a stable equilibrium. And if they all offer the same policy, that’s a natural monopoly for whichever one can offer it cheapest.
Next month, I’m traveling over 3,000 miles beyond the territorial limits of my security organization. Should I be worried?
Depends on the reputation of the security agency with monopoly coverage in the area you’re travelling to. And on whether you insist on e.g. killing your wife if you catch her sleeping around, or sleeping around yourself, or whatever it is that you’re accustomed to doing at home but is out of policy in the new coverage area.
Well, then. If my security organization’s rep is good enough to keep me from being preyed upon by a rival organization in an area where the rival has a monopoly of force, then a fortiori it should be good enough to protect me in an area where neither has a monopoly. There are still any number of reasons why the ancap scheme might not work, but I don’t think the absolute need for a territorial monopoly is one of them.
Generally speaking, when you travel outside your homeland, you live by the rules of where you go, not where you are from. When in Rome.
Security organizations don’t come into another territory to protect their own from doing things there that are allowed at home. We did not go to war with Iran over journalists being arrested. We don’t stop stupid kids from getting flogged in Indonesia.
Yes, you should always be aware of the local rules when traveling there. Don’t do drugs in Indonesia unless you would like to risk execution.
If my security organization’s rep is good enough to keep me from being preyed upon by a rival organization in an area where the rival has a monopoly of force, then a fortiori it should be good enough to protect me in an area where neither has a monopoly.
There are no such organizations except perhaps Great Power governments, and I think it naively optimistic to expect that for-profit corporations in a competitive market will have the power and reputation of Great Power governments.
@John Schilling
Why do you think that is the case? A security firm that negotiated with other firms to agree on what its customers’ rights are, then only defending them when those rights are breached, would have enormously lower operating costs than a security firm that got into fights with whoever its customer asked it to.
I’m not seeing why you expect these security firms to be so steadfast in what they do and don’t defend. They are selling services, not taking positions – I don’t see why they would care about the services they offer their customers any more than the CEO of Walmart cares about groceries. Certainly not enough to refuse to negotiate or compromise.
Why do you think that is the case? A security firm that negotiated with other firms to agree on what its customers’ rights are, then only defending them when those rights are breached, would have enormously lower operating costs than a security firm that got into fights with whoever its customer asked it to.
If your vision of anarcho-capitalism is a cartel of security firms negotiating with each other to decide what rights their customers will be allowed, I’m missing the part where they have any incentive to offer their customers any rights beyond serfdom. Serfs are easier to keep out of trouble than free men, generally less troublesome to deal with, and you can take more of their money.
If a security firm decides to defect from the strict cartel model and negotiate with potential customers, that might lead to net profit through increased market share. But it will definitely lead to a different package of negotiated rights than the one where the firms just negotiated with each other. And when multiple firms start negotiating with their customers, they will do what every competing businesses do in every other industry – target different market segments. Still more different sets of negotiated rights, and that does lead you to conflicts like Bob having a contractual right to kill an unfaithful right and Alice having a contractual right to be protected from a vengeful cuckold.
I expect that in practice you’d see some combination of mergers and cartelization leading to a two-tiered industry. Serfdom for most, privilege and immunity for the rich, and probably wergild by proxy instead of feud and war. I also expect this to be dystopic in a way indistinguishable except for the rhetoric from your average kleptocracy, but I’m pretty sure I can manage to come down on the “rich” side of the divide so if this is really where you want to go…
@John Schilling
The model is one in which firms negotiate with one another to agree on rights for their respective customers relative to one another. So there will be one set of rights between customers of A and customers of B, another between customers of B and customers of C, and so on.
I don’t think the term ‘cartel’ is particularly applicable. The incentive they have to offer attractive rights and charge market rates is that negotiating for laws that people find appealing is how they get customers, and getting customers is how they make money. If they negotiate for and offer terms customers do not want, or charge higher than market rates, their customers and would-be customers will buy rights protection services from a competitor instead.
You could argue that the returns to slavery set a lower bound on the amount of money a security agency will charge its customers. But, the same argument applies much more strongly to territorial monopolies, i.e. states, as the costs of enslaving someone are much lower when you have a territorial monopoly than when you don’t.
The model is one in which firms negotiate with one another to agree on rights for their respective customers relative to one another. So there will be one set of rights between customers of A and customers of B, another between customers of B and customers of C, and so on.
That would seem to mean that before Ted can defend himself against Bob, who is trying to kill him for stealing his wife, he has to figure out which security firm Bob has contacted with and then check on the matrix of reciprocal contracted rights whether Bob’s rights in this affair take precedence over his own. Do they all wear armbands and carry cheat sheets or something? It’s a nice theory at the negotiating table, but I don’t see how it can be expected to work in the field.
And I’m pretty sure that when Bob paid extra for the contract that protects his interest in his wife’s fidelity and guarantees his right to defend that interest with lethal force, he meant “when I catch them in the act”, not after he’s had a chance to consult with his agent. More generally, people will value highly the rights they are confident they can always exercise, and not so much the “rights” that they need permission to exercise according to some complex formula that varies depending on who they are dealing with at any given time. Bob probably will pay extra for the security contract that says he can shoot the sonovabitch he catches sleeping with his wife, but not the one that says he can only do so if the violator is a customer of security services X, Y, or Z but not A, B, or C. Similarly, Ted will pay extra for the right to shoot back at anyone who is trying to shoot him, not so much if the “right” to self-defense has a web of exceptions like “…unless the aggrieved husband of a woman you slept with and who is a customer of Acme Security”.
If you model this as security companies negotiating amongst themselves for the most economical deal and then imposing it on their customers by fiat, that very nearly is a cartel from the outset and certainly will be by the time they realize there is no profit to them in allowing their customers anything more than serfdom. If customers are able to say “no, that deal is not good enough” and walk away, then customers with different priorities will drive competing firms with different priorities and that leads to an intractably complex web of who gets to shoot whom over what.
Security is a natural geographic monopoly, because geography is the one thing(*) that actually does solve the problem you recognize as requiring complex negotiation, in the field where negotiation is not possible. Is Bob allowed to kill Ted for sleeping with his wife? If Bob and Ted are in Pakistan, yes. If Bob and Ted are in California, no. The end. Eventually, the most powerful security agency or cartel in a region will impose that solution by force. Recognizing this allows you to implement all of the usual protections against abuse of monopoly power. Failing to recognize a market failure in the making, in a regime as critical as security, will be catastrophic.
* ED: To be fair, there’s a second thing that can do this, which is a simple one-axis class system where if Bob is a noble and Ted is a peasant Bob can kill Ted for sleeping with his wife, but not vice versa. An anarcho-capitalist network of competing security firms could well collapse to that stable system.
I think there are key differences between 1234 and 2016 that make that scenario irrelevant to policy today. Most importantly: the value of land today is an order of magnitude smaller than that of human capital. Anyone can acquire capital, not just a small aristocracy. The market for workers is highly competitive.
Perhaps we could compare the feudal lord to governments today. European social democracies take 40-50% of GDP in taxation. The lack of international labor mobility makes it hard to have a spiral toward low taxation as governments compete to attract workers. OTOH they do provide you with more than the feudal lord would. Again, the differences seem too large to make the feudal scenario relevant. But if “exit” is easy there’s no way this would happen.
“How does libertarianism stop this from happening?”
Sounds like a competitive market. If 50% is more than the market rent on the land, it will get competed down.
As I interpret the historical evidence, that’s what happened in response to the Black Death. The existing terms of serfdom represented the market equilibrium. But the terms were not continually renegotiated but set for the long term, possibly because that maintained the peasant’s incentive to keep up the value of his land.
That worked fine as long as economic conditions were not changing too much. But when population dropped a lot, the equilibrium value of labor went up, of land down, meaning that the lords were charging more than the market rent. So a new problem appeared–runaway serfs. They might run away to a city or to the next lord over, willing to offer them better terms in order to get some of his now vacant land back under cultivation. The lords tried to get the national government, i.e. the king, to prevent serfs from moving, thus giving them a monopoly, but with limited success.
To put my point differently, in your story don’t you have a competitive market for both land rent and rights enforcement? So why wouldn’t the price of both reflect cost and value as in any ordinary market? To push the cost above that, you need a cartel among rights enforcers or land owners, and some way of enforcing it–which, historically, means a government.
How does libertarianism stop this from happening?
The same way absolute monarchy stops the Red Queen from having your head lopped off. The same way Communism stops the commissar from deciding you have the means to work the fields twenty hours a day but your needs add up to a hundred grams of rice and beans. The same way democracy stops a majority of the voters from deciding to enslave everyone of your race and impeach any judge or civil servant who objects.
In any functional system of government, the buck has to stop somewhere. If the person or persons with ultimate buck-stopping authority uniformly decide to screw you over, you’re screwed.
There’s one king. The commissars all march in lockstep. The will of the majority of the voters is binding on all of them. But if one single free landowner out of thousands wants to give you a fair deal, you can get a fair deal. And if there’s more land than peasants, the ones who lost the last round of musical peasants will profit from offering you a fair deal.
If there’s not more land than peasants, some peasants are going to starve no matter how you organize things. The ideal solution there is to Be Not A Peasant. Would you guess your odds are better with a king, a commissar, a mass of mostly-satisfied-peasant voters, or a community of free men and women?
You’ll never get a real guarantee that the society you live in won’t kill you, enslave you, or starve you. All you can do is play the odds and keep your options open. Liberty has better odds and more options.
This interview with the founder of “Detroit Threat Management Center” seems to speak well of the possibility of private defense firms functioning in the absence of (effective) state-based policing:
https://www.youtube.com/watch?v=r2IbjhV00as
It also goes to show just how much room there is for improvement over traditional policing methods, as there was in taxi services before Uber, etc.
We can theorize all day about all kinds of crazy scenarios which might come to pass, but all that isn’t worth even one real life example of the thing working in practice, imo.
Sometimes people say “X is true” when what they really mean is “there is a vast and complicated debate on the subject of X, and I happen to come down on the side that believes X is true.”
For example, if someone said “an increase in the minumum wage would have no significant impact on unemployment.” Some people genuinely believe it, and they can point to relevant evidence, but it is a controversial minority view.
I’d imagine that sometimes it is a dishonest debate tactic, and sometimes this is done in genuine ignorance of the controversy or when the speaker thinks that everyone he is talking to agrees with him. And of course often it’s just brevity. At any rate is is really really common.
Is there a term for this?
Isn’t that just basic begging the question, acting as if something that requires argument is true without making the argument?
I thought begging the question was when you assumed the CONCLUSION itself was true, not just one of the premises. E.g. ‘I know everything in the bible is true, because it says so in the bible and that must be true because everything in the bible is true’ (I don’t think this is a fair representation of many Christians, just an easy to find example in my head)
So it would only be begging the question if the issue under dispute was ‘does raising minimum wage cause unemployment’ – in practice it’s likely to be something like
“Would raising minimum wage be good for the poor”
“Would raising minimum wage be good for the economy”
or simply
“Should we raise minimum wage”
Well “X is true” is of course compatible with “there is a vast and complicated debate on the subject of X, and I happen to come down on the side that believes X is true.” In general people parse statements like “X is true/right/good/beautiful” as having an implicit ‘I believe’ before them…
I can recognise there’s a ‘vast and complicated debate’ about creationism and still have a position on it. Or climate change, or economic policy, or anything else.
If there’s a problem here, presumably it’s that people don’t just say ‘X is true’ but ‘everyone agrees X is true’, ‘it has been proved that X is true’ etc. I agree that if talking to people who aren’t exposed to the issue you should flag where the premises you’re relying on are heavily disputed (even in the creationist example) – is your problem that this isn’t happening?
By the way: you seem to be implicitly stating as a truth that the belief thatan increase in minimum wage would have no significant impact on unemployment is a ‘controversial minority view’. You haven’t however given evidence for that view being a minority view, or particularly controversial (though controversial could mean many things). So a non-expert observer might take it on trust that there’s some rigorous evidence showing only a minority of people hold that view, but I doubt you have such evidence.
“an increase in minimum wage would have no significant impact on unemployment is a ‘controversial minority view’. ”
If “unemployment” means “the measured national unemployment rate” and “significant” means “substantially more than the usual month to month fluctuation,” than I think the position is a pretty uncontroversial majority view.
The usual view of economists (with some notable exceptions) is that raising the minimum wage increases the unemployment rate of workers who were receiving minimum wage. About one percent of workers receive the minimum wage. So even if the increase resulted in a quarter of them becoming unemployed, that would be an increase in the national unemployment rate of only about .25 percentage points.
On the other hand, the view that a sizable increase in the minimum wage would not produce a significant increase in the unemployment rate of workers currently receiving minimum wage, or low wage/low skill workers more generally, is probably still a controversial minority view among economists.
the view that a sizable increase in the minimum wage would not produce a significant increase in the unemployment rate of workers currently receiving minimum wage, or low wage/low skill workers more generally, is probably still a controversial minority view among economists.
This is what I meant.
There’s also the question of whether, if raising the minimum wage does not increase short-term unemployment among people receiving the minimum wage, it will do something else bad.
For instance, will it lead employers to demand greater performance from their employees, in which case the wage gains come at the cost of a less pleasant working environment? Or will it lead them to cut employee hours in order to make them ineligible for benefits, in which case the wage gains come at the expense of workforce size efficiency?
Or will it lead to many low-skilled workers dropping out of the job market altogether, thus pushing down the official “unemployment rate”?
The main issue that it’s extremely difficult to see how the minimum wage could possibly do what its supporters want it to do, which is to transfer profits from employers to employees.
@Vox Imperatoris
I think that is an overly restrictive definition of what minimum wage supporters want. I think what they actually want is for it to transfer income to low wage employees from whoever. Ideally it would come from the rich business owners, but even if it comes from customers paying more per item, that’s fine too.
I agree with you that for it to actually have this effect would require an unbelievably implausible set of assumptions.
Perhaps it could be phrased “move more of the value of economic activity to those lowest in the hierarchy of production.”
It won’t do that, either, but the phrasing seems to be suitably all-encompassing. 🙂
That being said, I disagree with Anonymous: I think that the majority of people who want the minimum wage raised think that that is exactly what it will do – transfer surplus profits from employers to employees. Heck, most of them probably don’t even care if it’s profit as opposed to simply revenue.
“The main issue that it’s extremely difficult to see how the minimum wage could possibly do what its supporters want it to do, which is to transfer profits from employers to employees.”
Well, presumably, if we make it impossible to employ people who earn low wages, only more productive workers will be employed. (Or optimistically, more investment to make low paid workers more productive.) Since the real cost of production is workers’ time, stopping doing things that waste time for little value is to the workers’ advantage. (And if capitalists derive their profits from exploitation of workers, to their detriment.)
@ Mark – most of the truebelievers that I have spoken with would agree with you – raising the minimum wage means that the whole of the minimum-wage earning population would be earning more money. (This statement is often coupled with a statement to the effect that the employeer, company or corp is ‘rich’ and can afford it.)
This often goes hand in hand with the idea that paying the employees more will transform them into better workers.
(And they say Catholics believe in impossible miracles…)
I suppose, since I brought up the topic, I should say that my view is that the minimum wage at current levels is low enough that it probably doesn’t matter very much either way, and it gets *way* more attention than it deserves, probably because it’s superficially easy to understand compared to most policies. Also, that a very large minimum wage hike such as a national $15 wage would be net harmful.
@ Chalid:
I think the federal minimum wage is mostly harmless, but I am not so sure about local minimum wages in many states and cities.
I’m not saying it’s necessarily a problem. Sometimes it is and sometimes it isn’t. I think you have accurately noted the main case when it is a problem, that you can mislead people who are less familiar with the topic. (This did happen to me recently.) Also, by eliding the difference between “true” and “probably true” and “maybe true” you can fool yourself and others by constructing logical chains with weak links.
Anyway, something doesn’t need to be a problem to have a label.
Re: Survey: for the mental health questions, what should we answer if we were diagnosed but the diagnosis no longer applies?
On the nootropics survey:
The directions seem to confound two separate concepts:
– Does the substance have noticeable effects (i.e. obviously not a placebo), and
– Are the effects positive/useful
This made it difficult to answer for me. Specifically, for something with obvious, strong effects that were only situationally useful, and several side effects. Is that closer to 10, because the effects are strong and obvious (but not “life-changing” in the positive sense)? Or closer to 1, because the usefulness barely justifies the side effects (but it’s not at all placebo-like?).
I frankly had no idea where on the scale to score that, and could see an argument for any possible value. That tells me your survey results are likely to be hard to interpret. I think you need a “potency” axis and a “positivity” axis as separate questions.
What substance, out of curiosity and if you’re comfortable telling?
What is stupidity?
IMO, (everyday) stupidity has more to do with our attitude towards knowledge and words than our capacity to link those words. At least for understanding (perhaps conceiving of new ideas is different), limited working memory can be overcome with abstraction. (Though if you have to abstract too much (relations too complex for brain) you won’t feel as if the terms you are using are linked to anything in particular)
I once heard the statement: “stupidity is acting against one’s better knowledge as could have been recalled within 10 seconds before the stupid action.” I like it. Specifically, stupidity is not lack of knowledge, it is a failure to either (i) notice situations where relevant knowledge could be recalled or to (ii) act according to that knowledge.
Makes sense.
I think what I was thinking of above is a version of this – people forgetting how knowledge itself works (or acting against their knowledge of how knowledge works).
Someone with a really limited mental capacity could make entirely intelligent statements as long as they made sure that those statements were in keeping with their current knowledge.
There is nothing unintelligent about the statement “I like cheese” – intelligence isn’t related to true intelligibility.
Also, thinking about intelligence allowing you to manipulate your circumstances, I would say it depends more on how other people view intelligence, rather than intelligence itself. I think we see that – there is no real difference in life outcomes, except those related to the social structure.
If we consider intelligence to be a measure of precision and accuracy on pattern-matching, then stupidity is either over-pattern-matching to the detriment of accuracy, or failing to pattern-match from a lack of precision.
Risk aversion question: I’m a briton travelling to North America for two weeks in the early part of March. I’m spending a week with friends in Toronto and a week with friends in Princeton. Should I get travel insurance? (Are there good reasons above and beyond risk aversion to get travel insurance?)
Will the NHS pay your hospital bills if you’re injured or fall ill in the US? If not, travel medical insurance might not be a bad idea. You’re unlikely to need it but the pricing of medicine here assumes that nobody is actually paying the sticker price, which means it can be rather high for uninsured folks.
If by travel insurance you mean the little rider thing that will refund your ticket price if you have to cancel your trip at the last minute, it’s not the odds play, but given that it’s usually very cheap in an absolute sense (like thirty bucks on four or five hundred dollars worth of tickets) I usually buy it because I am a worrier and the peace of mind is valuable to me.
If you mean some other kind I have no opinion.
Relevant to stuff posted by onyomi, and the education realist piece Troy posted in response, but also to the “cuckservative” thing that seems to be getting discussed recently – this is something I’ve batted around before – but I have been thinking about it lately. The far-right people who use that portmanteau (not all who are far right use it, but all who use it are far right) seem to basically accuse mainstream conservatives of either being scared of the left, of trying to win over/impress the left, or both. I think it’s something different – I think it’s that, as things are right now, it is largely the far right that considers intellectual difference as something inherent and heavily biological – or at the very least, considers intellectual difference on a group level as inherent and heavily biological.
I think this is the cut-off point for far right: someone becomes toxic to the mainstream right when they start talking about race/ethnicity and intelligence. Compare, say, Breitbart (on the mainstream side of that line) to TakiMag (a little bit or so on the other side of that line). When mainstream conservatives talk about “culture” as determining things like school success, income, etc etc – they like talking about a “culture of poverty” for instance – I don’t think it’s a dog whistle. I think they really do believe that if everyone were to raise their kids right, not do drugs, work hard, stay in school, go to church, and vote Republican, most social problems would be solved. That is, they see ability to succeed in the relatively intellectual environment of a modern society as largely being about upbringing and personal virtue.
The mainstream right-winger, therefore, shares with most of the left the belief that most everyone can achieve success. Where they differ, then, is that they do what the left sees as blaming the victims: where the left will blame discrimination, an economic system that screws the poor, etc, the right will attribute the problems to communities, individuals, parents, teachers’ unions, etc. They are unlikely to opine that some people don’t have what it takes.
On the left, the split is between those who look for equality of opportunity (let’s call them liberals) and equality of outcome (let’s call them progressives – some of them call themselves radicals, but many of them don’t really seem to be arguing for a radical reformation of society). They both see the mainstream right as offensively wrong on what causes these social problems and how to fix them – but they share with the mainstream right the belief that these social problems can be fixed.
In comparison, the far right is fairly alone in taking the view that a fair number of people are never going to, and cannot, amount to much, at least intellectually speaking, with resulting social problems. As such, it’s not that the mainstream right deep down agrees with them but is too cowardly or weak to say so – it’s that the mainstream right has a completely different understanding of these issues.
Does this make sense at all?
The major names in IQ realism, HBD, or whatever, aren’t far right. Charles Murray, Razib Khan, Steve Sailer, Steve Hsu–none of them are far right. I’m not anything approaching far right–I’m a Trump supporter. What you call the “far right” is usually called the “alt right” these days.
I don’t disagree with your characterization of the “mainstream rightwinger”, but the alt-righters usually call them “the elites”. That is, there’s not much difference between the policy makers, academics, etc, of the right and left at the top.
The alt-right, if it’s who I think it is, isn’t really “right” at all. It’s made up of disillusioned leftists who have adopted some caricature of what they think the right is (and some of them know it is a caricature, but others do not appear to), along with a quasi-religion which tells them God is on the side of the left.
Beats me. I’m not alt right, either. Most people who acknowledge reality about IQ are pretty traditional, politically.
@Scott Alexander: Question. If I reply to the dog-whistle here, would I be violating the rule against race/gender in open threads?
On the one hand, the “no gender and race in the Open Thread” policy has been more of a “Tone it down, guys” than a strictly applied ban, particularly since there are no more alternative OTs to discuss the subject.
On the other hand, Reign of Terror.
If that was geared towards me, “reality” doesn’t mean “inferiority” or even “genetically based”.
That is the impression that I’ve gotten – that the alt-right is made up heavily of people who are not from a “traditional” right-wing (mainstream or far) background. They’re of “blue tribe” stock or however you want to put it. There’s also a strong streak of disaffected libertarianism.
But their political positions, such as they are, are those that would be associated more with the far right than any other group.
I guess this all depends on the circles you run in. My own circle is mostly based on conservative/Republican types who realized (I’m sure some might argue that “realize” should be in quotation marks) that the Republican Party, and mainstream conservatism in general, are not capable (and in many cases, quite unwilling) of defending our social institutions, our culture, our way of life.
A common refrain is “what are you actually conserving?” The answer is, of course, nothing; at a recent Republican debate, John Kasich claimed that conservatism was about “growing the economy and creating jobs”…and nothing else. This was not meaningfully challenged by anyone present.
I’m aware of the “blue tribe” alt-righters, but they’re largely not taken seriously, and in most cases objects of ridicule.
@ nyccine
(I’m sure some might argue that “realize” should be in quotation marks)
It usually should, everywhere, imo.
@nyccine:
The word “background” was a poor choice. Perhaps “context” is better. I get the impression that a lot of alt-right types aren’t coming from a traditional “red tribe” background.
Of course, it’s hardly like there’s a census or anything, especially given that internet-based stuff is pseudonymous.
The alt-right is full of people who noticed that God isn’t real and so decided to become Satanists.
Nice, I may steal.
The alt-right is a part of the far right, though, isn’t it?
Even if the guys you are naming are not themselves of the far right, those who favourably reference them often are. You’re not going to find left-wing or mainstream right sources favourably citing Steve Sailer, for instance.
As for Trump, his supporters are majority mainstream right, but he has a far-right following that is kind of a funhouse mirror version of how a lot of people quite to the left of the US norm (which admittedly is not that far left) took Obama as their champion, projected their hopes and dreams on him, and were baffled and disappointed when he turned out to be a fairly ordinary centrist Democrat.
>Does this make sense at all?
Seems completely on target to me. The only part I’m not 100% sure about is this:
>The far-right people who use that portmanteau (not all who are far right use it, but all who use it are far right) seem to basically accuse mainstream conservatives of either being scared of the left, of trying to win over/impress the left, or both.
I’m pretty sure there’s a racial element to it, too. The “cuckservatives” are selling out white interests letting, themselves get “cucked” by minorities by not being as anti-immigrant or anti-Muslim as they are. 4chan fascists came up with the term and they got it from a porn subgenre in which a (usually black) guy fucks a (usually white) guy’s wife.
That element is the strongest, but 1. I wanted this to be about a broader way of thinking, because comment rules, and 2. It seems different in degree rather than in kind.
In the same way that mainstream Republicans will insist that they are not racists, or against the poor – believing that the world is a place where everyone who works hard etc etc can become successful and hopefully a Republican voter, probably in 5 or 10 years or whenever they will be insisting they are not homophobes – having in mind a world where everyone who gets married and stays monogamous and has 2.5 kids and a golden lab in the suburbs (and hopefully votes Republican) will be accepted, regardless of sexuality. And so on.
The charge by the far right is that the mainstream right has adopted the left-wing values of yesteryear, out of fear or servility – not realizing that because they hold values that would have been left-wing in 1960, or 1980, or 2000, they will never placate or impress the left.
I don’t think it’s fear or servility – rather, the mainstream right has for a long time preached a certain “everyone is equally able to become respectable Republicans” message.
I’m pretty sure there’s a racial element to it, too. The “cuckservatives” are selling out white interests letting, themselves get “cucked” by minorities by not being as anti-immigrant or anti-Muslim as they are. 4chan fascists came up with the term and they got it from a porn subgenre in which a (usually black) guy fucks a (usually white) guy’s wife.
I’ve only ever seen this explanation for the origin of the term used in articles on left-leaning sites, which seem to have a vested interest in discrediting the term and anyone who uses it, and find it perplexing that anyone actually believes it.
The word “cuckold” has been a common part of the English language at least as far back as Chaucer, and the idea that they chose it specifically because a subgenre of porn often involves black men seems like grasping at straws, at best. Even if the earliest known use of the phrase referenced pornography, (which I haven’t seen any actual evidence for) it’s safe to say that the majority of the people who use the term have never actually seen the message board post where it presumably originated, so ascribing a racial element to the term still seems like a major stretch.
That isn’t to say you can’t find a racist element within the alt-right; you most certainly can, and a large one at that. But this push I’ve seen in some places to assign a racial motivation to a portmanteau of two common English words, which have no inherent racial connection on their own, strikes me as dishonest at worst and willfully ignorant at best.
Yeah, I doubt they’d have any less disdain for a dude jerking off watching a white guy fuck his wife. Maybe more, even.
There’s probably more race-based stuff in cuckold porn than porn in general, but I have no interest in doing a demographic analysis of cuckold porn.
