Cost Disease Reprise

Scott Alexander (Slate Star Codex) posted a wide-ranging thought piece on Cost Disease, particularly in Healthcare, Education and Housing. All three stand out for remarkable proliferation of cost without demonstrably returns to quality. For the first two sectors especially, Alexander notes that wages (per worker) are about the same as they’ve always been, so what gives? He runs through a gamut of hypotheses: regulatory barriers, distorting subsidies, market failures, monopolies, litigation risk, administrative bloat, measurement problems, changed consumer preferences, rapacious capitalists and others.

Alexander ultimately concludes that the results are inconclusive and worrying:

I’m more worried about the part where the cost of basic human needs goes up faster than wages do. Even if you’re making twice as much money, if your health care and education and so on cost ten times as much, you’re going to start falling behind. Right now the standard of living isn’t just stagnant, it’s at risk of declining, and a lot of that is student loans and health insurance costs and so on.

What’s happening? I don’t know and I find it really scary.

The whole piece is interesting and worth reading, but equally interesting is his follow up that collected some of the more insightful comments from professional economists, journalists and readers. Alexander says:

A lot of people thought the explanation was obvious; unfortunately, they all disagreed on what the obvious explanation was.

I actually don’t think it’s entirely accurate to say “they all disagreed.” Without going through all the comments, John Cochrane, Megan McArdle, Scott Sumner, Noah Smith and many of the lesser-known readers all basically point to distortions caused by government intervention (although Smith says the problem is bad intervention, as opposed to better intervention). They focus on different costs of intervention, but what Alexander fails to appreciate is that they are all linked and each one “causes” the other.

Administrative bloat, regulatory barriers to entry, disruptive subsidies and incentives, and even (in some ways) all the attendant litigation risk are all basically the same problem: the (inevitably) poorly-considered, one-size-fits-all business decisions of a third party that has little skin in the game,  and lacks both the motivation or the ability to internalize and correct its mistakes, and instead runs around trying to “fix” problems of its own creation.

Alexander’s conclusion that “they all disagreed” is just another way of saying the number of problems that flow from politically constrained decision makers are myriad, overlapping and mutually reinforcing.

Administrative bloat results from increased administrative burden, which in turn restricts competition by blocking new entrants, which restricts innovation and price competition, which increases the incentive to subsidize and restrict through regulation and handouts, which increases administrative bloat and so on and so forth. Moreover, at every regulatory/subsidy inflection point, some special interest (industry, union, aspiring regulator, etc.) gets a piece of the vig.

Nor does the left hand follow the right. Policy-makers consider themselves mechanics and divvy up the “market” into its constituent parts. I do drugs, you do insurance, Jane does consumer protection, Mark does subsidies, you do labor, I’ll do medical devices, someone has to do licensing, and maybe Ellen does safety? OK great. Now we go our separate ways.

Markets are, however, ecosystems. All of these “parts” are inextricably linked, you cannot change one without effecting the others, and the inclination to “administer” them centrally is like administering a Rain Forest, by establishing separate bureaus for frogs, birds, tree vines, rain, soil, big cats, insects, etc.

In this case, at the same time as the FDA is preventing new innovation, the HHS is subsidizing consumption of the old (pricey) products, at the same time as insurance regulators are demanding broader coverage, while insisting employers pay for it (reducing wages), while consumer protection agencies (and their private surrogates) are suing everyone involved over the insurance that must provide everything and be paid for by everybody, at the same time as professional guilds are restraining the supply of doctors and nurses because their costs have continued to rise (because bloat and costs of education), and at the same time as heavily regulated and (now) entrenched market participants demand regulatory cover from younger upstarts.

Distortions beget further distortions. To plug the price leak caused by increased costs by one part of the government, another part of the government offers subsidies, which begets further oversight and costs, which in turn lead to more subsidies, which lead to poor consumer choices, which lead to rising costs, which lead to more subsidies and regulation.

The Cost Disease is a one-way upward ratchet of poorly conceived policies from a firm that cannot be expected to do any better.

Alt-Right Primer

Last week, the New York Times ran a suggestively titled story Steve Bannon Cited Italian Thinker Who Inspired Fascists. The “Italian Thinker” in question, is Julius Evola, who did indeed find an audience among fascists–which is something I learned in college, when I too “cited” the Italian thinker. I was interested in political and philosophical critiques of Modernity because, among other reasons, political and philosophical celebrations of Modernity were commonplace. If anyone plans on punching me, please give me a second to remove my glasses.

Back to the story. I had a hunch the Times was referring to Evola both because I was familiar with Evola and because I had already read the transcript of Bannon’s talk that I assumed the story was referring to. But I took the bait anyway and clicked through.

