Freedom, Justice, and Economics

I support the fundamental principle of “one person, one vote,” and I interpret the common voting age of 18 in most democracies as contravention of this principle. To sustain the principle, the voting age must be zero: newborn babies (assuming they have citizenship) ought to emerge into the cares and wonders of the world with the right to a vote.

This proposal is far more radical than some recent discussion about incrementally reducing the voting age. It deliberately ignores questions of “competence” and “maturity” that are sometimes bandied when mulling criteria for franchisement.

Of course, we can’t have two-year olds bounding into voting booths alone and scribbling all over their ballots, just saying “no” to all the candidates. Rather, to make this work, the trick would be to assume that kids’ guardians will share in the exercise of this right to a vote initially; and to devise rules governing when and how kids could exercise it with additional levels of autonomy.

To my mind, having parents exercise the right on their kids’ behalf would be just fine: who better to look after the kids’ interests? Why shouldn’t those interests be looked after at the ballot box?

The rules would explain what assistance could be offered, how, and when, with the intent of preventing uncertainty or open conflict between child and guardian about whether to vote and who to vote for.

Note that many practical rules already exist regarding voting assistance for the elderly and disabled. I would favor modifying those rules, too, to ensure that their right to a vote is never rescinded, but see them as a possible source.

I’ve obviously set aside, for the purposes of this discussion, the question of whether people should bother to vote at all.

British territorial abdication following WWII caused disasters around the world. Two were particularly grievous.

First, the British failed to prevent partition of India and Pakistan or create conditions of safe passage for the religion-based mass migration that occurred. Hatred and fear during the exchange of 15 million people between the two new nations resulted in between 200,000 and 1 million deaths. The over-hasty British abdication on the subcontinent also caused a half-century of suspicion and war, now overhung with nuclear threat.

Second, the British let the Jews and Arabs fight it out in Palestine. The result was a tenuous state, surrounded by enemies, with millions of universally unwelcome refugees just across its borders.

Tired after WWII, and incapable of sustaining Empire, the British around the world just left. I do not quibble with their decision to depart; but for the tragedies their abdication of responsibility invited, we are more than fair to blame Britain.

Addendum:  Pankaj Mishra’s excellent recent review of Indian Summer by Alex von Tunzelmann concludes, “The rival nationalisms and politicized religions the British Empire brought into being now clash in an enlarged geographical arena; and the human costs of imperial overreaching seem unlikely to attain a final tally for many more decades.”

Current thinking in development policy is that recipients of aid– countries, communities, organizations, and individuals– should make direct contributions to the supported projects. One term for the idea is “participatory development” (c.f. the Participatory Development Forum), and there are many examples (among which the Kecamatan Development Program stands out for its early start, its size, and its success).

In Iraq, The Nation reports employment of 180,000 private contractors by the US, of whom 1/3 — fully 60,000 people — are not Iraqi. I find it incomprehensible that, given astronomical unemployment rates among Iraqis, any non-Iraqi contractors could be hired at all.

People are people, and I love them all.  But today and historically, some collections of people have been described as “civilizations,” and some time ago (okay, okay, while hiking through beautiful scenery from friendly but rough village to friendly but rough town, craving a hot, clean shower and a net connection) I began to ponder what this word meant.

I concluded that, for me, the defining features of a civilization are persistent traditions and bodies of knowledge, of exactly the sort that are maintained, preserved, and shared in recognizable libraries.

Suppose Senator A proposed that only a single kind of car could be sold in the United States. A government agency would write the specification for the car, and then manufacturers could produce it and set their prices for it. The Senator would be laughed out of office, right?

Suppose a wiser Senator B proposed requiring that lead paint not be used on children’s toys. Everyone would agree on this simple, prudent requirement.

Now suppose Senator C proposed standardizing the types of paper and ink that all newspapers had to use. Before (most likely) being shot down for infringing on First Amendment rights, Senator C might acquire some allies: small, hardscrabble publishers might believe that they’d be better off with the limitations on larger competitors’ flash and innovation such a proposal would engender. In addition, the growth in the market for the standard varieties of paper and ink might reduce the bargaining power advantage of the large players in negotiating discounts with paper and ink suppliers. The little guys might be better able to keep up with the standard in place.

