Crazy Like a Fox

One possible interpretation of Trump's actions is that he is ignorant, stupid, impulsive and thin skinned. During the campaign the obvious implication, which many drew, was that he had done and would continue doing stupid things that would lose him the nomination or, if he somehow got the nomination, the election.

That did not happen. When your theory confidently predicts something that does not happen, it is worth considering that the theory may be wrong. 

Additional evidence against that theory comes from Trump's earlier history. His finances are not public knowledge and some have argued, for all I know correctly, that he would have done at least as well if he had invested his inherited wealth in a collection of low risk interest bearing assets. But he didn't. He engaged in a long and risky series of entrepreneurial projects. If he was as incompetent as many seem to believe, he would by now have lost all or most of his money. 

That suggests an alternative interpretation, that while Trump may indeed be impulsive and thin skinned he is not stupid, that the apparently stupid things he did were for the most part tactics that were intended to win and did win, that it was not Trump who did not understand what he was doing but his critics. 

Hence the title of this post.

How well does that fit what has happened since the election? 

The initial travel ban made very little sense as a way of preventing Islamic terrorism  but quite a lot as a way of giving Trump the image of doing everything he could to defend America from Islamic terrorism. Seen from that standpoint, even its poor design made sense as a way of provoking noisy and passionate opposition, making his opponents in the Democratic party and the mass media seem to be soft on terrorism. It isn't as if the average voter can be expected to pay attention to the details.

The oddest thing about the response of Trump's critics to his moves is the implicit assumption which they would surely disavow if were made explicit—that Trump's motives are benign. On the assumption that his objective was to make America better, his actions look stupid. But not if his purpose was to promote his own power and status. 

The theory I am offering also explains the accusation that Obama tapped Trump's phone. As best I can tell, there is no evidence that it is literally true. But there is evidence, reported in the New York Times more than a month ago, that federal agents acted under a FISA warrant to tap the communications of some members of Trump's team in the Trump Tower. There is probably no evidence that they did so at Obama's urging or in order to provide information to him, but there probably would be no evidence of that even if it were true.

Obama, the New York Times and the rest of the opposition could have responded to Trump's charge by denying that Obama had tapped Trump while conceding that some around him had been tapped as part of a legal investigation, a fact reported a month or more before Trump made his charge. They could even have suggested that confusing the two claims was evidence of Trump's weak hold on reality. Perhaps some did. But the overall impression of their response as I saw it and, I suspect, as most others saw it, was that it amounted to "That's absurd, Trump must be crazy, nothing of the sort happened."

At which point Trump's supporters could respond that something of the sort, even if not exactly the same thing, had not only happened, it had been reported in the New York Times. That might not convince someone paying close attention to the two claims and the differences between them, but not many voters would be. Making people less willing to trust the mass media, especially when they are criticizing Trump, is a win for Trump.

When I offered arguments along these lines in a Facebook comment thread, the response I got, at least implicitly, was that by denying Trump's incompetence I was defending Trump and that Trump defenders were not worth listening to. My response, that assuming your opponents are stupid when they are not is a very dangerous mistake, fell on deaf ears.

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An earlier version of this argument.

Division Rules and Assortative Mating

 [Warning: This post assumes the reader understands the Principle of Comparative Advantage. Those who don't will find an explanation here.]

Assortative mating is the pattern of like partnering with like. A standard example is the tendency of men with college degrees to marry women with college degrees. It came up in a talk I recently heard in the rather different context of the tendency of elite law firms to have partners at similar levels of ability. To an economist familiar with the principle of comparative advantage that looks like the opposite of what we would expect, which started me thinking about why, in different contexts, assortative mating would or would not happen.

Consider a greatly simplified model of the marriage market in a world with the traditional division of labor between household and market production but without the traditional sexual division of labor. The world contains four people, two men and two women. One of the men and one of the women are high income earners—think of them as the college graduates. The other two command lower incomes on the market but are equally good at running a household. The two high income earners can each make $100,000/year, the two low income earners can each make $40,000/year. Any of them can produce household services, cooking, laundry, rearing children, whose cost if purchased on the market would be $60,000/year.