After a review of the objectionable political movements that currently admire Evola (e.g., The Golden Dawn, Richard Spencer), followed by a summary of the objectionable political movements that previously admired Evola (e.g., Mussolini and the Italian Fascists), the New York Times finally arrives at Bannon’s cite at the very end of the story:

As Mr. Bannon expounded on the intellectual motivations of the Russian president, Vladimir V. Putin, he mentioned “Julius Evola and different writers of the early 20th century who are really the supporters of what’s called the Traditionalist movement, which really eventually metastasized into Italian Fascism.”

OK, so Bannon pointed out that Evola inspired a movement that “eventually metastasized into Italian Fascism.” I take it that Bannon regards Italian Fascism as something akin to cancer. Good to know. Sounds very sensible. POTUS has chosen a wise adviser. Why I had to read to the end of the story to learn that, I’m not sure. But reading to the end is always a good practice.

In any event – and more to the point – buried within the story is a link to Milo Yiannopolous’s (and Allum Bokhari’s) An Establishment Conservative’s Guide to the Alt-Right from March of 2016. That piqued my curiosity.

When it comes to political and cultural outliers (like the Alt-Right), it’s always best to start with what the outliers have to say for themselves. If you never get past the commentary . . . then you will never get past the commentary. [Note: Milo and Bokhari do not identify as members of the Alt-Right, but they are closer to a first-person voice than what’s generally available.]

The guide is refreshingly lucid. It ought to be read in full, but I’ll endeavor to summarize the highlights:

The short version is that if the Alt-Right stands for anything, it’s a willingness to challenge consensus. Principled provocation, but mostly provocation. Since there are parts of the consensus that variously offend the various component parts of the GOP coalition, the Alt-Right offers a little something for everyone–what Milo and Bokari call the thinkers, the natural conservatives, and the youthful hellraisers. But the Alt-Right does not itself represent a consensus and frankly shits on everyone–shitting on everyone is kind of the point–so there’s that. Plus, it’s hard to tell the difference between provocation and sincerely held beliefs.

I. Milo and Bokhari first situate the Alt-Right within its central aesthetic motif: provocation and transgression:

The alt-right is a movement born out of the youthful, subversive, underground edges of the internet. 4chan and 8chan are hubs of alt-right activity. For years, members of these forums – political and non-political – have delighted in attention-grabbing, juvenile pranks. Long before the alt-right, 4channers turned trolling the national media into an in-house sport.

It’s actually something the establishment Left can relate to:

Were this the 1960s, the meme team would probably be the most hellraising members of the New Left: swearing on TV, mocking Christianity, and preaching the virtues of drugs and free love . . .

Young people perhaps aren’t primarily attracted to the alt-right because they’re instinctively drawn to its ideology: they’re drawn to it because it seems fresh, daring and funny, while the doctrines of their parents and grandparents seem unexciting, overly-controlling and overly-serious. Of course, there is plenty of overlap. Some true believers like to meme too.

If you’re a Buzzfeed writer or a Commentary editor reading this and thinking… how childish, well. You only have yourself to blame for pompously stomping on free expression and giving in to the worst and most authoritarian instincts of the progressive left. This new outburst of creativity and taboo-shattering is the result.

Trashing the previous generations sacred cows is an American tradition. Particularly if you weren’t around for the original consecration. Y’know, like the anti-war hippies that couldn’t relate to storming the beaches of Normandy.

Of course, just as was the case in history, the parents and grandparents just won’t understand, man. That’s down to the age difference. Millennials aren’t old enough to remember the Second World War or the horrors of the Holocaust. They are barely old enough to remember Rwanda or 9/11. Racism, for them, is a monster under the bed, a story told by their parents to frighten them into being good little children.

First and foremost the Alt-Right isn’t one thing. There are some themes and strains, but the most unifying aspect of the Alt-Right is a massive middle finger to anyone that scolds them for flipping the bird.

When anyone speaks of the Alt-Right in the singular [like me in this post], it’s misleading. Its members think and argue many things with varying degrees of sincerity, but they are generally reactionary, provocative and unconventional. Sometimes they mean what they say and sometimes they just want to break the rules about what’s allowed to be said. Usually, it’s a bit of both.

Still, Milo and Bokhari intended to write a guide, which means unpacking the substance of the messages and styles. They explain why transgression – particularly reactionary transgression – has parts appeal and appall for both parts of the GOP coalition: the traditional conservatives and the [classical] liberals (what Milo and Bokhari call “The Thinkers”). Not to worry, they also discuss the Alt-Right’s appeal for the skinheads.

II. For [Classical] Liberals, undermining authority (especially the thought-police kind) is itself a virtue. Again, similar to the George Carlins of yesteryear, the Alt-Right thumbs its nose at any attempt to police the boundaries of permissible discourse–quite the contrary, it encourages open revolt on boundaries of any kind. Milo and Bokhari offer the example of LessWrong.com:

Neoreactionaries appeared quite by accident, growing from debates on LessWrong.com, a community blog set up by Silicon Valley machine intelligence researcher Eliezer Yudkowsky. The purpose of the blog was to explore ways to apply the latest research on cognitive science to overcome human bias, including bias in political thought and philosophy.