As I see it, Senator C’s proposal shares important features with current proposals to preserve “Net Neutrality.”

According to the advocacy group Save the Internet.com, “Net Neutrality prevents Internet providers from speeding up or slowing down Web content based on its source, ownership or destination.” Traffic on the Net is made up of “packets,” and Net Neutrality requires that all packets be treated equally, implying most significantly that ISPs can’t impose charges that depend on either the content transmitted or the speed of its transmission. In practice, the likely effect of the end of Net Neutrality in the US would be ISPs offering multiple tiers of service, ie, charging more for faster packet delivery. In conventional economics lingo, without Net Neutrality ISPs might price discriminate.

Policy allows price discrimination in many settings. It’s unthinkable to insist, like daring Senator A, that all cars be of a single quality. Policy prohibits price discrimination in some settings, like where the lowest-quality goods would be outright dangerous, and only infinitesimally cheaper (consider iodized salt, in addition to Senator B’s justified cause cause against toys with lead paint).

In regard to the Net Neutrality example, (i) noone faces a health risk and (ii) in other media production, price discrimination is allowed (on the input side, as discussed above, and also on the distribution side). The (very limited) amount of economic research on Net Neutrality tends to argue that neutrality (like many other regulatory restraints) discourages innovation and decreases social welfare.

I think these analogies leave us with a question, the question on which the policy debate will and ought to turn: do we care disproportionately about the Internet analogues of Senator C’s small, hardscrabble boosters? We might, since not only do these people believe in a beautiful mythology of a free, collaborative Internet. They also contribute tremendous effort– writing and uploading free content, writing free software, volunteering time and spirit– to making the mythology true.

Somehow the debate about gay marriage seems to have quieted. Surely this state of affairs is temporary. When the debate resumes, what light can be shed in terms of the virtues of freedom and justice and the science of economics?

First, a note that it’s not clear or uncontroversial what “marriage” means. Dictionary.com has wholly ten definitions; Merriam-Webster has at least a couple that are relevant. Both refer once or more to a “legal and social institution.” I’ll take this to mean that (from a policy perspective) marriage is a form of contract.

This definition is fortunate, since economics hasn’t come up with much worthwhile to say about love, but has a whole lot of good insight into contracts. Economics (and the New Institutional Economics, specifically) teaches us that governments should enforce contracts but leave people with the freedom to devise contracts pretty much however they wish. To the extent a marriage results in a set of contractual rights and responsibilities, economic theory suggests that any individuals (ie, individuals of any sexual orientation, and any number of individuals) should be free to marry.

From this perspective, the right policy solution in relation to marriage is to have the state do what it ordinarily does: enforce contracts. Moreover, it should make no difference to the state whether those contracts are called marriages, civil unions, domestic partnership agreements, or something else. To minimize conflict (really!), I would favor the state ignoring “marriage” entirely, and recognizing only some contract labelled with a less inflammatory name like “civil union.”

Having reserved the state’s ordinary role to the state, it is fitting that we reserve the ordinary role of private community institutions to private community institutions. These institutions, including churches, mosques, and synagogues, define memes and respond with speed and grace to what their members wish. Giving their members the thrill and honor of marriage, however they define it, should be their right entirely, not the government’s.

Aligned with this earlier post, and in much more detail, Lant Pritchett’s new book, Let Their People Come: Breaking the Gridlock on Global Labor Mobility, advocates huge expansion in the freedom for people to move across national borders to opportunities.

Since the Iraq Study Group released its report on December 6, 2006, many of its recommendations have come under fire from the Bush Administration. Prominently among the attacked recommendations, the report recommended revoking the blank check that’s been extended to Iraqi Prime Minister Nouri al-Maliki and replacing it with promises that continuing support will be contingent on measurable progress. Put differently, the Iraq Study Group (led by James Baker and Lee Hamilton) advocated creating incentives for the Iraqi political leadership to solve the problems they face. These incentives have been decried by the Bush Administration.
Economists and conservatives generally believe that people respond to incentives. Following this line in many other cases, the Bush Administration has advocated sharp reductions in social welfare programs and spending. For example, in simplified form, the main argument for Social Security privatization is that private accounts would increase incentives for private saving. Opposition to welfare also emerged from the logic that entitling the poor to perpetual government support problematically removed incentives for them to figure out how to make it on their own.
As I see it, we have here a question for economists and a potential opportunity for Democrats: Is there good reason to oppose tough incentives for Iraqi politcians while advocating incentives for America’s poor, or is the Bush Administration being hypocritical?

