I was listening to Batya Ungar-Sargon on the Fifth Column the other day and realized we had fundamentally different models of how the modern American economy works. This post is exploration of how I think we ought to model the economy without much math.
Batya’s argument against immigration is that an influx of foreign workers increases the supply of labor, thereby driving down wages of the people already here. Her position singles out low-wage workers, suggesting that illegal immigrants take jobs from low-skilled domestic laborers, depressing their wages. However, this view is problematic for several reasons and fails to account for the nuances of the modern American economy.
First, as a side note, we could prioritize an immigration policy that tries to attract highly skilled instead of low-skilled workers! The Institute for Progress has a whole interactive tool on how to do this. But the last time there was a Republican President, Trump actually reduced legal high skilled immigration.
But more importantly, the American economy is not a fixed pie where low-skilled immigrants simply compete with Americans for a limited number of jobs. Consider a worker from Honduras. In their home country, employment opportunities may be limited, with jobs primarily in agriculture, local services, or perhaps managing a hotel catering to foreign tourists. However, if that same worker were to immigrate to the United States, their productivity would increase significantly, even if performing the same job.
The United States is an advanced, technologically sophisticated economy with a vast accumulation of capital and expertise across various sectors. By operating within this economic environment, workers gain access to cutting-edge technology, sophisticated management systems, and an abundance of resources that enhance their productivity. For instance, a hotel manager in the United States would likely oversee operations catering to business clients from major corporations, leveraging management software, efficient business processes, and integrated systems to optimize efficiency and service quality. Most American hotels require very few people to run them because there is so much automation already deployed. The same worker, performing the same role but within the context of the American economy, would become exponentially more productive due to the surrounding technological infrastructure and capital resources.
This phenomenon is not limited to the hospitality industry; it extends across the entire economy. The United States is a knowledge-based, service-oriented economy, where workers can be highly productive by leveraging the accumulated expertise, human capital, and technological advancements embedded within American companies and institutions.
You can see this dynamic if you take the Cobb-Douglas production function, which is a fairly simple model of outputs as a function of labor (L), Capital (K), and total factor productivity (A):
Total Factor Productivity or TFP represents technology, knowledge, and accumulated innovation that isn’t directly attributable to adding more labor or machines and buildings. In the US, TFP and capital components of this function are remarkably high, suggesting that the economy is labor-constrained. Adding even a small amount of labor can lead to substantial increases in productivity due to the abundance of capital and technological resources available.
And we see this concretely in the fact that Americans are paid so highly. Immigrants come to the US and see massive pay raises because they are now embedded in a economy with highly advanced knowledge, processes, technology, and automation. The American economy is adept at integrating labor and equipping workers with the knowledge and tools necessary to become highly productive contributors.
Furthermore, immigrants not only contribute to the labor supply but also represent a source of consumer demand. By purchasing housing, goods, and services, they stimulate economic activity and create opportunities for further businesses and workers across various sectors. Immigrants need to buy houses, groceries, haircuts, and cars too.
Of course, that doesn’t mean we should necessarily just throw open the gates to all immigration immediately; the fact that there are large benefits does not mean there are no costs. It takes time for new workers to be integrated into any economy and for their spending to be accounted for in new supply for everything they are buying. If new workers are concentrated in a specific industry, it can take time for that industry to expand to accommodate the new labor market. Thus, we can suggest specific policies that would lessen immigration impacts that are concentrated on specific people or industries.
For example, we should make the labor market as dynamic as possible. Hiring and firing should be relatively easy. Public sector unions that protect poor performers make it their services worse and make it harder to higher good talent. Also, healthcare should not be tied to your job. This would make any specific job relationship less critical for workers since switching jobs doesn’t mean switching providers. It also reduces the cost and overhead for employers to hire new workers, especially for low wage workers where healthcare would be a significant fraction of total compensation. We can also have regulations that require immigrants to live in different areas of the country. The US is a vast economy with 54 metro areas with over a million people, and over a 100 with populations over 500,000. That’s a lot of local economies we could spread immigrants out over to avoid huge shocks to the housing markets if immigrants concentrated on specific cities. As far as specific industries, many other countries have specific point based systems to target immigrants with key skills. The U.S. largely does not do this, and we ought to.
In summary, the belief that immigrants depress wages and displace native workers is the result of a direct failure to understand fundamentally the dynamic and efficiency of the American economy. The United States is a highly advanced, knowledge-based economy that can effectively leverage additional labor by integrating it with its vast capital resources and technological sophistication. Rather than viewing immigration as a threat to the working class, it should be recognized as a potential source of economic growth and productivity enhancement, particularly in a labor-constrained environment. When there are drawbacks, our goal is to figure out how best to minimize them in order to fuel the economy and make America grow.
I’ve recently added a new member to my family and become a first time parent! Here are some scattered thoughts and observations I’ve had about the experience. Beware all are basically projections of my existing biases as seen through a new experience.
Policy does not seem to take into account externalities of children. This is really the umbrella observation guiding many of these points. In a market economy, you pay for someone else’s time via wages. If there’s a new industry that forms from the advance of technology (say software engineer or YouTube creator), you can convince people to provide that labor in the new industry by paying them, and other industries will need to adjust to deal with more demand on the labor pool. They must either reduce output, offer better wages, or advance the productivity of their remaining workers. In this way, the labor pool for a given industry can expand or shrink based on the market forces of that industry, with some lag for education requirements.
However, you can’t change the whole pot of labor with market forces except in specific circumstances. Immigration is one of those, but we’ll set that aside for now. Let’s focus on population growth through new babies. Of course, adding a worker to the economy doesn’t just add to the supply side; new workers also buy things! You may think these cancel out, but I’m doubtful. As Adam Smith observed, the division of labor increases productivity and the more people you have, the larger economy you have and the larger the degree of division of labor and extent of the market, leading to super-linear productivity gains.
But just because some jobs’ wages go up doesn’t mean there are more babies being born; there’s no market feedback mechanism for this! You pay the worker once they are old enough to work; you don’t pay their parents to raise them! This results in a missing positive externality. The invisible hand is willing to pay for more workers to work in America’s massively productive economic engine (which we can see through huge immigration pressures). But there’s no market mechanism to pay parents to provide more workers! Thus the expensive costs are born by the family raising kids and the benefits accrue to the economy broadly, a classic positive externality problem.
Matthew Yglesias adds a related argument in One Billion Americans that is specific to the U.S.; there are positive spillover effects from having a large market in the U.S. which is fueled by an integrated largely free market encompassing hundreds of millions of productive workers. The U.S. economy, because of its size, dominates global commerce as companies seek to sell in the American market, which in turn exports U.S. cultural products and values of liberalism.
However, despite these economic and nationalistic benefits, failing fertility rates and deadlocks on immigration mean U.S. policy hasn’t really prioritized population growth. Assuming they should, it’s interesting to see from a parental perspective how U.S. policy impacts the decision to have children. Largely, it seems they work in the wrong direction.
The Baumol Effect is real. The Baumol Effect or Baumol’s Cost Disease is the rise of wages in jobs that have not seen increased labor productivity simply because of the rising salaries in other jobs. For most of the economy, jobs continually become massively more productive through the huge engine of a free market economy investing in new technology and capital. You expect to see rising wages for jobs in that industry since the workers are now more productive even as the overall cost of goods produced can continue to fall. For example, agriculture used to take up the vast majority of labor in the economy but is now a very small part, yet food is more plentiful than ever because mechanization and logistics is so advanced.
But some jobs have seen little labor productivity improvement, notably childcare; we don’t have robots or software that can take care of babies. So that labor needs to be done by parents or hired out via nannies or daycare. But today nannies, daycare workers, and especially parents have many more productive things to do in the economy because of the advanced capabilities and technology of the market. So the opportunity cost of taking care of children is massive. Being a new parent, you feel this viscerally. One week you are at a high paying intense job automating workloads and trying to streamline business processes that handle billions of dollars a year, and the next week you can’t get any sleep because you have to change diapers.
To be clear, I’m not complaining! Parental leave is actually a nice break despite the lack of sleep. But the cost to e.g. my employer and the economy broadly is almost hilarious. And yet, clearly there’s an incentive mismatch since collectively, the economy benefits if there are more children born in the long-run due to children’s eventual contributions to the economy and to innovation.
One could imagine a policy to try and encourage people to have children at a younger age when the opportunity cost to the economy is lower (since less experienced workers are probably less productive). But of course, the most likely to take advantage of this policy are probably people whose opportunity costs are lower anyway (the least productive workers), which means the benefits are skewed towards the members of the economy least needing this. Moreover, targeting any government policy directly at high earners is going to be an impossible political ask anyway.
Build more homes. One of the first things we realized is that we needed more space. However, our current job situation means we aren’t likely to stay in our current city for very long and so we had opted against buying a house when we had the option a few times given closing costs. There’s also some benefit I find from renting from a corporate run apartment complex with an always on-call maintenance staff. I’m sure at some point I’ll be more interested in DIY type repairs but not right now.
However, there’s not many options for people with children or especially multiple children who would like to live in an apartment. And my city is more affordable than most. This is of course just a small reflection of the overall housing overregulation we are imposing on the entire English-speaking world. The U.S. is actually more affordable than Canada, the U.K., or New Zealand in many cases, yet the U.S. could be so much better. The most frustrating part of this is that it would cost local governments literally nothing to allow more housing to be built. In fact, governments would likely see revenues rise as land value would be improved. Private actors are completely willing to provide desperately needed supply all up and down the market, but local governments have been coopted by literally landed interest groups to keep a lid on housing supply to monopolize already built housing.
It’s evil, it’s expensive, it saps growth, extracts rents for people who are not contributing to the economy, it violates property rights, and also as a smaller side-effect, it makes it harder to have a family! These are awful policy impacts and we should choose to do better.
Preeclampsia is pretty common. Preeclampsia is a condition that can occur during pregnancy characterized by high blood pressure and signs of damage to other organ systems, most often the liver and kidneys. It usually begins after 20 weeks of gestation. The exact cause is not known, but it is thought to be related to problems with the placenta, and it occurs between 5-8% of pregnancies.
I had the misfortune of having to see this firsthand and it was quite scary. Ultimately it led significant symptoms requiring an earlier than expected induced delivery and my child having to be in the NICU for over a week. Everyone is doing well now, but this seems like a major policy problem if we take as given that there are massive spillover effects to having more children. No one would get on a plane if there was a 5% chance of a serious complication requiring experts to be consulted just to land the plane. I’m not an expert on NIH funding categories, but it doesn’t appear that preeclampsia is a major priority. If long term economic growth matters and thus spillover effects from population growth matter, should this cause area be higher?
Artificial wombs would be amazing. The follow up to the last point: there are promising technologies that would solve the problem of preeclampsia and many others. Pregnancy sucks. It’s physically taxing, it can make women feel miserable for months, and there are serious risks of complications. If we can replace natural gestation with artificial wombs, we can likely reduce risks to both baby and mother and just make having children less stressful. It also means there’s less drag on the economy because women don’t have to trade off being in physical discomfort at work for several months or taking that time off.
A year ago ago when a tweet went viral talking about artificial wombs, there was a strange pushback I saw from people claiming it wasn’t “natural”. I investigated some of these claims the best I could on Twitter, but the argument really made about as much sense as you’d expect. “Natural” to me means dying from smallpox and dysentery. There’s nothing good or beautiful about dying in the state of nature. Preventing horrific and common complications for women giving birth in the 21st century is a no-brainer.
Emily Oster is really helpful. Emily Oster is an economist and author who publishes on parenting. Her books are written for non-academics and summarize the current findings for childcare and pregnancy. Her work makes it really clear what the data indicates on what’s important or not. She’s controversial because her interpretation of the data on drinking during pregnancy is that a drink or two a week during pregnancy does not have much negative effect. This is against the recommendation of most doctors in the U.S.