LessWrong urged its community members to think like machines rather than humans. Contributors were encouraged to strip away self-censorship, concern for one’s social standing, concern for other people’s feelings, and any other inhibitors to rational thought. It’s not hard to see how a group of heretical, piety-destroying thinkers emerged from this environment — nor how their rational approach might clash with the feelings-first mentality of much contemporary journalism and even academic writing.

For the most part, Stickin’ it to The Man involves butting heads with Progressives, who are, by and large, The Man in contemporary society. That’s something the GOP establishment can support.

I’m generalizing, but thought-policing, monoculture and telling people what to do have become part and parcel with Progressive policy. Naturally, they don’t see it that way, but if you set out to destroy the (ever-expanding) ‘isms and phobias by forcibly intervening at all levels of society, and you define the ‘ists and ‘phobes as non-Progressives, then that’s what you’re doing.

[Classical] liberals don’t like that. They like free speech and free association and freedom generally. They think telling people what to do, how to think, what to say, or who to hang with is always bad. Ergo, [classical] liberals laugh along with the Alt-Right, just like they laugh along with South Park. Take your diversity homogeneity training and shove it.

Plus, much of the thought-policing is both stupid and bigoted, which makes the ‘woke’ anti-bigots easy targets for the irreverent:

To young people and the politically disengaged, debate in the public square today appears topsy-turvy. The regressive Left loudly insists that it stands for equality and racial justice while praising acts of racial violence and forcing white people to sit at the back of the bus (or, more accurately, the back of the campus — or in another campus altogether). It defends absurd feminist positions with no basis in fact and ridicules and demeans people on the basis of their skin colour, sexual orientation and gender.

To be clear, Milo and Bokhari point out, [classical] liberal pieties about equality and freedom are not spared Alt-Right critique. All consensus is fair game, including consensus views on the relative (de)merits of monarchy, ethnocentrism and gender equality, to name a few:

Led by philosopher Nick Land and computer scientist Curtis Yarvin, this group began a gleeful demolition of the age-old biases of western political discourse. Liberalism, democracy and egalitarianism were all put under the microscope of the neoreactionaries, who found them wanting.

Liberal democracy, they argued, had no better a historical track record than monarchy, while egalitarianism flew in the face of every piece of research on hereditary intelligence. Asking people to see each other as human beings rather than members of a demographic in-group, meanwhile, ignored every piece of research on tribal psychology.

Similarly, to the extent those liberal pieties have been internalized by the establishment GOP to support more robust and interventionist foreign policy, the Alt-Right is not a friend:

Isolationists, pro-Russians and ex-Ron Paul supporters frustrated with continued neoconservative domination of the Republican party were also drawn to the alt-right, who are almost as likely as the anti-war left to object to overseas entanglements.

Still, for the most part, [classical] liberals aren’t scared of ideas (with some exceptions discussed below). Bad ideas tend to collapse under close scrutiny if you let them, so it’s best to let close scrutiny reign. Indeed, when bad ideas succeed, they are often accompanied by diligent thought-policing, which is why liberals have something to root for when it comes to the Alt-Right (i.e. their crusade against Progressive thought-police).

There’s a subtler point as well. There are surely “principled” objections to certain views expressed by members of the Alt-Right, but those views might be bundled together with other valid criticisms of the consensus (and provocation generally). More broadly, if you’re objecting to thought-policing and an overly rigid consensus, then you embrace a strong presumption against drawing lines in the sand.

III. Conservatives (like their [Classical] Liberal allies) also appreciate the Alt-Right’s willingness to stick it to the Man, but for different reasons. First and foremost, Conservatives like it because they are no longer the Man, having been run off campuses, Hollywood, media and government years ago by the prior generation of hellraisers. Now that Progressives run The Culture and relentlessly crap on everything Conservatives hold dear, e.g. Western Civilization, Conservatives appreciate the Alt-Right’s efforts to (a) crap back; and (b) stand up for traditional values, institutions and cultural myths. (Again, liberals like Western Civ too, but they value McCloskey’s bourgeois virtues, i.e. the process, more than the output.)

When Lena Dunham trolls White Men, the Alt-Right trolls back harder:

For natural conservatives, culture . . . is the paramount value. More specifically, they value the greatest cultural expressions of their tribe . . .  symphonies, basilicas and Old Masters. The natural conservative tendency within the alt-right points to these apotheoses of western European culture and declares them valuable and worth preserving and protecting.

Needless to say, natural conservatives’ concern with the flourishing of their own culture comes up against an intractable nemesis in the regressive left, which is currently intent on tearing down statues of Cecil Rhodes and Queen Victoria in the UK, and erasing the name of Woodrow Wilson from Princeton in the U.S. These attempts to scrub western history of its great figures are particularly galling to the alt-right, who in addition to the preservation of western culture, care deeply about heroes and heroic virtues.