However, I’m pretty sure that “cuck” as a shortened form of “cuckold” does derive from pornography. “Cuckold” is a relatively esoteric word these days. And the way that “cuckservative” gets used definitely seems to indicate a racial/ethnic angle. It could be used in regards to anything where the right is supposedly knuckling under, but mostly seems to be used about things like immigration.
This doesn’t match my experience. I’m okay with “HBD” ideas, but if somebody uses the word “cuckservative” I usually take that as a sign that it’s not worth listening to anything they have to say.
I think “ceding moral high ground to the Left” is a pretty fair description of this.
For example, take the standard conservative response to communism–“Great theory, but it doesn’t work in practice”–and compare it to the Objectivist response to communism–“A monstrous theory whose tragic real-world results are entirely predictable.” If one believes the latter (and I think most conservatives do, but probably only indirectly) wording it like the former seems pretty clearly done to avoid the fight over whether or not communism as a theory is monstrous or great. It’s also a practical mistake–if you don’t fight the dreamers being communist, that exerts cultural pressure, and pretending it’s “just engineering difficulties” instead of a fatally flawed foundation leads to engineers thinking “wait, I know how to solve engineering difficulties!”
I do think there’s a similar dynamic with the questions of individual and racial equality, where the alt right are serving as the Objectivists of human biodiversity, willing to not just say that racial equality doesn’t work in practice but that it doesn’t even work in theory.
I think there’s something to this.
I am definitely a “mainstream” Republican but I find myself disgusted when mainstream Republicans refuse to call out progressive dogmatics on their bologna. Bernie Sanders doesn’t have “unworkable” ideas (as Hillary Clinton might say), Bernie Sanders is morally repugnant (as Hillary Clinton probably actually believes).
One must actually make a MORAL case for one’s ideas, and not simply suggest that one’s own ideas are simply more “realistic.” Have some damn spine and fight for what you believe in.
Anything less is defeatism.
“Communism is good in theory but bad in practice” doesn’t necessarily mean that conservatives think that the motivation behind Communism is good, only that it’s sympathetic. In Moral Foundations terms, conservatives share the communists’ taste for fairness to a certain degree while acknowledging that it’s bad in other theoretical aspects. Also it’s intellectually easier to point to bad outcomes than to debate theory, so it’s a way of giving a good argument without committing to too much.
Does this make sense at all?
It does.
I’m not sure if I agree with it but I do think you might be on to something there.
The odd part of this is that, at least in my view, left-wing arguments for redistribution are far more convincing if they are accompanied by the claim that the poor are fundamentally incapable of ever providing for themselves.
Most of the reason I find true-believer left-wingers so annoying on this score is that they will not admit this.* “Redistribution” and “transfer payments” are exactly the same thing, logically speaking. But in my private classification system, I find the argument for transfer payments reasonable and the argument for redistribution irretrievably evil. If you want to help those who cannot help themselves, I’m listening. If you want to impose your version of economic fairness on the world because you are convinced it is correct, I oppose you and everything you stand for.
*Although “the poor” is a very large and heterogeneous group: some of them could doubtless provide for themselves under some circumstances. Assuming those circumstances do not apply in the context of this discussion yields the result above.
None of us “provide for ourselves” – we fit into the social structure in some way. You believe that society is meritocratic, so you are more likely to be sympathetic to the idea that the social structure might be unfair to those who are incapable.
Ho hum.
The (hard) left is more concerned with the fact that a society that reflects human values has to be driven by individual choice – are we being made to do things that are contrary to human nature? Can we redistribute power in such a way as to make it easier for people to say “no”?
Fairness implies conscious action in this context, in my private classification system. (You are under no obligation to respect my private classification system, I gladly concede.)
To the extent that the system (not individuals) discriminates against people for non-meritocratic reasons, it is unfair. We should work on that.
If your position is that it is “unfair” that some people are better at doing things that other people will pay them to do than other people, and hence any system where one’s abilities control one’s life outcomes is inherently unfair, I disagree. If it is likewise your position that it is “unfair” that we don’t all start at zero, I also disagree.
(My position on “fairness”)
If we’re playing football, and you win, I’m not going to start demanding the trophy.
At the same time, if I’m not particularly interested in playing football, I think I should have the right to not play, and the right to ignore your trophy.
I’m pretty sure I made the exact same argument you are giving here, in the context of a discussion on Charles Murray.
Yep, here it is:
One thing that’s interesting about Charles Murray is his tendency to “flip the script” on progressives. It is a fundamental progressive belief that things like crime, poverty, and drug abuse are caused by social factors out of the control of individuals, and therefore those individuals aren’t really morally responsible for what they do. It’s “there but for the grace of God go I”.
Now, Murray believes the same thing but with genetic factors instead of social factors. However, a curious thing is that many believers in the genetic superiority of one group moralize this. Like, they try to somehow make it an accomplishment of white people that they are genetically superior. Hence “white pride”. Where Murray seems to confuse progressives like those at the SPLC is that he doesn’t believe in “white pride” or anything like that. In his view (quite sensibly, given his premises), it’s not lesser races’ fault that they are lesser, and it’s nothing to be ashamed of.
For instance, take this quote on laziness:
See, most people implicitly believe in free will and hold that laziness is a moral flaw. You have a choice about whether to be lazy, and therefore it’s just if you’re punished for being lazy. Murray doesn’t accept this. It’s not poor people’s fault that they are lazy; it’s a matter of genetics. We shouldn’t blame them for it; we should accept it and treat it like a medical disease.
So in a sense, you might except people like Murray to be allied with the progressives on societal determinism, with it being a gentlemanly internal disagreement on what are the exact causes of this determinism.
But curiously, the social-economic determinists end up allied with the believers in free will because they share a common premise more relevant to politics: that it is possible for those who constitute the underclass to no longer be an underclass if only the right steps are taken. For one side, it’s individual responsibility; for the other, it’s government intervention.
However, the genetic determinists end up being the hated enemies of both because they believe that, essentially, little can be done to change society, as the deterministic factors are immutable, at least during one person’s lifespan.
But as Douglas Knight points out, Murray isn’t one-hundred percent faithful to this because to a large extent he’s also a cultural determinist. If we teach the poor better cultural values, this can help them deal compensate for their genetic inferiority. Yet progressives still dislike this intensely for a couple of reasons: a) they see it as victim-blaming, since the conventional view is that people are responsible for the cultural values they hold, making “black people have a culture of laziness” little better than “black people are poor because they choose to be lazy”; but perhaps more importantly b) the proposed cultural changes move in the exact opposite direction from what progressives think to be the way to make society less oppressive of the poor, and c) they see the cultural arguments rightly or wrongly as just a “code” for racial arguments, making “black people have a culture of laziness” a secret code for “black people are genetically lazy”.
While the far right does tend to claim moral superiority, this is pretty much it. The mainstream right, and the whole left, favours “soft” explanations. The differences between right and left are who they blame, while the differences within the left focus on how to measure the problem and how to fix it.
The question is, why is there not really a pocket of the left favouring “hard” explanations? I suppose the original Progressives were this, but they’re gone now.
Somewhat related to the above discussion of IQ, and also to the findings about how early life intervention shows an improvement in scores which fades over time:
I have an admittedly somewhat elitist notion that, if true, would explain a lot about education in general:
The amount of information/level of complexity that will “stick” in a person’s memory/cognitive ability is much lower and less responsive to change than the amount he/she may “learn” long enough to pass a test.
In other words, there may be some concepts or modes of thinking which you could teach say, an IQ 100 person to do long enough to pass a test, but which they would never retain or continue to practice on their own without constant external reinforcement.
What made me think about this is how the insane Chinese education system produces citizens who are, at best, marginally better educated than the much more lackadaisical American system produces (and this with a citizenry which probably has a slightly higher average IQ). Vast quantities of information get crammed down children’s throats long enough to past crazy tests, but, for most of them, most of it just evaporates.
This, to me, is a way of trying to explain these (admittedly heavily edited for humor’s sake, yet I have a very strong sense I could get similar results if I tried it myself) “man on the street” videos where you talk to college students and get them to express their feelings about the recent death of former president Franklin Roosevelt.
Everyone learned who FDR was in school, but not everyone remembered. To some extent this is a matter of interest, but to some extent, I feel like it’s just native intelligence acting as a kind of “sieve.” Smarter people have smaller holes in their sieves: some fine-grained distinctions will never stick in the minds of dumber people, but maybe more importantly, you can feel like you’ve filled the bowl of the dumber person and yet be frustrated over and over to realize that their “holes” are just too big to prevent certain levels of detail or abstraction from continually flowing out.
Put another way, I feel like there are two ways of “knowing” who FDR is: there’s “knowing” the name of some guy in a textbook who did some things at some point, and then there’s having a sense of some kind of historical flow and where this person fit into it.
Possible implication: people with IQ<100 derive no lasting benefit from going to high school; people with IQ<110 derive no lasting benefit from college; people with IQ<120 derive no lasting benefit from postgrad work, and so on (just as a rough estimate).
Relevant: https://educationrealist.wordpress.com/2012/07/01/the-myth-of-they-werent-ever-taught/
Wow, that is pretty much exactly what I’m talking about. And also my experience teaching.
For some students, it’s just like “oh, hmm, you seem to have forgotten this thing we practiced 1000 times last semester; lets go over it one more time. Okay, got it now? Yes? Okay, let’s just do a bunch of exercise to make sure it’s really firm in your memory? Got it? Yes? Okay, now let’s move on…” [one week later student makes exact same mistake as consistently as if the review, or, indeed, the original instruction never happened]
And this to me, far better than “there just aren’t enough educational opportunities!” explains all these examples of what seems like unfamothable ignorance on the part of otherwise totally functional and competent adults.
Remembering stuff has nothing to do with IQ, if I recall correctly.
A saw a video that, assuming it was accurate, demonstrated in a striking way the lack of education of highly schooled people. The interviewer asked a bunch of people the reason for the seasons. All or almost all answered that it was because the Earth was closer to the sun in the summer than in the winter. It apparently did not occur to them that, if that was the explanation, seasons would be the same in the northern and southern hemisphere–and they are not.
The people being interviewed were graduating Harvard students.
That sounds more like a test for quick thinking than education, unless your curriculum includes a class on celestial orbits.
“Remembering stuff has nothing to do with IQ, if I recall correctly.”
Based on my personal experience, at least, smart people tend to have much better memories, at least for facts and concepts, if not for “the look of the sky on that one summer day.” Of course, what we experience as “smart” in an everyday context is not perfectly correlated with IQ, but I think it’s close enough.
Also, having a good memory, I think, is part of what we mean when we colloquially say someone is “smart,” even if memory isn’t explicitly tested on an IQ test. It may be that the two types of “smartness” are more independent than we think, but I’ve never met someone who was dumb otherwise yet who had an amazing memory. And all the people with remarkable memories I’ve ever met have been otherwise smart and I’m sure would have done well on an IQ test.
Additional example:
https://www.youtube.com/watch?v=yRZZpk_9k8E
I know this is supposed to be funny, but it actually makes me really sad and even a little upset. Like, why, as a society, have we wasted and are we continuing to waste these peoples’ time and everyone else’s time and money keeping them in a classroom for 15+ years? I mean, they are obviously functional people who will probably grow up to have jobs and families and reasonably fulfilling lives, but clearly classroom-type learning just doesn’t work for them. (I also don’t want them voting, but then, I don’t want anyone voting).
To be fair, they could just be thinking of axial tilt making the hemisphere experiencing summer a little bit closer than when it is experiencing winter, at least near the poles, though I’m not sure that’s even true since the orbit isn’t circular and perihelion is in January. I guess that makes it true in the southern hemisphere.
The video David mentions is here. It includes not just Harvard students, but also faculty.
It is extremely different from Onyomi’s video. Many Texas Tech students admit that they don’t know and those that answer are obviously uncertain, while Harvard students confidently assert their answers.
Wow, that is really bad. When I first heard David describe the responses I thought, “well, that is a harder question than ‘who won the Civil War'” and also that there are at least two ways I can imagine someone being wrong about this:
The first, I think, more defensible position (though maybe I only think that since I held it before googling the question), is that the Earth’s tilt causes one hemisphere to be closer to the sun and one hemisphere to be farther away at any given time. Not knowing that the Northern hemisphere is technically closer to the sun during the winter but that the amount of sunlight is the key factor seems understandable to me (though I also am a humanities PhD who hasn’t taken a physics or astronomy class since high school, and if I had wrongly said that the Earth was closer to the sun during the northern hemisphere’s summer, I think I would at least have attributed the increased heat to an increase in sunlight).
The second way to be wrong about this question is to forget about the Earth’s tilt entirely and think it is just the distance of the entire Earth from the sun which is causing the seasons. This position seems like it should be much more vulnerable to common sense, since it makes no sense if you know that the seasons are reversed on opposite hemispheres (though I actually wouldn’t be surprised if a majority of Americans didn’t know it’s hotter in Australia in December than July).
When I heard about it, I assumed most of the students were making error 1, when it seems like a fair number of them are making error 2. What’s worse, some of them claim to have taken classes in physics and astronomy at Harvard.
Though my initial reaction was that the ignorance on display at Texas Tech was much worse since, at least from the perspective of a humanities PhD, the question of who won the Civil War seems easier than that of what causes the seasons, knowing the details of the Harvard case seems to make it more unfathomable, especially since these are not all philosophy majors and people who get into Harvard, by and large, have already proven themselves not to be the sort of person with a large-holed colander-like brain out of which basic facts seem to constantly leak.
Even scarier, as Douglas points out, the Harvard students assert their wrong answers with bold confidence.
Two points:
1. “Good memory” isn’t an unambiguous category. I am very bad at remembering people’s names, much worse than my wife at remembering details of a book we both read some time ago.
But I know a very large amount of poetry by heart.
2. The idea that the seasons are due to one hemisphere being closer to the sun because of axial tilt only makes sense for someone who has no idea at all of astronomical scale. The earth has a diameter of 8000 miles. The distance to the sun is about 92 million miles. So the effect would be a change in distance of something under one part in ten thousand.
“The idea that the seasons are due to one hemisphere being closer to the sun because of axial tilt only makes sense for someone who has no idea at all of astronomical scale.”
I don’t think I do have any idea of astronomical scale, though when you state the numbers it seems obvious, and, in my defense, I at least knew that the Earth had a tilt and that the seasons were reversed in either hemisphere (and also that they get more extreme toward the poles and disappear at the equator).
Also, had I been asked the question cold I do think I would at least have realized that the amount of sunlight reaching an area at any given time of year was the key factor, though I also would have guessed wrongly that the northern hemisphere was closer to the sun in July than in December.
“I am very bad at remembering people’s names…But I know a very large amount of poetry by heart.”
I think the variable nature of memory actually reveals something of the inextricable nature of memory and intelligence. I think much of what we mean when we say “he is good at math,” or “she is good at music” is actually “his brain has a good mathematical pattern recognizer” or “her brain has a good musical pattern recognizer.” After all, how many people do you know who are good at music yet who have a bad memory for tunes?
I, for example, am good at learning foreign languages, which one might attribute to my brain’s ability to easily pick up on patterns in grammar, phonology, etc. I also find these things interesting, but it may be because one tends to find more interest where one easily perceives patterns. This also translates into me having a “good memory for vocabulary,” which I think cannot be a coincidence.
I am less good at math, maybe because my brain doesn’t pick up on or hold on to mathematical patterns as well. To a math teacher I may seem to have the “colander brain” where I seemingly grasp a concept yet it also slips away easily. This might make it seem like I have a “bad memory for numbers,” but it may be that I am actually just not perceiving mathematical patterns in the same fullness as someone with a better math brain, making those patterns seem less significant to my memory. In fact, before I stopped taking math classes altogether after high school, I distinctly remember quite often having the experience of taking a test and thinking “well, it made sense when the teacher explained it or when I was reading the textbook, but now…”
Generally I find there is a loose correlation between strong pattern recognizers: it’s not too common to find someone amazing at math who can’t write a short essay, though the reverse seems to be a bit more common. But it can be very loose, as it’s also not at all uncommon to find someone very talented in one area and average or even below average in others.
Especially interesting is the case of the “idiot-savant,” for whom it seems like the pattern recognizer for one thing has almost strengthened itself at the expense of other areas. A weak version of this may be much more common: the stereotype that nerds are bad at picking up social cues, for example.
And this may help explain the seeming unfathomable ignorance of otherwise functional people: they simply don’t perceive patterns in physics, language, history, or whatever in enough fullness for those patterns to feel at all significant to their memories. These same people might have great memories for faces or names, because those things feel significant to them on a gut level.
The big question to me as an educator myself is: do we need more “triage” to determine who can get anything out of say, math class or history class and push students into training that will be useful to them earlier, or do we want to try to keep teaching the same knowledge set but with somehow improved methods? I think I could have learned more math and physics than I did had the instruction been more creative and interesting, but I also don’t think I’d ever be a good enough mathematician or physicist to contribute substantively to those fields. So maybe the only mistake was making me take as much math and physics as I did? Yet it also feels like a failure as a teacher to say, essentially, that some students are just incapable of learning the subject you’re supposed to teach.
Now that I’m thinking about the seasons, I’m not sure how much of the temperature difference is sunlight having to go through more atmosphere during the winter, and how much is shorter/longer days.
Are the seasons more extreme depending on which hemisphere you’re in? Do celestial bodies with little or no atmosphere have much in the way of seasons?
I would have answered the question about the cause of the seasons correctly, but that’s because that’s the sort of thing I can remember, not because I really understand the situation.
The reason for seasons is a difficult topic. I am not surprised that Harvard students do not know understand it. I am somewhat surprised that they do not know the “teacher’s password” that it is the “tilt of the earth,” but maybe it just isn’t in the curriculum. I remember it being covered in school once, in third grade.
No, the answer isn’t the length of days. The longest days are summers at the poles. Summers at the poles are warmer than winters at the poles, but they’re both colder than any season at the equator.
In theory, the seasons in the southern hemisphere should be more extreme than those in the northern hemisphere because the sun is closer in southern hemisphere summer than in northern hemisphere summer. But it’s only 1%, which is small compared to lots of other factors.
The sun is hotter at noon than at dawn or dusk. The sun is hotter when higher in the sky. It is higher in the sky at the equator than at the poles and it is higher in the sky in summer than in winter. But why does the height of the sun matter? No, it isn’t the atmosphere. Imagine that the world is flat. It isn’t, but the square mile you’re standing on is pretty close to a disk. How much energy does it absorb from the sun? Having detached the disk from the earth, we can talk about its shadow. The shadow is all the light that didn’t get past it, all the light that it absorbed. If it faces the sun, it catches a square mile of sunlight and has a square mile of shadow. If it tilts, the shadow is smaller, so more light is getting past, less is absorbed by the disk.
Seasons are more extreme in the northern hemisphere, but it’s because there’s much more land. Water has a moderating effect.
“Are the seasons more extreme depending on which hemisphere you’re in? Do celestial bodies with little or no atmosphere have much in the way of seasons?:
Yes.
An atmosphere makes seasons less extreme, not more, by way of convective heat transfer. Seasons are driven by the amount of sunlight per unit surface area, and it doesn’t much matter whether that light reaches the surface or is absorbed ten kilometers up. What does matter is that if you tilt the surface 45 degrees from the source of the light, you get 30% less sunlight per unit area by simple geometry. And with the Earth’s axial tilt of 23.4 degrees, that’s about the difference between summer and winter in the temperate zones.
So, I am going to give what I will affectionately call “the dieter’s model of the seasons.” Much like body fat, the seasons are completely described by the balance of energy in vs. energy out. For planets, this energy is light. (Obvious foreshadowing is obvious.)
Teachers in school tend to make a big deal about how the Earth’s orbit is an ellipse, something something, Issac Newton is smarter than you. But it is actually pretty damn close to circular. The difference between the closets and farthest distance from the sun is around 3 million miles (which is about 75 times the circumference of the Earth) and sounds really big, but this is out of a distance of almost 100 million miles so the difference is only ~3%. If you tried drawing it, you probably wouldn’t be able to tell the difference between a circle and such a really close to circular ellipse. The eccentricity of the Earth’s orbit only accounts for a couple percent difference in the light received throughout the year.
What does matter for the Earth, as Douglas Knight explained, is that when the surface is tipped w.r.t. the Sun, it receives a lot less light. The Earth is lying slightly on its side. During Northern winter, the North pole is tipped away from the sun, so the surface in the Northern hemisphere is receiving less light. At the same time, the South pole is tipped towards the sun, so the Southern hemisphere is receiving more light and is in summer.
So the teacher’s password for the reason for the seasons currently, and on Earth is “axial tilt.”
As a matter of coincidence, the South pole reaches the point where it points the most towards the Sun pretty close to the same time that the Earth makes its closets approach to the Sun. IIRC, early July and late June respectively. From this you would expect the Southern hemisphere is be (a tiny bit) hotter during the summer than the Northern. Likewise, the South pole points away from the Sun the about the same time the Earth is passing its farthest distance from the Sun, so you would expect Southern winters to be (a tiny bit) cooler than Northern. But the difference (if it actually exists) is, well, tiny.
Let’s spice things up a bit. Astronomers care an awful lot about albedo. This is basically how reflective a (part of a) planet is. Different materials reflect different amounts of light. Rocky planets like the moon reflect very little of the light that hits them. Icy planets–say, Enceladus–reflect almost all of the light that hit them. Think of the difference between a blacktop parking lot versus a field of freshly fallen snow. Whatever light that isn’t reflected is absorbed; this is why you’ll see a wet road on a cold-but-sunny day hot and steaming while the snow a few feet over is still thoroughly frozen. Albedo tells you how much of the light that hits a planet is actually absorbed.
If you’ve never noticed, the Earth is made out of different kinds of stuff in different places. Oceans, for example, absorb more light (has a lower albedo) than land. The Southern hemisphere has more water area than the Northern hemisphere, so we would expect it to be warmer.
But it turns out the Northern hemisphere is something like a degree C hotter than the Southern. What the hell?
This contradiction is basically because of climate. Like metabolism totally messing with the calories in/out model of dieting (Goddamn it! Burning calories by working out causes your body to conserve energy the rest of the day to hold the expenditure constant???) climate is made up of all kinds of crazy systems interacting in complex ways making trying to model it accurately a terrible way to spend your life.
It turns out that the land in the SH absorbs less light than that in the North (we’ll wave our hands and say
aliensclimate!), offsetting somewhat the difference in ocean area. The rest of the difference is made up with by cloud cover; the surface albedo doesn’t matter if the light never makes it that far. Again, climate. The end result is that when you actually measure the annual average albedo, the hemispheres are almost identical.This gets us to a point were we would expect the hemispheres to be almost identical in (average annual) temperature. We need another step in order to pump an extra degree into the Northern hemisphere. That step is ocean currents. Both the Atlantic and Pacific oceans have surface currents that bring hot water North, and undercurrents that bring cold water South. These oceanic convection cells are… climate.
And we haven’t even gotten to anything interesting like weather patterns, atmospheric composition, and so on.
So we have a beautifully simple principle, energy in/out, which really, really does exactly describe the system, but if you try zooming in even the tiniest bit you’re basically screwed every way to Tuesday.
And because they are useless, we should remember that the classic teacher’s password implicitly assumes “Earth” and “now.”
It is trivial to construct a thought experiment for which “axial tilt” does not cause the seasons. Just image a planet that doesn’t have any. Then the seasons would be the result of orbital eccentricity. In fact, you don’t even need a thought experiment! Mercury’s axial tilt is only about 2 degrees (compared to Earth’s 23), and it has a noticeably eccentric orbit (of about 0.20 compared to Earth’s 0.017).
And axial tilt doesn’t necessarily describe the seasons on Earth over larger time scales. Earths orbit oscillates between “virtually circular” to “not as circular” with a period on the order of 100,000 years. We’re currently closer to the “virtually circular” end; consequently, the (relative lack of) eccentricity only describes a couple of percent different in incident light throughout the year. At the other end of the oscillation, the eccentricity describes (IIRC) a couple tens of percent difference. This is enough to start seriously influencing the seasons.
And the axis doesn’t always point the same direction. Over time, the axis slowly processes. Think of a spinning top whose axis is slightly tilted, the axis will slowly rotate in a circle. The Earth does kind of the same thing. While the North pole may lean away from the Sun near the closest approach now, over time the axis will slowly process until it leans towards the Sun at the closest approach. This procession has a period of like–I don’t remember, 50,000 years or something.
And the amount of axial tilt isn’t constant either. Okay, it only varies by a couple degrees, but still.
And those annoying climactic details can go all fun house mirror and dominate the orbital mechanics. Glaciation is a feedback loop. The more glacial cover you have, the less light actually gets absorbed, the colder the planet becomes, the more glacial cover you have. Or something something AGW something something Cambrian hot house.
When you put it all together, “axial tilt” isn’t always the sole or necessarily dominant reason for the season here on Earth.
Anyway… I forgot where I was going.
It upset Scott, too. See “SSC Gives A Graduation Speech”. And to be completely honest, I agree with the both of you.
Compulsory schooling K12 isn’t actually there to provide an education. It’s daycare so that both parents can participate in the workforce. Yes you’d save everyone time and money by doing away with it, but then you’re left with the problem of who watches the kids before they’re old enough to work. Ideally we’d live in a world where one of the parents could actually stay home and manage a child until it was old enough to manage on its own, but considering how many families are barely afloat financially even with both parents working, that’s not a scalable solution.
There may be some other benefits to that, but you aren’t going to be improving economic efficiency. Keeping 1/2 of the parents out of the work force for 18 years to watch 1-5 children is going to be a hell of lot more man-hours than the teacher and principal hours consumed by the current system.
Lots of smart people use spaced repetition to aid memorization, which is similar to that infuriating thing teachers do where they repeat themselves week after week (and then the next semester they review the thing *again* before moving on)
like you are some sort of moron incapable of remembering the first couple of times.
Turns out that method does work. It’s just that the teacher has lots of students and it’s hard to find a rhythm that works for both fast and slow students.
+1 for bringing up spaced repetition.
I wonder how many of the frustrated teachers who taught their students the same concepts over and over again actually bothered to introduce said students to spaced repetition programs.
“I wonder how many of the frustrated teachers who taught their students the same concepts over and over again actually bothered to introduce said students to spaced repetition programs.”
Most of them. In fact, it’s during spaced repetition that they don’t remember.
But go ahead and pretend teachers are stupid, and that you’d know better.
@ realist
You misunderstood my comment. I was asking about introducing students to, and teaching them how to use, spaced repetition programs, such as Anki (or some sort of a Leitner box, if the students don’t have access to a computer.) I wasn’t talking about teachers effectively trying to do spaced repetition in class themselves by reviewing the material with students. (Which would be hard for the reasons Saint Fiasco mentioned.)
If most teachers these days actually do teach students how to use SRS, then I didn’t know that. Do they? (And I’m not talking about you, because you’re clearly an outlier in many ways.)