I haven’t actually heard any doctors cite specific studies to refute Oster’s position, but honestly, I’m of the position that alcohol is probably just bad for you regardless even if in moderate amounts the negative effects are small. I often go weeks without drinking anyway, so cutting down some more isn’t particularly difficult. So feel free to be more cautious than Oster on this point, but I don’t think it negates the overall benefits of her work.
Each chapter contains a nice summary of the key points, so if a couple weeks later you can’t remember the takeaways, its easy to look them up quickly and trigger the rest of your memory of the chapters. The only real concern is that her books are somewhat short and so I’ve found it important to have other child-rearing and pregnancy books available for more specific questions. However, Oster also has a LLM trained on her books and newsletter where you can ask specific parenting questions and it will find the citations related to your question and summarize an answer.
Bryan Caplan writes this week about life years lost due to COVID and in particular what he sees as an overreaction to the pandemic:
Well, we’ve now endured 8 months of COVID life. If that’s worth only 5/6ths as much as normal time, the average American has now lost 4/3rds of a month. Multiplying that by the total American population of 330M, the total loss comes to about 37 million years of life. That’s about 15 times the reported estimate of the direct cost of COVID.
Tyler Cowen has an important critique. Given very low government restrictions in the U.S. South, Sweden, and Brazil, we can see that even as a baseline, lots of anti-pandemic actions are actually taken by citizens voluntarily rather than by force of the state. If true, then there is little we can do to mitigate these costs even if Caplan is correct. And moreover, if we could change people’s behavior to pretend that everything was normal, then why wouldn’t we also change people’s behavior to perfectly isolate when necessary and wipe out the pandemic within a couple weeks?
Cowen argues that the best way to improve the situation if private citizens’ actions are in fact greatly damaging is to push for a vaccine as fast as possible. Robin Hanson has objections here, but putting all that aside, I wanted to look at Bryan Caplan’s numbers.
If Caplan is correct, I should change my behavior; I’ve been avoiding movie theaters and indoor restaurants and perhaps I shouldn’t. Caplan suggests 37 million QALYs lost due to “COVID” time being worse than normal time. However, this is based on a Twitter poll and Caplan points out that when asked personally about how to compared “COVID” time to normal time, his median follower says it’s almost even. But let’s take the 37 million figure at face value because it’s really the best we’ve got.
Caplan points out that what we are not comparing the 37 million QALYs to the total loss in QALYs we’ve had with COVID in this timeline, but rather a counterfactual one where we didn’t overreact.
You have to ask yourself: If normal life had continued unabated since March, how many additional life-years would have been lost? I can believe that the number would have been double what we observed, even though no country on Earth has done so poorly. With effort, I can imagine that the number would have been triple what we observed. There’s a tiny chance it could have been five times worse. But fifteen times? No way.
Actually, it’s pretty easy to imagine! Every country on Earth has had a strong reaction to COVID and that’s why it’s hard to imagine a doubling or tripling of QALYs. If people simply went about their business, or very nearly so, then there really is little to stop COVID from spreading exponentially. In all likelihood, we would have seen overwhelmed hospitals. Instead of the per infection death rate being 0.55%, it seems quite plausible to me it could be up around 1%, especially given we were worse at treating the disease towards the beginning of the pandemic.
Moreover, if lots of people got this disease, they’d have to deal with the aftereffects which can be remarkably unpleasant. Certainly there’s a guaranteed loss of quality of life for half a month to a month as you battle the virus. Many people then have extended loss of taste and smell, extended fatigue, difficulty breathing, and perhaps even cognitive effects.
If we taken Caplan’s citation that people who die from COVID on average lose 10 QALYs (I would guess higher if more people got it, but we’ll go with this number) and say people who survive COVID on average lose half a QALY from lingering issues, the formula for this calculation of QALY loss is:
[Total QALYs lost] = [US population] * [% who get COVID] * ([% who die] * [10 QALYs] + [% who don't die] * [.5 QALYs])
If we say two thirds of the country gets COVID under a “no change in behavior” scenario (again, this seems very conservative, I would think it’d be higher) and 1% of infected die, we get:
Notably, this is much higher than 37 million. Interestingly, the vast majority of the cost actually comes from the people who get the disease and survive. Perhaps I was too pessimistic on how difficult their lives are, after all, we are still uncertain. Let’s change it to a quarter of a QALY lost. Some people might have trouble breathing for years, but most people won’t, so perhaps this is a better estimate.
Again, bigger than 37 million. And it’s not close. In fact, even if you say it’s only one month QALY lost when contracting COVID (which seems way too low to me considering that’s pretty much the baseline of getting and recovering from the disease) that still gets you over 40 million QALYs in our model. Add back in that the two thirds assumption is definitely an underestimate, that 10 years of QALY loss per death might also be an underestimate, and 37 million is again completely unattainable.
In other words, I don’t think the consequentialist calculation recommends going to movie theaters or indoor dining.
Earlier this year I put together a list of most important policies that the U.S. federal government could implement which are actually discussed by candidates. The list takes into account impact both broad and deep. Also as part of my election year discussions, I’ve covered issues with our current electoral system and then, given those problems, whether it makes sense to spend time researching and voting in elections where you’re only one of many thousands or millions of voters. I conclude that in close elections where there are large differences between the major party candidates, it often makes sense to vote for one of the two candidates.
This post will take a look at this year’s presidential candidates based on their policies. I’m putting aside non-policy issues, like competence, corruption, and impact on democratic norms as I intend to cover them in my next blog post. I also think a policy-specific approach is useful to cut through tribal identities and focus on actual impacts in the real world. Extending the discussion from my last essay, I will be comparing Trump and Biden to see if there are large expected differences in their policy. As stated in that post, swing state voters should probably vote for one of these candidates since their expected value of voting would be high.
This post will be aimed slightly right of center since my policy analysis shows Trump doing very poorly compared to Biden. Based on purely policy grounds, I think swing state voters should vote for Biden, even if they are conservative. I will be taking inspiration from my previous post about important policies. If you want more background on why I think these policies are most important, I suggest skimming it first.
Great Power Relations
This is a newer issue that I wanted to focus on after reading The Precipice and its discussion of existential risk. I recommend that post, but in summary: an existential event is uniquely terrible because not only are there no humans left on earth, but any future human civilization ceases to exist. We are doing very little today to assess these risks or to plan and coordinate how we might deal with existential risks. Toby Ord estimates a 1 in 6 chance of human extinction this century. Even if that’s high, Metaculus suggests a 2% risk which is still completely intolerable when discussing the future of humanity.
Presidential politics isn’t really discussing existential risk directly, but the presidency has an outsized impact on great power relations, particularly between the U.S., China, and Russia, and catastrophic relations between them could significantly heighten existential risk. Indeed Toby Ord specifically discusses great power relations as a major risk factor in his book, and Trump’s own Defense Department notes the heightened nuclear landscape we find ourselves in their 2018 Nuclear Posture Review (Brookings Institute discussion). China and the U.S. have essentially incompatible views of liberalism, freedom, and human rights, and the world is better off with an America that promotes those ideas and thwarts China’s authoritarian ideology without resulting in dangerous tensions.
Conventional wisdom might suggest Trump was especially tough on China, but in reality he emphasized the exact wrong points at the expense of actual geopolitical power. He started a trade war, harming the U.S., which ultimately resulted in extracting Chinese promises to purchase additional American exports. While undertaking these trade negotiations, Trump refrained from criticizing China’s curtailing of the rights of seven and a half million residents of Hong Kong, and allegedly even encouraged Xi Jinping to construct Uyghur re-education camps. Chinese negotiators have stated they prefer Trump’s reelection because his goals are so transparently materialistic, and those goals are in areas where the CCP can compromise, unlike other American administrations’ focus on human rights. Trump also abandoned the Trans-Pacific Partnership, a Pacific based broad trade agreement meant to specifically improve trading relations between the U.S. and major Chinese trading partners, isolating China. Biden is also not great on trade, but has emphasized that he will push China on human rights, not soybean purchases.
I’ve also mentioned in the past that a huge advantage the U.S. has over China is our ability to take in new immigrants and turn them into Americans, and this is doubly true for skilled Chinese immigrants who often attend American universities. Yet the Trump administration has attacked legal immigration (even more so during the pandemic), making it harder for America to exercise an important asset in any long term disagreements with China.
Comparatively, Joe Biden is simply not that extreme. He’s been a fairly middle-of-the-road Democrat since the Bronze Age. Of course, that does means he’s voted for the Iraq War and was part of the Obama administrations’ intervention in Libya, but Donald Trump also supported the Iraq War, although he only wanted to go into Libya “if we take the oil” (?). Donald Trump has notably strengthened relationships with Israel, but Israel has little sway over China and Russia. Meanwhile, traditional important allies have been shunned.
Donald Trump is dangerous. A cold war with China is not inevitable, and a military arms race with modern technology, AI, and advanced genetics added on top of nuclear weapons is a recipe for absolute disaster. Even a small percentage increase in this risk through mismanagement could be worth millions of lives. The U.S. needs to work with our allies to confront China where necessary and work with the Chinese government to improve transparency and understanding between our two nations, while promoting human rights. Being President of the United States should perfectly position someone to make the case for freedom, free markets, and democracy against an authoritarian regime, but Trump has failed to do so, and his bad policy here should disqualify conservatives from backing him.
COVID-19 and Catastrophic Risk
This is an expansion of risk assessment from the Great Power Relations section and from the discussion in May. Catastrophic risk management is underfunded and underprioritized. We should be preparing for the next pandemic, the next earthquake, and so on. Neither candidate has really called for comprehensive congressional action on establishing better risk management, so let’s focus on COVID-19, which remains a key issue.
The U.S. has worse per capita deaths than a wide cross section of developed countries including Italy, France, and the broad EU. Germany, Canada, and Japan have rates several times lower. The U.S. rate is similar to the U.K. but is on a much higher trajectory, similar to Mexico. At best, we’re average, at worst, we are the most advanced country to still have out of control cases.
Trump revamped his National Security Council, including removing several people who were part of pandemic preparedness, altering the pandemic response policy set up under Obama. John Bolton claimed this was a cost-saving measure and allowed for better implementation of policy. Whatever the case, there’s no one to blame except Trump; he reorganized his bureaucracy in the way he wanted, and this was the policy result we got. He is also ultimately in charge of the FDA and CDC and as we discussed in April, those agencies had colossal failures. Moreover, Trump publicly discussed how COVID was not a problem, saying in February the number of cases “within a couple of days is going to be down to close to zero.” Meanwhile, he was telling reporter Carl Bernstein that this virus was extremely serious and deadly in February, and that he had purposefully played it down to avoid a panic. Regardless of morality, this is simply bad policy and cost American lives.
Trump should absolutely get credit for shutting down travel from China earlier than many people wanted. However, instead of acknowledging that any policy could only delay and not prevent a full outbreak, Trump then spent all of February downplaying the virus like it wasn’t a threat. Instead, given his apparent understanding of the challenge, he should have been issuing government guarantees to purchase masks, creating guidelines for how to reduce spread, encouraging indoor sporting events and concerts to consider cancelling, and more. We know much more about this virus now than we did in March. Delaying the peak from April to June or July could have saved literally thousands of lives.
As of September 28, the CDC estimates 208,000 – 274,000 excess deaths in the U.S. since February 1, with Metaculus estimating between 220,000 and 360,000 U.S. deaths from COVID this year. This is an unmitigated catastrophe. Not every death can be attributed to Trump’s policies, but we have plenty of evidence that his policies could be considerably better. Other developed countries have death rates a fraction of ours, and Trump has constantly made poor decisions, downplayed the virus compared to the flu, encouraged supporters not to wear masks. At this point, even small policy shifts that reduced the death toll by 10% would have saved 20,000 lives. Conservatives must hold the president accountable for failing to protect American lives.
Congressional vs Executive Power
The functionality of the U.S. government as a system for creating and executing policy affects every other policy. In particular is the glaring problems of congressional mismanagement and executive overreach. Unfortunately, both Trump and Biden have poor records, although Trump may be worse.