Conservatives can also appreciate that the Alt-Right unabashedly embraces the view that Western culture is in fact better than other cultures. Not only that, but other cultures are hardly the doe-eyed eager-beavers that Team Cosmopolitan, including the [classically] liberal-oriented Cuckservatives, would have you believe:

The alt-right do not hold a utopian view of the human condition: just as they are inclined to prioritise the interests of their tribe, they recognise that other groups – Mexicans, African-Americans or Muslims – are likely to do the same. As communities become comprised of different peoples, the culture and politics of those communities become an expression of their constituent peoples.

Conservatives also like some of the things that make some of their [classically] liberal allies a bit uncomfortable. Particularly the rise of White identity politics in reaction to non-White identity politics:

For decades – since the 1960s, in fact – the media and political establishment have held a consensus over what’s acceptable and unacceptable to discuss in polite society. The politics of identity, when it comes from women, LGBT people, blacks and other non-white, non-straight, non-male demographics is seen as acceptable — even when it descends into outright hatred.

Any discussion of white identity, or white interests, is seen as a heretical offence.

As mentioned above, the Neo-Conservatives, a.k.a. Neo-Cohens are a favorite target of the Alt-Right. The conspicuously Mosaic tradition of Kristol, Podhoretz, Goldberg, Shapiro, Wolfowitz, Kissinger, Indyk, Foxman etc. reminds the West “Never Again” on all manners of cultural and political life. That includes foreign policy, but it also touches on questions of identity, particularly “White” identity. As Milo and Bokhari point out, on this question, the governing consensus from both the Left and the Right, is that White identity is a big no-no.

At some level, resistance to White identity is a principled commitment to colorblindness. But at a more visceral level, it’s fear: [Classical] liberals like jokes, but the Jew-jokes and White race stuff make them wonder if everyone is still joking. That’s when they start to sidestep to their Left (but increasingly to the [classically] Liberal Right, given the Left’s increasing fondness for non-White ethnocentrism).

To the Alt-Right and Conservatives, identity for me, but not for thee is a bit hypocritical. “You can have your whole Jew country, but we can’t have our own damn country club?!”

Pointing out that hypocrisy – indeed, pointing out hypocrisy generally – is one of the Alt-Right’s favorite things to do. Particularly when there is evidence that not all is rosy for straight white males:

As minority advocates on college campuses raised Hell about offensive Halloween costumes and demanded safe spaces in which they could be insulated from differing points of view, working-class white males became the least likely group to attend university in the U.K. To politically alert Millennials, the contrast between the truly marginalized and those merely claiming victim status has become stark.

The GOP establishment though stood its anti-indentitarian ground, at least when it came to its own team:

[T]hey turned a blind eye to the rise of tribal, identitarian movements on the Left while mercilessly suppressing any hint of them on the Right. It was this double standard, more than anything else, that gave rise to the alternative right. It’s also responsible, at least in part, for the rise of Donald Trump.

So along with the anti-PC crusade and the defense of Western Culture, comes Pepe the Frog, the full gamut of holocaust-related jokes, and skin-headed provocation generally. No self-righteousness is spared.

Whether any particular member of the Alt-Right is venerating Whiteness only, venerating Whiteness also, or simply calling bullshit, is really hard to tell. The same goes for Maleness, or straightness, or Christianness and all the other unjust attributes in the Progressive catalog. What annoys the Alt-Right most (and where Conservatives sympathize) is that [classical] Liberals (especially the Jewish kind) stopped trying to tell the difference and just put the whole “whiteness” thing off-limits.

Again, Milo and Bokhari, reiterate provocation:

Just as the kids of the 60s shocked their parents with promiscuity, long hair and rock’n’roll, so too do the alt-right’s young meme brigades shock older generations with outrageous caricatures, from the Jewish “Shlomo Shekelburg” to “Remove Kebab,” an internet in-joke about the Bosnian genocide. These caricatures are often spliced together with Millennial pop culture references, from old 4chan memes like pepe the frog, to anime and My Little Pony references.

Are they actually bigots? No more than death metal devotees in the 80s were actually Satanists. For them, it’s simply a means to fluster their grandparents.

IV. To be clear, Milo and Bokhari don’t shy away from the bigots. They devote a whole section to the 1488ers [a Hitler reference] that they describe as:

[T]he people that the alt-right’s opponents wish constituted the entire movement. They’re less concerned with the welfare of their own tribe than their fantasies of destroying others. 1488ers would likely denounce this article as the product of a degenerate homosexual and an ethnic mongrel.

OK, so they don’t shy away from the fact of skinheads, but they do diminish them. It’s a hard claim to evaluate, but if you take their word for it, the neo-Nazis just aren’t that big a deal:

Those looking for Nazis under the bed can rest assured that they do exist. On the other hand, there’s just not very many of them, no-one really likes them, and they’re unlikely to achieve anything significant in the alt-right . . .