Also, I wasn’t trying to suggest teachers who complain about this sort of thing were “stupid.” Just ineffective. And to be fair, I believe schools in general are ineffective, and I don’t blame individual teachers for it.
“introducing students to, and teaching them how to use, spaced repetition programs, such as Anki”
Getting students to do anything outside of class which is not directly evaluated, but which you merely suggest would help them do better (including more efficient ways to study for quizzes and tests they have to study for anyway), is well nigh impossible for all but the best, most motivated students, who don’t need that much help. It’s hard enough to get them just to do the graded homework and show up for class.
@ onyomi
I believe you. I’m sorry my original comment was phrased in such a way that it implied individual teachers were to blame.
I also wanted to mention that your original comment that started this whole thread was very interesting, very reasonable, and phrased very politely.
In addition to that link, which is relevant, I’ve written a lot about the near total disconnect between Asian test scores and Asian demonstrated abilities. It’s all anecdotal, but I’ve got a lot of data points–six years of working in Asian academies here.
Keep in mind that at a certain point, it’s hard to tell if they are just gaming the test by sending it all to declarative memory just long enough to regurgitate it, or if they are actually cheating (that’s a huge problem). But certainly, it’s not going into semantic memory. Here’s an overview of memory (from my own idiosyncratic viewpoint: https://educationrealist.wordpress.com/2014/01/16/memory-palace-for-thee-but-not-for-me/)
It doesn’t mean that high school is a waste of time, but it does suggest that in the HUGE skills vs. knowledge debate, we should be teaching smaller amounts of knowledge for longer, and integrating it with skills. And there’s absolutely no point in teaching kids higher math or science if they don’t have an IQ over, say, 110.
It also means that the new SAT is a puzzler, because I don’t know how they’re going to get away from making the achievement gap worse, but that’s a different story.
I mentioned here before that I used to be a test prep teacher as a part-time gig when I was in grad school. The school was in California but almost exclusively Korean and Chinese. We ran a comprehensive bootcamp for eight weeks in the summer that involved eight hours a day in classes plus homework and, well, it worked. It worked really well. One girl improved her score 624 points. A lot of that was writing, which is much less an intelligence test than the rest, but even on the verbal and math, there are clear tricks you can use when you know exactly what types of questions come up and drilling them constantly for hours a day weeks on end will raise your score.
I’m almost completely certain none of that stuck with them, of course, because why would it? We were teaching them to take a test. The skills were not useful outside of that one specific domain.
Could you elaborate on the “disconnect between Asian test scores and Asian demonstrated abilities”?
Pretty much every kid I taught had received the highest score on their end of year English tests (in a difficult state), yet their vocabulary was very weak and their writing skills usually pretty ordinary. There were talented exceptions, but not many. Any white, black, or Hispanic kids I’ve met with the highest possible scores had abilities to match.
Similarly, I ran into kids who got a 5 on the APUSh but knew relatively little about American history, a 5 on the BC Calc with basically average algebra skills, and so on. It’s incredibly common, and you start to realize why the discrimination against Asians exist in college admissions. It’s either cheating or gaming, but in any case, the skills don’t match the resume too often. I’ve met dozens of 2400 SAT kids whose abilities aren’t anything much above bright, but nothing special. (With the understanding that I know any number of genuinely bright, talented Chinese/Korean kids.)
On the other hand, I can’t think of any white, Hispanic, or black kids with outstanding test scores who aren’t exceptional people.
Interesting. So would you consider preparing for the test by taking many practice tests “gaming the system”? The kids work harder. I think it’s unfair to call it “gaming the system” because the rules are the same for everyone. No one is stopping other kids from prepping for the tests.
Also, American high school classes are really easy. I went to a very average high school in Europe, got accepted to an elite American university, and was shocked to find that most of my peers haven’t had any organic chemistry or mathematical analysis. All of those kids from my average high school would probably perform as well as Asians perform in America on all sorts of tests, not because they are good but because Americans are bad. Asian parents are managing to maintain a culture of academic excellence despite how bad American schools are, and your response is to suspect them of cheating?
If the college admissions policies discriminating against Asians were justified, we wouldn’t see Asian students outperforming everyone else in college. But we do. And not only when it comes to academics. Take music for example. Do you think those Asian kids who kick ass on the violin or the piano are gaming the system, too?
I taught at the college level for two years. I saw absolutely no sign of Asian kids knowing less than their test scores would suggest. Most of my top students were Asian.
I don’t know what’s going on, but my best guess is that your assessment of your students’ knowledge is off. Maybe there’s a cultural difference or something that makes you judge them as less capable than they actually are.
It’s “gaming the system” in the sense of making the test less indicative of actual knowledge. If you want your test to test for willingness to shove tons of hours at rote memorization that’s one thing, but sometimes we want to test for things other than that. You say “no one is stopping other kids from prepping for the tests” but in the end the best case scenario there is that every kid spends a huge amount of time doing useless cramming and the results end up exactly the same. The worst case scenario is that due to some kids being better or worse at useless cramming the “useless cramming” portion of the signal drowns out the “actual knowledge” portion and everyone wastes all this time and the test is still meaningless.
@suntzuanime
Oh, I see your point. That does make sense.
I just don’t think Asians are guilty of crazy amounts of useless cramming to the extent that would even come close to justifying the discrimination they face in college admissions, for the reasons I mentioned.
First of all, doing practice tests can be a good way to learn. Drills are useful. You learn to solve problems by solving problems. I don’t think there’s an epidemic of people actually cramming solutions without understanding them.
Also, American standardized tests are easy to people who went to high schools in many other countries. I just don’t see it would really take that much drilling for Asians to do better on these tests than the rest of American students.
If Asians were gaming the system by cramming at the high school level, presumably they would stop being able to game the system in college, where there are higher cognitive demands. But they keep doing well in college. Are they gaming college? Oh wait, they also keep doing well in professional schools and then keep doing well at work. Are they gaming life?
Nadja, violin and piano are two examples where practice, practice, practice is the way (and for most, even most of the gifted, the ONLY way) to succeed. So they’re not really counterexamples.
I don’t see any reason you can’t “game” college or professional schools the same way as high school. Certainly in mathematics and physics classes there’s often the option of either understanding the subject, or memorizing all the formulas.
Are they gaming life? Actually, I think it’s just the opposite. They’re the ones grinding through the hard way, and those who actually learn easier methods are “gaming” the system by finding shortcuts.
Nybbler, it sounds to me like we agree. Violin and piano were meant to be examples of things you get good at by practicing. The point being is that practicing and drilling is good, and it leads to higher ability. And with violin and piano you can’t easily deny the greater ability by saying things like “oh they score high on tests, but if you ask me, they don’t seem to know that much about history.”
I’m aware that the realist’s comments contained the disclaimer that it was all anecdotal about Asian kids’ test scores not matching their ability. My point is that data doesn’t confirm it. Asians continue doing better well past high school. Some of their success is due to them continuing to work hard, and some of it is due to the fact that practice practice practice does build competence.
Are there any professions where practice and hard work aren’t essential to success?
Great point on who is actually gaming the system. People with high IQs often don’t have to put in much effort to get into, idk, programming and to lead a comfortable upper middle class existence. At the same time, someone with the same IQ but with much better work ethic will likely end up much more successful.
Since we have no reason to think Asians have lower IQs on average and since we do have reasons to think they work harder, then I think it’s reasonable to assume they’ll end up more skilled and competent in the end.
I don’t think the first part is actually true, at least not if we are talking about East Asians and as compared to those with similar paper qualifications. Prejudice is a plausible explanation but so is false signaling.
Anonymous, why don’t you think the first part is actually true?
“I just don’t think Asians are guilty of crazy amounts of useless cramming to the extent that would even come close to justifying the discrimination they face in college admissions, for the reasons I mentioned. ”
Actually, it’s almost certainly the other way round. The useless cramming or cheating or whatever causes them (including high IQ) to get test scores is a large part of why they are discriminated against, although few will say so.
>dozens of 2400 SAT kids whose abilities aren’t anything much above bright, but nothing special.
No you didn’t. Its probably just a part of the very typical white person “So ching chang chongo plays 5 instruments, speaks 3 languages, and got a perfect SAT score and 7 5’s on the AP tests. But he is just a study grind. He didn’t play sports, didn’t start a club(which as an immigrant, probably has no idea how to start), didn’t count”
Its a very white person type of dismissal of accomplishments for people not of their race. I’m not Asian myself, but I would be pretty damned infuriated always reading that online. After say, 50 hours of studying for the test ( a very reasonable amount for something so important. A weeks worth of a full-time job.), the gains are very very minimal on the SAT. You can study an extra 300 hours after that and expect to see less than a third of the initial 50 hours improvement(which again, is very reasonable for the test. I don’t believe a great deal in pure raw aptitude tests. But a trained test that stops improving after some training? That’s very real-life ish, and should not really be critiqued)
https://menghublog.files.wordpress.com/2014/05/the-bell-curve-1994-herrnstein-and-murray-graph-p-401.jpg
I mean, a 5 on the AP calculus tests isn’t as impressive as it sounds. But that’s simply due to the probability distribution of talent and proportion of high school students that take the test.
>20.1 percent of public high school graduates in the class of 2013 earned a 3 or higher on an AP Exam
Assuming that AP calculus and AP biology and AP English are the most taken courses(judging roughly by what I took and what I saw others take…and its a standard progression)
http://www.totalregistration.net/AP-Exam-Registration-Service/2015-AP-Exam-Score-Distributions.php
Looking at that..it seems that about 30% of students took an AP course. Probably lower, but roughly.
Just by percentiles of abilities with a third of students taking the courses, and a typical amount of 20% getting scaled 5’s, theres quite a bit of 5’s. I don’t think its terrible though. The average college that isn’t top 30’s intro courses are not really more difficult then AP classes. And that’s basically what AP courses are for. If a student gets a 5 on enough of them, they can skip a year of college for most difficulty levels(and I think a 5 takes off non-major courses for top ones), since they know the material. Its a fair deal.
I do find it annoying that to locate top math talent, the AMC has to be known, and studied for, and its not part of the normal national testing. But most analysis show that the proportion of Asian americans *increase* in those very difficult tests of ability. What then?
> Its probably just a part of the very typical white person “So ching chang chongo plays 5 instruments, speaks 3 languages, and got a perfect SAT score and 7 5’s on the AP tests. But he is just a study grind. He didn’t play sports, didn’t start a club(which as an immigrant, probably has no idea how to start), didn’t count
See, this is the kind of nonsense which makes it difficult to discuss these issues. The question isn’t whether anyone played sports or started a club. It’s whether they speak 3 languages — really speak them, as in can read works written in those languages and understand them, and converse with a native speaker — or have just managed to learn enough by rote to pass a test on those 3 languages. As I said above, if they play 3 instruments that’s a different matter, because in that case “grinding” IS the only thing that matters.
A test is intended to determine a students mastery of a subject. But generally it cannot be a perfect metric. Which means there’s potentially multiple ways to pass the test. One, to achieve mastery of the subject. And two, to come up with a way to increase the test score without achieving mastery. The accusation here, if it is an accusation, is that your stereotypical Asian “study grind” is doing the latter.
“After say, 50 hours of studying for the test ( a very reasonable amount for something so important. A weeks worth of a full-time job.), the gains are very very minimal on the SAT. ”
See, you don’t know what you’re talking about. The *average* Asian immigrant kid spends 144 hours in class, 32 hours taking practice tests, and about 64 hours outside of class in drills. Over the summer. Then they have additional tutoring during the school year, or they go to a weekly class.
These are the average kids, the ones whose parents are just trying to get them a boost—and they are going to test prep 300 or 400% more than the average white kid (whites are the least likely to take test prep). That’s not counting the really heavy test prep places, where the hours go into the 400-600 range–and it’s not counting what they actually do in China and Korea, where the kids spend 8 hours a day for a year prepping for the SAT. That’s how they get scores in the high 700s despite not actually understanding English.
And yes to what the Nybbler says.
Your stats barely scratch the surface. There’s tons of data on Asian results. There’s also huge barrels of anecdotal evidence on the cheating, and if you actually talk to American teachers who work in 80% Asian schools, you’ll hear the same thing. This is not a place for an earnest white person to tip a toe in and think it’s all about racism. There’s close to 30 years of adjustments and problems that have been uncovered.
@ realist
Could you link to your sources on those numbers? I think some of the disagreement in this thread stems from the fact that other people’s experience with immigrant Asian kids is very different from yours. I have a good number of Asian immigrant friends, and none of them took even close to the number of hours of test prep you suggest. Moreover, these people grew up in various Asian communities across the country, so presumably they’d at least be aware of the scale of these things in their communities. Now, if you have some good data on the average number of hours of test prep for immigrant Asian kids, then that would be useful. (We might still end up disagreeing about other things, such as whether these kids end up more competent than kids of equal IQ who don’t drill, or whether these drills are in fact mindless cramming.)
Tangentially relevant to discussions of aptitude and noge_sako’s bizarre NPC naming schema: settle down, Chongo.
For those aspiring rationalists with android devices who’d like to try out a Belief Calibration game, I just published my first app to the Google Play store: Confidence Quiz. Check it out, and let me know what needs improving!
Nice! I’ve been meaning to try my hand on the app market at some point myself. The quiz itself is good, but you need to work on the “problem set complete” screen, which is surprising (no warning it’s coming), and poorly laid-out. The user really doesn’t know what they’re looking at there until they back-out to the main menu and check Player Stats. Why not just use the Player Stats screen AS the problem-set-complete screen, and add a button there for “Next Set”. (Probably replace the “Done” button with “Menu”)
Thanks for the feedback! That’s a good idea and I’ll get to work on implementing it!
I was thinking about the Jewish practice of “sitting shiva” (basically a bunch of rules for mourning a relative), and how well-designed and humane it is, and also about how part of what makes it humane is its basically non-optional (for the serious observer) nature (because it’s the sort of thing which, if chosen, could seem self-indulgent).
And it made me think that in general we are seriously lacking in rituals nowadays, even among the religious (curse you, Vatican II!). But I also feel like moves to artificially create rituals, especially among atheists, can’t help but seem forced and silly and lacking in the necessary gravitas (that said, I haven’t been to any Solstice ceremonies or made any attempt to be a ritualistic rationalist or anything, so maybe they succeed more than I know).
I peg myself as “spiritual but not religious” in that I am agnostic tending towards atheism on the question of a personal god, but still see value in practices like meditation, so I’m not invested in the idea of creating fully secular alternatives to religious rituals. At the same time, I think I’m too skeptical to really jump in headfirst to any particular religious community.
But I am not so much asking about what I should do personally as whether people have thoughts on ways for society in the 21st c. and on to recapture the benefits of ritual on a wider scale without necessarily retreating into full-on cultural reaction.
I went to one of the Solstice ceremonies. It didn’t really work for me; too silly, too nerdy, too heavy-handed. They Might Be Giants does not really speak to me on a spiritual level, you know?
The ritualism in traditional martial arts does work well for me, but a lot of it is borrowed from Shinto. In Japanese martial arts, at least; the Korean art I studied was more Americanized and its ritual was more military-flavored, and I haven’t studied Chinese ones but I assume they have their own stuff.
The german reformed church has found the optimal solution for that I think: Adapting (and even contributing) to cultural changes while sticking to what they perceive as the Christian core message That society should look out for the individual and in particular the weakest.
This lets you keep the natural framework in which you can have rituals and spiritual experience, but you also don’t have to do any mental yoga (in my experience no one really cares what you ‘actually’ believe, and when interpreting the bible, this mostly serves as a lead up to actual thoughtful reflections about everyday life).
This necessarily sounds a bit like advertising, but that is just my experience. I know in the US and even maybe many other communities than where I grew up things are way different.
The point of rituals in my book is supposed to be that they work. You have rituals to cleanse your hands and mouth before and after activities where cleanliness is a legitimate concern, rituals to supplicate one or more deities involved with good fortune, rituals of healing for the sick and dying, etc. People (probably) started doing them because they actually expect the ritual to help accomplish the tasks that they were associated with.
So why not make rituals that actually help accomplish some practical goal? You can have your morning calisthenics ritual, where following it means that you make sure to stretch beforehand and use proper form. Or a ritual purity standard for food which makes sure your diet isn’t bizarre and that you actually have to cook your own food from fresh ingredients. Ritualistic cants to memorize important bits of data like the ignition sequence of your aircraft. The important bit is that following the form of the ritual will contribute to the function of whatever it’s attached to.
That way the rituals aren’t silly or arbitrary, people have a reason to adopt them, and with shared symbolism you can make non-obvious connections between interrelated tasks or objects clearer.
I feel like Falun gong sort of did this in China–attach a bunch of mystical mumbo jumbo to what is basically just some relaxing, meditative calisthenic exercises that are probably mildly good for you. I think at least part of the key is that you need a group which is united in doing the practice. Reminds me a bit of that weird thing Scott described at some point about a religion where you’d periodically be required to put your life in the hands or save the life of another member, but maybe easier and more beneficial. Unfortunately, it seems to work better if you do attach some spiritual mumbo jumbo to it. Nihilism isn’t very motivating.
What about philosophical mumbo-jumbo instead?
I’ve got a major intellectual hard-on for Marcus Aurelius myself, not that the other Stoics weren’t great, and Stoic philosophy as articulated by him explicitly works under both nihilistic atomism and providential natural law. And they were huge on ritual.
I’d second this comment.
Though I’ve lapsed lately, I used to make a point of taking cold showers and jumping out of bed immediately on waking specifically because of things I read in the meditations.
“I am rising to do the work of a Roman and a Man” is a good mantra to start the day on. Certainly shames one out of staying in bed all day.
As a beginner, I enjoyed and (I believe) profited from Irvine’s A Guide to the Good Life: The Ancient Art of Stoic Joy.
I almost mentioned this in a thread up-page, asking whether philosophy was obsolete. One of Irvine’s motivations was observing that modern philosophy seems curiously uninterested in questions like “how to live a good life”.
I think this is a good idea, but in fact we have this kind of practical rituals already. Think about cooking together, having an exercise regimen, etc.
Adding a spiritual layer on top is still arbitrary and artificial.
To avoid this I feel it really needs to come from some sort of established authority which does not have to justify itself rationally, be it tradition, the church, or even the state (I’m not saying that any of this would be over all desirable)
This is too limited a definition of “work”. Rituals that give one a sense of purpose “work”. Rituals that bring people together “work”. “Spiritual” stuff around, say, diet and exercise is not just the sugar that makes medicine go down.
Sarah Perry has written a lot on this that is worth reading: http://www.ribbonfarm.com/author/sarahperry/
An example of a created ritual that seems to work for some people.
The Society for Creative Anachronism does historical recreation from the Middle Ages and Renaissance. It’s a hobby that for some people is a large part of their lives. Its largest event is a two week camping event in the summer which nowadays has over ten thousand people attending.
One evening of the second week, there is a ceremony in which a model viking ship is sent out to sea—actually a lake—and set afire. It has on it shields with the arms of people in the SCA who have died during the year.
Here’s a comment on Reddit from a garbageman, relevant to this old post about attempting to throw out a trash can…
So I wanted to use the survey to report excellent satisfaction with one well-known stimulant that gets prescribed a lot for ADHD, and total lack of experience with any other nootropic, and the absence of any question about methylphenidate made me doubt the value of my experience with this boring conventional totally non-hip substance to the scope of the survey.
Oh yeah I also drink reasonable amounts of coffee and have super negative experience with nicotine.
I haven’t used most of the substances on the list, either, and still responded for those I have. I think it’s what you’re supposed to do. It’s also worth noting that methylphenidate is not so common in the US, which may explain its absence in the survey.
What’s your negative experience with nicotine?
I’ve found the biggest “nootropic” effects from drugs/supplements to come from improving sleep duration and quality. I’m a regular melatonin user and also supplement with ZMA, which I’m surprised not to see mentioned more in nootropic communities as its quite common amongst strength sports participants, for whom its supposed to improve recovery.
The scientific evidence for ZMA is mixed but anecdotally it works very well, I’d go as far as saying its more effective than modafinil for me (which is great for forcing myself to sleep at a reasonable hour, but doesn’t seem to affect sleep quality as much and sometimes leaves me feeling groggy in the morning)
Anyone else have any experience with ZMA?
1) being drunk enough to accept a cigarette from a friend and feeling a bit numb, disoriented, and out of balance. In a way that’s completely different than alcohol alone.
2) accepting a cigarette while practicing a riff on the guitar and becoming really twitchy, nervous, unfocused, numb, and putting ash all over my pants.
I’ve puffed on an ecig a few times and felt basically nothing. The worse is that no I actually want to smoke cigarettes. Those things are _evil_
I’ve never moderated a WordPress blog, so maybe this is a silly question, but does the Report Comment function offer any degree of aggregation? Like, “comment #123 received 6 distinct reports, #234 received 3, #345 received 2”, etc. Or is it just an undifferentiated stream of “person X reported comment Y”?
How does someone like Scott find research in an area they aren’t intimately familiar with?
For example, if I have the hypothesis “shorter people are more likely to be discriminated against by the legal system”, what can I do to find evidence either for or against it, other than typing “height discrimination” into google scholar and following the citations?
EDIT: on reflection, that should probably read “shorter people are given harsher sentences by the legal system”, but the exact hypothesis is less interesting to me than the way it’s investigated
I can’t fully answer your general question. I would like to comment on the specific one.
You might want to split that up.
more likely to be arrested?
more likely to be charged?
more likely to be convicted?
harsher sentence when convicted?
sometimes high stats for one can be related to low stats for another. For example a group can be far less likely to be arrested/charged/convicted but if they are they can receive a far harsher punishment. Say for example if police ignore minor infractions from some group then those who do get arrested are more likely to have done something really fucked up so can end up with harsher sentences.
This can help a little with queries. If you can make your question more exact you’re more likely to get good results and the exercise of breaking down the question carefully can sometimes net you the correct terms.
Your “other than” example isn’t terrible. More specifically, many universities have libraries with many journals, and some have librarians who will assist you with a research topic by pointing you in the right direction.
There are also online resources that help you search multiple journals, or even tally up how many citations an article has received so you can get a first-approximation of impact before delving deeper.
An idle question: anybody here ever get LASIK/PRK? Thoughts, advice, concerns?
Yes! I’ve had LASIK. One of the best decisions in my life. Two of my closest friends had it, one recently and one 10 years ago, and they say the same thing. Two coworkers had it, they were both happy with it.
I only had it done on one eye, because I didn’t want to have to start wearing reading glasses at the tender age of 40. If you don’t mind slightly impaired spacial vision (I don’t notice the difference, to be honest), I’d recommend doing one eye only. You can always do the other eye later.
Not personally, but I used to be active duty military and pretty much anyone with poor eyesight did it since it was free. They all seemed very happy with the results. My ex did it and said the difference was immediate.
I did it about a year ago, and have no regrets. Waking up and being able to see clearly without contact lenses or glasses really is life-changing.
I had essentially perfect vision within a day, and dry eyes for about three or four months.
I went from 20/40 in one eye and 20/200 in the other to 20/15 in both. But even neater than the improved vision (which is very neat) is the sudden freeing-up of mental effort at not needing glasses! You don’t need to remember where you put them! You don’t have to schedule time to clean them! You don’t have to worry about breaking them! You can wear sunglasses!
On the minus side, dealing with the irritation in my eyes for the first day after the surgery was one of the most genuinely unpleasant experiences I’ve had to endure.
No LASIK here- but I got prescription sunglasses to supplement my normal glasses a few years back, and would heartily recommend anyone else not using LASIK to do so. Lounging in a pool with a glass of tequila and a book is a lot more fun when you’re not sun-blinded.
My understanding of Lasik is that shifts the distance your eyes focus at but does not affect the range of distances, which depends on the flexibility of the eyeball and decreases with age. So if you currently need glasses for driving but can read without them, Lasik might mean you no longer need glasses for driving but now need them for reading.
Is that correct? Anyone who has had Lasik who is old enough so that the limited range of distances is a serious issue?
Also, my understanding is that distance of focus is all it corrects, so if you wear glasses to correct for astigmatism you will still need them.
There’s at least one brand of contact lenses which you can leave in for a month at a time. (Doesn’t work for everyone.) I’ve been using them for years. Only having to think about having impaired vision a dozen times a year ends up being a great deal like having LASIK (as long as you are not e.g. an outdoor rock climber or surfer, or other things likely to get stuff in your eyes), except that I can still adjust my prescription.
meme:
https://imgflip.com/i/zapx8
citation:
http://www.aao.org/assets/c53ade92-e496-41a9-9689-4c682b9fe8b8/635110637373130000/extended-wear-of-contact-lenses-may-2013-pdf
The rate is around 0.2%, which is far lower than the rate of complications from Lasik. And it’s treatable.
Very strongly recommend these. Have been using them for like 10 years with no ill effects except when the contacts start to get blurry as they deteriorate eventually.
Thanks, all. Will consider surgery a bit more seriously. Can’t wear contacts of any kind comfortably for longer than ~16 hours, but an interesting idea nonetheless.
State of the Rationalist Blogosphere
I’ve got a couple of Rationalist-interest essays brewing. I don’t have an existing blog. In the world of years ago, I might have posted to Less Wrong, possibly in discussion. Now, that’s a wasteland. I’d say Medium is a reasonable fit, but coming from being not-particularly-a-voice in R-space, it seems like a good place to shout into a void. At best, a void, actually, and at worst, a community without the language and context to understand, care, and not bring down the hammer that dareth not etc.
How does one start to start, these days, when targeting the community formerly known as Less Wrong?
Is LW really worse than no audience?
I am actively attempting to renovate and recolonize Less Wrong, and this will only work if the sort of people who are turned off by LW as it is now post to it and encourage other people to post to it.
So post it there!
Traditional media or collect the essays into a book and try to get published?
For those in the thread who have not had an IQ test: What do you estimate your IQ to be, and based on what evidence?
For those who do know their IQ: How does your experience correlate with the evidence presented by the non-tested? Does the evidence require re-calibration?
I have some experiences I will not share here for fear of deanonymizing myself that let me doubt that IQ can be diagnosed in any meaningful way by anything short of an IQ test, especially not introspection or peer judgement by actually tested others.
Then again what I just said seems to be a very strong claim, so if there is research on this topic, falsifying me, I’d like to know about it, preferably before we conduct FooQuuxman’s experiment.
I went online and compared my high school test scores with the correlating IQ score. It seemed accurate to me but I should probably get it checked officially.
If you visit the websites of the major IQ societies (Mensa, Intertel, Triple Nine) you can get conversions from many standardized tests to at least their entry thresholds. They all employ professional psychologists/psychometricians whose job it is to make sure those conversions are reasonably accurate.
cui bono?
A point.
This is what I did as well, but I got different results depending on which conversion methods I used. One method resulted in an IQ of 103, and another resulted in an IQ of 110, so I’m guessing my real IQ is somewhere in between there.
