Building a wider tent is not compromising on your principles

August 20, JDN 2457986

After humiliating defeats in the last election, the Democratic Party is now debating how to recover and win future elections. One proposal that has been particularly hotly contested is over whether to include candidates who agree with the Democratic Party on most things, but still oppose abortion.

This would almost certainly improve the chances of winning seats in Congress, particularly in the South. But many have argued that this is a bridge too far, it amounts to compromising on fundamental principles, and the sort of DINO (Democrat-In-Name-Only) we’d end up with are no better than no Democrats at all.

I consider this view deeply misguided; indeed, I think it’s a good portion of the reason why we got so close to winning the culture wars and yet suddenly there are literal Nazis marching in the streets. Insisting upon ideological purity on every issue is a fantastic way to amplify the backlash against you and ensure that you will always lose.

To show why, I offer you a simple formal model. Let’s make it as abstract as possible, and say there are five different issues, A, B, C, D, and E, and on each of them you can either choose Yes or No.

Furthermore, let’s suppose that on every single issue, the opinion of a 60% majority is “Yes”. If you are a political party that wants to support “Yes” on every issue, which of these options should you choose:
Option 1: Only run candidates who support “Yes” on every single issue

Option 2: Only run candidates who support “Yes” on at least 4 out of 5 issues

Option 3: Only run candidates who support “Yes” on at least 3 out of 5 issues

For now, let’s assume that people’s beliefs within a district are very strongly correlated (people believe what their friends, family, colleagues, and neighbors believe). Then assume that the beliefs of a given district are independently and identically distributed (each person essentially flips a weighted coin to decide their belief on each issue). These are of course wildly oversimplified, but they keep the problem simple, and I can relax them a little in a moment.

Suppose there are 100 districts up for grabs (like, say, the US Senate). Then there will be:

(0.6)^5*100 = 8 districts that support “Yes” on every single issue.

5*(0.6)^4*(0.4)*100 = 26 districts that support “Yes” on 4 out of 5 issues.

10*(0.6)^3*(0.4)^2*100 = 34 districts that support “Yes” on 3 out of 5 issues.

10*(0.6)^2*(0.4)^3*100 = 23 districts that support “Yes” on 2 out of 5 issues.

5*(0.6)^1*(0.4)^4*100 = 8 districts that support “Yes” on 1 out of 5 issues.

(0.4)^5*100 = 1 district that doesn’t support “Yes” on any issues.

The ideological purists want us to choose option 1, so let’s start with that. If you only run candidates who support “Yes” on every single issue, you will win only eight districts. Your party will lose 92 out of 100 seats. You will become a minor, irrelevant party of purists with no actual power—despite the fact that the majority of the population agrees with you on any given issue.

If you choose option 2, and run candidates who differ at most by one issue, you will still lose, but not by nearly as much. You’ll claim a total of 34 seats. That might at least be enough to win some votes or drive some committees.

If you want a majority, you need to go with option 3, and run candidates who agree on at least 3 out of 5 issues. Only then will you win 68 seats and be able to drive legislative outcomes.

But wait! you may be thinking. You only won in that case by including people who don’t agree with your core platform; so what use is it to win the seats? You could win every seat by including every possible candidate, and then accomplish absolutely nothing!

Yet notice that even under option 3, you’re still only including people who agree with the majority of your platform. You aren’t including absolutely everyone. Indeed, once you parse out all the combinations, it becomes clear that by running these candidates, you will win the vote on almost every issue.

8 of your candidates are A1, B1, C1, D1, E1, perfect partisans; they’ll support you every time.

6 of your candidates are A1, B1, C1, D1, E0, disagreeing only on issue E.

5 of your candidates are A1, B1, C1, D0, E1, disagreeing only on issue D.

5 of your candidates are A1, B1, C0, D1, E1, disagreeing only on issue C.

5 of your candidates are A1, B0, C1, D1, E1, disagreeing only on issue B.

5 of your candidates are A0, B1, C1, D1, E1, disagreeing only on issue A.

4 of your candidates are A1, B1, C1, D0, E0, disagreeing on issues D and E.

4 of your candidates are A0, B1, C1, D0, E0, disagreeing on issues E and A.

