The Collapse of the Technocratic World Order

As I read Stephen M. Walt’s post at Foreign Policy:

In Russia, China, India, Turkey, Egypt — and yes, even here in the United States — one sees either resurgent authoritarianism or a yearning for a “strong leader” whose bold actions will sweep away present discontents. According to democracy expert Larry Diamond, “between 2000 and 2015, democracy broke down in 27 countries,” while “many existing authoritarian regimes have become even less open, transparent, and responsive to their citizens.” Great Britain has now voted to leave the EU; Poland, Hungary, and Israel are heading in illiberal directions; and one of America’s two major political parties is about to nominate a presidential candidate who openly disdains the tolerance that is central to a liberal society, repeatedly expresses racist beliefs and baseless conspiracy theories, and has even questioned the idea of an independent judiciary. For those of us committed to core liberal ideals, these are not happy times.For those of us committed to core liberal ideals, these are not happy times.

I was overcome with the feeling that the world had turned upside down.

I agree that mobocracy isn’t the same as a liberal democratic system. By what stretch of the imagination is the UK’s voting to leave the European Union illiberal? The EU is undemocratic, elitist, and, well, German. By what definition of “liberal” is the EU liberal?

“Liberal” is supposed to mean supporting freedom. An undemocratic system of government may be liberal if it acts to support freedom but I see no evidence that’s what the EU is striving to do. Quite to the contrary I think it’s micromanaging governments to suit German preferences, frequently to the benefit of Germany and Germans.

I think the word that Dr. Walt is searching for isn’t “liberal” but technocratic. He’s mourning the loss of an imaginary world, designed by experts on behalf of everybody. What we’ve been approximating is a world designed by experts on behalf of experts and their patrons. That’s not remotely democratic and there’s nothing liberal about it.

Further, I think you can only imagine a rising tide of liberal government if you ignore about half of the world. Is replacing Saddam Hussein with sectarian government a triumph of liberalism? Replacing Moammar Qaddafi with chaos? China is not remotely liberal. Neither is the Hindu nationalism that has emerged in India over the last 35 years. Those are national socialist governments, not liberal ones.


Smart Money Not So Smart

Daniel Gross wonders how the “smart money” can have gotten British opinion so wrong? He lurches into the truth:

Now, in theory, we all live in a perfect market for information. With social media, television, and the Internet, most people have the ability to be exposed to information from a variety of streams and sources. We should be able to tap into all the sentiments that are out there.

But we tend to select — to friend and follow — those with whom we are sympatico. Even those who think they are open in principle to ideas they consider disagreeable tend to avoid those ideas in practice. (It’s only natural for people to seek the company of fellow members of their respective tribes.) When we curate our own feeds, it’s easy to block the information that makes us uncomfortable and fearful, and to include, amplify, and share the information that makes us feel comfortable and secure. When you have a particular worldview, and when you are surrounded by people who share it, you dismiss evidence contrary to your outlook. That poll showing that large numbers of people aren’t comfortable with the current arrangements? It must be an outlier.

Information theory addresses this issue neatly. There is a distinction between “signal”, the news and opinion articles, the polls, etc. with which you’re deluged, and information, usable information. Your preferences and beliefs and those of the people with whom you agree may just be noise.


Another Day, Another Crime Revealed

There has been another document drop of Hillary Clinton emails, including emails that had previously been suppressed by Sec. Clinton and her personal staff. The Associated Press reports:

The latest emails were released under court order by the State Department to the conservative legal advocacy group Judicial Watch. The batch includes 34 new emails Clinton exchanged through her private account with her deputy chief of staff, Huma Abedin. The aide, who also had a private email account on Clinton’s home server, later gave her copies to the government.

The emails were not among the 55,000 pages of work-related messages that Clinton turned over to the agency in response to public records lawsuits seeking copies of her official correspondence. They include a March 2009 message where the then-secretary of state discusses how her official records would be kept.

“I have just realized I have no idea how my papers are treated at State,” Clinton wrote to Abedin and a second aide. “Who manages both my personal and official files? … I think we need to get on this asap to be sure we know and design the system we want.”

Failure to turn over emails concerning how she conducted her office is a violation of the Records Act. Warranting that she had turned over all official communications when she hadn’t is perjury. These are serious matters not minor regulatory infractions.

Not all Democrats are scofflaws.