[T]he alt-right openly crack jokes about the Holocaust, loudly — albeit almost entirely satirically — expresses its horror at “race-mixing,” and denounces the “degeneracy” of homosexuals… while inviting Jewish gays and mixed-race Breitbart reporters to their secret dinner parties. What gives?

. . . For the meme brigade, it’s just about having fun. They have no real problem with race-mixing, homosexuality, or even diverse societies: it’s just fun to watch the mayhem and outrage that erupts when those secular shibboleths are openly mocked. These younger mischief-makers instinctively understand who the authoritarians are and why and how to poke fun at them.

Personally, I’m persuaded by the anecdote (as well as more quantitative analyses like Scott Alexander’s). For all the hatred that’s supposedly out there, it sure seems to be biding its time. There certainly have been demonstrations of violence and intimidation, but they are overwhelmingly perpetrated by the far left, not the far right. Anonymous tweeting and even anonymous graffiti – with at least as many false flags as real ones – just isn’t the same as beating people in broad daylight.

Provoking authority, however? That’s out there in spades.

V. What do Milo and Bokhari make of it all? They’re most interested in the Natural Conservatives.

The conservatives (in their view) are the most numerous of the Alt-Right, and while they may be a bit tribal, they’re not necessarily bad neighbors:

They want to build their homogeneous communities, sure — but they don’t want to commit any pogroms along the way.

In fact, their desire for homogeneity isn’t all that unusual:

The bulk of their demands, after all, are not so audacious: they want their own communities, populated by their own people, and governed by their own values.

In short, they want what every people fighting for self-determination in history have ever wanted, and what progressives are always telling us people should be allowed — unless those people are white.

So the question (for the authors) is whether the Liberal coalition — that dominates both the left and the right – ought to “deal” with the Conservatives. While they don’t come out and say it, Milo and Bokhari suggest the answer is “yes,” if only because the Conservatives aren’t going anywhere and there is downside to saying “no”:

[T]he risk otherwise is that the 1488ers start persuading people that their solution to natural conservatives’ problems is the only viable one.

I’m not quite as convinced that the peaceful segregationists are as numerous as Milo and Bokhari suggest. I agree that the desire for sameness is fairly ubiquitous — and that sameness for me, but not for thee broadly rankles — but I don’t think it falls along color lines, so much as cultural ones. If you look at the global picture, there are far more non-white cultural conservatives than there are white ones.

To my mind (and consistent with my biases), “dealing” with the Alt-Right isn’t dealing with the Richard Spencers, or Jared Taylors of the world. For the same reason that I had no difficulty believing America could elect a Black president (because it had no difficulty making Michael Jordan a hero), I find it hard to believe that many people actually believe in White Power. Plus, liberal fairness and cultural conservatism are deeply intertwined–the Protestant Ethic and all that stuff. Finally, conservatives may be slow to change, but they do in fact change, and while their notions of “sameness” may have previously required anti-miscegenation, that notion has faded with time. Once it’s gone, it’s gone, and going back is relatively more culturally jarring. Just ask the Syrians, the Iranians and the Saudis where the Richard Spencers of the world are in charge and anti-miscegenation never really went out of style.

Dealing with the Alt-Right is about a genuine commitment to live-and-let-live liberalism. A reactionary movement reacts – in this case to the hypocrisy and double-standards of an autocratic cultural (and legal and political) force that has elevated the stature of some groups and diminished the stature of others . . . all in the name of equality and fairness and non-discrimination. Dealing with the Alt-Right means giving them less to react to. Be a little less autocratic. You might find that all those flag-waving dudes with guns talking about freedom actually mean it.

Disgraceful Disgraces!

Did you hear? According to the New York Times, “Trump calls Hearing on Immigration Ban ‘Disgraceful.’” If you look at the headline on the front page, we learn that “Trump Attacks Judiciary for ‘Disgraceful’ Hearing on Ban.”

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Well, attacking the judiciary is the hallmark of an autocrat, so that’s bad. “Lashing out” seems even worse. Maybe it was taken out of context?

Not so, says the Times. Trump was talking about having watched the hearing and said:

“I listened to a bunch of stuff last night on television that was disgraceful,” Mr. Trump said. “I think it’s sad. I think it’s a sad day. I think our security is at risk today.”

Ahhhh, well that settles it. Trump definitely called “a bunch of stuff last night on television” disgraceful. What. A. Jerk.

But seriously, who attacks the judiciary? Only a monster would do that:

Days after the Supreme Court announced its opinion in 2010, the president warned about the dangers that “revers[ing] a century of law” would bring to our democracy by opening “the floodgates for special interests.” Last year, on the fifth anniversary of the decision, Obama (a former constitutional law professor and sitting president at the time of the decision) said that the “Citizens United decision was wrong, and it has caused real harm to our democracy.”