If anyone wants to take a crack at estimating my real IQ, my SAT scores were:
Verbal: 720
Math: 540
I also have my SAT writing test score (720, same as my verbal), but I know that’s not included when converting to IQ scores. I also know the difficulty of the test has changed over time, so it may be relevant to mention that I took it in 2011.
Edit: I also took the ACT, so I just dug up my scores from there. They were:
Composite: 26
Math: 20
Reading: 30
Science: 26
English/Writing: 25
I don’t know how you’d convert those to IQ though, or which subsections are relevant.
Well, the big question is “when”. The time period when you took the test matters for the conversion.
And then a a google search will get you to some “back of the envelope” level conversions you can do on your own just by looking up in a table.
Edit: I’m not sure if you done that already? But if you have, I’m not sure what you are expecting?
The highest possible SAT result is 800,800. Checking a conversion site for pre 1974 exams, it shows the corresponding IQ as 147. That suggests that the approach cannot produce very high IQ’s, however well you do on the test. That presumably is even more true for later dates, since they renormed the test to produce higher scores.
The pages don’t take account of the age at which you took the test. I’m not sure if they should. At what age does the performance on an IQ test stop increasing with age?
>For those in the thread who have not had an IQ test: What do you estimate your IQ to be, and based on what evidence?
115 is one standard deviation above the mean, right? Then roughly around that.
>and based on what evidence?
What was the rationalist term for “Gut Feeling”?
There is this old joke along the lines of “do you know anyone who would self-report one sd below mean?”
And, I might add, if yes, would you see that as an probably accurate estimate or rather as somebody acting out Socratic humbleness and / or low self-esteem?
I don’t want to sound mean either. Self-reporting one sd above average on the basis of a gut feeling is probably a sign of mental health.
I’d expect most people who enjoy hanging around Scott’s blog to be 125+. I think you’d likely score higher than you think you would.
What is the blog for 145+ people? (Not that I would necessarily understand it.)
gowers.wordpress.com
Oh, don’t get me wrong. I’m pretty sure we have a bunch of those around here, too. I lowballed it with the 125.
Among the commenters, 125 is likely too low a bound. Among the readers, it’s perhaps adequate. I think it’s probably about where I am and I rarely, if ever, have anything of value to add to the discussion.
No clue,
I scored in the 90+ percentile when I took the ASVAB for what that’s worth, but generally feel like an idiot most of the time.
I can vouch that having a 3sd IQ is no particular remedy for this problem and have met people who assured me that it was true at still higher levels. Don’t let that part affect your evaluation overmuch.
Sort of a Dunning-Kreuger effect.
Certainly a metaphorically related phenomenon. Perhaps the Meta-DKE. “If I’m so smart, how come [insanely difficult task/life outcome largely outside one’s actual control] doesn’t come easier for me? I must not be as smart as I think I am/everybody thinks I am.”
Maybe it’s what you’d get if the DKE and Imposter Syndrome had a baby. A really, really smart baby with no self-confidence.
How accurate/precise are those SAT/GRE to IQ conversion charts?
Depends on who made them and which test they are using. Some of the IQ societies will accept tests from some years and not from others, for just that reason. Some of them are reasonably accurate. Others, not so much.
The ones I’ve found seem way off. Why not just assume that SAT takers are the top 2/3 of the population (roughly the proportion that takes a college entrance exam) and then convert between percentiles?
I haven’t looked for a long time: how normal are the distributions of SAT scores relative to the distribution of IQ scores? Your algorithm seems pretty logical, but I’d be wary of confounders.
Somewhere between 120 and 140. For a long time I thought it was near the bottom of that range, but then I looked at one of those SAT-to-IQ equivalency charts, which told me that it was near 160. That, frankly, seems absurd to me, especially given everything I’ve heard about people who have actually tested at IQ 160. But I guess 140 isn’t absurd, especially since that’s where people at SSC often claim to be, and I seem to fit in pretty well around here.
Whatever.
This is meaningless without knowing the scale. 160 on a sd-15 scale, i. e. 4 sigma is as far as I know nearly impossible to even measure because the reference population is just that small. 160 on a sd-24 scale is impressive but not absurdly high.
What he said. Also/more specifically, standardized test conversions start to break down at that range. At the risk of devaluing my decoder rings, they arguably start to break down before that.
Also also, the scale itself starts to break down at the upper ranges, in practical terms. It loses a great deal of predictive power when you go from the”classical” level to the “relativistic” level, you might say. To strain an already iffy analogy, you can mathematically compare the impacts of two small projectiles traveling in the realm of hundreds of miles an hour, and the impact of two small projectiles both traveling near the speed of light. But you’re going to have a hard time doing the latter by physical comparison, because while the difference is mathematically large, the impact in both cases is going to be so catastrophic as to make precise comparison very difficult. In a practical sense, doubling the kinetic energy of a chemically propelled rifle bullet is a big deal and the results are obvious. Doubling the kinetic energy of a relativistic railgun projectile is probably not that important and unless you’re throwing it at large planetoids, it’ll be tough to tell the difference.
I don’t take this number seriously, because I assume self-estimates of IQ are inaccurate, but since you asked: 145
Evidence: the only IQ-ish test I ever took was the GRE. I got a 1510, which according to those GRE/IQ conversion sites would put my IQ around 152. I don’t really trust those sites, so I always kind of round down to be on the “safe” side, and 145 seems like a nice round number (I usually just think “eh, around +3 SD’s sounds about right”). And that number seems roughly consistent with how often I meet people who seem smarter than me.
But yeah, like I said I don’t take it seriously, and it’s just a number I keep in my head.
Very few people have had professionally administered adult IQ tests and almost everything else, including professionally administered childhood IQ tests, are not very useful. That’s especially true
at the 2 standard deviation plus level that people that like to talk about IQ online care about. Even professionally administered IQ tests have terrible error bars once you get beyond 2 sd.
Basically unless you’ve seen a score report you shouldn’t believe what anyone says about his IQ and if the score report uses the words “extended norms” or anything similar you should think carefully about what that means.
Tested at 142 on what I recall as being the WISC-IV by a professional psychologist when I was in high school (not through the school; it was a part of a battery of tests administered for other reasons).
The only other evidence other people are offering so far is performance on standardized tests. For what it’s worth, those match very well for me: perfect ACT and GRE scores (albeit on modern versions of those tests, i.e., the versions considered by Mensa not to correlate with IQ), very nearly perfect SAT score, etc. From this I’d guess that approximately perfect scores on standardized tests correspond very roughly to 145 IQ, which is +3ish standard deviations depending on the IQ test.
People are generally quite bad at this, mostly in a self-serving direction, but some groups are prone to the opposite.
If you have ADHD, an ASD, anxiety, or depression, and you’re evaluating yourself on the basis of life outcomes such as educational attainment, income, occupational prestige, or how witty you are in conversation, you’re very likely to be underestimating your intelligence, perhaps by a great deal. More generally, if people have told you you’re underconfident or have low self-esteem, that bias is going to carry over to this sort of evaluation as well.
If you’re generally confident, start here. Add or subtract as necessary according to your centile on the SAT. Add in other factors, then subtract 5 special snowflake points.
I would just like to add that subtracting five special snowflake points is probably a very valuable heuristic in most self-evaluations of whatever sort, absent the sort of situations nope describes. 🙂
The only standardized test I’ve taken is the GMAT. Apparently mensa will admit you if you score in the 95th percentile, I’m in the 99th. Not sure how strong the correlation between IQ and GMAT is though. I’d say +2.5-3sd?
I don’t know, frankly. I’m pretty sure I took an IQ test when I was 6 or so to get put into the GATE program, but I have no idea what the score was. Based on other tests I got to do some cool things like participate in sponsored science camps, go on a television quiz show, place but not win a regional spelling bee. I did my first year of high school at a private tech school and won an award from the school for having the highest admission test score and another for scoring highest on the state test. I got a perfect SAT score and 1570 GRE without doing any specific prep for either, so I’m guessing high, but as others have pointed out, any conversion tool gets pretty unreliable at the high end.
I was going to respond to this but am afraid of identifying myself. But I will ask a question if anyone wants to answer-does anyone think their abilities are kind of like this, with the analogy to the hard drive and the processor? Because I think mine are.
How would that affect an IQ score?
Long-term memory is not very g-loaded, so it shouldn’t really show up in an IQ test. Working memory most definitely will, and processing speed does on some tests.
I identify a lot with Temple Grandin. My first college experience was similar to hers, complete with the shaking fits and banging my head into things and even developing friendships with the local cattle, and some of this rings true. I definitely think I’m poor at multitasking but excel tremendously at anything that requires long bouts of uninterrupted concentration. It doesn’t seem to have been detrimental to me in taking tests. I’m not sure working memory is a good explanation for being bad at multitasking. I’m bad at splitting my attention and really, really hate being interrupted, but I’ve never taken a test that depended upon being good at those things.
Much the same for me, particularly the last part. I call it having narrow mental bandwidth.
(Sadly, my university had no cattle I could befriend.)
Above average, but not by enough to be impressive.
I’d guess around 130. My brother tested in that range, and there’s no reason to think one of us is smarter or dumber than the other, on the whole. Our father tested higher, but he’s probably got more brainpower than we do. Regression to the mean and all that.
Does anyone have any experience with this test?
http://www.iqcomparisonsite.com
I seem to remember taking it once, thinking that the test wasn’t really trying, and not bothering to pay to find out my result.
I would say around 123 – everything I’ve experienced suggests to me that I’m towards the higher end of normal in terms of intelligence. Nothing to write home about – it certainly isn’t unusual for me to meet people who are more intelligent than me – but, then again, out in the wild, I have more going on mentally than most.
Maths results also somewhere around top 10%, obviously absolutely terrible compared to proper math people.
I’m actually really interested in this topic – I don’t feel that my intelligence will allow me to keep enough relationships in mind for mathematics to be anything but a procedural slog – but at the same time, I really do feel as if I have some pretty shit hot natural language reasoning powers. If the danger of natural language is poorly defined terms, then perhaps simplicity (of mind) is an advantage? Maybe not.
I wonder what it is like for really intelligent people when they talk to me.
Siblings are supposed to be within five points of each other, or at least that’s what I’ve heard, and my younger brother was tested at 127 in middle school. Given that he seems to be about as smart as I am and I was just accepted to a relatively elite biochem PhD program that sounds like it’s in roughly the right range.
(My standardized test scores are good too but I don’t trust the conversion sites I’ve seen. The numbers are way too high and disagree with each other by large amounts, once by a full standard deviation.)
That 122-132 range also puts me roughly in the middle of the SSC / LW pack which seems to make sense.
No idea how I’d go about estimating IQ. Best I can say is I seem more intelligent than average in some areas, and less than average in others.
IQ tests aren’t that great, partially because what they test tends to be rather narrow and there is the question as to what to define as intelligence. I have scores that run quite the range, from about 1 SD to between the 4th & 5th SD. I’m at least 2nd, but probably mid 3rd.
Before I had anything resembling a formal test, I didn’t think of myself as very smart. I knew I was at least a little smart, but I wouldn’t have put myself much above 1 SD. This was due to lack of understanding of how much other people lie, that my primary points of comparison (parents) were both Mensa level (one was an active member, other was eligible), and my secondary points were all UMC professionals and their kids (doctors, lawyers, judges, etc). I fought with (and still struggle with) understanding the social aspect of people. Like many people here can attest to, a lot of very smart people are people dumb for a long time.
After the tests, I only understood the results on an intellectual level until college, then I started to understand what it meant. I didn’t really grok it until I entered the workforce. Now that I’ve been in a while, I can quickly tier people into distinct layers. I would roughly describe them as below average, average, smart (about 1 in 4), very smart (about 1 in 20), roughly equal (too rare to ballpark). It is almost pointless attempting to communicate anything other than direct simple commands to anyone at the average level or lower. They can understand more, but it is rather time consuming to teach them and their resulting work will be very prone to errors in applying the underlying logic. The smart ones can be given some flexibility in execution and higher level understanding, but it is easy for them to run off the reservation if not fenced in with strict boundaries. The very smart ones can reliably work with little more than a framework and tend to make good interpreters between myself and others. The roughly equal tend to have almost no problem understanding me, pick up on conceptual shorthand, and we can generally finish each others thoughts with decent accuracy, even if we barely know each other. I would be curious to find out how well this meshes with other peoples’ experiences.
As far as the untested, if you have to tell people you are smart, you probably aren’t very. If you are, you radiate it. When I meet someone 1st SD or higher for the first time, they know. Sometimes they know before I’ve even said a word. People I’ve never met know by reputation. If people just call you quick or sharp, you are probably 1st SD. If they call you bright, talented, or gifted (as an adult) you are probably about 2nd SD. When the 1st & 2nd SD people start telling you things like: “I know I’m smart, but you are on another level”, you are probably 3rd SD or beyond.
Comes off shamefully arrogant, but your experience in the workplace roughly matches my own. People from -1SD and up usually have something to offer me in terms of work-product, but your descriptions of command translation and resultant errors is pretty close to what I’ve seen. A fair bit of the reason I’ve taught myself some basic programming is so that I could code tools and reports that do some of the “thinking” that I would expect a +1SD to do on their own, and then supply it to others as virtual augmentation. Most of the rest of the reason is to augment or multiply myself, so this approach helps more than just the below-average!
As for quickly determining the rough placement of others: Generally, yes, it’s obvious extremely early on. Sometimes, though I’ve been surprised- usually because of confounders like those mentioned by “nope” above, or more prosaic medical difficulties. The occasional ESL person might also fly under the radar when speaking in English.
You’ve built an elaborate superstructure on a base of shifting sand. Your confidence in your ability to sight read people’s IQ (or g or whatever you want to call it) with the kind of precision you claim is almost certainly wrong. This reads like the self confidence of scouts in the pre-moneyball era.
I hope you are under 30.
I’m not claiming to sight-read IQ. I’m claiming to quickly read coworker likely-aptitude-at-shared-work to within a standard deviation or so. That’s a much, much weaker claim- and one that I think should be based a little more firmly, since the overlap is higher and the focus narrower.
I suspect that if Jason K. is being honest – and I have no reason to suspect he is not – he is quite a bit smarter than I am. However, I can do what he can do from my level on down, to a reasonably reliable degree. He doesn’t appear to be claiming to be a lightning-IQ-calculator. He appears to be claiming that between his very high g level and experience, he can determine a person’s competence and what kind of tasks related to his field of work they can be relied upon to do, with what level of necessary oversight, quite quickly. I don’t find this unlikely at all. I find it eminently reasonable because, as I said, I can do it too. So, apparently, can Andrew.
He did sound a bit arrogant, but as someone observed, it’s not arrogance if you really are that good.
It seems like you two (Marc and Andrew) are retreating to the motte with rather undue haste.
The post was made in a thread about IQ and the uses SD language that doesn’t make much sense if it is only supposed to be about a telling quickly whether or not a co-worker or employee is going to be productive.
Also, see the entire last paragraph. It reads exactly like some silly, reductive analysis of how “nines” and “tens” act.
Fair enough, science2- I don’t really like getting slammed with the IQ-arrogance link. I try very hard in my day-to-day life to see the value (via comparative advantage or other means) in everyone’s contribution. Out here, I want to express something closer to the beliefs I hold with 50% probability, if that makes sense.
The last paragraph is nothing about how certain people act. It is an attempt to provide guidance towards judging your own level without an IQ test, based on what I’ve witnessed. As I noted in the very first paragraph, my scores run quite a range. Partly because of that, I don’t put too much stock in those kind of tests. The other part is that intelligence can be incredibly variable. There is at least one facet I score 98%+ and another that I score at 20%. The former is the core factor in many (if not most) IQ tests, the latter is not.
I’m certainly not saying that I can place someone at a glance. It is ‘quickly’, not ‘instantly’. I know it is fairly easy to fool yourself into seeing patterns that aren’t there, so I was trying to get calibrations for my own perceptions. I am a bit concerned that I might be over estimating myself and/or under estimating others. It is difficult to get good direct comparisons outside of a formal setting.
You object to the very definition of intelligence the scientific community has settled on, mostly because you think it under-scores your great genius. But despite admitting that you have your own idiosyncratic definition and don’t “put much stock in tests” you nonetheless wish to offer guidance to others in how to judge their own and others’ intelligence.
It’s perfectly fine to have problems with the IQ research, and the way scientists think about intelligence. I do myself. But you can’t just mention that fact and then continue on as if it isn’t critical to what comes after. Your paragraphs about the characteristics of other smart people are completely meaningless in the absence of a consensus on what intelligence is. The only consensus available is the one you reject, and without offering much to replace it other than your personal intuition.
Whatever your IQ or Jason-K’s-new-and-improved-IQ, I’m sure you aren’t dumb. So try using some of that brainpower for a bit of personal introspection. And for your own sake find something else to base your ego on or you are going to be in for a world of pain sooner or later. As I said, I hope you are under 30. If so the outlook is still pretty hopeful.
@ science2
I’m really interested in your views on intelligence. You seem to care very much about the subject. Why do some of these comments irk you so much? (I do see where you’re coming from in terms of your rational arguments, but I’m curious as to where your passion comes from.) What’s your background / experience? (Just In case it’s unclear, I’m being genuine. You seem like you know a lot, and I think I could learn a thing or two from you.)
@ Jason
For what it’s worth, you didn’t sound arrogant to me. That might be because I like certain types of arrogance, hard to say. So, a purely recreational question for you: do you classify people who comment on blogs similarly to how you classify them in real life (intelligence-wise)?
Thanks for the compliments but I don’t feel to comfortable going into biographical details publicly. Sorry.
PS the science2 is just because science stopped working …
Banned for multiple abrasive comments
Would you care to elaborate on how you recognize smart people by sight? Eric Raymond has suggested that rapid shifts between internal and external processing are a marker for intelligence.
Haven’t had an official certified IQ test that told me the result, but many online ones over the years, of which some were somewhat professional (e.g. in psychology studies, think “stressors at test-taking”). Based on these, I’m 90% confident I’m in the 140~146 IQ range.
That looks way too narrow for a 90% confidence interval. That far away from the mean even the best IQ tests we have couldn’t get you there, and online IQ tests have essentially no evidence of validity.
You have a point. On the other hand, several tests explicitly designed for the high end gave this result over the years and the scores on the same tests replicate well over time. The real question is whether what the IQ tests test is what you’re interested in.
To revise and update my statement: If you hand me an IQ test designed to differentiate well at the upper end, I’m 90% confident I can score between 134 and 149, whatever that means.
If I’ve convinced you to increased your 90% confidence interval by two and half times I’d say we are moving in the right direction!
I’d say we have arrived at the destination. And I’ve increased my confidence interval way more than 150%, since we are talking about the right tail of a normal distribution, assuming a random human as the reference case.
I’ve never wanted to know my IQ score, and have actively avoided testing. We’re all high-functioning here, so I’ll skip the dick-measuring recitation of bona fides.
In what way does an adult need to know, or derive direct benefit* from knowing, his or her IQ score?
I ask because there are a lot of numbers floating around, but who cares?
High intelligence is beneficial. It helps in the achievement of difficult goals. As more and more physical manipulation of the environment is done by tools (and systems of tools) rather than human muscles and reaction times, creating and manipulating those systems is increasingly important. This is pretty noncontroversial.
Moreover, there are obvious benefits–for a child or someone still involved in the formal educational system–to having a simple score that purports to show how smart you are. A high score can get you into a better school or other program you might not have access to otherwise.
But as a working adult, again, who cares? What benefit do you derive from knowing your score? Professions–including and especially high-status professions like law, medicine, finance, and academia–judge your worth by how quickly and well you can achieve the instrumental goals of that profession. That is, by what you can make happen. Test scores can function as gatekeepers on your way to a specific place within a profession, but they won’t keep you there once you are there, and that score (rather than the intelligence it purports to represent) certainly doesn’t achieve any goals in and of itself.
* I suppose you could argue that feeling good about a high score provides hedons, which would be a direct benefit. I’m talking a little more concrete.
tl;dr: How is asking about IQ score not the self-congratulatory, usually-fibbed, useless equivalent of “how much do you bench, bro?”
I think in some rare cases, it can be of value to know your own rough IQ. Namely, if you’re considering a mathematics major in college (for example), or in trying to estimate how long it will take you to learn a new skill on your own.
The value of sharing this estimated score with anyone else seems very dubious.
I was under the impression that deviation IQ wasn’t very useful for that, and that ratio IQ’s are usually only tested in children if at all.
Can you accurately say how much faster, for example, someone 3 sd out will pick up a skill than someone 1 sd out? By accurate I mean having it be less of a guess than just saying that the smarter one will pick it up faster.
I believe this is covered extensively in military research on the ASVAB, with the entirely predictable result that smarter people learn faster.
The value of sharing this estimated score with anyone else seems very dubious.
I think it’s just the circular-self-pleasuring aspect of this thread that’s gotten me riled up. It seems like we’ve hit upon an obvious-in-retrospect fail state of this particular commentariat: we’re all pretty darn smart, but there’s a lot of deeply-valued self-image wrapped in this particular number, which makes us want to trumpet it loudly and clearly. Professionally administered adult IQ scores are dubious enough, especially in terms of “yeah, but what have you done for us lately?” Self-estimated scores (whether ported over from the ASVAB or SAT or ACT, or on the basis of thinking you were the smartest kid in your high school) doubly so.
I prefer Deiseach’s approach. She has repeatedly (and annoyingly self-deprecatingly) claimed to have a bog-standard IQ, yet consistently displays a remarkable verbal facility as well as a refreshing insight into how humans work. Show, don’t tell.
I do occasionally wonder if everyone on this thread estimating at their 140+ IQ is simultaneously sitting on other threads on other sites talking about their estimated 10-inch penises and their estimated 400lb benches. 🙂
Or maybe I just fell asleep on the wrong side of the bed and woke up in the same crotchety place.
I concur. Just get yourself damn well tested. Mensa does it for cheap. Then at least you have a document you can take a timestamped webcam picture of to refute naysayers.
I think the OP actually had a very nice idea, to compare self-estimation to the experiences of those tested to get some insight into the quality of self-estimation.
But most people are missing the point.
Thank you very kindly for the lovely compliments, but I’m not being self-deprecating. I am thick as two short planks when it comes to anything maths-related, and it’s only thanks to the paternal line’s freaky reading ability (which has damn-all to do with actual intelligence, I am more and more convinced, plus comes packaged with free extra bonus emotional/psychological screwed-upness for that special feeling of family togetherness*) that I can skate ahead on verbal/written stuff 🙂
*At least one of the younger generation has an Official Diagnosis of being on the autism spectrum that I am aware of, and God knows how many of us have it or what used to be called Aspergers (high-functioning or not), since few of us actually get any diagnoses by psychologists/psychiatrists, though we do end up on all kinds of “pills for our nerves”. My sister tells me that when she went to work in a residential centre for people with intellectual disabilities and other kinds of special needs, she was immediately struck by the resemblance between living with me in our childhood and those on the autism spectrum, so she pretty much thinks I’m some variety of autistic 🙂
@Deiseach: Surely you’ve sometimes used words to figure out something that was useful for you to know? From what you write, it seems as if you have an unusual definition of “intelligence” as being the exact same thing as “math ability.” If that’s not actually how you define it, then how do you define it, and why can’t verbal ability be used for the same purpose?
Purposefully misestimating in a downwards direction is still misestimating. Or, worse, just lying.
Seems obvious the asker here is curious about how and how well people can estimate their own IQ without taking a test, and/or what it’s like to have an IQ in different ranges, and/or what people with IQs in different ranges sound like. I’m curious about those things too.
> Seems obvious the asker here is curious about how and how well people can estimate their own IQ without taking a test,
In my experience the answer is close to “not at all”.
It’s probably not limited to your experience either. This would be one of those things people are going to be most biased about, given how important intelligence is to most people’s identity. It’s also what you’re using to evaluate itself, and the accuracy of its own evaluation of itself, so you get interesting effects from that. Plus the whole quantifying thing is going to make people who otherwise could correctly surmise that they’re “very smart” or “kind of smart” wronger.
There are good reasons to suspect smarter people might be better at evaluating their own intelligence, and reasons to suspect reading about rationality might make people more rational, and people here tend to have optimistic ideas about the general intelligence level and rationality of the commentariat. So there’s that.
In any case, it’s always interesting to hear how other people think of themselves privately inside their heads, especially in the context of a question that allows you to make comparisons between different people.
I would actually argue that knowing one’s IQ could be helpful to certain underconfident people (in the same sense that some people might benefit from reading Ayn Rand). If it’s high it might give them “permission” to try something they would have otherwise felt unqualified to do.
“In what way does an adult need to know, or derive direct benefit* from knowing, his or her IQ score? ”
“Need” is too strong. But there are contexts where knowing about how large a fraction of those you deal with are likely to be about as smart as you are, considerably less smart, considerably more smart, is useful.
Per MENSA, I’m 135+. Prior to that, I estimated 120-130, based on various online tests. I did investigate how Raven’s matrices are made and what patterns they follow prior to testing, however, so my official score may be too high.
– Per MENSA, I’m 135+.
Same.
I estimate that I’m somewhere around one in ten thousand, e.g. somewhere in the 150s.
I went to a high school with roughly 2000 students per class, with competitive admissions and am quite confident that I, overall, I was the smartest person in that class. No one else was close in math or science classes. In “soft” subjects it is harder to judge but I would at least have been near the top, probably at the top. Given that the population of that high school was much smarter than average, one in 2000 is an absolute lower bound. I am not confident that I was the smartest person if you count “adjacent” classes, and I’m not sure to what extent really exceptional students might have ended up in small elite private schools, private tutoring, and the like. So call it one in 2000 or better.
At an elite university I did well, but not spectacularly so. I people with similar high school experiences to mine in that university, and I’d guesstimate I was perhaps in the top 20% or so of them. Most of them did not have quite as good a high school background (for example, they might have been the top of a smaller/less selective class), and sample size is very small. So multiply 1 in 2000 or better by 1 in 5 or worse, and you get roughly 1 in 10000.
Professionally I am seen as a high performer, but not truly exceptional, in environments where everyone has been very heavily filtered for intelligence.
I’ve never been tested.
I had an IQ test as part of gaining admission to the gifted program I was part of, and it was…let’s just say very high. The program in question had a threshold of 140, and I cleared it with a fair bit to spare. (Admittedly, it was a child IQ test.) I then had the opportunity to observe both the other kids in the program and those who were in the normal gifted program (I don’t know what the cutoff for that was, but I’d guess ~120) and later on, honors classes at a very good high school.
I’d say that I saw a couple of different bands (among the gifted/smart, I have little experience with normal people), along with my estimates on IQ for each:
Very high (180+). I have one friend who said that his IQ test was reported as 185+, and I have no trouble believing it. He’s about the only person I know who I’d put here.