Conservatives ought to be concerned about the power of the executive and the reduced role Congress has played in policy-making. Moving away from a consensus building model in Congress to a winner-take-all super executive elected every four years to do anything they want is a bad idea for many reasons. For one this increases the stakes at every election and thus increased polarization. It also means more power concentrated more centrally, which conservatives should be quite skeptical of, and at least many were under Obama. And finally, there are specific things that conservatives want the government to do, like maintain a strong national defense. If we continue to pile responsibilities on the President without involving Congress or actual legislation, then our national defense relies solely on the whims of one person, who you might not trust.
I’ve criticized the Obama administration significantly on executive overreach, and Joe Biden was part of that administration. Obama invented the concept of unauthorized drone wars, complete with secret kill lists, including American citizens. Yet, Gene Healy details how Trump has essentially expanded on Obama’s work in every way, including civilian casualties, all under the guise of the 2001 Authorization of Use of Military Force against the perpetrators of 9/11, even nine years after Osama Bin Laden’s death. He also bombed Syria under a separate claim of pure executive war powers which has no constitutional basis, and this year unilaterally targeted a member of the Iranian government (and a bad person) without any congressional authority. This is an unprecedented use of presidential authority to wage war, and blatant disregard of the constitution. In an absolutely insane reversal, Trump vetoed the war powers resolution passed by congress to reign in his authority. No constitutional conservative can defend this action.
Healy does note that many of the more aggressive uses of Trump’s executive power can’t be categorized as “new” power grabs; Congress had largely ceded those powers to the president even if no other president had actually used them. For example, the Supreme Court upheld a later iteration of Trump’s travel ban (although earlier ones were ruled unconstitutional), and although “there’s ample ground for disputing the Court’s decision”, Congress allowed the president to interpret national security powers quite broadly.
However, on trade, Trump clearly expanded executive authority by lying about Canadian steel imports being a national security threat. This broad interpretation of the law was again unprecedented and means that tariff levels are likely solely controllable by the president, which is an absurd constitutional farce; Congress should have the sole ability to pass tax law. Trump also declared a national emergency in order to fund his border wall after Congress repeatedly refused to allocate money (partially struck down in court). Trump needed to lead on these issues, make broad appeals to the political center, and put pressure on Congress — which Republicans controlled for two years! Instead, he failed and fell back on executive orders which fly in the face of conservative small government beliefs.
For his part, Biden has not offered to fund a border wall through executive authority, so I guess point to him. On the other hand, Biden indicated he thought FEMA should be leveraged (and presumably a national emergency declared) to fund K-12 schools due to coronavirus challenges. Again, to be consistent, school funding from the federal government really ought to come from Congress, not executive authority.
Alright, now let’s touch on impeachment. If you want my full thoughts, read this post here. In summary, regardless of legality, Trump held up Congressionally authorized funds for political purposes, trying to get dirt on his enemies. From the perspective of concerns about executive power, this is wrong, and conservatives should be terrified of progressives getting into office and doing exactly what Trump did. We need to deescalate using the state as a political weapon; Trump is not deescalating.
Of course, no one is talking about what I actually wrote about in May, which was a resurgent Congress, not just a presidency that maybe didn’t quite expand executive authority as much as before. So I think overall the most important long term affects on congressional and executive power are worse with Trump, but they’re not night and day. Something like Trump gets an F and Biden gets a D.
Liberalizing Immigration
Conservatives and I may be far apart on this issue, but I think there is some common ground. The United States has perhaps the longest and most well known history of immigration of any nation on earth, and we all agree some immigration will continue to occur. Given that immigration will continue, we can also agree that an improved system is needed; current immigration rules favor family migration instead of merit and skill. We should change our immigration system to focus more on skilled immigrants, or on retaining students who pay to be educated at the best institutions and then seek to work in the most technologically advanced and dynamic large economy in the world.
Improving our immigration system to be more merit based would be a huge boon to our free market system, to our national security, to our global influence, and of course, would result in more Americans. We want the smartest people in the world to move here and innovate on the cutting edge. If we shut our doors, those people will go to other countries, and we will lose a massive advantage we have over places like China, which, as self declared ethno-states, simply cannot attract diverse talent from across the world.
Yet Donald Trump has slashed legal immigration and made it significantly harder for skilled immigrants to enter the country, or even apply for green cards. Both green card and temporary visa applications decreased 17% each between 2016 and 2019 while rules for granting green cards were narrowed. He even banned any new H-1B visas, which focus on high skilled, high earning immigrants (who are great for innovation) for the rest of this year through executive order. Given pandemic related issues are likely to continue into next year, I wouldn’t be surprised if this continued past December.
Given these extraordinary actions, particularly during the pandemic, I would estimate a Trump second term could see a million fewer legal immigrants than a Biden term. This would have long term negative effects on the U.S. economy, not to mention on those immigrants who literally want to be Americans. Trump has also shown no ability to work with Congress on reforming the immigration system, instead working through executive unilateral action.
Biden has planned to reverse most of Trump’s immigration policies. I’ve emphasized the horrific impact on high skilled immigration, but Biden focuses on more liberal talking points, particularly about children of illegal immigrants and refugees. Trump has absolutely crushed the number of refugees the U.S. has taken, thwarting a long standing Cold War era policy. While conservatives may be skeptical of the benefits of refugees (recent data shows they contribute positively to the economy), the geopolitical benefits of being a destination for refugees are clearly all positive. No refugee is picking Russia over the U.S., for example. Unfortunately, Trump has crippled that rhetorical win.
Finally on illegal immigration, I think it’s undeniable that Trump is harder on illegal immigration than Biden would be. However, I must stress that concerns about illegal immigration are often overblown by conservatives. Although caution is warranted, it’s likely that illegal immigrants are less likely to be criminals than native born Americans. Moreover, Trump has focused on things like building a border wall (which he claimed Mexico would pay for) which the OIG found did not utilize a “sound, well-documented methodology” for where the wall would actually be built. Also, many illegal immigrants cross the border at regular checkpoints and simply overstay their visa. Additionally, the administration spent lots of effort noticeably separating young children from their parents at the border rather than on improving the infrastructure in place for immigration courts, which would actually improve the rate at which the government could deport immigrants.
Trump’s policy of harsher, haphazard (and quite frankly idiotic) illegal immigration enforcement at the cost of harming legal immigration and thwarting the American economy’s ability to integrate foreign skilled labor is simply not worth the trade off.
Housing Policy
Deregulating housing policy, especially in “blue” cities like New York and San Francisco is a key measure needed to help grow the American economy. Housing is one of the largest expenses most Americans have, yet it wasn’t always the case. Restrictive zoning has made housing exceedingly unaffordable, and conservatives ought to defend the right of property owners to do what they want on their own property. Trump actually supported deregulation ideas early on in his presidency, and then this year abruptly switched tactics to favor stronger regulation. This is anti-free market and anti economic growth. These large cities have made it harder to build new housing, which causes housing costs to rise, homelessness to increase, and the young and poor to be priced out of good opportunities. Mobility is down across the country, companies are struggling to attract employees to these high cost areas, and many are leaving. Trump is supporting this.
Network effects mean more concentrated, dense cities are much better. For example, recreating the networks that made Silicon Valley in other places is quite difficult, but as regulations make it harder to live in the Bay Area, we are forced to rebuild the aspects of the Bay Area in other places, which wastes time and energy. The same applies to every expensive U.S. city, including Boston, DC, LA, and Miami. The costs involved are astronomical, amounting to tens of trillions of dollars in lost economic productivity over years.
Biden’s housing policy is actually remarkably thoughtful and deregulatory. He proposes improving the already existing federal rental housing assistance for low income families so that all who qualify can obtain it (right now it gives out money to families until a set amount is given out instead of to all who qualify). Then he pairs that with requirements on federal housing money where municipalities must reduce zoning rules that block new housing. Obviously it’s difficult to know to what extent these policies will be exactly implemented, but if a policy even close to what Biden has proposed were to be passed, it would be a solid boon to economic growth. Moreover, it stands a good chance as it’s moderate and compromising where Trump’s housing policy.…isn’t.
Additional Issues
These issues are either where the candidates differ little, or conservatives don’t often prioritize so I’ve kept them short. Nonetheless, Biden retains an edge on these issues.
Climate Change
Many conservatives are skeptical of climate change. I found a view articulated by Russ Roberts, host of EconTalk, to be illuminating. Like nuclear war or pandemics, climate change is a risk with unknown probability. Rather than binary choice of preparing for it or not, our climate policy should weight the various catastrophic effects with the probabilities. Even if conservatives find the most dire climate predictions unlikely, some action is likely warranted under standard economic theory; negative externalities like pollution ought to be taxed. And as we’ve seen this year, it’s bad policy to shirk preparations until the catastrophe is already upon you.
Carbon taxes with offsetting tax cuts seem pretty straightforward. The Paris Climate agreement also seemed like an easy win, with countries setting their own targets. Trump’s withdrawal from this agreement seems to involve no policy calculation whatsoever since the agreement wasn’t binding anyway.
Biden’s plan is a bit aggressive for my take. It goes beyond taxing externalities and into specific government spending. Of course, Donald Trump has spent boatloads of money and would likely continue that trend. Biden spending money on green energy doesn’t seem any worse than Trump spending money on…everything. Donald Trump’s plan to do nothing about climate change seems more negative.
Fed Independence
This hasn’t turned out to be much of an issue as the Fed has been extremely active this year and we have yet to see inflation rise. Nonetheless, Donald Trump’s continued insistence that the Fed cut interest rates even as the economy was well below 5% unemployment was clearly political rather than based on any actual economic theory. This should be condemned as bad policy. Central banking should remain independent and not subject to the whims of populist rulers unless you want to be Venezuela.
Trade
Trade can have large positive impacts on the world, although trade barriers had been pretty low. The highest impact policies would be to use trade to improve relations with liberal countries and tie economic success of the U.S. to a broad liberal coalition to counter China. This is what the TPP and TTIP were, both abandoned by Trump. This is bad, free market conservatives should oppose Trump here, but Biden is not particularly free trade either.
Criminal Justice and the War on Drugs
I listed this as a large and important issue in May. However, the extent to which Trump and Biden differ on drug legalization is small. Both have expressed some interest in decriminalizing marijuana. I’m slightly more inclined to believe Biden as he has stayed with the median of the democratic party, which has largely embraced the issue, meanwhile Trump has been president for four years and done little. In overall criminal justice, democrats have as slight edge. Biden has expressed moderate views in the face of radical segments of his party, calling for reform, but also opposing calls to defund the police. Trump’s rhetoric has been rather aggressively anti-reform, but his actual policy actions seem to be small.
Counterpoints
Taxes
Joe Biden wants higher taxes than Trump. I’m against this. But I remain more positive on Biden than on Trump because of the relative weight of issue impacts. Joe Biden is not suggesting a systemic reinvention of taxation where billionaires are banned, but rather a higher level of taxation than before. I don’t know the exact details, but I would guess this would cost the American economy hundreds of billions, possibly a trillion dollars over four years. That’s pretty bad, but in a moment I’ll do a cost-benefit analysis and see how it compares.
Healthcare
I think conservatives have a strong case that Trump is better than Biden on healthcare policy, given conservative policy preferences. However, the differences are small. Trump had the opportunity to overhaul the healthcare system with a united Republican government in 2017. He provided no leadership and accomplished nothing except the repeal of the individual mandate on people who did not purchase insurance; that’s fine, but the problems in American healthcare are systemic and remain.
Joe Biden would not institute the aggressive Medicare-for-all plans of Bernie Sanders, but instead wants to create a public option. This is not a free market approach, but could actually be a good starting point to disentangle healthcare from employment. A Republican compromise that added a public option for people to buy while also reducing the mandates on what coverage employers have to provide to employees could get more people covered while also reducing reliance on employment for healthcare (which never made any sense anyway and distorts the labor market). Nonetheless, Trump could obviously try and make headway on such a system without the public option and without Biden as president, but he hasn’t. He’s mostly ignored this issue for several years.
