Monday, June 29, 2009

iPods Are Not Cylons

While cleverly defending copyright law, identifying those against it as having a "bias to the collective," Mark Helprin on this week's EconTalk falls victim to his own collectivist leanings. He argues that many people succumb to "perverse adaptation." People adapt to technology instead of technology adapting to them. Helprin invokes images of commuters staring at their blackberries and consumers demanding things faster and faster as examples.
Human beings require time for reflection...We require stillness and the ability to absorb things rather than just being hooked up to a machine and made into bundles of tropisms. [Emphasis added]
But those who don't are not dead. We do not require these things. We may require them to accomplish certain goals, goals Helprin places high value on, but we do not require them in the absolute sense. We choose to not do them. Technology does not leap in our lap and hook into us like a drone from the Matrix. Those people who Helprin paints as so grey are people who always wanted to move faster; technology simply allows them to do it. It's not that technology has enslaved us. Helprin simply believes that if people don't like the same things he does, there's something wrong with them. Such an attitude is the hallmark of the collective mindset.

Pay Grades in the Extralegal Sector

In Peter Leeson's new book, The Invisible Hook, Leeson notes the pay grade was quite flat (pirate captains were paid twice as much as the lowest member of the crew, compared to merchant captains of that same era which were paid five or six times as much). He argues it's to encourage solidarity, discouraging envy and encouraging unanimous approval to continue on their plundering ways (a skewed system would encourage those at the top to stop and those at the bottom to keep going, thus creating tension).

But the same could be said of drug dealers, who have a very skewed pay scale. As Steven Levitt and Stephen Dubner note, the top drug dealers earns about 100 times that of the lowest earner. But gangs of this sort don't show the lack of harmony or disloyalty that should be plagued by Leeson's explanation. So how do we reconcile these two different worlds?

The key difference between a pirate ship and a drug-dealing gang is the level of entanglement with their surroundings. A pirate ship is basically a floating island and because it's so isolated, it's relatively easy for anyone to see how the game is played. A gang, on the other hand, is entangled with the larger surroundings. There's a lot of activity members don't see and many critical relations with those outside the gang that most don't have. In other words, the lowly sailor is a closer substitute to his captain than a lowly drug dealer is to his top boss. While a rebellious sailor might be able to handle captaining competently, a rebellious drug dealer would likely not have the same level of success. This also explains why pirates elected their captain while dealers autocratically promote from below (thus why the higher ups are paid so much: to encourage lower ranks to work harder on the chance they can be promoted).

Tuesday, June 23, 2009

Franchise Laws of the Automaker Apocalypse

Imagine for a moment that television studios by law had to continue making shows they would normally cancel. Or fast food chains had to make menu items that few people buy. Imagine we still lived in a world of New Coke, Arch Deluxe, and Cavemen. Well wake up because when it comes to cars, that's the world we live in.

As Mike Munger and Russ Roberts discuss in the latest EconTalk, car franchises long ago lobbied local governments to pass laws handing dealers a string of advantages over the corporate office. In the vast majority of states, two dealers can't sell the same model within fifty miles of each other (stories that the franchises are too densely packed aren't true), corporate must make a strong effort to advertise each brand, only dealers can unilaterally terminate the dealership agreement (unless the dealer does a very poor job selling), and corporate must keep supplying the dealership with a minimum number of cars. Dealerships did this because each franchise is based around one model of car. But it also means that any model GM, Chrysler, or Ford make is a model they can never get rid of (though they can re-imagine it).

There's lots of problems the American automobile industry has (and the podcast goes into more detail) but I found these laws most shocking. They also explain a lot (such as why foreign makers focus on a few good brands). Paradoxically, it was the domestic dealers that brought down the Big Three; the only way out of these dead-end dealerships is bankruptcy.

Saturday, June 20, 2009

How Obama Got People to Be Less Afraid of Being Republican

Robin Hanson proposes that Obama's election makes the public more conservative. No, the story isn't that Americans are secretly racist and have suddenly come to terms with their racism. Quote psychology experiments,
People were more willing to express potentially prejudiced attitudes when their past behavior had given them a bit of credentials as a nonpredjudiced person.
Bizarrely, Hanson cites recent polls that Americans are more in favor of gun control, less in favor of legalized abortion, and fewer people believing global warming is the result of human activity as evidence of this theory. What does racial issues such as affirmative action have to do with climatology?

People care what others think of them, even if those others are strangers. We care about it so much, we say we believe things we don't believe. If we value the truth on an issue low enough, ewe even fool ourselves into believing things we'd normally conclude are false. (Bryan Caplan calls this rationally irrationality.) In essence, we are paid (in the form of social capital) to conform.

The reason why we care so much about we others think of us is that we care what others think. We like to associate with people who are like us, a trend easily seen in grade school, high school, college, and beyond. This isn't merely shared interest but political opinion and values; constantly arguing with someone about politics gets exhausting for most people. It also makes it easier to talk to people since there's more common ground and you don't have to police your offhand comments or jokes.

There are lots of issues, though, and it's inefficient to list off your opinion on all of them. This is why we use labels (to the annoyance of some), such as Democratic, Republican, Libertarian, Populist, Christian, Muslim, Atheist, Jew, Protectionist, Free-trader, etc. In a single word, we convey a body of opinions to potential friends or mates. This is why it is normal for dating sites to post a person's political affiliation: it's a cheap way to convey important information.

