Gender Wage-Arbitrage Makes Me Happy

27 Saturday Sep 2014

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Alex Tabarrok, Arnold Kling, Capitalism, Gender Wage Gap, Intention heuristic

Should we condemn a man who hires a disproportionate number of women for his tech firm because “they are cheaper”? Or should he be praised for offering those women opportunities in a field in which they are severely under-represented? More likely the latter, and I’m not even sure he deserves criticism for thumping his chest about it in a talk he gave at a startup conference. Alex Tabarrok ponders this employer’s hiring practices, noting that he angered some women in the audience and on Twitter. But Tabarrok objects:

“Women’s wages aren’t pushed down by employers who hire women but by employers who don’t hire women. So why does Thornley [the CEO] get the blame?”

Tabarrok blames the negative reaction on a phenomenon that Arnold Kling calls the “intention heuristic.” This is an often misleading, judgmental rule-of-thumb that gives the benefit of any doubt to good intentions, and casts suspicion on actions taken in self-interest. This presumption is quite common among my friends and certainly in the media. Tabarrok goes on to say (about the CEO):

“…[He] has overcome prejudice (his or his society’s), recognized the truth of equality and taken entrepreneurial action to do well while doing good. It’s Thornley who is broadcasting the fact of equality to the world and encouraging others to do likewise.”

Maybe, but absent the fanfare, Thornly is simply responding to incentives, doing what a good capitalist ought. The response of resources to incentives is a major virtue of capitalism.

Cursed Knowledge Be Damned!

26 Friday Sep 2014

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Bad Writing, Curse of Knowledge, Steven Pinker

Here’s a great essay that attempts to identify “The Source of Bad Writing,” by Steven Pinker, who makes the case that bad writing is often caused by the “curse of knowledge.” This curse afflicts writers who assume, consciously or not, that their readers understand as much about their topic as they do. Of course, bad writing is often caused by a poor understanding of grammar, sentence structure, and other technical aspects of the art. But to anyone with a reasonable grasp of those elements, the curse of knowledge can poison the the writer’s well.

The curse tends to cause errors of omission, such as a failure to explain basic points that the author takes for granted. It can lead to errors in emphasis, as when writers minimize issues that might yield significant insights to different classes of readers. In technical writing, the curse can corrupt a piece grounded in sound concepts, allowing it to become something tedious or even unintelligible. In prose, by degrees, it can sap the finished product of beauty and emotion, stunting development of character, and diminishing its potential to evoke flights of imagination. The curse can even corrupt the conveyance of basic pieces of information, like the non-descriptive email titles that Pinker bemoans.

I tell you, all writing is at risk from the curse of knowledge! But if I left anything out, Pinker’s essay should cover me.

A Nudge Is Just a Mini-Shove

25 Thursday Sep 2014

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aeon, Behavioral Economics, Cass Sunstein, central planning, Cognitive Bias, nudge, Rationality, Steven Poole

Are we more rational than those who wish to “nudge” us? That is the premise of this interesting essay by Steven Poole. He discusses the “cognitive biases” revealed by behavioral economic research, but questions the context within which certain behaviors are deemed irrational. In a broader sense, he demonstrates that the human quirks regarded by behavioral researchers as “biased” can usually be construed as rational.

Advocates of nudging individuals toward certain choices must first determine the best option (in their own estimation, of course) and how to present the information to subjects. In other words, they believe in their ability to practice the art of manipulation. Some of these would-be nudgers, such as Cass Sunstein, deign to call this practice “libertarian paternalism.” Sorry, no… it’s just paternalism. Widespread use of nudging is really an elitist vision, and one which itself attempts to nudge individuals into a dangerous acceptance of social control, in small and potentially large form. From Poole, with reference to presumed human irrationality:

“This is a scientised version of original sin. And its eager adoption by today’s governments threatens social consequences that many might find troubling. A culture that believes its citizens are not reliably competent thinkers will treat those citizens differently to one that respects their reflective autonomy.”

The “manipulative arts” are nothing new, of course, and I am willing to admit that they can be used with good intent. After all, any law represents an attempt to manage behavior, and successful laws tend to be those over which there is an overwhelming consensus. However, I believe that “nudging” by government in an attempt to manage otherwise voluntary behavior is a red flag. It probably signals that the government is involved in an activity in which it has no appropriate role.