With assortative mating, the two high income earners marry each other. Both work, they purchase household services and are left with $140,000/year. The other pair also marry,  one works and one stays home, and they have an income of $40,000/year. The combined income for the two couples, net of the cost of buying or producing household services, is $180,000/year.

Suppose, instead, that each high income earner marries a low income earner. The high income earner works, the low income earner stays home. Combined income of the two couples, again net of cost, is $200,000/year.

The pattern is a familiar one in the context of trade. One partner has a comparative advantage in earning income, the other in household production. Dividing who does what accordingly can make both better off. The implication of that simple model is that men with college degrees should marry women without them and women with college degrees should marry men without them. That is not what actually happens. Why?

In the case of marriage, there are a number of possible explanations. Many couples meet in college. Educated men and women may get along better with educated partners. Educated men and women may prefer that their children be reared by an educated housewife or househusband.

I want to offer another explanation which is not limited to marriage, one that suggests why pairing would be assortative in some contexts, possibly including law firms, and not in others.

Add one more assumption to my model—that the income of each couple is split evenly between them. With assortative mating, the high earning couple get $70,000 each, the low income couple get $20,000 each. With mixed mating, each individual gets $50,000. As long as income has to be split evenly, the situation is stable, since neither of the high earning individuals would want to switch. Without that assumption it is unstable, since a switch to the mixed mating pattern with a 75/25 division of income in each couple makes everyone better off.

Generalizing from the simple model, we would expect to see assortative mating in contexts where differences among potential partners are large and pairs, or larger groups, are constrained to a roughly equal division, because the loss to the high value partner of having to share equally with the low value partner(s) outweighs the benefit of a more efficient division of labor. We would expect the opposite pattern where potential partners are free to vary the division between them.

Consider again the case of marriage. Husband and wife live in the same house, share the same meals and vacations. That limits, although it does not entirely prevent, an unequal division of consumption. Further, once they have been married long enough to have children they are locked into a bilateral monopoly bargaining situation in which any contract over the division of consumption is largely unenforceable.

Consider next the law firm. A law partnership is a worker run firm, although one where control is limited to a subset of workers. That fact limits the degree to which an unequal division can be maintained among the voting partners. So the prediction is that voting partners will be unwilling to recruit others who are substantially less productive than they are and unable to recruit others who are substantially more productive than they are. They will take advantage of comparative advantage by hiring non-voting members of the firm, whether non-partner attorneys or secretaries, who will receive a different, usually lower, share of the firm's income.  

Finally, consider the issue of immigration. It is in the interest of the population of a high income, high skill country such as the U.S. to admit low skill, low income immigrants due to the usual principle of gains from trade. For people who understand the relevant economics, the chief argument against doing so is that poor people will come not to work but to collect welfare. The solution offered by supporters of free immigration, the solution I offered more than forty years ago in my first book (Chapter 14), is that welfare should not be available to new immigrants. The response to that solution is that immigrants will eventually become citizens, at which point they will vote for income redistribution in their own favor. Hence, it is argued, we should admit skilled immigrants from India and China to work in Silicon Valley but not unskilled Mexicans to pick crops.

How accurate the final step in the argument is in the real world of 21st century America is not clear, but its logic is the logic I have offered for when assortative mating will or will not happen.

Anyone Want a Talk in or near Europe?

It looks as though I will be giving a talk in Moscow on May 30th. If I am going to come that far, I might as well give more than one talk. Is anyone in that part of the world interested? Looking at flights to Moscow, they seem to typically go through London, Paris, Frankfurt, or Istanbul, although I expect there are other alternatives. 

Another alternative is somewhere reasonably close to Moscow, such as Helsinki or Tbilisi. I gave a talk in Georgia once over the internet, perhaps I could give one in person.

My usual requirement is an interesting and interested audience and expenses. An honorarium is appreciated but not essential.

An Interesting Mistake

I recently gave and graded a midterm exam on the application of economics to law. On one problem a number of students made the same interesting mistake, interesting for two reasons. It illustrates one of the ways in which it is easy to misunderstand economic ideas. And it points to a conceptual mistake this is  common, important and dangerous.