Overall, for conservatives, I think the options are either doing nothing with a currently broken system, or see slightly worse reforms that tend to go in the wrong direction, but won’t be the end of the world. Compared to the vast differences in foreign policy, COVID-19 management, immigration, and housing policy, this just doesn’t make a dent on the enormous lead Biden has on Trump.
Justices
This is likely Trump’s biggest strength compared to Biden, however, there are some mitigating circumstances. The major one is that there are no conservative justices poised to retire soon. Clarence Thomas is 72, but many justices retire after 80. Another is that Supreme Court justices aren’t nearly as partisan as other members of the government. Many cases are decided unanimously, and many justices commonly rule against their “party” to uphold precedent. When justices do split, it’s not always clear what the lines will be. Gorsuch and Sotomayor are both strong proponents of 4th Amendment protections despite being appointed by different parties. Anthony Kennedy, despite being appointed by Reagan, was part of the majority in Kelo v New London. This ruled that state governments could seize private property and give it to private developers, which, and I can’t emphasize this enough, was outrageous. 45 states eventually passed legislation banning Kelo-like eminent domain seizures.
Which brings up another point: Congress can make laws. Remember all the debate about the Supreme Court ruling whether the President could implement his immigration bans in 2017? None of that would have mattered if Congress had simply clarified the law, and Republicans held both chambers! The level of intensity we have dedicated to Supreme Court appointments is encouraged by Congress’ inaction. We can either respond by pushing harder on court appointments, or we can respond by focusing on Congress!
Yes, appointing good justices matters, and Neil Gorsuch is an excellent justice! But we overemphasize the importance in Supreme Court nominations, and compared to the other issues that are costing thousands of American lives, this issue isn’t enough for Trump.
The Big Picture
When it comes down to it, Biden’s tax policy is not what I want, but it’s not going to have a lasting impact on the economy. Future Republican presidents can come in and fix marginal tax rates. Trump’s housing policy will cause long term harm relative to Biden’s. The reduction in cost of living for Americans if we can properly regulate construction of new homes in cities far outweighs any tax cut and brings in network effects on American cities. Cities are the currency of the economy. To see how behind we are, look at Tokyo where in 2018 more housing units were added than in New York, Boston, Houston, and Los Angeles combined. Trump wants that trend to continue, Biden doesn’t.
Add in Trump’s growth-crushing legal immigration policy, and the choice is even more stark.
Healthcare is another area where I don’t endorse Biden’s policy. But as stated, Trump has essentially nothing to offer here despite being president for four years. From a conservative perspective, at worst, Biden could implement a public option. Note however, this leaves private insurance completely intact. There is simply not a systemic risk conservatives should worry about. U.S. healthcare already has tons of government interventions and increasing government spending in healthcare 20% isn’t good, but it’s not going to be the end of America. It will put a strain on federal government finances, but Trump has consistently demonstrated that he does not care about that issue at all.
On the other hand, Trump’s actual policy when it comes to an actual pandemic has literally resulted in 200,000 dead Americans. Again, not all of this is on Trump, but it seems plausible that his downplaying of the virus, his bungling of agency responses, and his actual rallies during the pandemic has resulted in avoidable deaths. We cannot risk another catastrophe.
Finally, there’s the question of justices. To me this seems most comparable to the long term future concerns from the Greater Power Relations section. Both issues are concerning because of their impact on the trajectory of the long term future, but one is simply much higher stakes than the other. How the U.S. manages our relationship with China determines the course of human history in this century. If we screw it up badly, millions of lives are on the line. On the other hand, if Biden is elected, he might replace Stephen Breyer with another liberal leaning justice, and as stated previously, the overall impact here is smaller than most conservatives make it out to be.
I’ve detailed the importance of how we manage geopolitics and the dangers inherent on the global stage today as they impact the long term future. Arms races are extraordinarily dangerous, and in the future humanity’s weapons will only get more powerful. Trump has not managed geopolitics well. When the COVID-19 catastrophe hit, he was again subpar and his policy was not up the task of protecting Americans. Add in his poor economic policy on housing and immigration, throw in even a fleeting concern about climate change, and the evidence against Trump’s policies in favor of Biden’s is overwhelming.
Of course, I haven’t even got to some of the most devastating critiques of Trump, since I specifically tried to avoid discussions outside of policy. However, next post, I do want to cover, if it’s even possible, all of the Trump administration’s vast corruption, gross incompetence, authoritarian acts, and his divisive and polarizing approach to politics. I think much of this “extracurricular” activity matters a great deal even though some Trump supporters may brush it aside as trolling or just politics. But even if I’m wrong, Trump’s policy record is terrible enough on its own.
A Note on the LP Candidate
I didn’t want to take too much away from the more outcome oriented discussion of the Trump and Biden, one of whom is going to win the November election. However, as I noted in my last post, many readers will not be voting in a swing state, and so may be interested in the Libertarian Party candidate Jo Jorgensen.
Her policies do reasonably well on my list of issues (not very surprising on a blog about libertarianism and politics), and since non-swing state voters have essentially no chance to impact the election, libertarian leaning voters could cast their ballot for someone they actually like without worrying about electing the worse major party candidate. Very briefly, she hasn’t impressed on the issues of great power relations and catastrophic risks, two important issues. These tend not be libertarian strengths, so that makes sense, although I maintain they are key to the long term future of the world and the U.S.
On executive power, immigration, trade, criminal justice, and taxes, Jorgensen is reiterating the standard LP positions, which are generally pretty good as far as this libertarian leaning blog is concerned. I am surprised by her lack of discussion of housing deregulation (at least I couldn’t find anything) given it’s such a key issue, as standard libertarian positions should be positive here. On healthcare, I would take more incremental steps than she would. Overall, if you’re libertarian leaning and you don’t live in a swing state, I think voting for Jorgensen or Biden are defensible positions. If you want to learn more about Jorgensen’s positions, check out her ISideWith page and website.
It’s election season so it’s time to start talking electoral politics again. The Trump administration has been particularly successful in ignoring policy discussions in favor of political point scoring. This isn’t too surprising given Trump’s lack of consistent ideology, apart from perhaps opposition to free trade and immigration. Impeachment has also helped focus attention on Trump’s political situation rather than his policies or lack thereof. Don’t get me wrong, I think there is a strong non-policy case against Trump, and I think in particular Congressman Justin Amash has done an excellent job in articulating why Trump’s behavior is concerning.
However, I think there is also a policy-based critique of Trump. In order to properly make that case and compare Trump’s policies to Biden’s or other candidates, we must establish a foundation declaring which problems are most important, and what policies could be used to implement them. Criteria for these policy ideals include some utilitarian calculus, i.e., how to improve the lives of the most people in the largest way. Thus, the first of these policies is actually a meta-policy, a way to improve congressional power to pass laws and run the state. Changing the way we make policy can affect all of our future policy making.
Countering this interest in utilitarian idealism is a preference for some political feasibility; in other words, while I might prefer to emphasize revolutionary changes that significantly improve the country (changing all of our voting systems to approval voting or quadratic voting or switching taxation to be based on land value), I’ve left them off this list because they are not just unpopular, but in fact virtually never discussed. If you find a particular policy interesting, please follow the links in that section for additional policy discussion and details.
Finally, there is uncertainty here, and I’ll mention other policies that didn’t make this list at the end. Trying to filter major talking points out of a broader range of political ideas is difficult. Policies and political philosophies are interconnected, and where I’m drawing boundaries must be arbitrary. Nonetheless, these ideas should form a good basis for uniformly judging candidate policies.
Congressional Power
Any policy platform has to address the fact that our current system for governance, for crafting and enacting policy, is deeply flawed. We have uncompetitive and broken elections, we have bad ways of choosing candidates, and we have too much power in the executive branch. Executive authority compounds our problems by making each election a stark singular choice between polarized sides instead of a well rounded government built on a legislature with many interests represented. I can’t fix all of these in this policy platform, so improving the balance between the president and Congress seems like a good place to start.
The entire budget for the legislative branch, including congressional staff, offices, and congressional agencies like the GAO and CBO, is about $5 billion. Congress is then responsible for oversight and legislative action for the entire $5 trillion federal government. The CBO has a mere 250 person staff, and it can’t even research and score all Congressional bills. This is absolute insanity.
Congress needs to be able to wield its muscle. It should not be relying on executive branch bureaucracies as unbiased experts evaluating their own performance. It should have a better staffed research arm which can oversee all aspects of the massive American bureaucracy. Congressmen also need to have more and more policy-focused positions on their own staff, along with fewer committee assignments. National Affairs has an excellent in depth discussion of the thinking behind this brief overview. Legislators are currently underpaid amateurs who spend half their time outside of Washington focused on other things besides governance. This does not allow for knowledgeable congressional oversight of the federal government.
Cato also has some excellent ideas for strengthening Congress such as having a standing committee to review executive overreaches from statutory law, and forcing votes on major rules as implemented by regulators or bureaucrats. Other ideas include expanding the congressional calendar, making a new Congressional Regulatory Service to oversee the regulations made by independent and executive agencies, and requiring all civil asset forfeitures to be deposited into the Treasury to be spent by Congress, not the executive.
Unfortunately, even despite a recent impeachment trial this is simply not a major political issue in this year’s campaign, and no candidate is running with strengthening Congress as a priority. In fact, there are essentially no meta-policy ideas being floated. Yet ideas are not hard to come by!
Liberalizing Immigration
The U.S. immigration system is terrible (see section 8 here). It is esoteric, slow, and requires a complete overhaul. It should have a focus on a merit-based system rather than nation-of-origin and family ties as it does now. It should be simpler for high-skilled workers to be hired by American companies and it should definitely be easier for young workers, educated at excellent American colleges, to be hired by American companies and remain in the United States where they can pay tax dollars for decades.
Why is this so high up on the list?
This is a matter of national security. China is a growing power, but crucially, it cannot expand its influence or economy through immigration. The Chinese state has largely decided that ethnicity matters, and China is not seeking to create a multicultural amalgamation to improve the world, but rather a nationalist state. The U.S. isn’t restricted in this way; anyone can be an American. Immigrants are also more likely to start businesses and take risks. That means the most creative and ambitious people in the world can come to the United States and contribute to our culture, knowledge, technology, and wealth. Moreover, these remarkable people already want to come here. Increased dynamism and economic growth also makes the rest of our geopolitical challenges easier; it means the national debt is less of a burden, and national defense spending can be higher in absolute terms while costing less of a percentage of GDP.
This is also perhaps the best and simplest way to improve the world quickly. It’s extremely difficult to improve nations with poor institutions, yet people who struggle in developing nations can be immediately more productive if they are transplanted to the U.S. And of course many are quite willing to do so, uprooting their entire lives for a chance at the American Dream. We can pursue limitations on their access to public money, or a simple tax upon immigrating, but nonetheless we should be voting to improve the world in the most altruistic and nationalistic way possible: expanding legal immigration in order to make more Americans!
Federal Incentives to Build More Housing in U.S. Cities
This is a specific policy taken from the Niskanen Center’s Will Wilkinson. Cited on this blog before, he suggests giving federal money to urban areas that add large amounts of new housing stock. Why? Because American cities are absurdly expensive to live in, yet new housing is extremely difficult to develop due to overregulation and zoning laws.
The impact of our poor housing policy is enormous. Economists suggest housing constraints have lowered U.S. GDP by as much as a third over the last 50 years. Think about that. We could be missing a third of GDP because millions of people who wanted to move somewhere for a better job couldn’t find a place to live. It’s clear that the most productive areas in the U.S., especially cities like New York and San Francisco, are prohibitively expensive, keeping out potential new productive workers.
Wilkinson’s suggestion isn’t the only possible policy solution; another is to change zoning to be hyper local, composed by residents of a single street or city block. This would allow experimentation and innovation, instead of immovable local land interests which keep out future non-residents who can’t vote in today’s elections.
While the viable solutions are still up for the debate, the impact is clear: the lack of housing development in U.S. cities due to overregulation may be the single greatest barrier to economic growth, thus earning its inclusion on this short list of policies.