The European Union Is Germany

Front National president Marine Le Pen reacts to the British referendum against continued UK membership in the EU with an op-ed in the New York Times:

One thing is certain: Britain’s departure from the European Union will not make the union more democratic. The hierarchical structure of its supranational institutions will want to reinforce itself: Like all dying ideologies, the union knows only how to forge blindly ahead. The roles are already cast — Germany will lead the way, and France will obligingly tag along.

Here is a sign: President François Hollande of France, Prime Minister Matteo Renzi of Italy and acting Prime Minister Mariano Rajoy of Spain take their lead directly from Chancellor Angela Merkel of Germany, without running through Brussels. A quip attributed to Henry Kissinger, “Who do I call if I want to call Europe?” now has a clear answer: Call Berlin.

She points out something of which many Americans may not be aware: the European Union has been rejected practically every time it has been put up for a vote. Disregarding referenda in France, the Netherlands, and Ireland, the EU has forged along, implemented by undemocratic edicts.

It remains popular in Germany for a good reason. It is a continuation of a German project that goes back more than a century—the Germanization of Europe. However, despite the best efforts of the EU’s unelected bureaucrats, the Poles stubbornly insist on remaining Polish, the Hungarians are determined to remain Hungarian.

Government, even authoritarian government, requires consensus. If enough consensus to provide legitimate government cannot be cultivated within Europe, what are the prospects for world government?

Keep in mind that a putative world government would be no respecter of individual rights.


How Does Immigration Affect Income Distribution?

This post is mostly just a stub I’m using for a link to a paper I stumbled across, “Immigration and the Distribution of Incomes” by Francine D. Blau and Lawrence M. Kahn. Here’s a snippet from their conclusion:

In our review, we discussed possible reasons for the seemingly small effects of immigration on the native income distribution that many studies have found. First, it is possible that the open economy model of factor prices that are invariant to relative factor supply movements within a country applies. However, the evidence on the impact of immigration on industrial shifts seems inconsistent with this reasoning, since immigration does not appear to cause large changes in the overall industry structure/product mix. Second, it is possible that increases in the supply of immigrant labor of a given skill level induce the use of technologies that are intensive in that type of labor. There is some evidence in favor of this view, which in effect says that the supply of immigrant labor creates
its own factor demand within industries. Third, it is possible that substitution between high school dropouts and high school graduates is very high. If so, then increased immigration of less skilled workers, as is common in most OECD countries, will only change relative wages if immigration causes an increase in the aggregate of less skilled and medium skilled workers. There is some evidence for a high degree of substitutability between these two types of labor, although it is not unanimous.

Finally, it is possible that immigrants and natives are imperfect substitutes even within detailed education-experience groups. Researchers have found that production function estimates of immigrant-native substitutability are sensitive to specification; however, a recurring theme in the literature on immigration and wages is that immigration has larger effects on the wages of prior immigrants than on natives.

The paper has lots of interesting data from various countries and I think it should receive more attention than it has.

Although the authors approach the subject, there’s one thing missing from this paper as it’s generally missing from this discussion which is that an ongoing supply of low skill workers makes practical business models in which low skill labor is used rather than automation and a smaller number of jobs with higher skills. In itself that would foster more people at the high end of the income distribution than would otherwise be the case, more people at the low end of the income distribution than would otherwise be the case, and fewer people in the middle than would otherwise be the case. It’s no accident that the Germans call a system that allows the immigration of large number of low skill immigrants “the American system”.


What’s Wrong With the Republican Plan?

Lost in the din surrounding the ongoing outrage about Donald Trump and the shock that ensued after the Brits voted to leave the European Union, the House Republicans released a position paper on the contours of the plan with which they’d like to replace the PPACA:

House Republicans led by Speaker Paul Ryan (R-Wisc.) on Wednesday released the most comprehensive GOP health plan to date. The plan is the fifth of six agenda items that comprise the House GOP’s “A Better Way” agenda for 2017 and beyond. Evan Smith of Opportunity Lives and Avik Roy at Forbes have good summaries of the plan.

The proposal repeals and replaces Obamacare, but it does more than that. It is an ambitious effort to reform our health system more broadly by updating laws that are quite literally stuck in the 1940s and 1960s. The proposed changes to our $3 trillion healthcare economy (which is one-fifth of our entire economy) will have profound impacts on patients’ lives, jobs, wages, the future of American politics and the character and direction of the Republican Party.

which would seem to address the often-heard complaint that the House Republicans have no plan of their own. I haven’t looked around for commentary but I presume there will be continuing complaints about their not having completely fleshed-out legislation.