The problem involved the effect of alternative legal rules on the interaction between an airline and three thousand homeowners near the airport. One way of dealing with noise was for the airline to reduce it at a cost of a million dollars. Another was for the homeowners to achieve the same effect by soundproofing their houses at a cost of four hundred dollars each, for a total cost of 1.2 million dollars.

Suppose the legal rule is that the airline has the right to make noise and no  liability for the cost to the homeowners. The obvious outcome is that the homeowners soundproof even though it would cost less for the airline to reduce the noise. That suggests the possibility of bargaining, with the homeowners offering to pay something between a million and 1.2 million in exchange for the airline reducing the noise.

With three thousand homeowners that is unlikely to happen. If the bargain is struck, each homeowner gets the benefit whether or not he contributed to the payment. Thus each will be inclined to try to free ride on the expenditures of the others. They face what economists describe as the public good problem—how to produce something when those who pay for it cannot control who gets it.

Suppose, however, that the three thousand houses belong not to three thousand home owners but to one real estate company that rents them out. Now the public good problem vanishes. The company gets the benefit from sound reduction and will be willing to pay for it.

The mistake was not in predicting what happens but in explaining why. A number of students said something to the effect that combining the houses under one owner "levels the playing field" between home owners and airline. The implication of that way of putting it is that the problem is simply a conflict between two sides. Combining the homeowners into one firm increases their bargaining power and so results in their getting more of what they want, the airline less.

The result of the change is that the homeowners, now combined into a single firm, get more of what they want. But so does the airline. It is being paid at least a million dollars, probably more, to do something that costs it a million dollars. Bargaining over how much it gets is a conflict between the two sides. But the agreement to reduce noise at the expense of the homeowners, which is what combining them made possible, is a win for both. 

The reason the mistake is important to me as a teacher is that it illustrates a common problem in teaching economics and probably other things as well. The student has a pattern of ideas in his head, in this case a simple model of conflict where what helps one side hurts the other. He fits what he hears into that pattern, thinks he understands it, and so never gets the actual idea I am explaining.

But this particular example of that problem is important for a wider reason. A lot of people in a lot of contexts take it for granted that games are zero sum, that what benefits one side must harm the other. That is a very dangerous mistake. Consider some examples.

Trade

The term "competitiveness" is routinely used in a way that implies that what matters is how rich or productive the U.S. is relative to other countries, that if China gets richer that makes us worse off. It might be true if we were at war with them, but we are not. In the context of trade, China being richer means that they can buy more stuff from us and sell more stuff to us in our mutual benefit. 

A closely related error is the survival of mercantilist economic theory two hundred years after Ricardo showed why it was wrong, the idea that trade is a war in which each side is trying to sell more than it buys, to get a "favorable" rather than an "unfavorable" balance of payments.

Wealth

Consider discussions over what has happened to the incomes of rich and poor over the past few decades. As best I can tell—it is not a subject I have looked at very carefully—the answer is that across the income distribution people have gotten at least a little richer but that incomes have increased much more for those at the high end of the distribution. This is often represented as the poor or the middle class losing out, with the implication that the wealth of the rich came at their expense, that there is a single pool from which the rich are getting more and the poor therefor less.

Put that way the claim is obviously false, since average incomes have increased enormously over the past few centuries, both in the U.S. and globally. In any particular situation it might be true, since one way of getting rich is to steal stuff from people, whether legally or illegally. But it cannot be true in general. 

Politics

It is tempting to see all political disagreements as conflicts of interest, to assume that it is simply a question of whose side you are on. If you  believe that, there is no point in listening to the other side's arguments. They may say that what they propose is good for everyone, but that is just a trick to blind people to their true motives. It is a very common attitude and a very dangerous one. Carried to its limit, it implies that the other side is your enemy, in which case there is nothing really wrong with lying about them, wiretapping them,  stealing votes. 

All is fair in love and war, and this is war.

Love

Speaking of which, consider the effect on a marriage of assuming that all disagreements are about which partner gets his or her way, which loses out.

I have discussed some of this in at least two previous posts, one on status, one on my disagreements with two other anarchists, one left and one right.