Decriminalization of All Drugs
Ever since Pete Buttigieg announced his support for this policy, I’ve had it circled for inclusion on this list. The War on Drugs has been a colossal failure, has not reduced drug use, and has radically increased prison populations. There have been extraordinary costs to the taxpayer in both civil liberties and assets. Massive application of state force has helped to give a monopoly in funding to the most bloodthirsty and gruesome organized criminal elements in the world, including terrorists. There have even been spillover effects as governments crack down on prescription pain killers, leaving patients in agony.
This policy is wrong morally, practically, and economically. It is not the place of the state to determine what substances informed adults can consume or inject. It is also abundantly clear the state has zero capability to halt the trade or consumption of drugs. Rather, enforcement of drug laws have bolstered a black market where information is asymmetric and scarce, endangering all involved. The only thing the state has succeeded in doing is making organized crime more financially viable. The resulting conflict in Mexico has killed over 150,000 people, making it one of the largest conflicts of the 21st century behind only the Iraq War, Syrian Civil War, and Darfur. It is this monstrous loss of human life as a result of changeable government policy that places this item so high on this list.
And of course it goes without saying that this massive assistance to organized crime is occurring at great financial cost. Estimates for enforcement, prosecution, incarceration, and military interventions are as high as $50 billion a year. State prohibition of private mutually consensual transactions also requires erosion of our rights in ways that frustrate measures of concrete financial cost. The ACLU notes extensive surveillance has been justified under the guise of drug enforcement while increasingly militarized police forces have abused their power to break into homes unannounced or preemptively shoot victims all in the name of stopping transactions among consenting adults. It’s time to end this failed policy.
Catastrophic Risk
It’s clear today that the federal government does not respond well to large disasters. Perhaps too much relies upon the whims of the executive who happens to be in power, but it seems likely that we could institutionalize better responses to catastrophic events. Yes, this includes pandemics, but also major earthquakes, solar flares, artificial intelligence, and even plans for averting nuclear war (for a more detailed analysis, read Toby Ord’s recent book, The Precipice).
This is a highly neglected problem and thus one of the highest impact policies we could undertake (climate change could go here, but it has not been quite as neglected a topic as other risks, so I’ve detailed it later). At the beginning of 2020, I would not have included this in the list of top policies, not because it was low impact, but simply due to the fact that it was not discussed as a major political issue. The failings of the federal government to respond to a deadly virus have pushed catastrophic risks into the mainstream. While the likelihood of any given catastrophe is low, it is the enormous impact of the tail-risk that should concern us; preparing now will mean the difference between devastation and mere hardship.
We should look to create public commissions to investigate our preparedness for various catastrophic events, identify what can be done now for relatively small budgets with larger payoffs when a disaster comes, and then pass legislation that enshrines this knowledge institutionally in ways that do not rely on the whims and competence of whomever happens to be president. It is vital that any commissions include our preparedness for other challenges besides pandemics; preparedness for unexpected events is not selected through democratic pressures, and perhaps this has resulted in our current difficult situation with COVID-19. It would be wise to use this opportunity to prepare not just for the next viral outbreak, but for other unlikely events as well.
Other Topics
There are arguments for inclusion of a lot more policies. I’ll run through several more quickly.
It matters a lot who the president appoints to the Federal Reserve, and that they are extensively qualified and independent. I’ve left it off of this list mostly because we’ve lucked out and it seems Trump’s appointments haven’t been that different from normal. When odd choices were floated, they were largely quashed. Independence is obviously still at risk with the president tweeting criticism of his own appointees, so this issue shouldn’t be overlooked, but given that I treat it like a pass/fail grade, we can reasonably hope this will be a “pass” for all candidates in 2020. I wish I could say that more definitively, but I can’t.
Healthcare is a huge part of the federal budget and has an outsized impact on the economy. We also don’t have great solutions, but this is another issue that could easily have made the list. The most important aspects are stopping reliance on employers providing health insurance (which makes it much harder for workers to take risks and switch jobs), and expanding coverage for the least well-off. How we do that is difficult to answer in such a small space, but I’m wary of radical changes that seek to quickly re-imagine the U.S. healthcare industry from the top down.
Climate change is a potentially expensive disaster waiting to happen. If the past months have taught us anything, waiting for disasters to happen is not the correct strategy. Instituting a small carbon tax seems like a good place to start. It can be refunded to taxpayers equally, or even made to incentivize carbon sequestration programs with refundable tax credits for carbon taken from the atmosphere.
Free trade has had a massive impact on reducing poverty worldwide, while also improving the economies of all countries around the world. There’s also some evidence for reduced chances of wars between important trading partners. Aligning American and Chinese commercial interests through trade will be a vital part of avoiding a war between these world powers. Free trade is also a vital vehicle for continuing the pattern of global poverty reduction seen in the last 30 years.
U.S. interventions in the Middle East have been one of the largest contributors to excess deaths from U.S. policy. Obviously there is high uncertainty over whether many conflicts would have continued even without American intervention, but that seems unlikely in at least a couple large instances (the Iraq War being the biggest one). U.S. support of regimes like Saudi Arabia also seems to show negative payoffs from a humanitarian calculus. It also does not seem that larger 21st century goals like opposing authoritarianism in China and avoiding large scale wars are served through Middle Eastern interventions.
Candidates’ Priorities Matter Too
While this is a nice policy platform, ultimately the goal is to judge candidates by their relationship with these policies.
A major problem for this approach of separating out policies isn’t that most people running for office oppose these positions, but that they might be indifferent or even positive on these high impact policies while still focusing on other completely radical ideas. Elizabeth Warren’s many proposals come to mind here. There are some meritorious critiques in Warren’s proposals; competition is vital to a well functioning market, and some of her ideas could enhance competition. But many are far more radical with, at best, unknown effects on competition and the economy generally. These include the eradication of private equity, the changing of corporate boards, and an unprecedentedly large wealth tax which could significantly curtail investment. If Warren scored highly on the top policies put forward here (she does alright on immigration, housing, and drug policy), how do we balance that with the relatively radical (and I’d argue unhelpful) economic proposals she made the centerpiece of her campaign?
Unfortunately, we have to take those points seriously and note that while I have tried to rank these policies in a somewhat utilitarian, impact- centered way (policies within the Overton Window that help the most people by the greatest amount), radical policies that backfire could have very high impacts that shove aside the ideas proposed here.
There is a lot of uncertainty that remains; some of these policies could be higher on the list, and I’ve likely excluded some that are high impact that have not yet occurred to me. Major policies could matter in the future that we just haven’t encountered. And of course these are only policy preferences; as noted in my last post, simple competency is an important factor as well. Despite all of these caveats, this an important step in laying a foundation of policy discussion and analysis against which we can measure candidates. Electoral politics is messy and tribal; discussions confound concise and consistent frameworks, but when they do swerve towards policy, these points should help form the questions that need to be asked.
Tyler Cowen kicked off this year with a heavily discussed blog post defining what he calls “State Capacity Libertarianism“.
I didn’t get it.
Cowen described a moderate libertarianism while adding the nebulous concept of “state capacity”, in particular noting that a capable or powerful state was different from a tyrannical state. I read the words, but I assumed he was describing a “left libertarianism“, where a typical position might be to push for the government to collect efficient taxes, and then distribute those to everyone via a basic income, and avoid otherwise messing in the economy. I’m open to engaging with something like that, but I didn’t grok how Cowen’s take was different or what this view offered.
And then there was the worst pandemic we’ve seen in the 21st century. Huge swaths of the American economy have been shut down, and this disease is still likely to kill the equivalent of an entire year’s worth of influenza fatalities in a single month. Pandemics are an obvious market failure scenario, with difficult to control externalities, and thus we have state institutions to deal with this and pick up the slack. They failed.
Policy Failures
I looked up my first tweet about COVID-19 (back then it was just novel coronavirus or nCoV). It was on January 30 in a reply to Robert Wiblin. My first standalone tweet was a few days later:
Interesting that @metaculus median predictions for total cases of 2019-nCoV by year end doubled over the last few days with no real new information. https://t.co/DBmjuXb0eJ
Now, I wasn’t warning people that this would be bad or telling people to start prepping. But it was certainly something occupying my mind, as I tweeted about it a dozen times in February. I did start mildly stockpiling food and household items starting in mid-February. Ultimately, I consider my actions to be a failure. I didn’t short the market (although I didn’t buy any index funds either), I didn’t warn enough of my close friends and family to start gathering supplies, and I didn’t advocate loudly for changes in government policy. I was partially concerned about looking alarmist, which in retrospect was a really silly thing to be concerned about.
Nonetheless, this blog is a hobby. I have a day job which isn’t concerned about government policy. My question is about the people whose day job is pandemic preparedness. If an anonymous blogger with a few hundred twitter followers can be concerned about a possible pandemic, then where were the people who are paid specifically to deal with this eventuality?
Why didn’t the CDC and FDA start a program to quickly approve new COVID testing in mid-February instead of mid-March? In an exponential growth situation, that is a long time. Why didn’t they start pushing hospitals to create new isolation wards in February? Why didn’t the CDC start putting together lists of events it strongly urged local governments to cancel when the first case appeared at local hospitals? Why did the NBA have to unilaterally suspend its season only after a player was diagnosed in March? Why was there confusion between who was in charge and what steps should be taken?
Beyond lack of distancing and lockdowns, there were several other failures. Firstly, the CDC created their own test which differed from previously used ones in the world. It was shipped to public labs around the country and…didn’t work. The FDA compounded the problem, disallowing any tests except the one the CDC had created. The University of Washington virology lab was able to create their own test and applied to the FDA for approval. The FDA said it couldn’t approve the test until the lab had demonstrated it wouldn’t return false positives for other dangerous coronaviruses. Perhaps this would be a good idea in more normal circumstances, but it was an asinine requirement if you were trying to head off a pandemic where every day saw exponential growth in a virus spreading across the country. The lab started using the test through a research loophole, but the story gets crazier:
Still, Greninger complied. He called the CDC to inquire about getting some genetic material from a sample of SARS. The CDC, Greninger says, politely turned him down: the genetic material of the extremely contagious and deadly SARS virus was highly restricted.
“That’s when I thought, ‘Huh, maybe the FDA and the CDC haven’t talked about this at all,’” […] “I realized, Oh, wow, this is going to take a while, it’s going to take several weeks.”
By this point, there were already over 50 confirmed cases of COVID-19 in the United States and still, nobody but the CDC was permitted to conduct testing.
It was on February 28th, a full 8 days after the UW virology lab had applied for their test to the FDA, that the agency finally allowed other tests besides the CDC’s. Of course, most other labs hadn’t started making a test yet. What a disaster.
What’s interesting to me about the testing fiasco was its independence from President Trump. I think Trump is a bad leader, incompetent, unintelligent, a bad judge of character, and has terrible policies, but ultimately the point of a capable bureaucracy would be to have experts on hand with the proper plans in place to implement them regardless of political leaders. We shouldn’t have to recreate all the accumulated knowledge of the government every time there is a new president. Here, Congress had created agencies to oversee health and pandemic responses, the scenario arose…and then those agencies actively made things worse.
Of course, we can’t allow President Trump off the hook. He decided to dismantle the NSC pandemic response team which Susan Rice had set up, combining it into a single directorate with arms control, weapons of mass destruction terrorism, and global health. The president is entitled to manage the National Security Council bureaucracy as he wants, as it’s part of the EOP. It was claimed that there was too much bloat leftover from Obama’s NSC, and so this should have streamlined communication, which may have sounded reasonable. Nonetheless, whatever changes Trump implemented were a colossal failure. Managing the CDC, FDA, FEMA, and National Institute of Allergy and Infectious Diseases to coordinate in a pandemic is crucial, and it did not occur until weeks after it should have. We should ask if the NSC, which varies from president to president, should even have this coordination power or if Congress should implement a more permanent response hierarchy.