I have to take a moment to note the eventual (and doubly delicious) irony of the grassroots, small-money outsider (republican) whipping the big-spending, corporate big wig (democrat) and putting the lie to the whole ‘money in politics’ boogeyman.

More importantly, it reflects a recurring flaw in the Trumpsteria [Trumpolexia? Trumpoplectic is definitely a word I intend to use]. Whatever the demerits of Trump’s autocratic and disdainful style, the Democratic party just spent eight years reveling in disdainful autocracy. EO’s were Obama’s thing (although he wasn’t the first), and so was berating the judiciary when it didn’t go his way.

I mean, how do you simultaneously complain about a “stolen” SCOTUS seat, while bemoaning “attacks” on the court’s legitimacy? I guess the same way you take to the streets to protest violence, intolerance and fear, when it’s your team perpetrating most of the violence, intolerance and fear.

Tyler Cowen Has Been on Fire

Tyler Cowen is my odds-on favorite for public intellectual of the year (if not decade). I’ve run the data through my models and it’s incontrovertible.

But seriously, Cowen has had two terrific pieces on bubbles (and has consistently been the sanest, and therefore best, observer of Trump).

On bubbles, both pieces are worth reading in full, but just a taste of the first one, Ways to Burst Your Filter Bubble:

So I have a second proposal and one you may find less pleasant, perhaps precisely because it may turn out to be effective. Keep a diary, write a blog, or set up a separate and anonymous Twitter account. And through that medium, write occasional material in support of views you don’t agree with. Try to make them sound as persuasive as possible. If need be, to keep your own sense of internal balance, write a dialogue between opposing views, just as Plato and David Hume did in some of their very best philosophical works.

Cowen also mentions my personal favorite, Bryan Caplan’s Ideological Turing Test. If you can convince the other political team that you are a co-believer, then you have demonstrated comprehension of their political views. Until then, you’re fighting a strawman.

The second bubble piece, Ollie the Bobcat, Trapped Again in Washington’s Bubble, is a real something-for-everyone doozy. I don’t agree with all of it, but I admire Cowen for following his own advice.

On Wednesday, the female bobcat Ollie — who had escaped from her enclosure two days earlier — was discovered at Washington’s National Zoo. This may seem like a trivial event, but it does reflect some major themes of our time. . .

First, we Americans play it far too safe, most of all when it comes to our children. After Ollie’s escape was reported, 13 nearby schools canceled their outdoor recesses, even though bobcats are not a threat to human beings (they prefer very small prey). Better safe than sorry seems to be the national childrearing philosophy, but the phony threats are causing us to overlook real dangers to our children, such as the national debt and mediocre political institutions. At least the kids won’t be done in by a 25-pound feline.

A Straussian dig at the innumerate fear of terrorism and the folks who sneer at the innumerate fear of terrorism. We’ve all got innumerate fears. The political history of regulation is one of innumerate fears.

Dare I suggest that Ollie has shown us that walls do not work? The National Zoo supposedly has foolproof enclosures for its animals, but Ollie made a 5-by-5-inch hole in her cage and simply climbed out. A nearly 2,000-mile border with Mexico won’t be easier to police.

That one needs no explaining.

Ollie’s walkabout also illustrates a problem in gender relations. She shared her cage with two male bobcats, and perhaps they were part of the reason she left. Furthermore, the public descriptions of Ollie show a kind of gender bias: Her keepers called her as “standoffish,” whereas a male escapee might have been called “independent,” “adventurous” or “entrepreneurial.”

Bam. Didn’t see that coming, Mr. Economist Man. Something for everyone.

Upon capture, the treatment of Ollie shows why health-care costs are escalating so rapidly. Today she will be given a full medical examination, even though it seems she did little more than walk around some fairly posh parts of town. The rule seems to be that if we can give someone or something a full checkup, we will. Ollie did have one small scratch on her paw.

Just when you thought your affiliation bias was tenderly cared for, Cowen gits his dirty hands all over your ‘BamaCare.

The saddest part of the Ollie saga is that, believe it or not, not everyone cares so much about freedom . . . [Ollie] was found by the bird cages, shortly after the zoo reported it was giving up the search. It seems she is more of a homebody, preferring federal rule, federal housing and a heavily regulated diet to a tax-free life on the lam.

Wait. Wuhhh?

I think the moral of story, as set forth by Cowen, is a little corny. But, I’m nitpicking:

So what’s the bright side of this whole story?

. . . [I]t turned out our patience — our bobcat — never really went away. She was hanging around the whole time, right under our noses.

So just when things appear to be hopeless, just when our government appears to be ridiculously impatient, and the long perspective no longer seems worth the struggle and search, perhaps our American rigor, determination, far-sightedness will appear once again, as if by magic. Right here in Washington.