An Application of Economics to Teaching

After answering the exam questions you know the answers to you still have time left. You spend the rest of your time answering  questions you do not know the answers to, in the hope that something you write will fool the professor grading the exam into thinking you know the answer, at least in part, expressed it unclearly and deserve partial credit. Doing this is rational behavior on your part, but the result is to waste your time writing and my time reading. It also adds additional noise to the signal that exams generate, since there is a risk that I will either be fooled into giving you credit you do not deserve or interpret some other student's poorly written answer as entirely bogus when it is not.

I have a solution to this problem, an economic solution, although I like to claim that it was inspired by the story of Socrates and the Delphic Oracle.

Well, one day [Chaerephon] went to Delphi, and there he had the impudence to put this question -- do not jeer, gentlemen, at what I am going to say -- he asked, "Is anyone wiser than Socrates?" And the Pythian priestess answered, "No one." Well, I was fully aware that I knew absolutely nothing. So what could the god mean? for gods cannot tell lies. For some time I was frankly puzzled to get at his meaning; but at last I embarked on my quest. I went to a man with a high reputation for wisdom -- I would rather not mention his name; he was one of the politicians -- and after some talk together it began to dawn on me that, wise as everyone thought him and wise as he thought himself, he was not really wise at all. I tried to point this out to him, but then he turned nasty, and so did others who were listening; so I went away, but with this reflection that anyhow I was wiser than this man; for, though in all probability neither of us knows anything, he thought he did when he did not, whereas I neither knew anything nor imagined I did."

On my exams, knowing what you do not know is worth something—twenty percent to be precise. That is what you get on a question for not doing it. So if you suspect that the best bogus answer you can come up with will be worth less than twenty percent, you are better off leaving the question blank or writing "I do not know," going home early, saving both of us some time and saving me the hassle of trying to figure out which answers are or are not entirely bogus.

I posted on this and some related matters five years ago but thought it worth posting on it again.

Doing it Better with Computers

I have just read a fascinating article describing how political campaigns, most recently the Trump campaign, use the internet, social media, AI, and related technologies to target and influence voters. Assuming its account is accurate, what it is describing is what political campaigns have long done, just doing it better. It is a normal part of campaigning to try to target ads and campaign speeches to particular groups of voters, telling each group what the campaign believes its members will find most convincing. The difference is the granularity. 

This time they have it down to the individual voter.

The first step is to get information about voters at the individual level. Facebook provides one way of doing so, by looking at what people and pages each individual likes, along with the information individuals report about themselves. From that, deduce as much as you can about personality, beliefs, all of the things that will make one argument more persuasive than another. Target each individual with the campaign ads you think will persuade him. Watch what ads each person clicks on and use that feedback to steadily refine the model, improving both your information about what sort of person he is and about what sorts of ads work with that sort of person.

That approach to persuading voters is no more dishonest than conventional campaigning, just better done. Indeed, one might argue that part of what it is doing is reversing the effect of earlier technological change. In the world of 19th century whistle stop campaigns, where most of what you knew about a candidate was what you or your friends had actually heard him say, candidates could and did tell different stories to different groups of voters. The rise of national media made that harder to get away with. The speech telling farmers that, if elected, you would do all you could to keep crop prices high might be less persuasive to urban voters who read about it in the newspaper, heard it on the radio, saw it on television. 

But now, through the power of newer technologies, you can not only tell farmers you are particularly concerned with their problems without anyone else overhearing the conversation, you can target your ads to sugar beet farmers in North Dakota. And you can vary the particular version of the ad according to what sort of argument each individual farmer finds most compelling, as reflected in which ads he reads and shares as well as the information deduced from his other online activities. 

So far, it is merely conventional targeting done better. The anonymity of online conversation adds another tool for persuasion—fictional identities. The technique is familiar from online arguments where three of the four people supporting a position may be sockpuppets of the fourth. Done on a professional scale, the hundred people arguing for a position, insulting opponents, praising supporters, may be three people in one office.