Occupying a Meaningless Climate Summit

24 Wednesday Sep 2014

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Climate fraud, Glen Reynolds, Occupy Wall Street, OWS, People's Climate March, Roger Simon, Ron Bailey, Roy Spencer, Steven Koonin, UN Climate Summit

Today’s UN Climate Summit was, by all reports thus far, pretty much a waste of energy, that pun very much intended. It was an event for solemn repetition of good and misplaced intentions. Last week, Roger Simon challenged readers to “Suppose They Gave a Climate Conference and Nobody Came.” Well, a few people came, but Simon quotes Newsweek’s apprehension regarding “the failure of leaders from the U.N.’s three largest member nations—China, Russia and India—to attend.” Ron Bailey at Reason notes that neither the U.S. or China were ready to make any pledges regarding future emissions at the Summit. The entire affair was simply a political show, but there are parties to global climate negotiations with serious goals. More on the scam from Simon:

“I went to Copenhagen in 2009 for this website to cover another UN climate conference (COP 15), then considered to be extremely crucial. Several islands — Micronesia, I think — were supposedly about to go under from the rising tides. I ran into the representative from one of those islands and asked him if he was worried. He started to laugh and shook his head. So I asked him what he was doing at the conference. I want the money, he said.”

Nevertheless, there is a political constituency for politicians who wish to play the climate card. It has been forged by certain grant-hungry climate scientists, spotlight-hungry advocates, and an always crisis-hungry media playing to the back row of the science class. As former Obama science advisor Steven E. Koonin writes, the science is not settled. Anything but.

The editorial The People’s Climate Demarche in the Wall Street Journal describes some of the “free-lunch” nonsense from the climate lobby that passes for good economics, as well as the politics of why momentum on climate negotiations is stalling.

Perhaps a bigger spectacle leading up to the UN Summit was the “People’s Climate March” in New York City on Sunday. Basically, if you think everything about a modern, market-driven society sucks, then the climate change bandwagon is for you. It’s an all-inclusive excuse to bash … almost anything, but especially anything conceivably subject to confiscation! The participants apparently have no inkling that without the fruits of modern capitalism, they would be without the material comforts to which they are accustomed (such as electricity) and have life expectancies of about 40 years from birth.

Roy Spencer minces no words when describing the march:

“The marchers are trying to teach us how we should live our lives, when they have no clue what life would be like if they got their way. Someday we will have a realistic, affordable, abundant energy alternative to fossil fuels. But that day is not here yet. And its arrival cannot be legislated or negotiated with a treaty.”

In another interesting sidelight, Anthony Watts posts a copy of a Craigslist ad soliciting paid volunteers for the climate march.

Finally, the climate march and the subsequent “Flood Wall Street” march (which was described in Reason as more of a trickle) are obviously close cousins to the Occupy Wall Street protests of 2012. Glen Reynolds’ syllabus for OWS is simply a gem.

Well Done, Mr. President… You’ve Screwed Your Supporters!

23 Tuesday Sep 2014

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dependency, economic growth, Heritage Foundation, Obamanomics, Redistribution, stagnation, Stephen Moore, The Daily Kos

Sorry for the sarcasm, but I always have to laugh when I see that meme from The Daily Kos congratulating President Obama for a job well done. It lists some misleading, cherry-picked statistics about the economy, pre- and post-Obama, and it attributes certain outcomes to the president over which he has absolutely no control. Would it be unfair to say that Obama had any control over the lousy outcomes cited by Stephen Moore in “Obamanomics victimizes president’s biggest supporters most“? Probably not, because this is exactly where an economic philosophy based on redistribution takes you: increasing dependency on the state. That’s economic cannibalism, and it is sad, though in fairness it must also be said that the big-government Bush years were a period of relatively stagnant median income growth.

As Moore says, “Income redistribution is not an economic strategy for growth. It’s a lifeboat strategy. It would be hard to point to a single initiative the Obama administration has proposed that would help businesses grow and invest.” And so we see that certain groups — blacks, hispanics, Americans with a high-school education or less, and single women with children — have all suffered disproportionately under President Obama relative to the median family, and the median family has nothing to brag about, having weathered more than a 3% decline in income since June 2009. See the chart in Moore’s article. The one inserted above is a little older, but it shows growth over a longer period by race.