High (160-180). This is the band I fall into. I usually saw one or two people a year who seemed to be in this band. There was a little bit of difference between them and people in the next band down.
Normal (140-160). This is normal for the program I was in, not society as a whole. Still very smart, and still pretty much peers to the High band, but they didn’t spend as much time doing recreational math or the like.
Regular Gifted (120-140): There was a visible difference between these and the next band up, although it faded some in high school. These are the normal denizens of a typical gifted program.
I’m not certain of my calibration on this, as I don’t have good IQ data on people besides those used in the creation of the model.
Childhood IQs are ratio IQs rather than deviation IQs. The two aren’t commensurable. In particular ratio IQ scales regularly produce numbers that are impossible to measure in adults and would be implausible given expected rarity. The fact that the gifted childhood community stubbornly insists on maintaining a separate system with the same name, despite the manifest confusion it causes including even among researchers who should no better is rather unfortunate IMO.
Even using deviation IQ, a test taken in childhood doesn’t particularly well predict adult IQ (parents’ average is a better predictor).
How good of a predictor is parents’ average?
Better than self-assessment 🙂
That’s funny, Alex. =) I was hoping science2 might actually know the answer, because I’m curious, but not curious enough to delve into the literature.
Not very good, especially if the kid in question wasn’t t raised by the parents.
The IQ test in question was WISC, which is deviation-based. And it wasn’t the only test. I think the requirements translated to something like an IQ of 200 in ratio terms.
As for prediction of adult IQ, I’d like to see cites. A quick google turns up reasonable correlations. Or to put it another way, my classmates in 4th grade all came from very smart parents and are all very smart today.
I can agree that you would see higher scores on childhood deviation tests because they have a broader range of sensitivity. I was about 8 when I took the test, and it was designed for those between the ages of 6 and 16. I think there’s some normalization by age, so it’s entirely possible that you’ll see an 8-year-old who puts in what would be an impressive performance for a 16-year-old get a score of 160+ that won’t recur when tested as an adult.
If someone tells you his test can tell a deviation score of +5.33 for a eight year olds, check your wallet. That’s 5 in 100 million. Just how many eight year olds do you think were in the validation study?
Childhood IQ tests are less sensitive (or to put it better less accurate further away from the mean) than adult tests because they are normed against smaller relevant populations. It seems like the opposite because the people selling the test make voodoo adjustments involving norms for older populations that they pull out of their collective rear ends.
There’s a ton of bad science surrounding childhood IQ but the whole apparatus is maintained by parents that looove hearing that little precious is one in a 10 million. Apparently they shut off whatever part of their brain should question how anyone could tell such a thing with any confidence.
I did not say that a childhood IQ test is 100% accurate, and acknowledged that you could get weird results at the upper end of the range. And my ranges are probably somewhat high, in that they’re based on said childhood IQ tests. But, at one of the best school districts in the state, every single one of the National Merit finalists for my year had been in the special gifted program in elementary school.
@science2:
They haven’t “pulled it out of their rear ends,” they’ve done their best to create theoretically sound extrapolations that are as accurate as possible. (However, it is starting to look like the real problem may be that the distribution of the underlying…thing the tests are trying to get at…is actually not normal. If that’s true, then extrapolations based on assuming a normal distribution will never, ever work quite right.)
“Childhood IQ tests are less sensitive (or to put it better less accurate further away from the mean) than adult tests because they are normed against smaller relevant populations.”
This is true as far as it goes, but you’re ignoring ceiling effects.
When someone has gotten every or almost every item on an IQ test correct, then their final score will be an underestimate–because the whole point of any IQ test is to *find out when the material becomes so difficult that they miss several items in a row*.
That’s a “ceiling effect,” and it shows up before you ever start looking at norm tables–before you ever start trying to turn the raw score into a standard score and percentile.
But when you’re confronted with a child for whom you know the test you just administered is going to be an underestimate…it’s entirely reasonable to want to see how they do on a more difficult test. An adult with an IQ of 85 and one with an IQ of 115 could both do extremely well on a test designed for 9-year-olds–but a 9-year-old who scores 85 on an adult IQ test needs schoolwork at a very different conceptual level than one who scores 115. (About middle school level vs. about college level.)
That’s the reason for “out of level testing”–such as the above example, or the now-common practice of giving the SAT to high-achieving 12-year-olds. But you’re not going to give the SAT to a sample of unselected 12-year-olds (or an adult IQ test to a sample of 9-year-olds). That would subject those unselected kids to far too much stress to be remotely ethical. So if you want to generate any kind of age-based score for that unusual child, you’re forced to use some kind of extrapolation.
Which is why they do it.
“There’s a ton of bad science surrounding childhood IQ but the whole apparatus is maintained by parents that looove hearing that little precious is one in a 10 million.”
I think most parents are frightened to hear such a thing, rather than enjoying it. What makes you think they enjoy it? Have you encountered some who seemed like they did?
“They haven’t “pulled it out of their rear ends,” they’ve done their best to create theoretically sound extrapolations that are as accurate as possible.”
That they’ve tried really hard is meaningless. The output is unsound. And they way they present it is dishonest–hiding the unsoundness deep in the heart of barely published validation studies, with score reports referring to authoritative sounding “extended norms”.
“This is true as far as it goes, but you’re ignoring ceiling effects.
…
That’s a “ceiling effect,” and it shows up before you ever start looking at norm tables–before you ever start trying to turn the raw score into a standard score and percentile.”
No it doesn’t come “before”. What comes before is the validation study. If you don’t have enough people in the validation study than you can’t say anything meaningful about the people that hit the ceiling. Even if there were many many more difficult question it wouldn’t matter, you’d have a higher raw score but it would still be meaningless.
Which is exactly the case with “out of level” tested children. You’ve found out the “interesting” fact about how they do on tests normed for higher ages, but that fact can’t be translated into an IQ. At least not by anyone with a shred of scientific integrity.
“So if you want to generate any kind of age-based score for that unusual child, you’re forced to use some kind of extrapolation.
Which is why they do it.”
Why do they need to generate an age-based “IQ” score? Give the raw testing data to whoever is designing the educational program for that unusual child. They generate the fake number not for a pedagogical reason (much less scientific) but to stroke egos.
“What makes you think they enjoy it? Have you encountered some who seemed like they did?”
Yes. And their kids that turn out like people in this subthread.
It’s not dishonest. The topic is just extremely complex, so it’s easy to misinterpret.
(Bottom line is that deviation IQ is constructed around a reasonable and sincere assumption that the target trait is distributed normally. It’s starting to look like that may not be true. If that’s the case then deviation IQ just does not work quite right at the extremes and never can. That would explain why every attempt to make it work right at the extremes has failed.)
That they hit the ceiling is meaningful. If you didn’t follow standard procedure in generating the raw score, then the raw score doesn’t actually correspond to the percentile assigned. This is true regardless of whether you got that percentile from the norm sample or from extrapolation.
And if they hit the ceiling, then the way you didn’t follow the standard procedure is that you didn’t “keep going until they missed enough questions.” Because you *couldn’t* because they *did too well*. It’s appropriate to call the resulting percentile an underestimate.
I’m getting the impression you just don’t believe in ever using any theoretical models for anything. Which is your choice, but really, the fact that someone else *is* willing to use a theoretical model does not mean they’re dishonest. Especially when they *openly publish exactly what they did*.
Initially it’s obviously more important to translate it into an approximate conceptual level (“mental age”) so you know what kind of schoolwork the kid needs right now. But once you’ve done that, the definition of ratio IQ means that you can easily generate an approximate one. Which is better than nothing–or more accurately, better than chronological age–for predicting the child’s future needs.
Or if you’re a researcher like the SMPY/SET group, you want to come up with an estimate of how rare is the population you’re studying–it’s a pretty basic question to ask about your subjects. But of course, the definition of deviation IQ means that once you have an estimate of rarity, you have a deviation IQ as well.
And SMPY/SET wanted to estimate their subjects’ IQs so that people could compare their findings to those of IQ-based studies, too. That’s why they chose a standard deviation of 16 instead of 15–they wanted their estimated scores to correspond with Pinneau-corrected Stanford-Binet scores. That way anyone who wanted to consult the research to figure out how to help a kid could easily form an idea of whether their study applied.
(Again, looks like it didn’t work because…the underlying distribution seems to maybe have a fat tail. But they didn’t know that.)
So they don’t have to put the kid through getting tested over and over again in the future.
(Especially since the very kids who do especially well the first time they’re tested, also tend to remember the test for years longer than is typical–and hence seem to remain vulnerable to test-retest effects much longer. Two years after the initial test, your IQ-based estimate of their mental age is probably less likely to be inflated than their actual score on a retest.)
…well, I’ve said before that I have a weak “arrogance detector”…but all I see the people in this subthread doing is discussing a topic they find interesting. If they’re interested, there’s nothing wrong with discussing it. Even if someone has issues around it, discussing it will help them work through those issues. So I’m not sure what the problem is–could you be more specific?
This is the apotheosis of the tail wagging the dog. There’s exactly zero evidence for this is the literature on adult IQ. Rather than acknolwedge that they’ve been wrong for forty years and that the 180 IQs they been handing out like candy make no sense, the juvenile “IQ” industry is doubling down on their bullshit numbers and claiming the distribution isn’t normal. Of course they don’t have sufficient evidence for that, that would require doing large scale studies. Why do large scale studies when there’s all that money to be made fleecing parents? No, they’ve got models, who needs data when you have models?
Theoretical models are great. For generating hypotheses which you can then test. You know, the whole scientific method thing?
Of course charlatan always want to jump the gun. Can’t wait for validation before starting to sell earthworm blood capsules or “extended IQ tests for profoundly gifted children, now only $2999!”
—
Sometimes I wish we had a science Pope. The institutional mechanism we have a fairly decent within a field, but when an entire field goes astray there’s very few tools from bringing them back. Peer review is actually harmful in that case because the peers in question are themselves all in thrall.
There is yet a third system, used in some of the SMPY/TIP literature, though not usually told to the students. This is to administer the SATs to children under the age of 13. This gives a test with a well understood mean and standard deviation, which can be converted the IQ scale linearly. The tail is not a bell curve and it yields pretty big numbers.
They did this at my middle school in 6th grade, took the four of us who scored highest on the CAT and sent us to UCI to take the SAT when we were 12. I think I got like 1360 or something? It’s hard to remember that far back but definitely between 1300 and 1400. We started an NTN club after that where we stayed after school and played against whoever was on the network and that was how I ended up on a television quiz show.
The fundamental problem is that just because an 8 year old has an usually early growth spurt doesn’t mean he’s going to end up 7′ tall. You can’t really fix that. It simply doesn’t make sense to use the same name and scale for what’s being measured in children as for what’s being measured in adults.
Either the people studying children should keep the name IQ or the people studying adults should, but not both. Arguably the child people have the better claim historically, but there’s better theoretical and empirical grounding for the adult version.
“The fundamental problem is that just because an 8 year old has an usually early growth spurt doesn’t mean he’s going to end up 7′ tall. You can’t really fix that.”
That’s a reasonable concern. Thing is, so is ceiling effect (which I described upthread).
IQ tests *really aren’t valid* when the subject never misses the required number of questions. They *really are underestimates* in that case. Check the manuals!
And it’s just easier to find material difficult enough to stump a child than it is to find material difficult enough to stump an equally-(un)usual adult.
So it’s in this sense that “out of level testing” *is* *more* accurate than age-based (or adult) testing: it’s more likely to *actually stump the subject as an IQ test is supposed to*, instead of lumping together those who easily got a perfect score with those who just barely managed it.
Studies like SMPY/SET (discussed here a few months ago) have tried to check for your “early ripe, early rot” / “developmental spurting” concern. Of course, they tend to be stymied by the issue described above: it’s harder to measure high performance in an adult. They do find that if you group people by childhood IQ or SAT score, then the higher a group’s mean childhood score, the “better” the group does on average. And this effect continues all the way up the SAT scale–there’s no score above which age-12 SAT score stops “mattering.” (IOW, it is really hard to check, but it sorta seems like maybe IQ-type measurements are more reliable at the very high end.)
Since that’s so, people reasonably conclude that telling apart those who easily got a perfect score from those who just barely managed it…is actually worth trying to do.
Personally, I care more about the developmental differences that tend to be associated with extreme IQ scores than I do about the scores themselves. I want these kids to get the kind of academic and social experiences that are the best fit for them given those developmental differences–I want them to grow up happy and healthy.
IMO identifying “the 9-year-old who needs 8th grade work” and “the 9-year-old who needs college work” is much more important and valuable than fussing over exactly which percentile each kid is in.
(OTOH, clearly percentiles are important if you’re trying to plan a district-wide program–so you can have some idea how many students you can expect to need the program.)
They aren’t underestimates because numbers higher than the test tests for are meaningless. What’s meaningless are numbers pulled out of the air rather than out of validation studies.
I’m just going to leave this here and ask you to refer to my handle.
Then you should convince the Gifted and Talented Industrial Complex to find a different name and quit screwing with the scientific literature.
Then you should keep them the hell away from the aforementioned G&TIC. They are interested in producing newspaper articles about child prodigies and they don’t care about how miserable the kids turn out to be as adults–once they get a Phd at 17 or win a putnum the G&T crowd don’t care what happens after that.
As I said in my other comment, if the standard procedure is to stump the subject, and you didn’t do that because you *couldn’t* stump them because they *did too well*…it’s appropriate to call the resulting number an “underestimate.” Also, extrapolations don’t come “out of the air,” they come out of the theoretical model the test is based on. If I still haven’t managed to convince you of that after two different attempts…I guess you’ll just have to keep being Wrong On The Internet. 😉
Well after they’ve won a Putnam they’ve proven their ability *did* continue into adulthood now haven’t they? 😉
…but IMX the people who are focused on “producing articles about child prodigies” are journalists. They’ve always been incentivized to sensationalize, but these days *especially* so (ever read Ryan Holiday’s Trust Me, I’m Lying?). They will twist everything you say to make the best story, regardless of what it does to accuracy or your feelings or reputation (as Eliezer learned and frelkins explained the incentives around). That’s hard enough for an adult to deal with, let alone a child–especially a child who’s particularly sensitive and concerned about fairness, as high-IQ kids tend to be. Betty Meckstroth and Kathi Kearney agree:
So yeah. Avoid media attention.
…so…from an interview with Stephanie Tolan:
…it’s a developmental difference. Our best evidence is that it *doesn’t* go away. It can be really tempting to try to pretend like it did…but when you try, you generally find that wherever you go, there you still are. Same personality. Same traits. Traits of the same old developmental difference.
But it’s OK.
And for the kids…it will be difficult no matter what parents and teachers try. IMO Gross was right that it’s always “tough to be them,” no matter what; Terman was right that they have “one of the most difficult problems of social adjustment that any human being is ever called upon to meet”–no matter what. There is no magic bullet. But…I believe acceleration still is the “best of a bad bunch” of options.
Right, the best option for happiness just happens to be the one that strokes parental ego and gets the testing / enrichment industry money. And no, of course there’s no actual data on this — but don’t worry we’ve got theoretical models that say the kids will grow up to be happy, well adjusted adults.
And when our terrible, terrible developmental programs fuck up kids for life and produce miserable adults — well we’ll just claim that extreme intelligence is highly associated with mild autism, depression and other emotional problems. See it wasn’t our fault, they we fucked up to begin with.
Sometimes I really really wish there is a hell.
Now I’m wondering how many people in this subthread are former prodigies. *raises hand*
Professionally and financially, I’ve been a huge success, because I was lucky enough to have the proper connections. Socially and emotionally, I’m a wreck. But I don’t know how much of that is specifically linked to having been accelerated and how much is just innate to my personality. There’s no sharp boundary between nature and nurture here.
Edit window closed, but I’d like to add: I sometimes fall into an “atypical mind fallacy” – I assume that because I’m so unusual my experiences don’t map to anyone else’s.
“Now I’m wondering how many people in this subthread are former prodigies.”
Probably depends on your definition. I entered Harvard at sixteen; the first math course I took was an advanced calculus course open to both undergraduate and graduate students.
And I am, on the whole, happy at how my life has turned out. It’s possible that being a prodigy is easier when that’s the norm for the family.
@BBA
I hope socially and emotionally things will get better for you. Have you read this, BTW? Someone posted it on the SSC subreddit: http://www.worlddreambank.org/O/OUTSIDRS.HTM
Do you think this captures the problem pretty well? Or is something different for you?
@Nadja
That certainly reflects issues I had when I was younger. I feel like I’ve outgrown most of that but it’s left me with different issues.
I’m certainly in the “committed” group – I come from an upper-middle-class background (no Nobel laureates in my family though), attended prestigious colleges, and currently have a very good (and well-paying) job in the financial industry.
But due to my academic acceleration I had a very lonely childhood, with essentially no peers, and I think my social maladjustment may stem from that. Or it might be my natural personality, or borderline Asperger syndrome. I’m not sure.
What I do know is that I find social interaction tiring and unpleasant, even as I’ve gotten much better at it. I have no close friends outside of family and work ties and my romantic experience is next to nil. Usually I’m comfortable in my solitude but every so often I feel like I’ve completely missed the boat on a normal human experience and I’m doomed to die alone. Well, at least I have some money saved up and I’ll be able to travel, so it isn’t all bad.
Well, this is a lot more personal than I’d typically get in a blog comment. I’ve made minimal effort to hide my identity and it’s possible that someone who knows me in real life will find this and trace it back to me, in which case: I’m okay, really I am, I just have bad days every now and then and today was one of them.
@ BBA
Obviously, I don’t know enough about your situation, but I can imagine that the combination of being an introvert and being highly intelligent would make anyone’s social life difficult! So, you know, it might not be that there’s anything wrong with you.
First of all, if you’re unusually gifted, then I imagine it’s very unlikely for you to run into people who are at your intellectual level. And you need that for a good chance of a real connection. Because if people are not capable of understanding you, then your basic human need of feeling “felt” is not being met. And then the whole thing is just frustrating. So in the end no wonder you’re exhausted from regular social interactions!
Also, it sounds like you’re an introvert. I find the American culture particularly difficult for introverts. You have to be friendly towards everyone you talk to, but when you actually start enjoying your conversations with someone, you find that it’s almost impossible to get really close to them! (Terrible generalization, I know.) Here’s an interesting take on it: https://hbr.org/2014/05/one-reason-cross-cultural-small-talk-is-so-tricky/
So I guess what I’m trying to say is that maybe all you need is to meet the right people. And if you don’t meet them around where you live right now, then you can always take all that money you’re saving and travel to a coconut culture country to see if it suits you better. =)
Wishing you as few as possible of those bad days!
Let me put it this way. Have you ever heard of Plato? Aristotle? Socrates?
Morons.
Anyway, I vaguely recall my mum mentioning I scored around 150ish on a test taken as a child, but I could well be misremembering, and if I’m not then who knows what test it was (or even what language/country it was in – we traveled around a lot when I was little).
On correlated measures I’ve scored near or at the top with very light prep – 800/800 on the newer SAT and 170Q/169V on the GRE. My academic performance has been solid, too – top 3% GPA at a top 15 US-News undergrad with a double major in two sciences and way more credits than necessary (and the GPA couldda been higher, but it was already above the threshold for summa cum laude – which is all I was shooting for – and I had plenty of other things to occupy my time). I’m in a well regarded grad program now (let’s say top 5-10ish) and get awards, grants, scholarships, etc. pretty regularly (the latest big one being an NSF-GRF). I’ve been told I’m really smart by some rather accomplished people, too.
All that said, I’m not sure how I’d go about guesstimating my IQ – its literature is not one I’m too familiar with and I’ve no immediate intuitions on how IQ is distributed. For generic nerdy/bookish smartness, I’d put myself somewhere between the 80th and 98th percentile for most of the groups I’ve hung out or participated in, which themselves might be sampled from the, oh I dunno, top tercile of the general population?
At the risk of identifying myself, my childhood IQ test came back 180+. (Apparently that’s as high as it would specify, and my parents were told it was estimated at ~220.) The only IQ test I’ve taken as an adult was the Ravens test, which came back ~140. (That test was an infuriating guessing game at times. Yes, I see a pattern, I see two, but neither of them are very parsimonious, so is it a third I haven’t spotted yet, or…)
My experience with noticing the intelligence of other people matches Jason K and Andrew’s. You know, within a minute or two of talking with someone, whereabouts they are. There’s a lot that is going on at an unconscious level to process it, but the part I’m most aware of is something like the complexity of thoughts people are capable of, which comes across most obviously in terms of the complexity of ideas they can effectively express. The other side is something like… mental flexibility, which is generally only demonstrated in communication of difficult ideas; it can be demonstrated, for example, by switching through metaphors until one of them clicks. Lower-intelligence people will understand something in terms of one or maybe two metaphors – which is to say, they don’t really understand the subject, they understand the metaphor.
I don’t think I could tell somebody equal to me apart from somebody more intelligent than me; my own intelligence already exceeds the use I can extract out of it, as the problems commensurate tend to be highly domain-specific.
Pride is a sin. That said, let me try to estimate my IQ.
(I’ve always said that I would find out my IQ before I tried to determine whether IQ was a valid measure of intelligence; that way I know what side to be on ?)
Preliminary:
I know the mean IQ is 100, with a standard deviation of 20. Do I feel one standard deviation above the average person (in some hard-to-quantify intelligence domain)? Probably. 2? Maybe. 3? Hardly; that would imply I was in the top .3% of people, intellectually. I note that in my high school career I’ve been in, perhaps, the top 1%, but this doesn’t really feel like intelligence; that’s a portion, but I feel less remarkable in domains where I’ve felt I was relying more on intelligence than willingness to do pointless tasks…
I know the mean IQ of Less Wrong is 135, per a post Scott made on his tumblr.
When I saw this Raven’s Matrix (http://images.lesswrong.com/t3_lq3_2.png?v=430da704bcee8ed645e7133257b6de62) I was able to solve it pretty easily, with no great strain or disruption to my normal thinking pattern. It was followed in a Less Wrong post (http://lesswrong.com/lw/lq3/innate_mathematical_ability/) with the phrase “Most people can’t see the pattern in the above matrix”. However, I have no indication that I actually got the question *right*, as the answer was not listed anywhere…
Preliminary estimate: 140
Slight Investigation:
Pursuant other comments in this thread, I looked up how to convert from SAT scores to IQ, and found this website: http://www.iqcomparisonsite.com/greiq.aspx
Several facts confronted me:
*IQ is, in fact, normalized with a standard deviation of 15, not 20 (though sometimes 16, because there is no god). My prediction above would be adjusted to 130. I’m not sure how I feel about this.
*I took the SAT after 1994, so Mensa does not consider it to correlate with IQ anymore.
*I had a little trouble following the procedure, which caused me to doubt my intellect entirely, but in my defense I was skimming at 1 AM in the morning.
*I don’t know what an “SAT I” is. I assume it’s the one I have. The other table on the site that I might use (which would give me an IQ of 159.07) leads me to believe that the non-I SAT is older, so I didn’t take it.
I scored a 770 in reading and a 780 in writing on the SAT. I don’t remember preparing much, but I think I tried to prepare a little. It was a tough week (?). This combines to a score of 1550, which, according to the table, is roughly 148.56 in IQ (normalized such that σ=15). I think I’ll take only two sig figs and call it 150 (lucky me).
This seems a little high, but perhaps Robin Hanson was right when he said that smart people overestimate the intelligence of others.
Estimate after Slight Investigation: 150
Taking a Test:
(In the meantime I read slatestarcodex.com/2016/02/14/ot43-roses-are-thread/#comment-326256 and its thread…)
I’ve been meaning to take an IQ test for some time. Someone in a past SSC thread recommended http://iqtest.dk/main.swf which appears to be designed by “Mensa Danmark” which appears to be an actual Mensa place. I’m pretty sure the background is a picture of some sort of genitalia. Anyhow, I decided to take it a couple days after my slight investigation.
The test is 39 Raven’s Matrices to be answered in 40 minutes. They got really tough by the end. The test gave me a calculated IQ of 138.
Estimate after Online Test: 138
Reflection:
I don’t plan on taking a real, in-person IQ test (can’t be bothered) so there we are. I feel pretty good about having estimated my IQ naively, notably while I misunderstood how IQ was normalized. I also feel pretty good about being 2-and-a-half standard deviations above the mean. I guess the SAT wasn’t a good test of IQ when I took it.
At every step I updated my estimate, but since I considered each step to produce much greater evidence than the previous, it was as though I threw out the previous steps for each estimate. If I had taken my adjusted-based-on-actual-σ gut feeling and averaged it with my result from the SAT table, I could also have gotten 140…
I took 2 significant figures in the first step because I didn’t have a basis for more and less would have been useless. I took 2 sf in the second step basically for the same reason. The guy who made the table noted that the numbers weren’t as precise as they seemed. I took 3 sf in the third step because that’s how many the results page gave me.
The SAT I is just the SAT, the reading + math + now writing (older versions have only reading and math) one. There is also a subject-specific SAT II that’s less commonly taken.
The SAT is the closest thing to an IQ test that college-bound American high school students take consistently, but SAT-to-IQ tables are unreliable without some research because the SAT has been renormalized a couple of times. You need to figure out what version of it you took and find a table for that version.
As best I could tell when I looked at it, the highest possible score (800,800, pre re-norming) corresponds to an only moderately high IQ, 140 something.
I was a child prodigy but I haven’t had my IQ tested as an adult. I suspect significant reversion.
I believe my score on a standardized test some years back would qualify me for Mensa without further testing, but I haven’t bothered going through the trouble of digging it up. Besides which, do I really want to join a club of people who think IQ matters?
Since people are mentioning the SAT, I feel obliged to give the standard leftist spiel about how the SAT was designed for elite WASP institutions and a large part of the “intelligence” it measures is inculcation in elite WASP culture, i.e., knowing what a regatta is. I don’t know if it’s even possible to measure IQ without cultural bias seeping in.
David Friedman makes the point that market failure is sometimes a problem with markets, but is usually the problem with politics. I’ve always thought this point was well-taken, and maybe the single best argument for anarcho-capitalism, but I never saw it so sort of concretely until now:
http://www.vox.com/policy-and-politics/2016/2/15/10995274/scalia-mcconnell-obama
That is, when I say that “market failure is common on the political market,” I mean that “most people don’t feel the good or bad effects of voting for a good or bad candidate, so they remain rationally ignorant about voting” or “most policies end up benefiting a concentrated minority at the expense of a diffuse majority since it isn’t in the interests of any individual in that majority to oppose the policy.”
But here we see it at work within a political party, within arguably the most powerful political body in the land. What is good for individual Republicans very clearly is not good for the Republican Party. Maybe this is too obvious, but this is the first time I noticed such a clear example.