There’s something that makes me uncomfortable about many discussions of anti-Semitism. I can’t put my finger on it exactly, but it has to do with (i) the extent to which I think about being Jewish as racial versus religious, and (ii) how I feel about proponents’ tight linkage between the State of Israel and Judaism.

More or less, I think of Judaism as a religious thing, as a set of beliefs, rituals, and cultural factors that can in principle be separated from bloodlines. I’m aware that at this point in my life, many of these “cultural factors” are so deeply ingrained in me that they might as well be racial characteristics. But I nonetheless resist the absoluteness of the racial definition, in no small part because it aligns me with people like the ultra-Orthodox who are more different from me than (say) many secular Christians and Muslims.

Second, I think of Israel as a state– a political entity– rather than a dream.  As a result, to my mind a priori exclamations that “Israel has a right to exist!” don’t suffice. To what extent does any state have a “right to exist”? Who decides? On what principles?

It was recently decided that Iraq didn’t have a right to exist in its form as a repressive Baathist regime; some might argue that Sudan doesn’t have a right to exist now in it’s current genocidal incarnation. Broadly, the question is when states engage in sufficiently awful behavior that the international community can “legitimately” contemplate infringing on sovereignty. After thirty years of severely restricting the political and economic freedoms of a third of the population it controls, a serious (though perhaps not ultimately convincing) case can be made for Israel’s illegitimacy.

On many of these matters I’m obviously different from other Jews. They purport to speak for me when they insist on equating criticisms of Israel and challenges to Israel’s “right to exist” with Anti-Semitism, but my feelings obviously differ. As a result, despite my cultural and philosophical loyalty to Judaism, I’m stuck outside of the political debates. I’m pleased for the possibility of high-level international discourse about Anti-Semitism, but concerned that noone will represent my voice, and that the absence of this kind of moderate perspective — which rigidly separates hatred of a group from hatred of a State — will make true reconciliation less likely.

Senate Democrats succeeded in June in preserving the estate tax. To assess this outcome, first some facts.

The IRS website reports that before 2004, only estates worth more than $1 million were subject to the tax. In 2006-2008, only estates worth more than $2 million will be taxed. Most estates are smaller than these thresholds, and some estates carry exemptions, so only about 2% of estates are subject to the tax. According to the BBC story above, the estate tax is projected to raise about $1 trillion over the next decade.

Philosophical arguments about the estate tax:

• (con) Double taxation should not be allowed. People are taxed on their income when they earn it. After the remainder is received, it should be free and clear.
• (pro) Resources should be earned, and kids have not earned their parents’ wealth.

Economic arguments about the estate tax:

• (con) Saving promotes economic growth, and most standard analyses imply capital should not be taxed. Thus estate taxes, which reduce the returns to capital accumulation, ought to be eliminated.
• (pro) Without estate taxes, inequality can grow without limit.
• (pro) Estate taxes motivate (tax exempt) charitable giving.
• (pro) Estate taxes, which are only incident upon the extraordinarily rich, have only minor consequences for their wealth accumulation: people with taxable estates are so rich that their saving is driven by much more than the bequest motive.
• (pro) The marginal utility of wealth to the extraordinarily wealthy is much lower than the marginal utility of wealth to the typical individual in society. Estate taxation is a great way to redistribute.
• (pro) People with estates subject to tax will be able to escape some of the taxes anyway by making gifts during their lifetimes and setting up trusts and other tax shelters.

On balance, estate taxation is very compelling for philosophical and practical reasons. It justly implements the principle that wealth should be earned. And the freedom it takes from the dying is less than the freedom it creates for others through efficient redistribution.

In fact, the inexorable conclusion for me is that justice and freedom would both be best celebrated by extremely high estate taxes. Since this way of playing Robin Hood is so economically sensible, in a utilitarian sense it is a brilliant way to expand freedom. And since equality of opportunity is so obviously enhanced by taxing transfers of wealth, in a philosophical sense it is a brilliant way to expand justice. When I think about estate taxes my ultimate question is: Why shouldn’t we raise estate tax rates to 100%?