Moreover, the president himself downplayed concerns about the virus the entire month of February, and even promised that 15 cases would soon be down to “close to zero”. This is an idiotic statement but is not unexpected. Trump has long ignored expert advice, lied to the public, and spoken erratically about how his administration will execute at hisdirection. The difference is that while the first 3 years of his presidency had few crises that weren’t self created, a pandemic actually requires decision making and policy implementation. Trump claimed that he would surround himself with good managers, and yet his White House has been plagued with scandals, including one that resulted in his impeachment. Ultimately, Trump is responsible for the leaders of the agencies that failed so spectacularly to manage this crisis. When asked about the testing fiasco, Trump said “I don’t take responsibility at all”.
Finally, the Obama administration had even created a “pandemic playbook”, a 69 page document you can review at this link which details decision making rubrics, key agencies that need to be consulted, and which questions need to be asked. It’s apparently unclear if senior leaders at government agencies even knew the playbook existed.
“State Capacity”
The typical consequentialist libertarian critique runs something like “the government doing things is bad because the state has poor incentives”. However, with this pandemic, we have instances where the state did too much, like where the FDA got in the way of scaling life-saving testing, but also where the state did too little, like coordinating responses of expert state agencies, or providing guidelines to local governments. A consequentialist libertarian critique would have a hard time dealing with these two failure types, and as somewhat of a consequentialist libertarian, I didn’t understand Cowen’s “state capacity libertarianism” until I was faced with these current government failures.
In a pandemic, every individual and company wants to continue working and consuming as much as possible, but each action also endangers non-parties to the transaction (e.g. other grocery shoppers or attendees at a basketball game). Here was a role for government to play, and yet it completely failed in that role. While a more typical libertarianism might treat the state as a necessary evil from which helpful action is capricious and rare, state capacity libertarianism suggests there is an expected duty for the state to play where there are negative externalities like the spread of a pandemic. The government’s failure here should thus be taken more seriously under state capacity libertarianism.
This also opens up a discussion about “state management” that previously I have often avoided. For example, it’s quite onerous to file taxes in the United States. Some libertarians argue that this is actually a good thing, and in fact making these state interactions difficult helps to convey to citizens how useless the state is, and they will thus be supportive in making the state smaller. Other libertarians might argue that added difficulty in the form of coerced taxation is adding additional rights violations on top of an already immoral action. A state capacity libertarian approach wouldn’t have this confusion; in this view, taxes ought to be collected in the most economically efficient way possible (land value tax or Pigouvian externality taxes would be a good start), and that method should be carried out competently and easily by the state. The IRS would just calculate your Pigouvian externality tax and send you a bill without requiring each citizen to compile their own information, spend hundreds on tax advice and then be punished when the amount is incorrect.
Relatedly, the management ability of electoral candidates sometimes comes up, and I think I may have even argued in the past that if congress or the president are less capable, then they would pass fewer laws. If most laws are net negative, then perhaps this incompetence would be good. However, elected officials do not just pass laws, they impact how government services are carried out. When a high risk, externality-laden scenario arises, like a pandemic, the management aspect of governance rises in importance.
Many presidents, especially Trump, have campaigned on the idea that they are good managers. Until now, I mostly shrugged at these claims, since governing is most often about policy and posturing than actual management. Yet the rare scenarios where management is required have outsized impacts; having fire insurance doesn’t matter until you actually have a fire, but then it matters a great deal. If we are concerned about catastrophic risk, then government management is a vital skill to be evaluated. State capacity libertarianism strongly favors evaluating this skill.
Libertarian Critiques Remain
Finally, we should quickly cover that a strong libertarian critique of government intervention into markets remains. Private property based markets with competition have much better incentives for rapid development and innovation. The FDA’s intervention to thwart testing probably killed thousands, especially compared to an alternate world where additional testing kits were explicitly allowed beginning in mid-February. Libertarians have been criticizing FDA policy on slow drug approval for decades though, and COVID patients will not be the FDA’s only victims this year.
And that’s not the only place where the state is dangerous: the War on Drugs, for example, has resulted in the deaths of hundreds of thousands as prohibition empowers organized crime, makes drugs more dangerous, incarcerates people for non-violent crimes, creates more violent interactions between citizens and police forces, and on and on. U.S. government policy has also resulted in long-lasting deadly wars in the Middle East with little to no concrete benefits for the U.S. globally, and I’m sure your local libertarian could continue on with a verylonglist.
This pandemic places into stark realization that government both needs to get out of the way in some areas to save lives, and also competently carry out the tasks only it can do. A Cowenian marriage of state capacity and libertarianism is the way forward.
Last year I wrote up a post discussing my recommended podcasts, and I figured it was about time to update my list. Podcasts have grown significantly in the last 10 years to the point where I honestly haven’t listened to terrestrial radio stations for several years. Podcast distribution is decentralized, and the barrier to entry is low. We live in a world where if you have a niche interest, there’s going to be a podcast and several YouTube channels covering it.
But since podcast discussion is decentralized, my most common method of hearing about podcasts is through other people. In that light, I have created this list of recommendations. It is loosely grouped with podcasts I have listened to longer and/or enjoy more at the top, with more recent podcast discoveries or podcasts whose episodes I have found hit or miss towards the bottom.
I’d also like to take a second to recommend a method of podcast listening: have a low barrier to skipping an episode of a podcast that you otherwise enjoy. This was actually a recommendation by 80,0000 Hours podcast host Rob Wiblin. He encourages his listeners to skip podcast episodes if they find it uninteresting because he’d rather they continue to enjoy the pieces of content from the podcast that they do like, rather than feel like they have to slog through parts they don’t. Moreover, there is just so much good content out there, you should never waste your time with something you don’t find interesting. And now the (slightly sorted!) list:
First up, the Reason Podcast includes several different types of excellent content. My favorite is the Monday Editor’s Roundtable which usually includes Katherine Mangu-Ward, Matt Welch, Nick Gillespie, and Peter Suderman. It’s well-edited, sharp, witty, and always tackles the latest news of the week from a libertarian perspective. In the last few years I often find myself wondering if the political world has lost its mind, and on Mondays I’m able to get the message that yes, everyone has gone crazy, but you’re still not alone, there are these four libertarian weirdos who are right there with you. Moreover, Nick and Matt’s obscure 70s and 80s pop cultural references and cynicism play well off of Katherine and Peter’s more techno-libertarian science fiction vibe.
However, that’s not the only content here! There are many interviews from presidential candidates to authors and professors. Audio from the monthly SoHo Forum debates are also posted, and I always listen to at least the opening statements (audience Q&As are less interesting to me). Overall, I almost never skip an episode of the podcast and they produce a ton of great content!
80,0000 Hours is an effective altruist organization researching how people can do the most good with their careers. The effective altruist movement does great work, and I think anyone seriously interested in making a difference in the world should be aware of it and the approach with which effective altruists analyze the world. But more than that, this podcast is just more awesome than other interview shows. Rob Wiblin, the host, is excellent at interviewing. He presses the guests on issues but is also willing to accepting strange concepts about the world and follow them to their interesting conclusions.
The interviews are also long, sometimes resulting in 3 hour episodes. This is on purpose, as they can cover in depth why people have the beliefs they do, and what specialized knowledge they have accumulated working in niche roles. Sample episodes include Vitalik Buterin (founder of Ethereum) on ways to revamp public goods, blockchains, and effective giving, Paul Christiano (AI alignment researcher at OpenAI) on messaging the future, increasing compute power and how CO2 interacts with the brain, and Philip Tetlock (author/inventor of Superforecasting) on why forecasting matters for everything.
This one is perhaps a bit more intense than some of the more chill “people hanging out” podcasts, but I listen to every episode.
EconTalk is centrally an economics podcast hosted by Russ Roberts. It’s funded by the Library of Economics and Liberty and Roberts leans libertarian, but he is a courteous and thoughtful interviewer. He knows his biases and acknowledges them during discussions. The podcast strays into many related fields, not just economics; Russ is interested in personal philosophy and introspection as well.
As of late, Russ has particular concerns about the economics field and how free market policies fall short of what we might hope for. In particular, he has discussed themes of societal disillusionment and isolation that simple “material” concerns that dominate economic metrics cannot capture. I wouldn’t say I always agree with Russ and certainly not with all of his guests, but I can say I listen to almost every episode because there are so many good insights discussed.
I recently heard the term “Dive Podcast”. This is an excellent description of The Fifth Column, a talk show hosted by Kmele Foster, Matt Welch, Michael Moynihan, and Anthony Fisher. All lean various degrees and shades of libertarian, and discuss the news and/or critique the ever continuous stream of takes in print media, television, online, Twitter, etc while in various states of inebriation. This is much less of a cerebral lecture and more of a “rhetorical assault” as Kmele calls it.
I find the show incredibly entertaining, often informative, and very funny. I listen to all episodes as soon as they are posted.
Hello Internet is another talk show, hosted by YouTubers CGP Grey and Brady Haran. It isn’t really related to any topics we cover here on the blog, but it is nonetheless entertaining and charming. Unlike The Fifth Column, there is no alcohol involved in the making of this podcast, but it does have an amusing self-grown culture and language.
For example, there is an official flag of the podcast after a referendum of users was held, but one of the losing flags is occasionally taken up by rebellious listeners. There are also unofficial official birds of Hello Internet (the Reunion Swamphen with limited edition t-shirts). Topics covered include YouTube, technology, but also the various interests of Brady and Grey, such as mountain climbing or Apple products. There’s no simple way to convey this podcast, but I do recommend it, and I do listen to every episode.
Rationally Speaking is an interview show hosted by Julia Galef, founder of the Center for Applied Rationality and who I’ve heard described as one of the major pillars of the rationality community. Like Russ Roberts of EconTalk, Galef is an excellent, fair, and thoughtful interviewer. However, the subjects of these interviews are much broader than EconTalk’s admittedly broad discussion of economics. There is a general focus on the philosophy of why we believe what we believe. I do tend to skip more episodes of Rationally Speaking than I do of previously mentioned interview podcasts, but I estimate I still listen to 90% of all episodes, and I would absolutely recommend this very accessible podcast to everyone.
This one is pretty straightforward. In a world where we tend to get news continuously from the internet or our smartphones, this podcast is a short, ~20 minute weekly selection of important topics from a global perspective that you might not know much about, and that may have gotten swept away in the torrent of your daily information deluge. The Economist is certainly opinionated, but I think does a good job of promoting moderate, liberal ideas that would improve the world. This podcast is an excellent way to expose yourself to some of those simple important concepts in a global context.
From Founder’s Fund, this is a bit of an outlier podcast on here. It’s much more of a series of scripted journalistic pieces or lectures rather than recorded unscripted discussions between people. However, it is quite ambitious in its ideas. The latest season, entitled “New World” which finished up in early 2019, is about how to build a human civilization on Mars. Anatomy of Next explores everything, most of which does not exist yet, but perhaps could. There is terraforming, genetic engineering, sci-fi launch concepts, etc.
I wouldn’t say this podcast is for everyone, but if you feel like you are missing out on human optimism, where people talk about settling Mars with technology that doesn’t exist and yet remain incredibly compelling, this is a podcast you should definitely check out. Also, thanks to Nick Gillespie and Reason for interviewing Mike Solana and letting me know about this podcast in the first place!
Building Tomorrow is a podcast about technology and innovation, and how that is leading to and interacting with individual liberty. It’s hosted at Libertarianism.org which is a project of the Cato Institute. I only recently discovered this podcast and thus it is lower down on my list only because I haven’t had a chance to listen to as many episodes as I would like. Nonetheless, every episode I have listened to is really great! Of course, this program is the perfect niche for me to enjoy, but I would definitely recommend it to anyone who enjoys this blog.
Tyler Cowen co-hosts one of the most popular econ blogs in the world, Marginal Revolution, and, of course, he is quite an accomplished economist and author. I have recently discovered his podcast, and it’s pretty wonderful. I admit, I don’t listen to every episode, as it turns out Cowen’s and my interests diverge somewhat, which is quite alright. On the episodes that I do find interesting, Cowen is an excellent, although unorthodox interviewer. I rarely go into an episode knowing much about the interviewee or even thinking that I’d really enjoy the topic, but I am always impressed.