Related, I feel like the Republicans have recently gone from “totally ignore our constituency because who are they going to vote for? Democrats?” to “loudly and obnoxiously signal that we are doing what our constituency wants even and especially if it can be used as a way to avoid actually doing anything they want.” The Democrats are mostly still riding a wave of “who else are you going to vote for? A Republican?,” but may regret it if Bernie wins the nomination.
Article, of course, assumes that a Trump nomination does endanger the senate. Which is certainly non-obvious.
True, but I doubt Mitch McConnell is playing some kind of masterful long game. Even if we assume Republican president and Republican Senate in 2017, I don’t see how he actually benefits by loudly announcing his intent to block any potential nominee, which seems only to hurt the bargaining position (how to claim that you have a good reason for rejecting someone who hasn’t even been suggested yet?)?
Like, let’s say you know your friend has terrible taste in restaurants and, if allowed to pick one, will pick a terrible one. What is the better strategy:
“Where do you want to go for dinner?”
“I don’t know, but I’m sure I don’t want to go wherever you want to go.”
vs.
“Where do you want to go for dinner?”
“I have some ideas. Where do you want to go?”
“How about x.”
“Naah, x is not so great for reason y. What about z?”
McConnell doesn’t want to negotiate, he wants to stop Obama from appointing anyone at all and keep Scalia’s seat vacant as long as possible. This doesn’t make announcing it up front any better as a strategy.
Personally I think the Republicans best strategy would have been to tempt Obama into making an interim appointment. This would take all the pressure off confirming the nominee, so they’d trade 1 year of Obama’s choice on the court for deferring the lifetime appointment to the next President.
Is that even constitutional, Nybbler? I can’t say that I’ve ever heard of an interim SCOTUS justice.
“This doesn’t make announcing it up front any better as a strategy.”
That’s precisely my point.
Well, first of all, I’m genuinely curious as to what Mitch McConnell has done that makes you think this is gonna be bona fide obstruction of Obama on this issue, as opposed to just more failure theater, which I’m pretty sure it is.
But even assuming this is going to be a legit stand by Senate Republicans, why *not* get the outrage machine to go off too soon, before there’s even a nominee, with a record, that everyone can point to and lament about how he or she isn’t getting their fair shake due to partisan obstructionism? That, way it burns itself out ahead before Obama’s even had a chance to vet potential candidates.
If so, the media doesn’t seem to have taken the bait, that I can tell. Perhaps they’re cognizant of the hypocrisy of calling out Republicans for what Democrats did in Bush’s last t-no, sorry, I can’t even type that with a straight face.
Why summaries of research on psychological theories are often uninterpretable (pdf) is a rather long article which talks about some of the difficulties in soft science. Mainly focuses on psychology but I think it would be more broadly applicable. I don’t have too much to say about it just thought it might be of interest / spark discussion.
edit: I forgot, there was something of interest:
>Twenty years ago David Lykken and I conducted an exploratory study of the
crud factor which we never published but I shall summarize it briefly here. (I offer
it not as “empirical proof” — that H0 taken literally is quasi-always false hardly
needs proof and is generally admitted — but as a punchy and somewhat amusing
example of an insufficiently appreciated truth about soft correlational psychology.)
In 1966, the University of Minnesota Student Counseling Bureau’s Statewide
Testing Program administered a questionnaire to 57,000 high school seniors, the
items dealing with family facts, attitudes toward school, vocational and educational
plans, leisure time activities, school organizations, etc. We cross-tabulated a total of
15 (and then 45) variables including the following (the number of categories for
each variable given in parentheses): father’s occupation (7), father’s education (9),
mother’s education (9), number of siblings (10), birth order (only, oldest, youngest,
neither), educational plans after high school (3), family attitudes towards college
(3), do you like school (3), sex (2), college choice (7), occupational plan in ten
years (20), and religious preference (20). In addition, there were 22 “leisure time
activities” such as “acting,” “model building,” “cooking,” etc., which could be
treated either as a single 22-category variable or as 22 dichotomous variables.
There were also 10 “high school organizations” such as “school subject clubs,”
“farm youth groups,” “political clubs,” etc., which also could be treated either as a
single ten-category variable or as ten dichotomous variables. Considering the latter
two variables as multichotomies gives a total of 15 variables producing 105
different cross-tabulations. All values of χ2
for these 105 cross-tabulations were
statistically significant, and 101 (96%) of them were significant with a probability
of less than 10e–6.
If “leisure activity” and “high school organizations” are considered as
separate dichotomies, this gives a total of 45 variables and 990 different crosstabulations.
Of these, 92% were statistically significant and more than 78% were
significant with a probability less than 10–6. Looked at in another way, the median
number of significant relationships between a given variable and all the others was
41 out of a possible 44!
Basically everything is correlated with everything else and statistically significant.
Vaguely related: https://twitter.com/chrisdc77/status/699170307723153408
That was depressing to read
I’d like to point readers to something Eliezer Yudkowski wrote recently regarding central banking and a model of “the economy” called market monetarism. I’ve been following market monetarism and specifically Scott Sumner’s blog since before it was even called market monetarism. It seems to be the best model with both internally consistency and externally consistency with the major economic events of the past decade. This is the first I’ve seen Eli come out in favor of the market monetarism model (I very easily could have missed something earlier), and I must stay its validating to know we share a positive evaluation of the evidence towards MM ideas.
The article is on Facebook.
SUMMARY
It is written as a Q & A with central bankers asking why they consistently undershoot inflation targets and Eliezer answering above every objection: “JUST PRINT MORE MONEY!” But click the link because it’s a very well written presentation of the details and responses to common critiques to MM.
QUESTION
When explaining this model to others, I always run into the same argument: “Well if this explains everything, why doesn’t the central bank use the model to improve the economy?” It really is a good question that I have not answered satisfactorily to myself, so I thought I’d pose it to the community:
Running the risk of sounding arrogant: If I, a nobody undergraduate business econ major from a state school who doesn’t even work in economics can figure this stuff out sitting in my dorm room just by listening to the arguments, why can’t Janet Yellen or Ben Bernanke?
HYPOTHESIS
The answer I’ve come up with is that they have figured it out, but are just politically constrained from acknowledging it/acting on it/even hinting that they get it at all. But in that case, what exactly are those political constraints?
P.S. As an aside, this issue is imo a hugely underrated topic of discussion in effective altruism circles. Poor central banking is the #1 economic malady all over the world. It affects billions of people, wasting valuable productive capacity and resulting in much suffering that could all be alleviated for the low, low cost of printing more pieces of paper. It’s amazing when you think about it.
You could at least pretend to consider the possibility that Janet Yellen and Ben Bernanke know something about macroeconomics that a nobody undergraduate business econ major from a state school who doesn’t even work in economics doesn’t.
On reflection, I guess I’ve considered that possibility and rejected it. That is truly how confident I am in the hypothesis that MM ideas are more correct than the model the Fed was using from 2006-2015 to guide policy. That’s why I moved on to potential political constraints.
Agreed. I have also been following Sumner’s blog since inception. The evidence in favor of Market Monetarism throughout the crisis and throughout advanced economies is overwhelming.
I am sure some higher-ups “know” something I don’t, in the sense they are focusing on some metric that has virtually no predictive value. For example, oil prices in 2008.
I am certain this is partly due to the Fed’s structure, which is financial, not academic. Financiers definitely know a lot about financial indicators and assume they “know” more about the state of economic health than they really do.
>The evidence in favor of Market Monetarism throughout the crisis and throughout advanced economies is overwhelming.
Given that this is a model of macroeconomics that’s an astonishing claim. Macroeconomic data are messy, confounded by everything in the universe, and not actually that numerous. Given these constraints, (and especially given the feedback from correct predictions to changing fundementals), I’d find it hard to give much weight even to a model that perfectly predicted reality.
Why is it that you’re so confident about this? Is it just that your prior supports it? Or do you think there’s more evidence here than I’m seeing?
@Adam
I thought much the same thing. Anybody that’s extremely confident in any macroeconomic model needs their head checked.
I don’t think that Japan is good evidence for MM. But he was definitely right during the “Great Austerity Debate” of 2013 where keynesians assured us that mild cuts in growth of government spending would doom us to another recession, only to deny this assertion when that didn’t happen.
You see some very similar criticisms of Yellen and Bernanke from economics experts (like Paul Krugman and Brad DeLong and their ilk). Indeed, my impression is that this is one of the areas where the difference is between the most politically connected experts who come up with excuses for tight money and a majority of other experts who say it isn’t working, which has to make one suspect that the people advocating tight money are doing it for reasons related more to politics than expertise.
Agreed. I think there is politics here. There is little evidence that moderate inflation does much manageable damage. But voters hate inflation. In large part due to money illusion dynamics — voters see rising prices, but forget that wages are rising symmetrically and that the shift in nominal prices does not reflect a rise in real prices.
Are wages rising symmetrically?
It’s a good question and I do think the answer was ‘no’ for many people for at least a while there. I’ve heard it said that in the long run wages have to keep pace with prices, which makes sense because people need money to spend money, but it hasn’t been true in the past few decades with consumption driven largely by debt rather than income, especially making mortgages and student loans so easy to get.
That’s somewhat of a different animal, though. Wages have mostly kept pace with core CPI. They haven’t kept pace with housing and education, or healthcare, which consumers mostly don’t pay for out of their own income, and inflation in those specific industries isn’t really the result of money supply effects.
If wages rose symmetrically, inflation wouldn’t work as a response to wage stickiness. So the opposition to inflation by wage-earners is rational.
@ Nybbler,
That’s pretty much what I was thinking.
Sumner’s review of Bernanke’s memoir offers some potential answers to “what constraints”: http://econlog.econlib.org/archives/2015/11/benankes_memoir.html
Very much this. The short of it is that whatever Bernanke’s personal views he was acting as the face of a committee and historically the Fed has been very averse to public disagreement. The only split vote in the Fed that I can recall actually happened during the recent depression with Bernanke being on dovish majority. Bernanke is an economist with a background in macro but that isn’t true of most of the board members. Most of the work the Fed does has to do with finance rather than macro and the board composition reflects that. And some of the board members are idiots. The head of the Dallas Fed made some remarks in 2008 about how he talked to some of his friends in business and they said they were doing fine so the economy can’t be in a recession that left me speechless.
I wrote a post about the topic of the Fed and institution design recently myself.
Thanks for the link anon. That was illuminating, and it was interesting to see some of the quotes from Bernanke lining up exactly with some of the questions from Eliezer’s Q&A.
Thanks for the insight Andrew. I have a hard time ever going on the assumption that “X are idiots,” but what I get from your comment and from your blog post is that bank regulation and monetary policy making are wound up in the same institution and this could possibly lead to conflicts of interest or people making decisions in one area who are actually only qualified to make decisions in the other area. A quick google of the ECB and BoJ show they also have bank regulatory responsibilities as well.
You don’t print more pieces of paper for the same reason you don’t allow private citizens with a printing press to print more pieces of paper in order to increase their available income to pay debts. It’s the same reason diamond supply is restricted; if diamonds are as common as pebbles, they become worth as much as pebbles.
Do you think inflation should always be as low as possible?
The point of Eliezer’s article is that current economic problems can be traced to the central bank is not printing the right number of pieces of paper (or creating the right number of 0s and 1s in a computer system). It happens that from 2007-2015 they created too little money. If we were talking about this topic in the 1970’s I would be saying “Why doesn’t the central bank just stop printing as much money?”
This. Printing(*) too much money can be catastrophically bad, and the catastrophe can creep up unexpectedly. Printing too little money can also be catastrophically bad; that was one of the drivers of the Great Depression. Figuring out the happy middle ground is a genuinely hard problem in economics, and you get no credit for pointing out the right answer in hindsight. For that matter, you get little credit for your foresight being right in one economic cycle; that’s no better than calling a coin toss.
Prudent central bankers tend to target low positive inflation rates for various secondary reasons, and to avoid radical changes in the money supply in any event. If 2007-2015 is the worst one can say about the effects of such prudence, I’ve studied enough economic history to consider that a win.
*Not actually accomplished with printing presses in the modern era, at least in the early stages.
Correct, but supply of money must increase if demand for money increases. During financial shocks like the 2008 meltdown, money demand skyrockets.
If demand for money increases while the supply of money does not, prices need to fluctuate rapidly, and most likely cannot adjust in a fashion that ensures full employment.
Yes, If the government expands the money supply to rapidly the resultant inflation will damage the ability of the currency to function as an effective medium of exchange. But if the government doesn’t expand it enough, the weak aggregate demand will damage the ability of the currency to function as an efficient medium of exchange. Recession either way.
The issue that Summer and others are illustrating is that the not expanding the money supply enough failure is what pretty much every major developed country is doing right now. Central banks have been much more paranoid about inflation than about weak agg demand. Which is about the opposite of how they should behave. It takes a lot of inflation to do the type of damage that a major demand driven recession does.
This is going to sound like a really dumb question, and I’m probably the only person on SSC who doesn’t understand it, but would anyone mind explaining in simple terms why inflation is good? It sounds like the general consensus among everyone who knows anything about economics is that it’s good to have about 2% inflation.
But why? Is it because it causes the real value of debts to slowly wither away, reducing the amount of money people have to spend on debt servicing? This is the only obvious good thing I could think of that inflation would cause.
And I’m also curious about the related question of why deflation is bad. In my naive, extremely uninformed view, it seems like it should be good for my money to be worth more tomorrow than it is today. Is it bad because it makes our exports more expensive for people in other countries to buy? And shouldn’t that be balanced by the fact that we can import things more cheaply due to our currency being worth more?
I’ll put the popcorn on.
If you don’t think that deflation is bad, I’m guessing you don’t have a mortage. Or were you thinking that deflation applies to everything that you buy, but somehow the stuff people buy from you (e.g. your labor for wages) will be unaffected?
Beyond that, the short (thus oversimplified) answer is that interest rates and inflation rates are closely correlated, with the prime rate typically being 1-2% above the real inflation rate. And low-rate short-term loans are vital to the functioning of a modern economy, e.g. Honda needs to buy a shipload of steel to make a shipload of cars, there is essentially no chance that they will fail to sell the cars in a few months for more than enough to pay for the steel, but they need to pay for the steel first and they don’t actually keep that much cash in the vaults.
Interest rates basically can’t go negative(*), because if they did the lenders would just hoard the cash instead. So if inflation is zero, you are a minor economic fluctuation away from having the prime interest rate go to zero or below, and then “hoard my cash in a vault” starts looking better than “let Honda use it for a few months”. Honda has to offer premium terms on secondary money markets, at the same time that it can no longer be certain that new cars will sell for their current target price in six months. And printing more money may not work as a solution if the rational move is for the recipients to just stash it in a vault and wait for it to appreciate.
Targeting 2% inflation gives central bankers enough margin that they can almost always prevent this from happening.
* Interest rates can go a little bit negative for a little while, at least, for logistical reasons like people not actually having Scrooge McDuckian money bins to hoard their cash in. Sweden, I believe, just dropped their prime rate a fraction of a percent below zero; Japan has done the same from time to time without major problems. But it’s a sign that they are cutting things close.
Switzerland has been at -0.75% for more than a year now in a desperate bid to devalue the Swiss Franc. It has a lot of fairly odd side effects, few of them particularly desirable.
As for Scrooge McDuck like cash hoarding, that only sort of works to counter it – count on the central bank simply outright banning cash if the hoarding starts to matter.
…count on the central bank simply outright banning cash if the hoarding starts to matter
The six other central banks with control over reserve currencies thank you for the increased influence and seigniorage profits. Likewise the local organized criminal community, and the gold industry. The local economy will not thank you for introducing them to the concept of “capital flight”.
Swiss bankers, in particular, are not going to do this.
This isn’t the only reason, but the answer you would see in an econ textbook is sticky prices. The economy needs real adjustments in wages and prices to happen. And at some point this means that someone will take a cut in their income. But people are very resistant to taking a nominal pay cut and businesses are quite resistant to cutting nominal prices. Therefore, about the only way to have real prices adjust is for there to be an inflationary environment where real prices can fall without nominal prices falling. See the following article, http://econlog.econlib.org/archives/2013/09/why_dont_wages.html
Hah I like how we have 3 nearly simultaneous answers that say nearly the same thing. I even linked to that same article from Bryan Caplan.
So what you are basically saying is that inflation is a way of deceiving people into thinking that they aren’t making less (or at least shifting blame) so that more economically deserving recipients can make even more relative to them?
That’s the first time I heard it explained like that, and frankly it is remarkably persuasive. (Yes, it’s been awhile since I’ve read an economics textbook). Does still seem like the sort of balancing act I wouldn’t trust anyone to be able to hit without catastrophe, but then if it were predictable I suppose it wouldn’t work.
The Keynesian answer is price stickiness. Prices are inflexible, ESPECIALLY so in the downward direction. So general deflation would distort the economy, as the prices in the economy would no longer reflect actual information about costs and benefits.
In the modern debt-driven economy, deflation might as well be suicide. I have $550,000 in debt (number altered slightly for sake of privacy) between student loans, home, and cars: any systematic deflation over an extended period of time would destroy my standard of living.
EDIT: Well several other people already answered.
Here’s another way of looking at this. Quantity Theory of Money.
Simplified:
M=PY
The stock of money equals the Price of All goods times the GDP (Y in the economic world).
If you cut M in half, and hold P constant, Y must fall by half, too.
In the Real World, it is assumed P is inflexible in the short-run and so GDP falls, say(making this up), 70-80 cents for every dollar $1 in Money Supply.
In the Real World, when a financial crisis hits, people run to Safe Assets. This especially means Cash…think hiding cash under your mattress. M falls precipitously.
A major part of solving the Great Depression is attributed to the US leaving the Gold Standard and Roosevelt certifying the health of major banks during the Bank Holiday, which had the effect of increasing M.
Over the short-term, monetary effects drown everything else. You can have some rather crappy economic policy and still have increasing GDP as long as your Central Bank keeps printing money. At least for a while.
Prices are inflexible, ESPECIALLY so in the downward direction.
Half true. Prices of commodities are very flexible, even at the retail level. See, e.g., gasoline. Prices of non-commodity goods and services are reasonably flexible, even in the downward direction – though sometimes camouflaged (e.g. sales and discounts) to make it easier to bring them back up when practical.
Wages, are very sticky. In part because mortgages and other consumer debt would make it crippling for many wage-earners to accept a pay cut, in part because “…and no wage cuts EVER” is an effective Schelling point to anchor one end of a negotiation. At this point both that Schelling point and the home mortgage are so firmly established in Western economic tradition that it would be difficult to handle a period of substantial deflation.
Yep, that’s a fair addendum.
Though I would elaborate and say that this is largely applicable to the so-called “primary” labor market of full-time workers. For “secondary “workers (part-time, contract), employers regularly employ all sorts of “under-handed” tactics and this could easily lead to massive lay-off and re-hire at lower wages.
Employers shy away from driving a similar hard bargain with Full-Time workers, because that would destroy morale.
Econlog actually posted a book review that discussed this. There was a labor economist who included labor economic theory and actual interviews with real companies. I could not find that blog post with my google-fu.
Of course it might have actually been Marginal Revolution…
Agreed. Corollary: if we do get a prolonged period of deflation, say goodbye to traditional full-time employment.
A Definite Beta Guy: “Econlog actually posted a book review that discussed this.”
The post you mentioned is this one, in which Caplan discussed Truman Bewley’s Why Wages Don’t Fall During a Recession:
http://econlog.econlib.org/archives/2013/09/why_dont_wages.html
Edit: Brian R also mentioned this post downthread.
Deflation is bad exactly for the reason you think you’d like it: if your money is worth more tomorrow, you’re less likely to spend it. Bad for the economy. Also liquidity traps.
Inflation is useful for two reasons: 1) increasing inflation decreases real interest rates which has a stimulative effect, and 2) nominal wages are “sticky” downwards (firms are reluctant to decrease them for various reasons) which means that labor markets don’t clear in recessions. We use inflation to decrease real wages, which decreases unemployment. It also gives you “head room” to avoid liquidity traps.
Not dumb, it’s a really good question actually. Market monetarists would probably favor targeting Nominal GDP for broadly similar reasons as I state below, but since the current paradigm is to think in terms of inflation, here is my best shot at defending a 2% inflation target for the central bank:
The short answer to why we should have low and stable inflation is money illusion. Money illusion is when economic actors fail to see money in “real” terms of what it can buy and instead view it in “nominal” terms of the face value of their holdings. Money Illusion is seeing a $10 bill and thinking “I have $10, which is less than if I had $11” instead of thinking “I have $10, and at the current price level this is equivalent to having $11 at a price level that is 10% above the current one.”
This type of thinking leads to wage stickiness, which a term for the observation that nominal wages rarely and begrudgingly decrease in the aggregate, either because workers refuse to take wage cuts (even if they are not “real” wage cuts-because of money illusion) or because employers are reluctant to cut wages due to fears of hurting morale (again, because of money illusion).
For evidence of downward wage stickiness, we this Paul Krugman post. For stories that can explain why we see wage stickiness, I suggest this post from Bryan Caplan on Truman Bewley’s book “Why Don’t Wages Fall During a Recession?”
The upshot of wage stickiness is that when the price of labor (all labor in aggregate) needs to adjust downward relative to the rest of the goods in the economy (for the same reasons of supply and demand that explain why the price of gas changes), we see unemployment rather than nominal wage decreases. Unemployment is unused productive capacity in the economy, which is bad because it decreases the thing we all really care about — making real things or services and then trading them for other real things or services.
Inflation mitigates this effect, because when prices (and everyones wages!) are increasing by 2% a year, a *real* cut in wages =/= a *nominal* cut in wages. Money illusion acts at the nominal level, and so with inflation it is possible to get the *real* value of wages to decrease while still increasing the nominal value of wages and avoiding problems stemming from money illusion. This is not possible with zero or negative inflation. A low and stable inflation rate allows for a much more flexible labor market, and prevents recessions that would otherwise occur at a 0% or negative inflation rate.
These guys have all given great answers. I’ll just add, as a child to this answer rather than top-level because it directly pertains, that there are plenty of more tangible reasons for price stickiness than just money illusion, too. The reality for most spenders of money is that quite a bit of their short-term future earnings are spoken for. The terms of your lease, mortgage payments, student loan payments, car payments, whatever it is, are stuck for at least some while at a prior contractually agreed-upon level. All of these are plenty good reasons from the employee perspective to not want to see a nominal wage decrease, because many of their short-term expenses are set in nominal dollar terms. The same is true from the business perspective. Their lease, installment terms on their inventory, employee contracts, even theoretical commodities that trade in a liquid market that may be fixed in price by futures contracts. The problem is very much that a whole lot of different prices would all need to drop at the same time for it to be practical for any of them to drop. The only way to drop a whole bunch of prices at the same time that are all nominally set by unrelated parties with no incentive or possibly even means of coordinating, is inflation.
Great addition.
Basically, it’s good for two reasons: Mild inflation helps spur investment, rather than sitting on useless cash, and because mild inflation is better than mild deflation, so you target 2% inflation so that if you miss it in either direction by a little, it’s not so bad.
Whoa, I got a ton of answers. Thanks a lot to everyone for explaining, I think I get it now. It’s because we need to incentivize people, businesses, and banks not to just sit on their cash (which is what they’d do if we had deflation) and because we sometimes need to have people take pay cuts without them realizing they’re taking a pay cut so that unemployment can go down.
Right?
Also, @ John Schilling, you were right, I don’t have a mortgage. I’m from the underclass, so no one in my immediate family has ever had a mortgage, or even a car loan (we buy cheap cars in cash). That makes it kind of hard to visualize. I do have student loans though, and I’d like to be able to afford a house (with a mortgage) someday.
You’ve got it. And +1 this not being a dumb question; it’s the type of thing that should be taught in high school but usually isn’t.
The divide between people with mortgages and people without on this can be huge. The Free Silver movement transformed the political landscape of the United States in the late 19th century. TL,DR, the plan was to back US currency with both silver and gold at a fixed ratio, meaning anyone with silver bullion (at the time just a useful shiny metal) could demand that the banks turn it into freshly-minted Real Money, roughly doubling the nation’s money supply for a one-shot 100% inflation. The status quo at the time was mild deflation as gold mining wasn’t quite keeping up with economic growth.
Farmers, with huge mortgages and incomes tied to the sale price of commodity goods, were violently in favor of this for the same reason they would be opposed to deflation. Make the same mortgage payments with the money you get selling wheat at twice last years’ price. Urban laborers figured (probably correctly) that their wages would be stickier than the price of food and they’d be left hungry by the inflationary spike. Business pragmatically understood that both mild deflation and 100% inflation were bad ideas, but better the devil you know.
Fortunately, people were pretty burned out on the idea of Civil Wars at the time, but the electoral politics were as interesting as what you’re watching now. Free Silver lost, and everybody muddled through.
Then there was the time FDR invalidated the inflation clause (via gold pegging) of every contract in the entire country by executive fiat.
If we need people to take a pay cut without realizing they’re taking a pay cut, teaching them that in high school seems a little counterproductive.
I think your folks are right that buying cheap cars in cash is a better value. But if you want a mortgage someday, you might want to get a car loan onto your credit record. (Having many different loan types improves your credit rating.) Have the money saved up before taking out the loan if that makes you more confident that you can repay it.
On the subject of deflation driving interest rates negative, this map seems timely. Sweden, Denmark, and Switzerland are already there, the EU and Japan are on the edge.
As already noted, you can get away with this to a small extent for a little while because it is also costly to try to improvise non-central-bank ways of storing and moving large amounts of money, but as you get farther into the negative or stay there for longer periods people will start investing in the alternatives.
Endorsing the “wage stickiness” and “negative real interest rates” explanations above. I just want to note that lots of people think 2% is much too low, myself included.
Also, it is absolutely not a dumb question.
Thanks for thinking it’s not a dumb question. In my day-to-day life I mostly only encounter people who are less knowledgeable about pretty much everything than me (due to being underclass), but on SSC I feel dumb a lot. Everyone here is so smart.
Why do you think 2% is too low? Do you think people are still hoarding too much of their money at 2%?
Also, a related question for everyone, how do advocates of a 2% (or more) inflation rate square that away with the common advice that people should save money for retirement and for emergencies? If our money is going to be worth less each year, it doesn’t make sense to save (in fact, that’s the point of inflationary policy, or so I understand).
So how should people save? Or should they not save at all? I’m talking about regular people here, not banks or corporations. Should all of our savings be invested in the stock market or something so it earns money at a rate at least equal to or greater than inflation?
(I don’t have a retirement account, nor do I even know anyone who does, so sorry if this is a super dumb question.)
Long term real returns to diversified equities (i.e. after accounting for inflation) are thought to be 5% or better. So you still come out well ahead on, though that’s somewhat dependent on your temporal discount curve. Money you won’t need for decades should be mostly or all in equities (the stock market).
Short term emergency savings should not be in the stock market and may well lose value in real terms. That loss is kind of like an insurance premium. The small expected cost is seen as worth it to prevent a catastrophic loss if you had no savings.