In producing an election year position paper, they’re following the Democrats’ lead. In 2008 the Democrats hadn’t drafted a piece of legislation, either, but they did produce a position paper and their position paper included many of the features that eventually became ObamaCare.

I assume that Democrats will reject the Republicans’ plan out of hand. Here’s my question. Is that the right reaction? Based on the analyses I’ve read the Republicans’ plan isn’t all bad. As it stands the PPACA will continue to stagger upright as long as the Congress is willing to toss money to insurance companies.

I should show my own cards. I’m skeptical of any plan including the PPACA that doesn’t confront the rising cost of healthcare head on. I don’t think that any market-based approach can work because there is no market in healthcare and can’t be one as long as we restrict the supply of healthcare services without restricting the demand for healthcare services and, frankly, it makes pretty good sense to restrict the supplyu of healthcare services.

But I’d like to get more reactions.


Countries, Sovereignty, and Trade

From all of the commentary here in the States over a majority of the voters in the UK having decided that they wanted their country to leave the European Union, I get the distinct impression that Americans don’t understand that the United Kingdom is a different country from the United States and that Americans don’t get a say in what the United Kingdom does. It reminds me of nothing so much as the Iraqis who wanted to vote in the U. S. elections on the grounds that the outcome would affect them, too, so they should have a say.

The United States is a country. The United Kingdom is a different country. Just because you as an American own assets denominated in pounds sterling or euros that puts you at risk of decisions made by the people of the United Kingdom doesn’t mean that you should have a say in the United Kingdom’s affairs. If you don’t want to take the risk that the citizens of another country will take actions deleterious to your economic interests, don’t invest in those countries.

We cannot understand the context of the Britons’ decisions. We might think we do but we don’t just as Europeans don’t understand the context of our decisions. There is no worldwide system of civil law or politics and not even a universally agreed-upon system of values.


The Wailing and the Gnashing of Teeth

I am genuinely astounded at the lamentation that has accompanied the United Kingdom’s referendum of yesterday. There are lots of interesting takes but I think that these remarks from Jean-Michel Paul at Bloomberg deserve consideration:

Globalization, and immigration, promote growth. But neither can benefit the majority over the longer term unless the state invests in physical infrastructure and human capital. Unfortunately this isn’t happening. Accounting rules that assimilate investment into budgetary spending ensure that investment spending is crowded out of budgets. Focused on balancing budgets and believing austerity to be an unqualified virtue, Britain failed to invest in its future and sowed the seeds of the current divisions that produced Thursday’s dramatic referendum result.

The implications reach beyond the U.K. The answer isn’t redistributive welfare policies, but investing in physical infrastructure, though large public works projects and investing in education and skills-training. The more generous the welfare system, the lower the comfort threshold for immigration.

The emphasis is mine. I’m struggling to come up with an analogy that explains why I think that advice is almost completely wrong.

Imagine a world of medieval guilds. Now imagine that the weavers’ guild is capturing an increasing percentage of the national income, frighteningly so.

Would the solution to that be to give more people the training to become master weavers? Certainly not. Not everyone has the peculiar set of skills, patience, and tenacity necessary to become master weavers. And it takes decades to become a master weaver.

No, the actual solution is the Jacquard loom. It completely displaces master weavers, renders them largely obsolete.

There is no amount of investment or training that’s going to enable ordinary people to become neurosurgeons or air traffic controllers or petroleum engineers or pharmacists. But it is possible to create systems and devices that enable people with much less training and skill to perform jobs that don’t even have names yet that come into being because neurosurgeons, air traffic controllers, petroleum engineers, and pharmacists have become obsolete.


Britons Vote to Leave European Union

You may have noticed that I haven’t commented on the Britons’ decision as to whether the United Kingdom should remain part of the European Union or leave it, “Brexit” as that’s been dubbed, a portmanteau of “Britain” and “exit”, a peculiar neologism since to the best of my recollection in the UK exits are frequently labelled “Way Out”. Britons have voted for Brexit. The BBC reports:

Prime Minister David Cameron is to step down by October after the UK voted to leave the European Union.