It is an interesting article and worth reading for a more detailed account of the technology. The author obviously has his own axe to grind, since he believes that at the moment the leading practitioners of the new dark art are working for the wrong side; he makes what he is describing  sound more sinister than it actually is, most of it being simply new and better versions of ancient tricks. 

As he makes clear, it is a technology that could be used for any political cause. It could also be used for non-political causes, and is. Presidential elections are  every four years, but people are always buying and selling. Technologies that tell a political campaign what arguments will persuade a voter to vote for their candidate can as well be used to persuade a buyer to buy what the seller is selling.

Seen from this standpoint I find the technology considerably less sinister. It is true that it can be used to produce bogus praise for products from fictional users, but I already knew that and discount such praise accordingly, more heavily the more it feels like something that could have been churned out by a computer program. But it can also be used to try to sell me the sorts of things that I want to buy. I would much rather receive emailed ads for opal rough on ebay—one of my hobbies is lapidary work—than be interrupted at dinner by a phone call from someone trying to persuade me to refinance my nonexistent mortgage.

Fictional Economics: A Request for Aid

My current nonfiction writing project, which I have been working on for some years, is pretty close to complete—with luck I will be sending it to my agent by the end of the semester. That raises the question of what I should do next. One possibility is a second edition of either Hidden Order or Law's Order. Another is fiction–I have partly written sequels to both of my novels, one of them pretty far along. 

But there are two other book ideas that I have played with, and this post is mostly to see if any of my readers can offer suggestions for one of them: a collection of works of literature that teach economics.

So far I know of only two such works. One is a science fiction story, "Margin of Profit" by Poul Anderson. Its central point is that in order to make someone stop doing something you do not want him to do it is not necessary to make it impossible, merely unprofitable. 

The other is a poem, "The Peace of Dives" by Rudyard Kipling. Its point is that economic interdependence produces peace, since nobody wants to kill his customers or destroy his own property that happens to be located in someone else's territory. The poem was written in 1903, so arguably turned out to be somewhat optimistic, but it is still an interesting and important idea.

I want more. I want readable works of literature, prose or poetry, that demonstrate economic ideas and get them right. Any suggestions?

My other book idea, for which I could also use suggestions, would be titled "Bad Economics." It would consist of advertisements, quotes from the speeches of politicians, bits from textbooks written by people who don't understand economics, each accompanied by an explanation of why it is wrong. A simple example would be one of the radio advertisements I have heard that offers listeners an opportunity to speculate in heating oil futures, on the grounds that winter is coming. A somewhat less simple example would be almost any statement by almost anyone about the distribution of the burden of taxes, since such statements usually take it for granted that what matters is who actually hands over the money to the government.

The Economics of Insider Trading: A Puzzle

The standard story on insider trading is straightforward. I have knowledge that implies that a stock is going to go up, so I buy it. The seller sells because, absent that knowledge, my offer is more than he, and presumably most of the rest of the market, thinks the stock is worth.

There is a problem for this story if we assume that all the players are rational. If there are a significant number of insider traders in the market, the fact that I offered more for the stock than the owner thought it was worth should be evidence to him that I know something about it he doesn't, and so a reason not to sell.

To put the point differently, if the insider traders are making a higher return on their invested capital than the market average, which is the point of insider trading, everyone else must be making a lower return than the market average. But anyone who wants can get the market average by buying the whole market, or an index fund, or a random selection of stocks. All he has to do to protect himself against insider traders is to avoid the strategy of estimating stock values for himself and selling when the price he is offered is above his estimate, buying when below.

One possible explanation is that some traders are insiders and some think they are, believe they have better than average knowledge or judgement but are wrong. But I am assuming, as economists often do, that all the players in the game are rational.

This puzzle first struck me when I thought I had an ingenious explanation of why, on average, stocks outperform bonds, as it is commonly asserted that they do. If buying stock and holding for ten years is practically guaranteed to give you a better return than buying bonds and holding for ten years, one would think that everyone investing for the moderately long term would buy stock and their doing so would drive the price of bonds down and their yield up until the two investments were equally attractive. 