Different asset classes are affected differently by inflation. Equities don’t care very much. Existing bonds would be hit by a permanent increase in inflation because they pay out in nominal terms, but prices would adjust to the same real rates (but – real expected bond returns can be negative). There are also bonds called TIPS that pay out depending on inflation (and from their prices we can back out the market’s inflation expectations: https://research.stlouisfed.org/fred2/series/T10YIE the expected inflation for the next 10 years is only 1.18% right now).
You should definitely save.
Interest bearing demand deposit accounts (ie. savings accounts) for short term savings. Safe interest bearing financial assets like the I Series Treasury Savings Bonds (an inflation adjusted Treasury bond that households can buy) for long run savings. Riskier assets like stocks and real estate for very long term savings where the risk is acceptable.
@ all replies
Thanks everyone! I’ve learned a lot about economics today, and I now understand why a small amount of inflation is good and why it is still a good idea to save.
On 2% being too low: if inflation were higher, then it would be more effective at counteracting wage stickiness – if an economic shock happens that leads to people in a particular industry being 10% overpaid, then it’d take roughly five years for the economy to readjust at 2% inflation but less time if it were higher.
Also, it would expand the feasible range of “real” interest rates (interest rates minus inflation), such that real interest rates could be more negative. This would be valuable in recession-fighting, since negative interest rates are an incentive for people to spend money.
On saving – if you’ve got money in a savings account in the bank, and inflation rises, then the interest rate you’re earning on that savings account will rise too, so there is still an incentive to save. (I suspect that the incentive should be unchanged approximately, on average, in the long term, subject to various caveats, but I’m not certain).
How you “should” save? The advice from previous posters is kind of targeted at rich people. I don’t know your situation in detail, but my *guess* is that your top priority should be to get several months worth of money in a savings account at the bank in case of some emergency. After that, your top priority would probably be to pay down your loans as quickly as possible, highest-interest ones first.
And even after that I wouldn’t think about buying stocks/mutual funds/bonds/whatever until you were at the point where you had a large amount of money (off the cuff, >$10,000) to commit to the project in addition to your emergency fund.
1. Invest in your work 401k if you have one. Most companies match up to a certain percentage. That means you are automatically getting 25-100% return (depending on the matching rates).
2. PAY DOWN YOUR GODDAM CREDIT CARD DEBT! IF YOU ARE IN CREDIT CARD DEBT, YOU SHOULD EAT NOTHING BUT BOILED POTATOES UNTIL YOU ARE OUT OF CREDIT CARD DEBT!
3. Create Emergency Savings. You need 6 months of Emergency Savings, based on your expenses.
4. If your work offers Long-Term Disability Insurance, I would advise you take it.
5. Budget. You need to know how much money you spend to have any hope of controlling your spending. Mint is an excellent tool…I just started using it myself. My God I love Mint.
Do not get into the trap of thinking “if I make X income a year I never have to worry about money again.” You can easily burn through any income with enough imagination.
No Credit Card Debt. No Credit Card Debt. No Credit Card Debt.
Seriously.
I know some people from college who financed entire Dream Vacations on Credit Cards. DO NOT DO THAT. YOU WILL REGRET IT.
I like this piece of advice, and to reinforce it: no matter what income you think is “more than you could possibly spend” there is probably somebody at that level who’s freaking out about making payments at the end of the month. That’s not to say that it’s not better to be at that level, as they’re probably freaking out about their payments on a much nicer home, but remember that many lottery winners are bankrupt within 6 years. Or, as was in the news this weekend, Kanye West is $53,000,000 in debt.
I agree with Chalid and A Definite Beta Guy and add:
If you don’t have a work 401k, you can open an IRA. One relatively easy option is an index fund, such as is available from Vanguard. These let you invest in the whole market (or a subset of it), rather than in specific stocks. They also have index funds that are targeted for you to retire in a given year (these start out “riskier” and move to “safer” investments as your target year approaches). IIRC you need $1-3K to open an IRA through them. So step 1 is to save $3K (or however much it is). Step 2, go to their website and open an IRA. Step 3, you can set up automatic transfers from your bank account to your IRA if you want. (Only a good idea if your income is pretty predictable, of course.)
(Except I personally think the stock market is actually on a long term downward trend, so current adults might be better off “stashing money under the mattress” (as they used to say people did who had lived through the Depression). Or investing in other things, such as improving your skills and/or building your *own* business.)
improving your skills
This is would be the absolute best thing to do, except that, unfortunately, so very many of the ways to “improve your skills” are simply expensive scams.
Yes, you’re better off heading to the library and/or a friend who has the skill you want to learn.
I agree about paying off your credit card, or at least clearing the balance at the end of the month. The APR interest you pay is iniquitous and you really would be better off taking out a loan with Vinnie the Legbreaker instead.
Credit cards are hugely convenient, but there is no such thing as free money. Never mind “minimum monthly repayment”, how banks make their money is on the interest. Clear it all off and don’t go anywhere near spending up to your limit (unless something unavoidable happens like your house burns down).
The advice here is all solid. Bogleheads.org is the best place on the Internet to learn about saving and investing.
I’ll second the above financial advice first-hand.
A few years ago, I grew alarmed at noticing our debts were growing rather than shrinking, and irritated at monthly student loan payments. I made a spreadsheet of every expense and every dollar of income and tracked it every day, making sure that we could start putting most of it towards paying off the debts. This included moving to a cheaper apartment. We paid off two student loans, a car, and some minor credit card debt, prioritizing them in order of interest, and then kept on the same budget putting the excess into savings thereafter.
I was glad to have done so, as well as developed the habit enabling us to do so, as shortly later we had some rare medical problems, then some time under employed.
@ all additional replies
Thanks for all the savings advice! This is the kind of stuff you never, ever hear when you grow up in the underclass, so it’s super helpful! No one in my family knows anything about saving; they all just live off of Social Security when they get old. I’d like to do better than that.
I will focus on my credit card debt first, then. I don’t have a ton (probably about $1500 across two credit cards) and most of that was for an unavoidable car repair, so it shouldn’t take that long to pay down once I graduate from college and begin working full time. Right now I can only afford the minimum payments, but I’ll be graduating soon and getting a different job right after that.
If my “real job” (when I get one) offers a 401K option, I’ll use it. Otherwise I’ll start an IRA.
Regarding sticky wages: I’ve wondered before whether it would be possible to get a kind of Wage Lubricator going. That is, some kind of symbol you put on the corner of your CV/resumé, some kind of badge you wear to the interview, some code-word you say to your boss, that means: “I am choosing to opt-out of sticky wages. I recognize that a wage cut is better than losing my job, and so should an economic downturn cause you to consider firing me, please just cut my wages instead. Yes, really. No, I won’t complain. Yes, really.”
In other words, problems caused by cognitive errors, like having disproportionate concern for your nominal income to the point where you would rather get fired than take a pay cut, seem like they ought to be solvable in the same way that the problem “I want to go a long way away very quickly but can’t run that fast” was solved by the invention of the car.
Some industries, like finance, have heavily bonus-based pay, which you’d think would solve the sticky wage problem. But they still fire people all the time in downturns, largely because if you pay people too little they tend to leave anyway.
In a way, that badge is freelance and contract work where you sign a set contract to work x amount in the not too distant future and then renegotiate when the little more distant future comes. Freelance work is not prevalent in all industries though.
What Brad and Chalid both said. This problem is quite intractable. Good monetary policy is the reasonable solution.
To argue with ADBG and Chalid just a little- I do think heavily bonus-based pay is a partial solution. Using finance as the counter-example is a bit misleading, as finance is probably a lot more likely to fire people in a downturn for reasons other than making payroll (ie, an expectation that they should have made more money despite it- unlike a factory worker who’s never expected to “beat the market trend” in making widgets).
The one time I had to lay people off (back when the recession originally hit), I laid off 1/3 of my department. One of the hardest things I’ve done, and I did it because they were all flat-wage and we had to cut costs immediately to keep afloat. If half their salary was in bonuses (like mine was), then a bad downturn for the company would have meant no bonuses being paid, which would have been around a 30% total payroll cut on it’s own (less than half because of fringe/benefits). Probably no firings would have been needed- and these were working- and under-class kind of people that probably wouldn’t have left the job if the bonuses had been zeroed, especially not with the economy apparently burning down around them and no back-up job or major savings at the ready.
One point that I think gets obscured in some of the responses is the distinction between anticipated and unanticipated inflation (or deflation).
If I lend you money in a world where prices have been and are expected to remain stable and the government then prints lots of money and creates a 10% inflation rate, you benefit and I lose, since you pay back the loan in money worth much less than we expected. But in a world where inflation is 10% and was expected to be 10%, the interest rate we agree on allows for the fact that you will pay me back in less valuable money. The nominal interest rate is now i+10%, where i is the real interest rate.
So unanticipated inflation helps debtors, hurts creditors, anticipated inflation does neither.
That formula is a fairly good approximation for typical values of inflation and interest rates, but it isn’t quite right. Suppose I lend you $100 for one year and I want a real interest rate of 5%. If I charge you a nominal interest rate of 15%, I’ll get $115 in a year, but assuming 10% inflation that’s worth only $104.545 of today’s money (ignoring time preference), so that’s a 4.5% real interest rate.
Correct. I was being imprecise.
David Friedman, what are your thoughts on monetary policy in general?
We’ve had a whole sub-thread about how we’ve got to have currency inflation sufficient to produce 2% price inflation per year.
But presumably, you favor the abolition of government currencies and adoption of private currencies. And it would seem to me that everyone ought to prefer to be paid in a strong currency (i.e. little or no currency inflation) than a weak currency, such that private currencies would look a lot more like Bitcoin (very little currency inflation; huge price deflation) than what Scott Sumner wants for the dollar.
So it seems like you have to endorse one of three options:
a) The government really ought to be in charge of monetary policy, after all.
b) Price deflation, as opposed to currency deflation through the sudden and unexpected destruction of money, is not really bad. This, as far as I can tell, is the view of people like von Mises, Rothbard, and Reisman. If you endorse this (it’s what I lean toward), I would be interested to hear what you have to say about the wage-stickiness argument and the can’t-have-negative-interest-rates argument.
c) Price deflation is bad, but it’s a lesser evil than giving the government the power to control the money supply, since they won’t exercise it right. This is perhaps plausible, but it’s hard to argue if the consequences of price deflation are as bad as some people say.
I’m in favor of competing private issuers. If we ignore the operating costs of keeping a money in circulation, the competitive equilibrium is prices falling at about the real interest rate, giving a nominal interest rate near zero. That’s a straightforward implication of the usual zero profit condition.
It’s also the optimal behavior of the money supply, as per my father’s old essay on the optimum quantity of money. For reasons that have nothing to do with macro.
I expect that in an economy which had had such a system for a while, people would build the expectation of slow deflation into their expectations.
@ David Friedman:
Okay, that’s pretty much what I think. We’d have price deflation, but this wouldn’t be bad, wouldn’t favor creditors over debtors, etc.
What do you think the best argument for this is? Book/essay/etc.
I mean, I’ve read several, but I’m interested to know what your opinion is.
It seems that “market monetarist” libertarians like Scott Sumner disagree. Or at least, that’s the message I’m getting (am I misunderstanding?). I guess the real problem is that I understand your point of view, but I don’t really understand where he disagrees with people like you.
@Vox Imp:
I’ve pretty much stayed out of macro, for two reasons:
1. I don’t have good intuition for it.
2. I don’t want to spend my life primarily identified as my father’s son, much as I loved and admired my father. I gave up on staying out of economics after concluding that I was a considerably better economist than physicist, but I at least avoid the area where he made his main contribution.
Both my father’s optimal supply of money piece and my analysis of competing private issuers are straightforward price theory, aka micro, which I feel much more comfortable with.
I don’t know if there is an analysis of the equilibrium of competing issuers in print, but the argument is straightforward.
Not a popular answer, but it is an aspect of inflation that hasn’t been mentioned. When new money is created, it shifts real resources to whoever gets the money first. Having a target of X% inflation to be met by printing Y$ in money gives Y$ in money to influence the economy. This Y$ can be used to fund government programs or help private companies that need it without having to tax and redistribute.
It’s a Y$ tax with some interesting properties, because it effectively comes out of each dollar and dollar denominated asset (like bonds). It’s based on liquid capital rather than fixed capital. It hits net creditors worse and net debtors less. It hits people with fixed income worse. I’m not sure if it’s good, but this could be seen as desirable.
“because it effectively comes out of each dollar and dollar denominated asset (like bonds).”
Not quite right. If the inflation is anticipated, the interest rate on bonds will take it into account. So fully anticipated inflation is a tax on currency, which can’t pay interest. Unanticipated inflation is a tax on currency plus a transfer from people who hold a positive amount of assets defined in nominal terms (such as bonds) to people who hold a negative amount of such assets (such as the company that issued the bonds and must eventually redeem them). The latter effect provides income to the government only to the extent that the government is a net nominal debtor—which, of course, it usually is.
Is there any way to read this if I don’t have a Facebook account? In the past I have been able to follow links to EY’s posts on Facebook, but this one asks me to log in.
Given the general outlines of the class analysis presented in the other thread, to what extent can we say that Communism was simply the gentry-underclass alliance taken to an extreme, while Fascism was simply the elite-labor alliance taken to an extreme?
As far as I know, mainstream communism was outright hostile to the underclass (even inventing a special nasty name for it), and actively cooperating with labor (or shamelessly manipulating labor, if you will). So — nope, we really can’t?
In theory, yes, but in practice, no industrialized nation has gone communist in the way Marx predicted (an alliance of industrial labor with thought leaders); it’s always been poor, rural farmers uniting with urban elites against the urban middle class (bourgeoisie).
it’s always been poor, rural farmers uniting with urban elites against the urban middle class (bourgeoisie).
And the kulaks. I tend to think that – particularly based on the writings of the time – that the least wealthy farmers could give a fig about the urban merchants – it was their (comparatively) wealthier neighbors that they cared about.
(And the constantly drifting definition of kulak is one of the reason I refuse to engage in “1%” demonizing. I might not be first up against the wall when the revolution comes, but I’ll probably make the third or fourth round.)
Sorry, what? Oh, now I understand. You think that “working class” means “the butcher, the baker, the candlestick maker” — but that’s not how communists define it.
To them, “working class” and “bourgeoisie” are two different classes. The quintessential proletarian is a factory worker, the next-best-thing is a poor farmer (i.e., ex-serf), and then various service and workshop workers. The urban middle class contains too many small business owners — basically, small-time or wannabe capitalists — to fit into the working class bracket.
But why you’re conflating rural farmers with the underclass is still a mystery to me.
In the US the two are largely the same.
Itinerant farm workers are almost entirely illegal immigrants or their descendants, and rural whites are generally seen as “white trash” by those of us in the cities and suburbs. The days of Jeffersonian yeoman farmers, antebellum planter gentry or western homesteaders are long over. We take a very Greek view of manual labor these days.
@ Dr Dealgood
Ah, thanks.
Well, as you can imagine, the fields of Russia were not tilled by illegal immigrants. And the fruits of their labor were the main source of food for the entire country at the time, so, although they were not yeomen or gentry, they weren’t “white trash” either.
“Rural farmers” =/= “itinerant farm laborers”, and haven’t been for some time.
It’s an error to conflate the two, but it’s also an error to think that the rural/urban divide is just ‘farm laborers’ vs city folk.
The portion of farm work which includes heavy manual labor has greatly shrunk. That which is *just* heavy manual labor is smaller still. The distinguishing difficulty of farm labor is more weather/environment than physical effort anymore.
It’s arguable that the R/U divide is more based on property owner/independent contractor vs salaryman/factory worker, because the rural population’s low-level manual laborers largely all moved to the city and became factory workers.
This is complex and needs more thought.
As the grand-daughter of a farm labourer in rural Ireland, I can tell you that an itinerant (or even settled) farm labourer is NOT the same thing as a farmer, even a small farmer.
The farmer owns the land and hires on the labour. The labourer has no land of his own and works for wages. It’s that old “owning the means of production” thing again 🙂
In American usage, I believe “farmer” almost always refers to people who own and/or manage farms, or can reasonably aspire to do so by the end of their career. The rest are “farmhands”, “farm workers”, or the like.
There are approximately 2 million farms in the US, most owned by individuals or families. About half are either hobby or subsistence farms, with negligible sales but likely feeding a household whose head occasionally does outside labor for cash. See “Dukes of Hazzard” for an idealized version, “Winter’s Bone” for one less so. The other half fall are profitable small businesses with generally middle-class owners, see Norman Rockwell or any traditional version of Superman’s childhood. And there are thousands of giant agricultural corporations, many of whom hire ex-family-farmers as skilled labor or low-tier management.
Farm work is also dangerous.
Oops, I missed a point.
Industrial labor was definitely involved in Russia — strikes and demonstrations by workers precipitated the regime change.
And communists were not the “elite” at the time (that would be the aristocracy, and perhaps the largest capitalists), so I guess they pass for “thought leaders”.
“And communists were not the “elite” at the time (that would be the aristocracy, and perhaps the largest capitalists), so I guess they pass for “thought leaders””
Yeah, that’s how I said it didn’t go. The communist leaders have generally come from the gentry.
Given that the elite-labor alliance is identified with the right, and the gentry-underclass one with the left, is this any different from saying that fascists are far-right and commies are far-left?
Well, to me at least, an explanation for why fascists are considered far-right is inherently interesting, even though most people forget about the “socialism” aspect of “national socialism.” That is, from a libertarian’s perspective they both seem to be on the same end of some “government-liberty” spectrum–i. e. totalitarianism based on “the working class” or else totalitarianism based on the ethno-nation state.
But to the extent the real difference between left and right is less substantive and more about differing yet predictable alliances between certain groups in society, that helps explain to me the fascism=far-right, communism=far-left association. As to why we can’t have a non-totalitarian extremism…
I think the ‘nazis are actually socialists’ argument is weak http://pseudoerasmus.com/2015/05/03/fascism-left-or-right/
However, I think looking at the political spectrum in this was as composed of alliances between multiple groups is interesting. Fascism/far right as the extreme alliance between labour and communism as the extreme alliance between gentry and underclass helps clarify a lot of the confusion with ‘far right’ that occurs when people also talk about right wing libertarians.
I guess the classical liberal/libertarian position is therefore an alliance between gentry and elites. I’m not sure what an extreme alliance between the underclass and labour would look like, and I suspect it doesn’t exist.
I suppose if we’re going to divide things up into quadrants, the gentry are mainly concerned with social liberalism, and usually team up with the underclass who are concerned with government support for themselves. Both of these together gives us mainstream progressivism.
Labour are concerned with patriotism and tradition, and stopping the underclass getting out of hand, so are social conservatives. Elites are concerned with money, so are economic conservatives. Both together gives mainstream fusionist conservatism.
So gentry liberalism plus elite conservatism gives libertarianism.
Underclass welfarism plus labour conservatism gives us something that looks like an even more populist and pro-government version of Donald Trump.
This seems to make a lot of sense, but if libertarianism is an alliance between arguably the two most powerful segments of society, then why isn’t it more successful? Maybe elite+gentry is still too small a segment of society? And, of course, most of the gentry are already too wed to the gentry+underclass alliance to join the gentry+elite alliance (which is also, perhaps, weakened by what seems to be the general antipathy of a group for the group one rung above them).
If we want libertarianism to be more successful, is the most logical way to convince more of the gentry to ally with the elite? Looking at it this way makes it seem less likely that libertarianism will ever be a populist philosophy, given the difficulty of getting three different segments of society to agree on anything.
@boottle
I just wanted to say that I really like this analysis and it feels essentially correct to me.
@onyomi
I think libertarianism hasn’t been very successful because the elites view the gentry as being provincial at best. Gentry is just too close to labor for their aesthetics. You see the same kind of thing with labor’s refusal to team up with the underclass.
Gentry also isn’t entirely sure that libertarianism is in their best interests (it is for some of them, and it isn’t for others, depending on how exactly they’re earning their income).
@onyomi & @Anon –
There are a few other reasons libertarianism has been unsuccessful. One of these is that under a democracy, elites and gentry are far outnumbered.
Another is that it actually has been pretty successful. Explicit libertarianism not so much, but the US and the UK (where I’m from) have generally over the last 50 years moved in both a more socially liberal direction and in a more marketised direction. Rothbard types are just the fringe weirdos, they’re to this general liberalising trend what communists are to bernie sanders. This is in spite of most of these policies not having much support from the vast majority of the popn (underclass and labour).
I was also going to say that it seems to me that libertarianism largely has been successful, if you compare the US to virtually any other OECD nation. We’ve certainly had opener borders and freer trade for much of our history than most places, lowest taxes of any developed country other than small islands and oil autocracies, pretty decent and continually increasing levels of social permissiveness and acceptance of alternative lifestyles, freedom of religion. We’re not all the way there because an overwhelmingly huge majority of politically active people don’t want us to be along one axis or another, and the things we’re worst at (drug war, prison population, overseas military adventurism, local regulations and crony corporatism that kill small business) are things that would benefit either comparatively powerless people that no one cares about or foreigners.
@boottle
You’re right, society has been moving in a more marketized direction. That’s interesting, given that it’s a move that is strongly supported by the elites but is despised by the underclass and labor (who typically support economic protectionism).
I don’t know how gentry usually feel about this. Do they like free markets (in the sense of globalized free markets with no tariffs on foreign goods)? And what about free movement of labor (de facto open borders)? I only recently started associating with people who could be termed “gentry,” so I don’t have a great understanding of their opinions yet.
Since a lot of them support the socialist Bernie Sanders, I’d guess they’re ambivalent about free markets at best, but they also seem to hate the most protectionist and anti-open-borders presidential candidate, Donald Trump.
Virtually no one is for open borders in the broad sense. The five people that are, all economists, are a huge propaganda boon for all those that are strictly against immigration and like to paint all advocates of any immigration as open border advocates.
That said on issues of immigration and free trade generally the “gentry” is divided. The important thing to fit in isn’t a particular position but how you go about explaining your position. If you are for free trade / immigration you need to argue that it is good for most everyone involved (e.g. immigrants, home countries, and US). If you are against it it is better if you argue that it is bad for everyone involved, or at least most people. Making a very particular-ist argument (it’s good or bad for me or people like me) would be taboo in a gentry setting.
@Anonymous
Maybe not, but a very large number of people are in favor of the total open borders of the EU. No, it’s not total open borders to the whole world, but it’s still quite significant.
I was under the impression that the EU is a project to create a federation in europe similar to what the US is in america, and open borders in such a state is a given. I don’t think Mexico is slated to become a new state.
@Anonymous:
I am pretty sure I have heard more than five people, some of whom were not economists, vigorously agree with the sentiment that “no human being is illegal.” This sentiment is, for all practical purposes, an endorsement of open borders.
No there aren’t. Thinking countries should take in an unlimited number of refugees (per the international law definition) is not the same as being for open borders.
You are just proving my point re: propaganda.
I feel pretty firmly planted in the gentry at this point and I’d say no, they don’t support any of those things. They really do basically support the Bernie Sanders platform.
Personally, I’m all for open borders and free trade (which I realize is an extremely unpopular opinion around these parts). I fully admit it will hurt people, including many American voters, but I don’t care. It will help more people and the people it will help are currently worse off than the people it will hurt and I feel no particular reason to care about Americans more than non-Americans. Of course, I’m not a person it will hurt, so easy thing for me to say, I guess. My also I’m sure very unpopular opinion on income inequality is basically the same as this. Sure, opening up trade, shipping jobs overseas, busting up unions and tariffs, are all things that hurt American workers and the middle class. It also brought tremendous increases in prosperity to parts of the world that previously still suffered from cretinism on large scales, and sorry American middle class, but those people count too.
To me, Sanders and Trump are close to equivalent in this arena. It’s just that Trump is much more of an asshole about it. I imagine David Friedman and onyomi are about the only people here who would agree with me about any of this. Only one of the three of us is an economist.
“I’m all for open borders and free trade (which I realize is an extremely unpopular opinion around these parts).”
It is?
Maybe I’m mistaking the loudest people with the most common, but the ‘we really really badly need to keep the country as white as possible’ crowd sure seems like it makes up a hefty majority here.
@Adam: Doubtful. I would think the majority here are either mild reformers one way or the other, or open borders on utilitarian grounds types. No hard numbers – was this in the poll?
@Adam
I don’t see that. I’m a free trade supporter who wants more immigration and I’m sympathetic to the idea of open borders if enacted gradually. I think supporting free trade comes along with a good understanding of economic theory.
I’m probably mistaking the loudest for common. Plus, this is the only place at all I get any exposure to the whole alt-right sphere that I would otherwise not know exists, so its size in the general commentariat probably gets exaggerated in my psyche.
I’m another pro-open borders person.
I’m also in favor of open borders.
I believe that any human or human institution, including but not limited to sovereign nations, has the right to own property and put up a fence with a big red “no trespassing” sign. But in most cases it is best to leave it at “no solicitors”.
I am in favor of open borders in theory.
So many other incentive structures would have to be changed to make them a net positive that I am not in favor of them in practice.
@Marc Whipple
I take that slogan to be an objection to the dehumanizing terminology of immigration opponents. Surely it signals support for some sort of amnesty, but I don’t think it is reasonable to suppose it signals support for Caplan-esque open borders, even with the caveat about practical purposes.
The general community here is pretty pro more immigration. From last year’s LW survey (which scott said elsewhere was very similar) http://lesswrong.com/lw/lhg/2014_survey_results/ average support for immigration on scale of 1-5 is 4.
Asking a question about “immigration” is a sure fire way of getting pro-immigration results. Opposing “immigration” is a rare position; opposing particular categories of immigration and opposing unlimited immigration are more common positions.
Before we go too far into this analysis, do we have numbers to confirm that the Fascists were supported by labor and not the underclass and vice-versa for the Communists?
There is a difference between an political system and a political program to bring about that system. If communism and fascism were identical in final practice, but one co-opted the elites, while the other replaced them, then you should expect them to have different supporters and maybe a different left-right label. (Maybe that’s your point, but I’m not sure.)
Going back to Church’s model, the Gentry can’t simply replace the Elites because they are socialized differently. Eliminating the Elites either produces a truly different system, or the Gentry turn into Elites, perhaps via massive purges of people who can’t adapt.
It’s worth noting that Mussolini, who invented fascism, was a prominent Italian socialist who broke with the socialist movement over his support for Italy’s involvement in WWI.
To expand on something brought up re. “stealing” other people’s girlfriends, but which I think has a broader applicability:
What do people think about the economics/ethics/practice of blaming people for providing a better option? That is, let’s say you’re a taxi driver and you’ve invested tens of thousands of your own money plus years of training into getting a sweet gig but then along comes Uber and basically undercuts you. Or to remove the complication of government restrictions, just imagine you’re running a successful family business and Wal Mart moves in next door, providing the same stuff for less. The dating scenario, of course, is you have a girlfriend who likes you until some jerk at her work place who’s handsomer, smarter, and funnier than you starts to hit on her. And for first world blue collar laborers, of course, the obvious culprit is third world and immigrant labor.