Bobcat lore also holds that “bobcat people are typically already learned in the importance of keeping silent about sensitive affairs.”

If only a few food traps out by the bird cages would do the trick.

Start-ups Love Protectionism Too!

For all the entirely justified hang-wringing about Trump’s protectionist inclinations, it’s not like he invented this stuff. Indeed, one of the best arguments for protectionist policies is “what about us?” Conversely, one of the most effective rejoinders to academic economists is “you give up your protectionism first.”

Consider the Fintech crowd – free market disruptors, patriots against Trump and . . . protectionists? Well, at least when it comes to free access to personal banking data.

Telis Demos (WSJ) reports on Fintech’s hope to save at least one part of Dodd-Frank:

Consider Section 1033: While much attention around Dodd-Frank has focused on its proprietary-trading provisions or the consumer-protection agency it created, this one-page, 342-word provision has garnered the attention of startup venture-backed companies . . .

Section 1033 says that banks must “make available to a consumer, upon request…information relating to any transaction, series of transactions, or to the account” and “in an electronic form that can be used by computer applications.”

Fintech startups argue this language enshrines their right to pull data from customers’ bank accounts when the customers give them permission. Companies such as Betterment LLC, an online investment manager, say that accessing bank-account data helps them make it easier for consumers to use investing apps, borrow money or move dollars between accounts.

Got it? So Dodd-Frank forces banks to hand over the personal banking information that is the life-blood for consumer finance apps. The Fintech companies are concerned about “their right[s]!”

The banks, however, say “not so fast.”

Banks, on the other hand, say that while they support customers’ right to share their account data, there should be certain restrictions as well. These are needed, they add, to protect consumers from third parties accessing more data than is authorized, or to track how data is used.

Kindly banks. They’re concerned about their customers. That seems reasonable enough. I mean, that’s what regulation is all about, the consumers. Right?

Fintech certainly agrees:

Already, Betterment and a group of well-funded fintech startups have created an industry group, called the Consumer Financial Data Rights group, in hope of protecting Section 1033 and pushing for broad implementation of it. The group, formed in January, said it would work with policy makers to promote “consumer choice and access.”

 

The fintech firms argue they need a provision like Section 1033, on which the Consumer Financial Protection Bureau has been gathering industry input as it considers potential rules, to ensure access for their apps and services. Because they aren’t typically set up as banks, they don’t have direct access to users’ checking and savings accounts.

“The most important issue is access to customers’ own financial data,” said Jon Stein, chief executive of Betterment, in an interview. “Customers have a right to manage their own.”

So Fintech and the CFPB are working together “to ensure access for [Fintech’s] apps and services.” Now that’s a business development consumer protection partner I’d love to have.

Just to recap: the banks collect, store, audit and protect transactional data from their customers. Fintech companies use this data to run their apps. Fintech currently gets free access to that data under an obscure provision of Dodd-Frank that may get repealed as part of a broader Dodd-Frank repeal. Fintech has organized a trade group and allied with a federal agency to prevent the repeal of that specific provision “because the consumers!” The banks, for their part, say “au contraire, it must be repealed, also because the consumers!” The consumers? They declined to comment.

With all do respect to Mr. Stein of Betterment, I call bullshit. If you want access to customer data, then buy it. Or convince your customers to insist upon it. Or better yet: start your own bank that gives data away for free, Mr. Disruption Guy. Customers have no “right to manage their own [data]” unless they bargain for it.

I mean, why should the banks bear all the fixed costs and increasing risks of collecting and storing data just so the Fintech folks can build their beautiful products (while maintaining extremely low fixed costs, e.g. little or no compliance typically associated with the collection and storage of banking data)? Plus, the banks may have a point when it comes to data security: can you imagine the reaction if some fintech app was pilfering data to sell on the black market? In those circumstances, it’s not going to be Betterment that suffers the costs of “open access.”

To be clear, I don’t see the banks necessarily as “victims” here. It wouldn’t surprise me at all if fintech companies have, in fact, tried to shoulder some part of this burden:

Upstarts and banks have discussed compromise proposals, such as creating new ways to create anonymous passwords. Some banks also plan to submit comments to the CFPB on data-safety guidelines for sharing.

“We know customers love sharing their data, and banks are working hard to make sure they can share their data regardless of whether there’s a law or not,” said Robert Morgan, vice president for emerging technologies at the American Bankers Association, a banking industry group.

Banks and fintech companies have managed to reach some accommodations. J.P. Morgan Chase recently struck a deal with Intuit Inc., which owns the Mint.com service, to enable the bank’s customers to share data without giving up their password to Mint and other Intuit services.

Wait, so firms are solving this data problem through a combination of innovation and deal-making? But certain competitors, like Betterment et al., are either getting frozen out or holding out?