One could avoid that by assuming that there was enough risk averse money looking for short term investments to drive bond prices up and the yield down to a point where the yield was below the return on stocks. That conjecture could lead to interesting empirical work testing it. But I am by nature a theorist not an empiricist, so I was looking for a different answer and thought I might have found it.

Imagine a market where everybody is an inside trader on a small scale. I know more than the market about the firm I work for. You know more than the market about a firm you have repeatedly had dealings with. He knows more than the market about a technology he has worked with extensively that will affect the performance of several firms.

Each person invests some of his money where he has an edge and, by the standard analysis of insider trading, makes an above market return. But because he is risk averse he wants to diversify his investment, so part of his money goes into other investments. His marginal return is the return he can get without inside knowledge, his average return is a suitably weighted average of that and his insider return. Bond investments only have to do as well as his marginal investments, so the return on bonds is lower than the average return on stocks.

I thought it was a lovely theory–until it was pointed out to me that an investor who wanted to get the average return on stocks could do so with no inside information by simply buying the whole market, or an index fund, or ... . And, if the average return on stocks was higher than on bonds, he would.

Which brings me back to my puzzle. Does anyone have a good solution? I have wondered if it has some deep connection with Robin Hanson's old puzzle of why each of us prefers his own opinion to that of others even if he has no reason to think he is better informed on the subject than they are.

Anyone want a talk in Brazil this fall?

It looks as though I will be speaking in Brazil on the 10th and 11th of November. I expect I will want to spend at least a week in the country, given the time and effort of getting there and back, so was wondering if anyone else was interested in having me give a talk. An honorarium is nice, but the minimum requirement is expenses plus an interesting audience.

Gypsies, Jews and Amish

It is a book I want someone to write. The three groups are in many ways similar, in many different. Each has, for substantial parts of its history, been effectively self governing, imposing its own rules on its own people with or without the permission of the government over it. Each has created and maintained its own culture, complete with its own language. Each imposed constraints on its members that might be expected to make them want to exit the group, and each found ways of keeping most of the members from doing so.

All of the Amish and many of the other two groups ended up in North America, a more tolerant and accepting environment than those they experienced in the past. The Jewish group has mostly dissolved in the wider culture–only about ten percent remain orthodox, and many even of the orthodox are more nearly a part of the surrounding culture than most Jews were a few hundred years ago. Only the more extreme factions, such as the Hasidim, retain the traditional pattern of cultural separation.

The Romani, as I interpret the evidence, are a little farther behind on the same path. For evidence, compare two books on the American Romani by Anne Sutherland, Gypsies: The Hidden Americans and Roma: Modern American Gypsies. The first, based on research done around 1970, described an independent and alien nation with its own language, law, and customs, embedded within modern day America. The second, published last year, describes the gradual collapse of that system.

Only the Amish have been almost completely successful in maintaining their own society, peacefully embedded in ours. They have done it for more than two centuries now and, judging by its current state, may well continue for another century or two. 

Which raises an interesting puzzle.

Those interested in more details on all three will find them in the relevant chapters of the book on legal systems very different from ours that I have almost finished writing.

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When someone got very sick, they all flocked to the hospital and to the funeral. The living were never left alone day or night. Everyone brought food or took up a collection for the family so ones far away could come. People took care of each other. That is gone now. In the past anyone could drop by the house and you would feed them, they could stay the night. Now you have to phone if you want to visit, and they often say, “No. We are busy.” Someone throws a party and makes a lot of food and hardly anyone shows up. The saddest thing is the loss of community. We never visit with the Machwaya. They keep to themselves and we keep to ourselves.

The Machwaya still have the slava and pomani and kris. They are mostly not Christian and only go to a priest for baptism of a baby. The ones who have become Christian have their own churches and we do not go to their churches, and they do not come to ours. In the past we all were part of the kumpania, we had slavi together, and we all went to the pomani. Now everyone keeps to his own kind. The children are not taught our language, go to school, and have no respect for elders. We don’t even have any elders anymore. They are all dead.

(Sutherland, Anne H., Roma: Modern American Gypsies)

Explaining Trump

There are two possible approaches to explaining odd things Trump does. One is to assume that he is stupid, crazy, erratic. Early in the campaign that looked like a plausible explanation. After he won twice contests everyone expected him to lose, first the nomination and then the election, it was still possible–he could have been lucky–but less plausible.