On the one hand, the plumb line libertarian stance is basically to say “too bad” or “do better” or “that really sucks, but you can’t expect everyone else to suffer inferior, overpriced tax service so you can keep your artificially sweet gig.” And for the most part, that makes a lot of sense to me.
At the same time, as David Friedman pointed out in the thread on dating, there is a sense, in the romantic context, at least, in which the “tempter” is culpable insofar as no one has infinite willpower (celebrity marriages are tested in this way because of the near infinite number of hot people who throw themselves at celebrities; we see how well they last, though, arguably, maybe the lasting celebrity marriages are the “best” marriages because they can withstand such a test). But let’s imagine that tempter isn’t even actively pursuing your girlfriend. Let’s just imagine that he is just not actively pushing your girlfriend away, yet is being in her presence (at her workplace, say), and being more handsome, smart, and funny than you. Is he not still harming you in some way? If dating worked like business could you sue him to redistribute some of his hotness to you?
So the logically consistent stance is to say, basically, if your employer/customers/girlfriend leave you for a better option then you can’t really blame the better option for existing. Yet there are entire institutions (unions) designed to prevent this sort of thing (in a way of which I mostly disapprove). Is it ever reasonable or just for people to try to maintain their current position not by getting better themselves, but by keeping out better options? My gut-level, plumb-line libertarian reaction is “no,” yet it seems like there may also be limits to this (as in David’s example of how there’s only so much temptation any given relationship can withstand).
It’s short term vs long term benefits, and distributed vs localized cost/benefit analysis.
Societies seem to be set up to allow people to compete within limits – in the pre-bigboxstore era, the mom&pop computer store competed with the twobrothers computer store, and that was fine, so long as one of the brothers didn’t put out a hit on pops in order to get a larger share of the market. That kind of competition would have been outside of the accepted limits. Like wise, mom&pop were generally not allowed to “find” a stack of computers on the town hall loading dock and sell them in their store.
While no governance policy is going to provide ideal progress towards better human conditions (*) we tend to agree that letting people pick their own conditions and methods of progress is best. When there are competing interests, and the ideal solution is not apparent (**), majority gets to pick the solution they think is best.
So (getting back around to your question re:tempting coworkers) in the American culture, you as boring dad-bod husband have to deal with your wife working with, oh, George Clooney, on a daily basis, because the majority has decided that husbands dealing with the harm of a tempted wife is worth the upsides to society.
Saudi Arabia, OTOH, has not agreed to this same situation.
IMO, there is a difference between “this has no downsides” and “we have decided that the downsides of this are worth putting up with” and we should not pretend that the people who see only upsides in a given situation are the only morally righteous people in a situation.
(*) not least because we don’t agree on what is “better conditions”
(**) that college students at midnight coffee shops find a solution “ideal” doesn’t actually make it so
The difficulty you encounter comes with conflating (what used to be) lifelong commitments to a spouse or to a profession with mercenary deals such as which baker to buy bread from.
Trade guilds and traditional marriages served the same legitimate purpose: they provide stability to your professional and personal lives beyond the momentary whims of the market or dating scene, stability which is essential psychologically and for raising a family. Divorcees and the unemployed are much more likely to commit suicide for a reason. People thrive on order and cannot tolerate disorder.
My pet peeve in this department is Amazon competing the hell out of anyone else in everything they touch and thereby drawing a lot of flak, at least in my country, in a way that google does not because google made up a new business out of thin air, so in peoples minds no existing business got hurt.
But Amazon does not only compete on price. Their customer experience as a whole is just so much better than any alternative that not buying at Amazon is increasingly becoming a non-option for me. And having left several thousand Dollar-equivalents at their doorstep over the years and them knowing that in a way that the local salesman does not keep track of, if there is a problem they are very generous. And other than with local salespeople I can take that with me, should I move It is a business relationship meant for eternity.
So what’s not to like? It seems to drive people mad to watch Amazon knowing what they are doing. In contrast it drives me mad to see local salespeople having no freaking idea what they are doing. There’s that.
But, there are many shops in my street and 80% of them are empty, due to a mix of Amazon-like phenomena (the local closes equivalent to Wal-Mart does not help either) and incompetent political reaction. A sad state of affairs. The few shops that are left have in common that they are relatively expensive and sufficiently specialised to outcompete jack of all trades Amazon in their respective business. I buy in these shops with the explicit purpose of keeping them in business because I like having them around.
So being less of a libertarian and more of a demanding customer I do indeed pride myself of having a fairly consistent stance in that I condone Amazons competiveness while at the same time actively doing something against the dying of local shops that I deem worthwhile. But this is a upper middle class ideal. The other people in my street are either to poor to follow that strategy, which coincidentally is the main reason I’m not an economic libertarian, I need them to be wealthier than they would become left to their own devices so that they can sustain the shops I like, or to stupid to grasp even such simple connections, i. e. the guy buying at Wal-Mart to save a few cents while complaining how Wal-Mart killed the local high street.
And if you insist to apply the same economics to relationships, despite this being a unromantic thing to do, the same logic seems to apply. From my safe position well within the upper middle class of lovers I can draw confidence from the fact that were my girlfriend to sleep around she’d most likely come back all the more convinced of my relative merits. And I can take pride in the logical consistence of my stance that I do not condemn the “provider of the better”, convineiently ignoring that I can afford this stance only on the grouds of it being very unlikely that such a person really shows up. But this would not work as a recipe for everyone to follow in the same way as “well be more like Amazon then” would be a useless advice for failing local businesspeople.
As a non-Amazon eCommerce guy- part of the reason Amazon catches flak is because they *don’t* have as good customer service as they initially appear, and their prices *aren’t* necessarily any better. They can trash big-box behemoths that should have evolved a decade ago, but when they’re stealing my cheaper, higher-quality pie-slice it’s easy to get irrational.
Surely its also about trust. With Amazon I’m in an iterated prisoners dilemma that has going on for, I don’t know, maybe 15 years, i. e. it dates back to the days when Amazon was basically the only player. With you, I’m not.
Do you think it is irrational of me to put a price on that?
And like I said, not only did Amazon never defect in all the years. Amazon knows that I did not defect either, as in: their business intelligence tool obviously tells their hotline drones to be patient and generous with me if something does go wrong.
Admittedly, being “known” in this way as a person to what used to be faceless corporations scares off a lot of people.
No, I don’t think you’re being irrational. The iterated prisoner’s dilemma is *exactly* what’s going on, and you’re almost certainly right that it’s better off to stick with the person you know cooperates than to try a new person that might or might not, even if they have a bigger reward when cooperating. Our customers will end up being a mixture of the ones who Amazon burned (not many, as a percentage), or those customers that spent the additional nontrivial effort to research us / talk to us / etc., and otherwise get confidence that we’ll cooperate.
That’s why in my initial reply I described myself (standing in for all non-Amazon eCommerce) as irrational- you have perfectly good reasons to stick with them, it’s just frustrating to the rest of us.
I misread you. Thanks for clarifying.
In amazon’s case, I think what some people are reasonably not a fan of is the use of brick and mortar stores to provide some of the value of the transaction while amazon captures all of the income. Namely, the reason b&m stores have higher costs is because they provide the additional service of letting you physically interact with the item before purchase, which is valuable in a wide variety of product categories. Pre-internet, this was practically inseparable from the purchase decision (few people would browse a store, decide on a product ID, and then drive around town looking for a cheaper version of the identical product). The Internet caused a shift in the landscape whereby the assumption that that service can be coupled with the purchase was violated.
This wouldn’t be a knock against amazon as much as an unfortunate state of affairs if it weren’t for the fact that they exploit it pretty cynically (for example, with their marketing that explicitly encourages “showrooming”)
“Namely, the reason b&m stores have higher costs is because they provide the additional service of letting you physically interact with the item before purchase, which is valuable in a wide variety of product categories.”
Three comments:
1. One market solution to that problem is for the producer to restrict discounting of their product by contract, thus giving retailers an incentive to compete on non-price dimensions. That has to varying degrees been treated as illegal under antitrust laws.
2. A different market solution would be to separately sell the service of letting you try out products. I’ve long wondered why there are not firms targeting people who want to buy (say) a minivan. The firm wouldn’t sell minivans. It would charge you a per hour price to test drive each of the most popular models, making it easy to compare them, provide you with reference material, perhaps offer expert advice. It would then point you at the least expensive online source for actually buying a car.
3. In my experience, free riding on physical stores isn’t an issue for Amazon–if anything it’s the other way around. Amazon reviews give me more information about most products than I could get by going to a store, looking at the product and talking to the sales clerk. I wouldn’t be surprised of some people free ride on the reviews when there are advantages to buying from a physical store.
I used to do that when I wanted something quickly, but at this point, Amazon will deliver many things within two hours in Dallas. They’re going to win. As soon as Amazon fresh becomes available here, I’m not sure what I’ll ever still leave the house to buy. A car, I guess, but thanks to Uber and living downtown, I’m not sure I still need one.
I’ve long wondered why there are not firms targeting people who want to buy (say) a minivan. The firm wouldn’t sell minivans. It would charge you a per hour price to test drive each of the most popular models
Some prices are stickier than others, and “free” is among the stickiest of all. Nice, defensible Schelling point, “free” is.
The American consumer is accustomed to the fair market price of a test drive being “free”.
> A different market solution would be to separately sell the service of letting you try out products.
I heard that “pay for buying advice, get a refund if you actually buy in the same shop” is increasingly being done. Never experienced it myself though.
I can remember exactly one occasion in which I realy got advice in a physical store and the bought at Amazon. I felt dirty. But the price difference was around $300. I’d happily split the difference in a resonable way, like paying $30 (10%) for the ten minutes of advice, if given the opprtunity. But a $300 premium for a 10 minutes chat on a piece of retail electronics, I don’t think so.
The thing that always impresses me is that most consumers (like Alex above, I’m guessing) don’t know that almost all big-box stores will match Amazon pricing. I’ve bought a few things at Best Buy at well below their sticker price by show-rooming then just showing the cashier my phone.
Im unsure what a big-box-store is (although I have a mental image of Best Buy, im unsure about its accuracy). In my example the other shop was really small. Also my country has little to no tradition in point of sale price negotiation. Funnily, this goes so far that I don’t even know the English term. Is it “bargaining”?
You’re looking for “haggling”.
Paying for advice has the problem that the type of advice which maximizes the store’s income from selling the advice is probably not the same as the type of advice which is best for making consumer decisions, and in fact may be farther from it than the free advice you can get now. Even though the free advice you get now is still designed to sell product, it’s not going to be the same as when the advice itself is the product. (For instance, imagine a store which lets you browse 90% of movies, but charges you extra to browse the last 10%. Or imagine a store that optimizes its advice for sounding useful rather than being useful; the less direct connection between the advice and the purchase would make it harder for the stores to suffer for giving bad advice.)
I’ve honestly thought that David’s model would work very well for electronics, specifically cameras. Pay an annual subscription, come into the nice looking shop, test the product, hear an expert explain how to select between camera and lens models, teach photography, even track and show people where online to find the best prices from non-ripoff shops.
@Jiro
On this, along with many other problems of a similar kind, what seems to me the most appealing solution is a contract. You buy a good or service. It comes with a set of conditions: “Statement X will be true of the product. If Statement X is not true, we will pay you $Y.” You sign the contract – perhaps implicitly, just by buying the product. It does or does not fit the stated terms. You collect the compensation money applicable to the broken terms. Make the sets of conditions into products themselves – as in, pay SuperRegulaCorp $500/year and you can put their logo on your products, with the legal meaning that this product will abide by SuperRegulaCorp’s terms, and customers can rinse you for cash if your product breaks the terms. Then let the market sort out the rest: what terms, what compensation, what eye-catching logos.
Actually, this probably works better for objective terms – “this food item will not contain this ingredient” – than for more subjective issues. On the other hand, a more cut-down form has existed for subjective claims for a long time: “Guaranteed satisfaction, or your money back!”.
When it comes to this kind of thing I try to also factor in the people who don’t yet exist because of the status quo or can’t easily be pointed to.
When a highly automated factory making cooking pots opens up it’s easy for a reporter to line up a hundred traditional cooking pot makers who are going to be driven out of business and have their lives ruined when campaigning to have the factory blocked or closed.
It’s basically impossible to line up the million people who don’t exist yet who’s lives are going to be just a little bit worse because they have to pay over the odds for expensive cooking pots.
[repeat with any other good or service, blankets, bread, clean water]
It’s easy to line up some deeply-angry people who’ve had a partner leave them for someone else.
Indeed they’ll often line themselves up.
It’s a bit harder to line up lots of people who just felt a bit sad for a long time in a relationship which they just sort of went with before they met someone who really made them happy.
On average we almost all get to be far better off if everyone can choose better options but each individual would really really like it if everyone else had no choice but themselves.
Most people would want make sure their child is free to walk out on a lazy bum they happened to have settled with while also sort of wanting their own partner to be locked into not leaving.
Everyone wants to be able to choose the best/cheapest goods and services themselves but if an individual is running a local store they really sort of want to force others to keep patronizing their business even when someone else moves in and offers something better.
“Is it ever reasonable or just for people to try to maintain their current position not by getting better themselves, but by keeping out better options?”
Reasonable in the sense of “that’s probably their best option to achieve their desired [presumably selfish] ends” sure.
But “reasonable” in the sense of “morally acceptable” I’d say probably not. The reason we generally tolerate some degree of this in relationships is because we’re taught to treat relationships as a uniquely emotional situation and we discourage the use of logic and reason in analyzing them.
However, it troubles me that people form this kind of uniquely emotional relationship with local businesspeople. 🙂
[Do we even do emoticons around here? On reflection, SSC appears strangely emoticon-free. I fear I commited a bluder]
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I shig the diggy electric
In the situation you described with a hot man working at your girlfriend’s workplace who isn’t actively pushing her away but also isn’t pursuing her, I also have the gut-level libertarian response that he’s not doing anything wrong. He’s just there to make his paycheck, and he’s not trying to incentivize her to cheat by hitting or her or anything. Of course, the argument could be made (somewhat legitimately) that his mere presence is an incentive for her to cheat, so I’m not sure what to think about it.
On a funnier note, Saudi Arabia seems to think that he would be doing something wrong.
I’d take it a step further and say that even if he IS pursuing her, he’s still doing nothing wrong. He is not a party to your relationship and has no particular obligation to honor it.
When Wal-Mart moves in to a neighborhood, we don’t expect them to NOT advertise and attempt to win customers away from local businesses.
I would make that conditional on not being aware of the relationship. If you don’t have that as a limit, then you end up with something that boils down to ‘might makes right’.
Do you? I feel like you just end up with “people are responsible for their own promises, not the promises of others”.
This seems to me to be conflating two quite different situations:
1. You have a girlfriend. You are not married. You have made no promise equivalent to being married. A more attractive man makes advances to her. She leaves you for him.
I don’t think he has done anything wrong.
2. You have a wife, or a girlfriend in an explicitly monogamous relation. The more attractive man knows it, has an affair with your wife/girlfriend anyway.
In that case I think he has acted wrongly by persuading her to violate her obligation to you for his benefit. That would not be the case if your relationship with her includes an exit option and she invokes it before sleeping with him.
Although even in that case, he might have acted badly in a weaker sense–done something that produces a minor benefit for himself and perhaps her at a large cost for you. Not, in my terms, a violation of your rights but an act he should not have taken.
@Anon
It basically boils down to respect. The other guy isn’t doing anything wrong ethically, but he is disrespecting you and typically that goes to a competition. Presumably the winner takes the spoils if you ignore that the woman will make her own choices regardless of the results of your silly man conflicts.
Knowing this is a challenge, however, makes this weird. Because people generally hold the party who did the provoking negatively if they choose to take sides at all.
David/Loyle,
Is it somehow disrespectful or wrong of a newly opened Wal-Mart to take out an advertisement in the local paper showcasing their low prices on hardware, knowing full well that current town residents have a standing arrangement that they buy their hardware from Mom & Pop’s Hardware Store?
No-fault divorce is now very common. ALL personal relationships have an “exit option” for any and all reasons, up to and including “I’ve found someone better.”
@Matt M
Was just explaining what “might makes right” means in this context.
Everything Walmart does is disrespectful. Even hypothetical proxy-for-guy Walmart.
And to the slighted party, I imagine it feels more like hanging those advertisements on the doors of the Mom & Pop’s, and handing out flyers right outside.
Not even comfortable discussing this analogy.
Again, it’s two different situations.
In one scenario, Wal-Mart goes to the supplier used by the mom-and-pop stores and makes an under-the-table deal with them to sell to Wal-Mart while still ostensibly being under an exclusive contract with the mom-and-pop stores. That’s dishonest and wrong.
In the other scenario, Wal-Mart offers up a big bonus to the suppliers, enough to convince them to take the hit of breaking the contract and paying the damages. I don’t think there’s anything wrong with that.
In fact, Verizon has a radio ad out I heard just the other day, saying that they will pay you to break your contract with the mobile phone company you currently have. In other words, they buy out your contract. So here we have a literal example of this.
To move this back into the sphere of relationships, I do see something wrong with cheating with a married person behind his or her spouse’s back. Or doing the same with someone in a long-term relationship.
But I don’t see anything wrong with going up to that married person and saying that, if for any reason things don’t work out, you still love him or her, and you’ll be there. That is, basically the lyrics to “Take a Chance on Me”. Now, this is unlikely to be a good idea: the suggestion that things won’t work out is likely to be taken as offensive by the person you are propositioning. However, I don’t think you’re somehow infringing on their spouse’s rights.
And this is different from “indecent proposal” type stuff where you offer someone $10 million to break up with their spouse. The problem there is not that you are legitimately saying that you would make a better spouse; rather, you are using money to tempt them into doing something that is most likely unwise in the long run.
[responding to the last paragraph] How so? It is still their choice to take the money over the relationship, isn’t it? Maybe the expected lifetime earnings of their partner was <$10 million split two ways.
“Do you? I feel like you just end up with “people are responsible for their own promises, not the promises of others”.”
Yes, you do.
Most relationships involve some amount of investment on both parties. To knowingly pursue someone in a relationship is to intentionally try to destroy that investment. It becomes “I win, you lose” against someone who likely doesn’t even know something’s afoot. I would be curious as to what serious defense you can muster for knowingly causing harm to someone else for your own benefit. The only people that tend to support those kind of interactions are ones who are confident that they are always going to win and that it is theirs to take by the virtue of their ability to take it. That because you were able to convince the other person to leave, that excuses the harm caused. Hence ‘might makes right’.
If we apply reciprocity to that idea, then the only people that don’t lose out are the ones at the very peak of desirability. Everyone else has to expend significantly more effort on mate guarding. You have a system that benefits a select few at the cost of everyone else. This is generally a good indicator that what you propose isn’t ethical.
We are generally okay with competition in commerce because:
1: You are generally always assumed to be competing.
2: Investment in any given customer is typically insignificant.
3: One customer typically does not have a significant impact.
4: The competitors can be easily identified.
As you see those conditions cease to be, you will see more and more animosity between competitors and anti-competition agreements will flourish.
Holistically, the idea that it is fine to poach someone else’s partner is extremely toxic to modern society, however that is a very long proof to write.
Besides, you should never take a woman that goes for that seriously, because if she’ll do it to him, she’ll do it to you too.
@ RandyM:
There’s more to life than money, right?
If the only reason that person stuck to his or her partner in the first place was the money, then there would be nothing wrong with it. But I take it the general idea is that there is supposed to be something more to it.
A general point I don’t think I’ve seen made– is having a secret relationship with someone whose partner doesn’t consent a bad idea for the unpartnered person because of the chance of the secret getting out and resulting in conflict and misery? Even if the brunt falls on the person who was cheating, at least some of this is going to affect the person who didn’t break any promises.
There’s the issue of why you can’t compete.
For example, think of the companies that put plastic into their pet food so it would test as having more protein than it actually had. If your company can’t compete because you aren’t doing that…
You could generalize that as, “…because your company is being responsible” or “isn’t cheating” or “is more principled.”
IOW, is the competitor undercutting you because they are offering, at the same price, an actually worse product that is simply difficult to detect as worse?
The cool guy, in most possible views (excluding criticisms of heteronormativity, artificial beauty/coolness standards etc) can’t and needn’t share his coolness, and more pragmatically, his contextual advantages over you are not enforced by the state.
Walmart’s wealth, privileged position (including the US government subsidizing its workers, who otherwise couldn’t reproduce their labor-power at minimum wage with few hours and no benefits) and other advantages are all to some extent based to arbitrary social relations, and in any case NEED to be enforced.
Redistributing Walmart’s wealth, or altering the relative balance of enforcement of its rights vs. the rights of those threatened by it, etc, etc are a very different class of proposition from “Hey you, the fuck you doing around my girlfriend?”.
Why does Wal-Mart’s position “need” to be enforced by anything more than the Walton family having a Giant Money Bin from which they can chose to pay people valuable money for doing the things they like and not if they don’t? Including but not limited to guarding their money bin from thieves and managing a more convenient payment system than bags of cash handed out at the Money Bin.
If it’s about enforcing the value of money, I’m pretty sure Wal-Mart’s business model would survive with bitcoin, Kruggerands, or goats as the medium of exchange. The Giant Money Bin would need a bit more managing in the latter case.
Interpretation of “NEED” 1: Unique tax breaks, interstate highways, eminent domain findings, welfare for walmart employees, and all the little things that make Just in Time Inventories possible are all things that wouldn’t happen without repeated (either continuous or periodic) reinforcement. Without a body maintaining that enforcement, they go away.
Interpretation 2: All of the above things are things Wal-Mart benefits from that “need” to be enforced because they service some local, non-Wal-Mart need, and thus can’t be canceled.
As an aside: Someone working for Wal-Mart once said that without the significant government investment in the company’s stores they would not be able to support a national presence, even on the seemingly huge money supply they have access to. There are too many Wal-Marts to make that kind of maintenance feasible, so you’d see them shrink back down to a Central-Southern US territory.
+ cops
” (including the US government subsidizing its workers, who otherwise couldn’t reproduce their labor-power at minimum wage with few hours and no benefits) ”
1. Back when the iron law of wages, which is what you are referring to, was originated, the real wage of the mass of the English population was a fraction of the current minimum wage. They nonetheless managed to more than reproduce themselves. It’s possible that the workers wouldn’t choose to reproduce their labor power at minimum wage—Ricardo’s improvement on Smith and Malthus—but not that they couldn’t.
2. One could as easily claim that the existence of welfare, unemployment insurance, and the like makes labor more expensive for Walmart, since it means that unemployment doesn’t lead to starvation.
3. In any case, your basic argument is that anything the government does that makes labor less expensive for Walmart counts as subsidizing them. One thing the government does is to restrict immigration. That makes low end labor less available, hence more expensive, the opposite of the result you are arguing for. A much more direct link than your population theory.
4. Malthus’ version of the iron law led to a prediction—that real wages for the mass of the population could never be very much above their then current level. It was an ingenious argument–and the conclusion turned out to be wildly false.
Seriously. How can anyone think that Wal-Mart is paying literally the lowest possible wages above the starvation line?
Yes, I suppose it’s true that starvation wages are a hard limiter on how low wages can go. If you’re going to starve, you’d rather starve working zero hours a week than starve working a hundred hours a week. But this is just as irrelevant to the actual determination of wages as is the fact that, if you wanted to move to NYC and had to sell your car, you’d be willing to pay someone to take it off your hands if you had to.
Namely, it’s irrelevant because in both cases, there exist buyers willing to bid up the price of what you’re selling against one another.
This would be the logical result of the “market power” type arguments, which say that labor markets don’t work well because workers can’t afford to change jobs. Eliminating this welfare would make it even more difficult to change jobs.
The only halfway reasonable way I can see to interpret the “welfare subsidizes Wal-Mart” argument is like this: people have a right to some kind of universal basic income. Therefore, any level of welfare spending below this is equivalent to subsidizing business at the expense of labor. In the basic income world, changing jobs would be relatively costless; thus, not having one enhances employer power and effectively subsidizes them.
Namely, it’s irrelevant because in both cases, there exist buyers willing to bid up the price of what you’re selling against one another.
Well, *self-evidently* the market price would be still considerably below the US minimum wage.
It is not in fact self-evident because of the path-dependent nature of the overall problem. There is no way to know what the clearing wage would be absent minimum wage and the vast regulatory overhead involved in hiring an employee.
I’ll grant you that it’s a reasonable first-order assumption. And if we basically say “all the regulatory overhead involved in hiring an employee is part of their wages,” then it’s pretty straightforward. But doing that brings a whole other set of policy preferences into question.
@ multiheaded:
Obviously, to the extent that the minimum wage is causing unemployment, it means that the market wage for those people is below the minimum wage.
However, in addition to Marc Whipple‘s arguments about eliminating overhead, there is the fact that this says nothing about real wages.
If a significant number of people are put out of work by the minimum wage and have to subsist on welfare and/or support from their families, by eliminating the minimum wage we put those people back to productive work. Meaning that we are producing more than we were before. And fairly soon, in such an environment of full employment, though the lowest nominal wage will be lower than the old minimum nominal wage, that money will actually purchase more in terms of goods and services.
Studies on how tiny the wage share of prices in e.g. Walmart is aside, you forgot the part where most of the things consumed by poor people are manufactured in SE Asia.
@ multiheaded:
Except the part where a large percentage of the “value added” comes from the labor costs of workers in America to load it on the shelves, clean and maintain the store, staff the register, etc. Even the labor in building the store in the first place.
This is the reason that, if you visit Russia or China, everything is cheaper. Or the reason things are cheaper in Alabama than in San Francisco.
Many things aren’t any cheaper in Russia.
I’ve never been to Russia, but I have been to a couple of less-developed countries in Southeast Asia. Locally produced goods are cheaper, gas and lodging are cheaper, and basic necessities like food are amazingly cheap to my American eyes, but a lot of things aren’t — I paid as much for stuff like deodorant and razor blades in Manila as I would in San Francisco, and media and computer stuff were actually more expensive.
I suspect this is being driven by cheap local labor and fewer (or less consistently enforced?) consumption taxes on the one hand, and a more isolated position in the global supply graph on the other.
A few studies have indicated that when a new Walmart opens in a geographically isolated area, the number of people on government assistance goes up even if population remains constant. This seems to suggest that Walmart causes people to have less wealth than before the Walmart was built, instead of providing jobs to people who previously weren’t working at all either at that location or who moved.
Anechdota: Most of the people I worked with when I worked at a Walmart had been full time employees at businesses that had failed, who claimed they had been able to buy more stuff from that Walmart before working there. However only one guy claimed that Walmart had actually had any effect on his employer going out of business.