There are some additional podcasts I listen to sporadically, but either don’t fit the context of this blog, or I haven’t listened to enough episodes to recommend them here. Nonetheless, it’s worth mentioning that I have listened to a handful of episodes from the Neoliberal Podcast, and I hypothesize that if I wrote this list again in 3 months, it would likely be here.
If you have any podcast recommendations, please tweet at me or leave a comment! I’m always interested in more podcasts.
This week I saw an absolutely horrendous take on Twitter by Chris Arnade and felt compelled to discuss it. This is partially because the positions are incorrect, but also because his discussion itself was in bad faith and actively worsens our dialogue. Are there bad takes on Twitter every minute? Yes, but hey, I saw this one.
First, let’s start with the object-level fact that hundreds of millions of people were lifted out of poverty in China. The intentions of the advocates of free trade isn’t relevant to this fact, what’s relevant is whether a particular policy improved the well being and life expectancy of millions of people. This is equivalent to claiming Jonas Salk was only in it for the name recognition, and therefore, we shouldn’t have used the polio vaccine.
Next, Arnade is simply wrong about the intentions of his political opponents, claiming they only support free trade because of greed. He then obfuscates the target of his accusations by using the ever popular term “elites”. Free traders have been talking about the moral benefits of trade forever. Friedman wrote Capitalism and Freedom in 1962, 10 years before Nixon’s visit to China, and The Economist was founded to repeal the Corn Laws in 1843. Saying Milton Friedman was defending free trade just to make money off of China’s market liberalizations decades later is just lazy argumentation.
So Arnade is wrong about their intentions, but are these even the “elites”? As far as I can tell Chris doesn’t have a good definition of elites. I noted in the past:
Tagging @EconTalker@Chris_arnade. The final discussion of faith also seemed incorrect. I don't know how Chris defines elites, but income doesn't predict church attendance that well. https://t.co/lQ06tBXz8X
He claimed on his interview on EconTalk, that while elites are abandoning faith, it remains an important aspect of life to more everyday people. This divide is not borne out by the data. Income doesn’t predict church attendance, and according to Gallup, the difference in church attendance between college educated and non-college educated is within the margin of error. If you want things that predict church membership, you should use age (young people are less religious) or political ideology (those identifying as “conservative” are far more likely to go to church than those calling themselves “liberal”).
If Arnade doesn’t have a good definition of elites, then it seems pretty duplicitous to then claim “elites” have any particular position since we can’t identify who he is talking about. Even if such a group existed, surely there would be many different positions and ideas within this group. Not for Chris though, everyone in this group is one in the same. And it seems especially malicious to then claim that not only does this group with no definition exist, but they have specific stated incorrect claims! In fact, Arnade has identified these claims from an imaginary group as fake and then reveals the “true” beliefs which are, of course, simply greed. This is not just a strawman, ladies and gentleman, but indeed strawwomen and strawchildren too.
It’s plausible that someone could have disagreements with free traders, but just ignoring their arguments and claiming they’re only after money is a terrible way to learn and improve our understandings of the world. We should be engaging with each other’s ideas sincerely, not attributing hidden values to people we disagree with. I guess I find this especially upsetting because EconTalk, Russ Roberts’ podcast, does such a good job of emphasizing those values of charity and understanding, and Arnade was recently a guest on that podcast. To see someone who was treated very charitably turn around and be so underhanded on Twitter is quite disappointing.
Let’s return to China. Arnade discusses a “deal” where the U.S. allowed human rights abuses hoping that democracy would follow. I know of no one who has ever said that. In fact, the opposite occurred: the Cultural Revolution killed 500,000 people, ending in 1976 and following the Great Leap Forward which killed some 18 million people in the lowest estimates. Since trade liberalizations began, nothing on that scale has occurred again.
The interest in China from Nixon was as a tool in the Cold War against the Soviet Union. Democracy was really not the goal. Moreover, the U.S. didn’t dictate to China to liberalize its economy, the market liberalizations were largely from within Deng Xiaoping’s government. In fact, I’m not really sure the U.S. would even be able to extract human rights improvements through protectionist policies. What is the model we would base it on? Cuba? Iran? North Korea? Venezuela? All have become wonderful bastions of human rights following American sanctions.
Also, I should bring up the simple libertarian critique that even if you have the perfect policy, the perfect knowledge of exactly how a foreign government will react to sanctions and trade agreement details, government is not an impartial executor of policy. Democratic forces and interest groups will always mutate policy as it passes through government, and it will not be implemented in the idealized fashion you might like. For example, what does the phrase “U.S. foreign policy human rights record” conjure up?
It’s true that China has not become a democracy, while many foreign policy types certainly believed it could happen, particularly in the 90s. Chris seems to think he predicted this outcome (not cited). Suppose you knew this, would you change policy? In a choice between a poorer China without democracy and a richer China without democracy, it seems we should choose the richer one because, you know, we want good things for all humans, not just people who live in the same country as us.
Finally, let’s get to the economics here. There is no “us” who “exported our factories”. Individual firms make decisions in a complex economy. And those decisions have been that as a percentage of the total, manufacturing jobs peaked in the 40s prior to the establishment of the People’s Republic of China:
Arnade seems to understand that as he cites the recent scandal in the NBA where the Houston Rockets GM tweeted in support of the Hong Kong protesters, and quickly deleted it under a firestorm. Yet, Arnade switches between U.S. trade policy, governed by Congress (allegedly), and private firms making profit maximizing decisions without bothering to differentiate them.
It’s unclear exactly how Arnade wanted U.S. policy to intervene to stop private firms from making their own decisions. He cites an upcoming book, but provides no details. He also cites anti-labor policy, and I have heard similar discussions from economist Noah Smith, and many others associated with the new neoliberal movement. My problem is that given all the weird deceitfulness and strawmanning, I have no reason to trust Chris when we finally get to the policy discussion. I agree with him that the NBA or Blizzard caving to the Chinese government is a bad thing, but saying more robust industrial policy would have changed that is a non-sequitur.
Moreover, there are still tons of benefits from trade with China. The smartphone revolution changed the way we interacted with the world, and mostly in good ways I believe. This happened in part because of Chinese manufacturing allowing anyone to buy a highly complex piece of technology for cheap. On the other hand, technologies we have a dimmer view on today, like social media, are entirely U.S. grown.
There are problems in the world today, but we need to improve our level of dialogue if we want to solve them. Refusing to engage with well known arguments that critique your position and instead going on uncharitable Twitter threads is something we should avoid.
Immigration liberalization is one of the policies this blog has described as highest impact. It could have massive benefits to both immigrants and native born citizens in the United States and other developed countries. Immigration bypasses the need to solve the extremely difficult problem of “building good institutions” which is a mercurial and sparsely solved goal in development. By moving people directly to societies where good institutions already exist, we don’t have to make them. OpenBorders.info also suggests free movement of people could double world GDP, with smaller migration seeing proportionally smaller but still substantial growth.
The United States is uniquely positioned to absorb immigration. It is the largest developed country by both population and GDP by significant margins (developed country referring to either OECD member or country with HDI > 0.8). By nominal GDP the US economy remains the largest in the world, and by PPP it is second only to China. Unlike China, the US is the only large country with a large foreign born population, and indeed the US has the largest foreign born population in the world at over 46 million. The US also has a long history of immigration contributing to its excellent position as an immigration destination.
Given this blogs inclination towards the benefits of markets, self determination, and individual rights, our default position should be in support of more liberalized immigration. Current immigration policy is geared towards family connections despite much of the potential benefits of immigration stemming from economics. The U.S. also takes in less immigrants as a percentage of its population than other developed nations, despite the previously mentioned advantages the U.S. has in absorbing immigration.
Originating from economist Gary Becker, an immigration tariff would allow prospective immigrants to pay a tax or fee to enter the country and work. We have a somewhat similar although highly limited current system with H-1B visas which are sponsored by companies for employees. Expanding this and accounting for age and level of education, Congress could create a tariff schedule for various immigrants based on potential costs and tax revenue from these immigrants. They could also simply sell off additional green cards after the current legal green card approaches were filled in the current year. The Cato paper linked goes into more detail.
The benefits of any such system would be to guarantee that immigrants with the skills and ability to work productively in the United States would be able to do so, with additional monetary compensation provided up front to the U.S. to avoid any potential risk of those immigrants becoming a net cost on society. This would see benefits in terms of additional labor, entrepreneurship, and economic growth.
The issue with this approach is that immigration is a highly divisive political issue. Republicans would be unlikely to embrace this proposal due to their base’s opposition to apparently all immigration. Democrats may be more interested, but may balk at the notion of people “buying” their way to the front of the line.
The entirety of the openborders.info site offers substantial arguments to the benefits of open borders, and virtually all arguments they make apply to marginal immigration liberalization as well.
I found many arguments that Bitcoin wastes energy to be lacking, so I decided to write up this post. However, it’s gotten pretty technical, so be warned.
TL;DR:
Bitcoin is an economic activity like any other, and thus it has associated input costs that are paid for by its users. Its costs just happen to be very clear and singular (electricity)
I go over several technical ways we could change the Bitcoin protocol to achieve Pareto improvements and why I don’t think they would work, or work only marginally.
I discuss how Bitcoin counterintuitively may help renewable energy rather than just rack up carbon emissions.
First, why I think referring to Bitcoin’s energy consumption in terms of economic efficiency makes sense.
Bitcoin mining is economic activity. It provides the service of securing and running the Bitcoin network. Like all economic services, there are costs associated with providing it. Reddit is a website that provides the service of an online forum and discussion, and it has associated costs. Some people don’t use Reddit or find that Reddit is a time sink, they might say that Reddit is “wasteful”, after all, they don’t use it, and they could think of better things to do with the resources. In another example, some people might be uninterested in baseball and thus believe that the New York Yankees are a waste of resources. They use space for their stadium, training facilities, and offices, they use energy to run those facilities, and they use advertising space to promote their organization where more useful things could be advertised, like charity. I think this usage of “wasteful” is fine for both Bitcoin and the New York Yankees, but this seems to be more an argument about preferences or about Bitcoin being a bad thing that exists in the world regardless of its resource use. There’s nothing really economically inefficient with Reddit’s existence or the existence of the Yankees; people want the services those organizations provide, they provide them, and they fund it through ads on a website or ticket sales to baseball games.
Bitcoin mining provides something that literally didn’t exist before 2009; the ability to send digital value across the internet with no third parties, or at least no specific third parties. This is technically impressive and apparently highly valuable. To do this, the Bitcoin network had to solve all the problems normally solved by the banking and payment system, including how to prove authentication when sending money, how to check you actually have the money you are sending, how to avoid double spending, how to achieve consensus on the current state of the network and transactions, and how to survive malicious attacks on the network, all without state support, or in fact any third party of any kind. This is remarkable, and to provide this difficult service securely, the network relies on Proof-of-work by miners. Just like the New York Yankees, Bitcoin’s services aren’t used by everyone, yet they still have costs associated with with providing their services, used by many around the world. This work done by miners isn’t wasted any more than the Yankees’ investment in staff, facilities, or their brand.
So how do Bitcoin “consumers” pay for their service? Each transaction has a fee associated with it, which is given as a reward to miners for including the transaction into the next “block” or batch of transactions. Additionally, the protocol slowly adds new Bitcoin into the system by including a block reward for the miner who finds that block. Thus each block has a reward for the miner, which is what Bitcoin users are “paying” to miners to keep the network safe.
In fact, this is where articles that discuss how much energy Bitcoin is using come from: they are taking the current market value of the block reward (12.5 Bitcoin @ $5000/Bitcoin today) and multiplying that out for a year. One block every 10 minutes and 525,960 minutes in a year means 52,596 blocks worth a total block reward of $3.3 billion a year and probably more with transaction fees. Bitcoin mining is competitive; you only get the block reward if you solve the hashing problem first. Consequently, margins are tight. That means there are big incentives to only use the most efficient hardware (efficient in terms of hashes/kilowatt hour) and the cheapest electricity. Depending on your estimate of what miners are paying for electricity, you can divide 8 cents a kilowatt hour or whatever into the ~$3.5 billion to get a these massive energy estimates. Of course, we should note we don’t really know what percent of earnings goes into R&D for ASIC design and manufacturing costs, rent, etc.