The alternative is that he is crazy like a fox, doing odd things for reasonable, perhaps tactically correct, reasons. I am not sure that is what is going on but I think it quite likely and have been trying to make sense of his moves on that basis.

The most recent example, not done directly by Trump, was preventing Elizabeth Warren from speaking against Sessions on the grounds that one senator was not supposed to say hostile things about another. That got a lot of negative publicity and was widely viewed as a blunder.

There is another possibility. The incident raised Warren's visibility and status within the Democratic party. That will tend to pull the party left. Trump may well believe that pulling the Democrats left will make it harder for them to win future elections. He may well be right.

Apply the same approach to making sense of the apparently bungled executive order on immigration. Including green card holders in the initial order made no sense in terms of the stated objective and was a considerable, and highly public, nuisance for those affected. The result was a lot of hostile criticism, greatly increasing the amount of publicity the executive order got. 

Seen from the standpoint of Trump's base, he was doing something about immigration and terrorism, as he had promised and it must be a substantial something if his enemies in the media were so upset about it. As Jack Goldsmith, a former head of the Justice Department’s Office of Legal Counsel and a Harvard Law School professor, put it:

“The president would get a huge symbolic boost with his base while not violating the law and while changing nothing of substance. He would get maximum symbolic value while doing nothing. Trump’s a genius at this.”

A Different David Friedman

A Trump advisor named David Friedman has been announced as his choice for ambassador to Israel. At least one news story on the event had my picture and I have just gotten an invitation from the Indian embassy to a Hanukkah event.

Not me. But the Picture is

Two Visions of Anarchy–My Exchange With James Scott

A few weeks ago I had a debate on anarchy with James Scott, a writer whose books I find interesting. Robert Ellickson was moderator cum participant. It has now been webbed.

I have read two of Scott's books. One, The Art of Not Being Governed, is about the existence of extensive stateless areas in South-east Asia over a very long period of time. From the standpoint of the adjacent states, the stateless areas, typically hills, mountains, and swamps, are populated by primitive people who have not yet developed far enough to create or join states--"our ancestors." By Scott's account, on the other hand, much of the population of the stateless areas is descended from people who were once in states, much of the population of the states from people who were once stateless. The pattern as he sees it is a long term equilibrium based on the difficulty of maintaining a state when population densities are low and transport and communication slow. When a state is doing well it pulls in people, whether voluntary immigrants or the captives of slave raids, from the adjacent stateless areas. When the state is doing badly, the flow of people goes in the other direction, fleeing taxes, conscription, and other benefits of being ruled. 

Part of what I found interesting was Scott's discussion of features of stateless areas that make it unprofitable for adjacent states to annex them. It was very much an economist's point of view and suggested an approach to the question of how a modern anarchist society could avoid annexation by adjacent states that I had not considered. In my writing I have described that as the problem of national defense. What Scott's account implies is that military defense is only one part of a broader set of solutions.

The other book I read is Seeing Like a State. Its central theme is the ways in which states have attempted to reorganize societies in order to make them easier to rule, to make the territory look more like the rulers' necessarily simplified map. It is harder to rule a country if the people do not all speak the same language. It is harder to tax land if the country contains a wide variety of systems of land tenure and units of measurement. It is harder to keep track of who has or has not been conscripted if there is no uniform and consistent system of names. It may be possible, sometimes has been possible, to change those features of a country to make it easier to rule and tax.

A secondary theme is the amount of damage that states have done in the process of revising societies to be easier to rule and ruling them. While it was obvious to the author that his account would be attractive to market libertarians such as myself, he went to some trouble to make it clear that he was not himself one of those icky market libertarians. His part of the exchange linked to above may help suggest why.

Another theme that he devotes considerable attention to is what he describes as "high modernism," the belief that modern science lets us figure out how everyone should do things and, once we have figured it out, we should make them do it that way. Examples include planned cities, Soviet collective farms and attempts by first world agronomists to tell third world peasants what to plant.

Adam Smith had something to say on the subject:

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.