My apologies for the obnoxious pop-up ads that appear when you go to the link with Moore’s article.

There Is No Nordic Nirvana

17 Wednesday Sep 2014

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Denmark, Finland, Iceland, John Fund, McCleans, Michael Booth, Nordic MIracle, Nordic Utopia, Norway, Privatization, Sweden, Tax Competitiveness, The Conversation, The Economist, Welfare State

Perhaps the Nordic utopia is not all it’s cracked up to be! Here’s a glimpse behind the facade from Michael Booth in The Guardian, with some blistering (and humorous) country-by-country commentary on a few of the cultural and economic failings of these darlings of the American Left. Here is The Conversation‘s rather cautious response. And here’s a comment from McLean‘s.

Apparently, the meme-niks of the Left are unaware that the more recent trend in Nordic countries has been away from government domination of the economy and high taxes. In fact, to his likely demerit, Booth even bemoans the widespread privatization of services that has taken place. This week’s Swedish election results were expected to herald a shift in direction, however, back toward the kind of welfare statism from which the country has turned away. Here’s The Economist‘s pre-election take on the situation. It includes some detail on the dismantling of the vaunted Swedish welfare state. But the outcome was not quite what The Economist expected. John Fund discusses the results, which included the advance of hard-line nationalists. Support for the welfare state seems to have eroded in tandem with the influx of immigrants. The hard-liners aside, this shift could simply indicate that support for the state from taxpayers is contingent upon the expectation of a return in the form of services, which may be diminished by redistribution to newcomers. However, some of the articles linked above imply a rising degree of racism toward non-Nordic immigrant populations.

As a further indication of the extent to which the Nordic countries have evolved, take a peak at the rank given to Sweden, Finland, Norway, Denmark and Iceland in this survey of international tax competitiveness. They are all ahead of the U.S. (which ranks 32nd out of 34 OECD countries) on the overall score and on most individual categories of tax competitiveness and neutrality.

Casting A Bad Light On The Seventh Floor

16 Tuesday Sep 2014

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Benghazi, Cover-Up, Hillary Clinton, Sheryl Attkisson, State Department

The seventh floor, in this case, meant the offices of Secretary of State Hillary Clinton and her top staff. Sheryl Attkisson’s report on the latest allegations of a Benghazi cover-up at the State Department is a real eye-opener. If it holds up, it will implicate some of Hillary Clinton’s top advisors at State. It sounds as if the allegations could be corroborated by several individuals. This is sure to be a topic of discussion at hearings of the House Select Committee on Benghazi beginning on Wednesday.

Is Travel Attire So Controversial?

11 Thursday Sep 2014

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Curb Your Enthusiasm, Endless Summer, Glen Reynolds, Jon Hamm, Larry David, Mark Perry, Slate, Travel Attire

I love this little uproar over appropriate attire for air travel. I’m guilty of wearing jeans, or shorts when I travel to warmish climes, but hey, I wear nice shirts! Mark Perry quotes Larry David on the subject, complete with a video from “Curb Your Enthusiasm.” Perry and Glen Reynolds both link to an article in Slate, “In defense of looking nice for your flight or train ride.” This quote is nice:

“Alas, the general lack of respect for travel, itself, as a worthwhile human experience, seems to be the root of this lazy dressing phenomenon. Many of us act as if we’re trying to create a private, instantaneous bridge through folded space-time between our bedrooms and our hotel rooms by flying in our pajamas or busing behind oversized sunglasses; the bad news is, barring a sudden forward leap in technology, wormhole creation is impossible.”

Reynolds agrees that you’ll be treated better if you don’t look like a slob; he likes to wear a sport coat for air travel because of the extra pockets. He also quotes Jon Hamm on the movie ‘Endless Summer‘ from a Facebook post: “These two surfer dudes travel the world to find the best waves, but whenever they got on a plane, they put on coats and ties.”