But it's not perfect. Some issues are more important to some people than others and individuals are more diverse than the label's official or perceived hierarchy of priorities. We want to connect with people that share what we care about, starting with top priorities. People will then adopt most of the views of one group, including views they don't believe, to signal that they believe things that they find very important and distinguish themselves from the group that seems (rightly or wrongly) to disagree with them, even if they secretly agree with that group on less important issues. When an event convinces people that most agree with what you find to be really important, you will more accurately express your view of the less important things since you are less afraid of being mistaken for some other group.

To illustrate, consider two parties: D (Democratic) and R (Republican). Also consider two issues: A (being for racial equality) and B (being for less gun control). ~A means, then, that a group is perceived as being against racial equality and ~B means that a group is perceived as being against less gun control (or in favor for more gun control). Before Obama, one could argue that the public views the parties as so:

D (A, ~B)
R (~A, B)

Consider a person who has the preference of (A, B), but cares much more about A than B. In other words, he'd rather spend time with a person who's restricting gun ownership and is racially tolerate than a racist gun nut. U(A, ~B) > U(~A, B) (U stands for utility, economic lingo for satisfaction.) Thus, he will adopt policies of both racial tolerance and gun control to better signal that he's a Democrat, making it more likely he'll spend time with his preferred type of person. He might even start believing B, since he'll have to argue the point at parties and it's easier to argue something if you fool yourself into believing it's true. (This is where the rational irrationality comes in.)

But suddenly, Obama is elected president and it starts to look less like ~B is a staple of group R. If so many Americans were racist, it's hard to believe a black man could win (especially since he got 52.9%). Thus, the public perceives racism as being uncommon enough that it isn't a defining attribute of a major political party. At worst, the public's opinion on the stance is uncertain and the perception changes to this:

D (A, ~B)
R (?, B)

Now back to our hypothetical (A, B). No longer concerned with openly believing B will attract ~A people, he expresses his B opinion (or overturns his previous ~B opinion). He is no longer afraid of being mistaken for R.

In practice, there are more than two issues and people might still call themselves Democrats out of habit, fear of losing current friends, or because there's still enough about the party they like. But, in time, more will be willing to. In the meantime, expressing the secondary opinion will be more common. So, here's the punchline: Obama's election made Americans, and by extension moderate Republicans, seem less racist. Thus more people are willing to be seem as (or mistaken for) a Republican.

Monday, June 15, 2009

Control Breeds Suspicion?

Here's some data from the General Social Survey about how much confidence Americans have in various institutions. These are the averages between 1972 and 2006:
InstitutionPercent With "A Great Deal" of Confidence
Organized labor12.50%
Executive branch17.20%
Major companies25.30%
Banks and financial institutions27.10%
Organized religion29.40%
Supreme Court33.00%
Scientific community43.10%
A few interesting things stand out in this survey, most of all the four government institutions: Congress, Executive branch, Supreme Court, and Military. It seems that the more direct control the public has over the institution, the less confidence they have in it. My initial guess is that more direct control means more attempts to grab the voters directly, meaning less believability of claims of neutrality. This would also explain why the press is ranked very low and the two highest are science and medicine--like the judges and soldiers, people see doctors and scientists as being coldly rational necessary for their job. Robin Hanson, though, would have a different opinion as to why people have so much confidence in medicine: we're afraid to be suspicious of them.

Saturday, June 13, 2009

The Profit Motive of Eureka

Yesterday on Morning Joe, Joe Scarborough mixed up his economics. While expressing disgust that a 4% of the world "taking" 25% of its resource output, he proposed that if
....we control the next wave of energy, we will own the 21st America we have eight of the top ten research universities on the planet. Why not tap into that and really have a focused effort to create the next wave of energy resources....
Those in the developed world do not take resources; they buy them. And they can afford so much because they produce so much, notably the technology that Scarborough wishes to see. Since private investors and inventors are creating the next waves of technology, his insistence of an American focused effort can only mean some sort of central government planning. This deadly pair--economic nationalism and government centralization--is truly wasteful. Technology becomes harder to produce under such large bureaucracies, especially when you restrain where in the world you can draw your inputs for discovery from.

There is a big push for new technology and it's been that way since the dawn of human civilization. Only in the past few hundred years has government been laissez-faire enough to let it truly flourish. And look how far we've come so quickly! Technology creates resources far more than it consumes them. It is our greatest source of genuine growth and with so much wealth up for grabs, it instantaneously creates a vast network of entrepreneurs far more focused than Scarborough could ever imagine.

Monday, June 08, 2009

Too Cool For Grammar School

One of my mother's pet peeves is improper grammar, most potently using the phrase "I should have went" instead of the correct phrase "I should have gone." A couple of day ago, she read me an opinion piece by someone who shared her frustration, arguing grammar mistakes (even in casual conversation) demonstrate sloppy thinking, laziness, and a disrespect for the English language. I conceded that for instances such as job interviews, this makes sense: good grammar signals intelligence and etiquette. But something about the story didn't sit well with me and I let it go.

Later, I realized bad grammar is also an example of countersignaling. When you can send multiple signals, you are best to eschew weak signals and stick with strong ones, demonstrating that you are not be confused with those who are merely adequate (as average candidates will send the weak signals in case the strong ones aren't as strong as they think). This is why you don't put that part time job from high school on your post-college resume.

Good grammar is a weak signal (with the exception of, perhaps, English professors). By making (purposely or not) common grammar mistakes, people can show they are so qualified, they don't need obsess over the nuances of the English language. This, of course, does not work with rare mistakes. "I is interested in working with you" will not get you the job.