But this is how regulation works. It takes an ordinary commercial dispute and turns it into a political battle. What you can’t get by negotiation, regulation gets you by force. Why deal/innovate, if you can lobby government officials to give you what you want for free because “the consumers!” Political actors are surely going to undervalue whatever rights are being redistributed, and the consumer-beneficiaries are going to get far less bang for their buck. Simply put, it’s not good when regulators force consumers to buy things.

The bigger issue though (and I’m speculating a bit) is that this whole fight in some ways reflect the high fixed costs of banking imposed by regulation (and not, e.g. capital requirements). Part of the banks’ gripe (I suspect) is that they could do this Fintech stuff too, but they have so many other fixed costs related to banking that non-banking firms don’t have. Their nuts and bolts work, though, is critical to the success of start ups that are poaching some of the banks’ higher margin financial services: “You take our expensive dirty work for free and then you skim off the upside. Not cool, Fintech.” Again, the banks are not innocent. Keeping out low-cost competitors through regulation is part of the compromise that large financial institutions make to shoulder the burden of regulation. Otherwise, they might not waste time picking this fight, but regulation begets more regulation. Fair is fair.

At some point the argument is that these barriers to entry and fixed costs (compliance, lobbying, lawyers, etc.) are worth it for the consumer. The government’s bet is that it’s a better shopper than consumers themselves, even without knowing the actual cost of what it’s buying.

So it’s weird that this highly informative article from a sophisticated and thoughtful source doesn’t even attempt to raise that question (let alone address it).

This is, instead, an article about how the fintech startups are fighting Trump and fighting for financial regulation (against the big bad banks). Those are popular things to fight for (and against). That’s a more compelling story than the difficult question of whether consumers are actually benefited by these rights the government bargains for on the consumers’ dime. That’s how protectionism is made.

Fear Mongering

My favorite contra-Trump is “He’s a an alarmist and a fear monger and if he becomes president the country is GOING TO HELL!”

I’ll have a longer post on the politics of fear, but in the meantime, stuff like this makes it hard for me to take you seriously MSM:

Bury the . . . whole story

You can sort of imagine how this conversation went:

Editor: “someone needs to write something about the Milo thing just so they can’t accuse us of not covering this stuff.”

Writers: [Silence]

Editor: “Anyone? Christopher Mele–what about you? You’re the low man on the totem pole!”

Christopher: “Ugh. Fine. But I’m going to make the story about whatever Trump does, otherwise no one will read it.”

Editor: “Whatever. Just write something.”

Here’s the headline and picture:

capture

Granted, the speech never happened, so the Times decides to lead with a stock photo of Milo speaking “last week.” Isn’t he ridiculous looking? To it’s credit, the Times does point out that “demonstrators set fires and threw objects,” but they also started punching people. Which is now their thing.

The important thing is that Trump was tweeting something Crrrrrazy!

Here’s the next picture the Times decides to run:

capture2

Yes, it’s true, the riot didn’t start until after it got dark. Good point.

Finally, at the very bottom of the story, the Times gives the visual only the most loyal readers are fit to see:

capture1

From that distance, I think I can make out what appears to be a small cooking fire. S’mores probably. Stupid, violent and intolerant Milo. Don’t you know a campfire when you see one?

Oh wait. According to the university, not just “a high-intensity light” fire:

Fires that were deliberately set, one outside the campus Amazon outlet; Molotov cocktails that caused generator-powered spotlights to catch fire; commercial-grade fireworks thrown at police officers; barricades pushed into windows and skirmishes within the crowd were among the evening’s violent acts.

The masked agitators came to campus eastbound on Bancroft Way, and fire damage and other destruction to the Stiles Hall construction site, where a new residence hall is planned, was reported. The group entered campus and immediately began throwing rocks at officers. . .

Agitators also attacked some members of the crowd who were rescued by police. UCPD reported no major injuries and about a half dozen minor injuries. Mutual aid officers from the city of Oakland and from Alameda County arrived at Berkeley around 7:45 p.m. to assist UCPD and Berkeley city police.

Real live people in masks beating other people with poles, bats and pepper spray, attacking random cars, and setting fire to people’s stuff:

Remind me again–who’s got an issue with violence, intolerance and hatred?

[Update:

To clarify, I don’t think these antifa fascists are representative of the broader coalition (although when people start debating whether it’s OK to punch someone for his political views, you begin to wonder).

If, however, you’re the type (like the New York Times) to hide the women and children because Pepe the Frog, then you should be terrified. For all the digital ink spilled about how Trump represents and emboldens an intolerant, angry and violent constituency, it’s not actually his constituency that’s perpetrating all, most, or even much, of the intolerance, anger and violence. There is quite plainly a dominant and powerful majority that is intimidating a scorned minority, but that dynamic rather obviously flows Left–>Right, particularly at a place like Berkeley. I see that as problematic (albeit, not hide the women and children problematic), but I’m not the one calling for a revolution against tyranny. If that’s you, then you’re probably the tyrant.]