Speaking outside 10 Downing Street, he said “fresh leadership” was needed.

The PM had urged the country to vote Remain but was defeated by 52% to 48% despite London, Scotland and Northern Ireland backing staying in.

UKIP leader Nigel Farage hailed it as the UK’s “independence day”, while Boris Johnson said the result would not mean “pulling up the drawbridge”.

Scottish First Minister Nicola Sturgeon said she was “absolutely determined” to keep Scotland in the EU so a second Scottish independence referendum was now “highly likely”.

A regional and demographic analysis of the patterns of voting would be interesting and there are maps of the regional results here. My off-hand guess, supported by the maps, is that native English voted to leave. Note that in the north of England 70% or more voted to leave, in the Midlands, the west of England, Cornwall, and Wales majorities voted to leave, while in Scotland, the home counties, and areas surrounding other major cities majorities voted to remain.

On the merits of leaving or remaining, I really have no view. I think that a European free trade zone makes sense, the European Union, essentially a government without a country run by unelected bureaucrats, makes less sense, and the euro makes no sense at all.

For the last century and a half if not longer the Germans have had a persistent project to Germanize Europe. In the 20th century two world wars were the outgrowth of that project; in the 21st century its primary engine has been the European Union. The Germans are not philanthropists. Their idea of a European Union will inevitably be run according to German preferences and to benefit Germans. It seems to me that, sensibly, ordinary Britons recognize that.

I have pointed out repeatedly that our European cousins have a choice to make. They can be the ethnic states they’ve always been or become multi-ethnic and multi-cultural. They can’t straddle, at least not effectively. I suspect there was a tinge of a desire to remain British in the Britons’ vote to leave the EU.

Note that the polls that predicted as some did that Britons would vote to remain were gigantically wrong. I think that increasingly respondents are telling pollsters what they think the pollsters want to hear and that phenomenon isn’t limited to the United Kingdom.


Chaos or Decadence?

In reading this post keep two things in mind. First, I’ve already acknowledged that I don’t understand what’s happening this election cycle. My intuition is that something very, very different from what has gone on all through my adult life is occurring but I have no idea what the outcome will be. The second is that I don’t like either Hillary Clinton or Donald Trump and can’t envision myself voting for either one of them.

I’ll open with a little snippet of Matthew Hennessey’s recent post at City Journal:

The dominant and disorienting attribute of America in 2016 is that nothing is what it seems or, more accurately, what it actually is. On the campuses, intolerance is tolerance and censorship is free speech. In our public bathrooms, boys are girls and men are women. In our cities, the forces of protection are the forces of aggression. Stagnation is recovery; poverty is prosperity; war is peace.

Media cynicism has lately devolved into “don’t believe your lyin’ eyes” absurdity. In Orlando, according to the New York Times, an Islamist terrorist attack is somehow the product of Christian intolerance. In a bold display of cynicism about what its readers are willing to believe, the Times published an editorial pinning blame for the murder of 49 people in a nightclub not on the man who pulled the trigger—and pledged allegiance to the Islamic State and its leader, Abu Bakr al-Baghdadi—but on GOP lawmakers “who have actively championed discriminatory laws and policies.” Omar Mateen’s victims, the Times said, were not the latest casualties of Islamism’s long war on the West but rather “casualties of a society where hate has deep roots.”

I think he’s reacting to the same things I’m seeing.

If you look at what the pundits, pollsters, and media outlets are saying, it’s dizzying, as if looking through a funhouse mirror. The only thing that’s clear to me is that they’ve learned nothing.

Their hatred of Donald Trump is obvious as is their defensiveness about Hillary Clinton. Look at the stories they’re running with as if in a pack. The Trump campaign is broke. How weak his campaign organization is. How damaging his policy positions are.

If fundraising from major donors, a strong, seasoned campaign organization, and solid, coherent policies were dispositive, Jeb Bush would be the undisputed Republican candidate. He isn’t. He fell on his face. I think that what that all of that tells us is that the yardsticks we’ve used in the past just aren’t worth much in this election cycle.

Something else to keep in mind: three-quarters of primary voters voted for neither Hillary Clinton nor Donald Trump. Based on the tone of what I’m hearing, concluding that Democratic primary voters will come home to Hillary or Republican primary voters will rally ’round Trump are just lunacy.