Senate Dems Are 1st Amendment Flunkies

10 Wednesday Sep 2014

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ACLU, Al Franken, Citizens United, First Amendment, Free Speech, Protected Speech

Or, perhaps they cynically wish to silence ideas they oppose. Or, perhaps they simply want to rig their own reelection. The attitude of the Left toward free speech has lapsed into an intolerance that is eagerly taken up by unthinking minions within their sphere of influence. It is a well-established and longstanding principle that the First Amendment protects speech conveyed by individuals or by associations of similarly-inclined individuals, such as churches, clubs, unions, businesses and trade groups. Protected speech can cover any topic, though unfortunate exceptions based on “public standards” of varying degrees of prudishness have certainly interfered with free-speech rights. Political and religious speech are arguably the ultimate forms of protected speech, as they are almost certainly the First Amendment’s raisons d’etre. Speech takes a variety of forms, but it is recognized as speech whether it is spoken, printed, acted, painted, sculpted, or filmed. Speech can be reproduced and distributed in many ways, and any restriction on its distribution has long been recognized as an abridgment of protected speech. (This topic has been discussed on this blog before in the context of FCC regulation.) But reproduction and distribution are costly activities. These facts explain why spending limits on political speech have been rejected by the courts. Yet the Left almost uniformly condemns the Supreme Court’s 2010 Citizens United decision, usually jeering mindless epithets about faceless corporations (though the faces they normally invoke belong to the Koch brothers, whose contributions are relatively minor compared to some of the biggest “faceless” spenders of the Left. The Left also turn a blind eye toward the Obama campaign’s illegal solicitation of foreign contributions. On Monday, Democrats on the Senate Judiciary Committee passed a resolution to amend the Constitution, essentially gutting the First Amendment. The proposed amendment pretends to protect “freedom of the press” by giving Congress authority over defining just who is part of the press! Well, how comforting is that sort of protection? Haha! Interestingly, while the public might be supportive of curbs on election spending in general, curbs that would apply to all candidates, they do not wish to see curbs on free speech. Both of the links above provide good background on free speech issues, the proposed constitutional amendment, and Citizens United. Al Franken apparently has a shallow understanding of free speech protections. To the great credit of a number of ACLU old-timers, the proposed amendment (and the debate over any contribution limits) has created a rift within the organization. The ACLU does not support the amendment, but its more hypocritically-inclined members are apparently unhappy with that position.

Human Machinations, Technophobic Trepidations

04 Thursday Sep 2014

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Automation, David Autor, Factor complementarity, Factor substitutability, Human capital, Jackson Hole, Luddites, Mark Mills, robots

Are robots likely to replace labor at an increasing rate? Or, are robots and labor sufficiently complimentary as inputs that there will be a continuing role for humans in production? The first argument has been made by pessimists and Luddites for at least two centuries, often hysterically, and they have been consistently wrong, as Mark Mills demonstrates in “The Data Are Clear: Robots Do Not Create Unemployment!”

Of course, “labor” has many facets: there is physical labor, there are skilled crafts, and there is so-called knowledge work; many other categories and sub-categories can be delineated. Mills makes the simple distinction between “drudgery” and higher-level “cognitive chores,” and he notes that automation has primarily functioned to eliminate the former. He also emphasizes that over time, automation has actually given rise to various cognitive chores that were never imagined prior to the substitution of capital for human drudgery. In this sense, new forms of labor are seen to be complimentary to capital. So, at once, the automation of tasks is both “labor-saving” and generative of new human functionality. There is every reason to believe that this process will continue to play out as robots begin to collaborate with humans in more complex ways.

Mills links to this interesting paper by David Autor of MIT, which the author Autor recently presented at the Federal Reserve’s annual conference in Jackson Hole, WY. The paper offers an interpreted history of the labor market over the five decades since the computor revolution. He summarizes the thrust of his thinking on the subject by appealing to the paradox that “our tacit knowledge of how the world works often exceeds our explicit understanding.” This implies that technological advance can and does tend to create expansive opportunities for humans. Autor says:

“… journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities. The challenges to substituting machines for workers in tasks requiring adaptability, common sense, and creativity remain immense.”

Autor and Mills both note that automation necessarily leads to reduced demand for certain types of labor, and that the process can lead to severe dislocations and losses for many individuals in the short run. Autor also notes that some lower-level tasks are not yet especially amenable to automation, and that workers in such occupations are unlikely to benefit as automation takes place elsewhere. This serves to emphasize the importance of gaining the kinds of complex skills that can be of value in collaboration with more intelligent machinery. In other words, investment in human capital will be as valuable as ever.