But in my view, it doesn’t really matter; all of these costs are paid for by Bitcoin users in order to use the network. The energy input into the Bitcoin network is determined by the block reward and price of Bitcoin; if Bitcoin and Bitcoin transactions are in demand, the block reward is higher, and miners spend more resources on energy and chip manufacturing. If the demand is lower, they spend less. It’s analogous to people who pay to go to Yankees games; if the demand is higher and fans are willing to pay more for tickets, the Yankees can spend that on advertising, improving the stadium, or getting better players, etc.
Technical Improvement Proposals
Next, technical counterarguments would demonstrate that this ability to send value across the internet with no third party can be done for cheaper than is currently available with Bitcoin. I will now go over the best arguments I know of.
No Block Reward
Currently, miners complete work through hashing to solve a difficult problem. The problem can only be completed with brute force, meaning you just need to run as many hashes as possible to solve the problem. The way this is done today is with specialized hardware and electricity as noted above. However, it is a protocol design that Bitcoins are added to the network with each block that is mined (and this is a pretty useful idea for bootstrapping a digital currency when none existed). We can quickly imagine a cryptocurrency that is identical to Bitcoin except no new coins are added, the ~17 million that currently exist are the grand total. Each block only gets transaction fees rewarded to the miners.
It seems in this case that we have recreated all the value of the Bitcoin network for users, but have reduced the input of electricity on the cost side. Ignoring the usefulness of the block reward for bootstrapping Bitcoin, isn’t this an efficiency gain?
It depends on how liquid and efficient the Bitcoin/dollar exchange market is. If Bitcoin was unexpectedly changed so that no more coins were created, the market cap of Bitcoin (total units of account * exchange rate per unit) would soar, by the net present value of all future coins that are no longer going to be produced. It’s hard to say exactly what that is, but it’s about 3.6 million coins, with the majority produced in the next 10 years. The value would be at least a few billion dollars, maybe as high as $10 billion depending on the discount rate. The current market cap is about $87 billion so that’s not a huge percent increase in price, but it’d be notable. That means if transaction fees in Bitcoin remained constant, in dollars they’d increase by a similar amount forever, unlike the fixed block reward which decreases over time.
In an efficient market, we’d expect this increase in transaction costs due to the higher market price of Bitcoin to exactly offset the reduction in block reward. In other words, current Bitcoin holders are “paying” for the block reward though a reduction in net present value of Bitcoins they hold today. Simply removing the block reward doesn’t change that, it just moves value around.
However, markets may not be that efficient. Dollar/Bitcoin exchanges seem relatively liquid, but they are certainly less liquid than traditional stocks. Additionally, I’m not sure you can borrow money from an exchange to invest in Bitcoin, which is also a sign of an underdeveloped market. So we can imagine a hypothetical world where the Bitcoin protocol originally had much smaller block rewards or had reduced its block reward more quickly. In this world, it’s possible we could achieve a net decrease in total energy expended even with a likely higher price. However, I’m not sure we could know which direction the market inefficiencies would go; perhaps the price of Bitcoin would “stick” higher, meaning higher priced transactions outweigh the reduced block reward.
A final point to be made for this counterargument; transaction costs don’t have to remain constant in Bitcoin terms in this hypothetical. If Bitcoin prices go up, transaction costs might remain the same in constant dollars since users will probably continue to demand transaction space on the blockchain at the same level as before. We do however, have empirical evidence that transaction fees in dollars have correlated with the dollar/Bitcoin exchange rate, and even perhaps in pure Bitcoin terms.
If this argument is true (and so far I don’t believe it is), it should also be noted that it would imply Bitcoin will get more efficient over time as it moves towards smaller block rewards.
Inefficiencies Due to Fixed Bitcoin Protocol Constants (Block Size)
In a theoretical free and efficient market, consumers demand goods with downsloping demand curves, producers supply the good with upward sloping supply curves. Where the curves meet, there is a market clearing price and quantity. In Bitcoin, consumers demand transactions (or transaction space) on the blockchain, but producers don’t produce blockchain space; they produce hashrate, or perhaps “security”. The transaction space is fixed by protocol.
This means that total transaction fees could theoretically be lower if the fixed transaction space (i.e. block size) was changed. This would be determined by the slope of the demand curve for Bitcoin transactions. A shallower slope would mean shifting the supply curve to the right will increase the value of total transaction fees, even if each individual fee drops. A steeper one would mean total transaction fees could drop. It’s been pretty common for Bitcoin blocks to be less than the maximum for the past year, so I’m skeptical that a larger block size would lead to a drop in total transaction fees, and I suspect even if it there was a drop, I don’t think it would be massive in magnitude. Nonetheless, I think this is an argument that Bitcoin could achieve the same ends and be slightly less wasteful, but it needs more empirical evidence.
Suppose instead of hashing and Proof of Work, new transaction fees went to current holders of Bitcoin. This “Proof-of-Stake” would demonstrate commitment to the blockchain’s success not through investment of mining hardware but rather direct demonstration of stake in the blockchain through ownership of the currency.
Firstly, I still have some doubts that this allocation of new currency can actually be done without any actual work. Casper (Ethereum’s proposed Proof of Stake system) requires some calculation as to which random number to pick, which determines which staked coins get the transaction fees. It would be highly valuable to affect that calculation, and it seems optimistic to suggest there will be no way to influence it. But Ethereum isn’t my specialty, so I’ll concede it’s actually possible despite it not existing today.
In Bitcoin, miners spend the equivalent of the block reward and transaction fees every 10 minutes in order to compete and be in the best position to obtain that reward. In Proof-of-Stake, Validators still have to deposit coins to be staked. They risk these coins, because if they misbehave and disagree with other Validators, they can lose them. The amount deposited determines likelihood of receiving the transaction fees, and so these are just a form of “bonds”. Returns to bonds are analogous to returns to mining resources. Value locked up in bonds could have been used in other more productive parts of the economy. The opportunity cost isn’t as externally obvious as the electricity used in Bitcoin mining, but it is nonetheless there and it is identical. Locking up value in validation bonds isn’t a permanent thing, whereas investing time, money, ASICs, R&D, and electricity in Bitcoin mining cements that value into silicon and heat which can only be used for one thing. Thus the returns to mining are going to be higher on a per percentage basis to account for the increased risk.
We already pointed out that the cost of Bitcoin mining is a consequence of the block reward. The block reward if Bitcoin switched to a Proof-of-Stake system would still be the same. But because buying validation bonds isn’t as risky as tying up resources permanently into silicon and electricity, there will be significantly more resources tied up in Proof-of-Stake for any given level of block reward/transaction fees (because the market will keep putting more until the rate of return reaches the market rate for the given risk level). There is thus no free lunch with Proof-of-Stake; users of Bitcoin are auctioning off a block reward/block transaction fees worth of value every 10 minutes, and so a competitive market will form to always provide that value at that opportunity cost, whether that cost is through validation bonds or mining.
My view here is agnostic on whether PoS is a “better” system than PoW, just that PoS doesn’t eliminate the mining cost from the system.
“Useful Work”
What if you used Bitcoin mining to do “useful work”? One counterpoint is that mining is already useful work, since Bitcoin users are paying billions of dollars for it a year. Another is that using Bitcoin for some useful work wouldn’t change anything if miners can capture the benefit of the useful work. For example, using mining rigs for heating in the winter allows you to profit more. But this is equivalent to an increase in mining ASIC efficiency which happens all the time. The network uses this extra efficiency to increase the hashrate, the difficulty level adjusts (the network aims to always have a new block average every 10 minutes) and we are back to where we were, same energy used, but now with a higher hashrate.
However, what about useful work that was a positive externality? For example, finding prime numbers? Assuming away all the difficulties with this specific example, like how hashes are much easier to check than prime numbers, if the work resulted in a true positive externality public good, like information becoming public, then that has to be an efficiency gain.
It should be noted that the work can’t be too useful because if it’s profitable enough where any single individual could benefit given the cost to mine, then lots of people would start mining for the benefit of the work itself. In which case, this would be treated again like an increase in efficiency with the difficulty level increasing significantly until the marginal cost of mining again equaled the total marginal revenue of both block reward/transaction costs and the public good. But assuming it’s not usually profitable, the benefits could be so spread out across society that there is no way for an individual to benefit, yet there benefit at the societal level. I just don’t see “finding prime numbers” as fulfilling that value, but I’m open to other suggestions. Given the current value of mining is over $3.5 billion a year, I think the useful work would have to have a value that’s a significant fraction of that to matter in terms of efficiency gain.
Carbon Emissions, Regulatory Arbitrage, and Renewal Energy
Bitcoin mining is location independent. That means it will only be undertaken in locations where the input values are cheapest in the world. We don’t actually know where Bitcoin mining is done, but we have some guesses based on information in blocks mined by companies and where the coins are deposited (see this article). The majority is certainly in China due to proximity of the world’s computer manufacturing base there. Miners in other countries would have to wait for mining material to be shipped to them, which could be out of date by the time it gets there. Eventually, we would expect diminishing returns to slow the rate of improvements in ASICs, which would allow non-Chinese miners to utilize mining equipment before it becomes antiquated. That means they could use their locally low price of electricity to their advantage.
That also means that the Bitcoin network could be optimizing for polluting energy, like fossil fuels that are incorrectly priced (i.e. lack of carbon tax). A country that creates a carbon tax would make fossil fuel energy more expensive, and Bitcoin miners there unprofitable, so they might switch to a country without a carbon tax, thus polluting more. This is a regulatory arbitrage and is an efficiency loss.
However, there are caveats to this argument. One is that many countries, including the ones with the most Bitcoin miners, China and the U.S., never had carbon taxes. Bitcoin blew up there because of their technical advancement and network effects of their tech economies (hardware and software respectively). If they were to implement carbon taxes, and miners then left, that would be an inefficiency brought about by Bitcoin.
Another caveat is that Bitcoin is highly efficient in finding the cheapest energy sources. Many renewable sources of energy are very cheap on a per kilowatt hour basis, and so Bitcoin has actually acted as an incentive for expanding renewable energy (see Morocco).
Bitcoin’s monetary existence, unstable though it is, provides a floor underneath which states can no longer mismanage their currency, or else those states risk their population turning to Bitcoin instead. Similarly, Bitcoin mining’s existence means that there is a floor under which local energy prices won’t be able to drop. This is good, as locally cheap (not globally cheap!) energy means that demand is lower relative to supply in a given area, but it’s too expensive to build transmission lines to other areas where energy is more in need. Compared to a world without Bitcoin mining, mining creates value from cheap local energy which can then be transported digitally. The beneficiaries are the users of Bitcoin who get a payment network that literally didn’t exist before. It is paid for with locally cheap energy around the world that had excess supply. There are also secondary effects as users and miners are better off and the wealth effect on their behavior will be to increase some spending, some of which should enrich people who live in already energy expensive areas. This means some people in expensive energy areas will see a cheaper relative cost of energy.
Final Notes
A couple other arguments that I hear a lot but I don’t consider to be challenges to this view.
Bitcoin mining leads to centralization. This is true empirically, but not an argument that it’s wasteful, just that it’s bad for Bitcoin.
Bitcoin uses a lot of energy. This is basically the argument I’m opposing and it is very common. I’m not saying Bitcoin doesn’t use a lot of energy, I’m saying it provides a service and has associated costs and expenses.
Bitcoin has no use cases. The empirical evidence seems to contradict this, as billions of dollars of Bitcoin transactions happen every day. If you need some more discussion on what Bitcoin is used for, check out my previous post on the subject, or check out this useful page from the EFF on how payment service providers can be used to censor free speech.
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