4 of your candidates are A0, B0, C1, D1, E1, disagreeing on issues B and A.

4 of your candidates are A1, B0, C1, D1, E0, disagreeing on issues E and B.

3 of your candidates are A1, B1, C0, D0, E1, disagreeing on issues D and C.

3 of your candidates are A1, B0, C0, D1, E1, disagreeing on issues C and B.

3 of your candidates are A0, B1, C1, D0, E1, disagreeing on issues D and A.

3 of your candidates are A0, B1, C0, D1, E1, disagreeing on issues C and A.

3 of your candidates are A1, B0, C1, D0, E1, disagreeing on issues D and B.

3 of your candidates are A1, B1, C0, D1, E0, disagreeing on issues C and E.

I took the liberty of rounding up or down as needed to make the numbers add up to 68. I biased toward rounding up on issue E, to concentrate all the dissent on one particular issue. This is sort of a worst-case scenario.

Since 60% of the population also agrees with you, the opposing parties couldn’t have only chosen pure partisans; they had to cast some kind of big tent as well. So I’m going to assume that the opposing candidates look like this:

8 of their candidates are A1, B0, C0, D0, E0, agreeing with you only on issue A.

8 of their candidates are A0, B1, C0, D0, E0, agreeing with you only on issue B.

8 of their candidates are A0, B0, C1, D0, E0, agreeing with you only on issue C.

8 of their candidates are A0, B0, C0, D1, E0, agreeing with you only on issue D.

This is actually very conservative; despite the fact that there should be only 9 districts that disagree with you on 4 or more issues, they somehow managed to win 32 districts with such candidates. Let’s say it was gerrymandering or something.

Now, let’s take a look at the voting results, shall we?

A vote for “Yes” on issue A will have 8 + 6 + 3*5 + 2*4 + 4*3 + 8 = 57 votes.

A vote for “Yes” on issue B will have 8 + 6 + 3*5 + 2*4 + 4*3 + 8 = 57 votes.

A vote for “Yes” on issue C will have 8 + 6 + 3*5 + 4*4 + 2*3 + 8 = 59 votes.

A vote for “Yes” on issue D will have 8 + 6 + 3*5 + 3*4 + 3*3 + 8 = 58 votes.

A vote for “Yes” on issue E will have 8 + 0 + 4*5 + 1*4 + 5*3 = 47

Final results? You win on issues A, B, C, and D, and lose very narrowly on issue E. Even if the other party somehow managed to maintain total ideological compliance and you couldn’t get a single vote from them, you’d still win on issue C and tie on issue D. If on the other hand your party can convince just 4 of your own anti-E candidates to vote in favor of E for the good of the party, you can win on E as well.

Of course, in all of the above I assumed that districts are homogeneous and independently and identically distributed. Neither of those things are true.
The homogeneity assumption actually turns out to be pretty innocuous; if each district elects a candidate by plurality vote from two major parties, the Median Voter Theorem applies and the result is as if there were a single representative median voter making the decision.

The independence assumption is not innocuous, however. In reality, there will be strong correlations between the views of different people in different districts, and strong correlations across issues among individual voters. It is in fact quite likely that people who believe A1, B1, C1, D1 are more likely to believe E1 than people who believe A0, B0, C0, D0.

Given that, all the numbers above would shift, in the following way: There would be a larger proportion of pure partisans, and a smaller proportion of moderates with totally mixed views.

Does this undermine the argument? Not really. You need an awful lot of pure partisanship to make that a viable electoral strategy. I won’t go through all the cases again because it’s a mess, but let’s just look at those voting numbers again.

Suppose that instead of it being an even 60% regardless of your other beliefs, your probability of a “Yes” belief on a given issue is 80% if the majority of your previous beliefs are “Yes”, and a probability of 40% if the majority of your previous beliefs are “No”.

Then out of 100 districts:

(0.6)^3(0.8)^2*100 = 14 will be A1, B1, C1, D1, E1 partisans.

Fourteen. Better than eight, I suppose; but not much.

Okay, let’s try even stronger partisan loyalty. Suppose that your belief on A is randomly chosen with 60% probability, but every belief thereafter is 90% “Yes” if you are A1 and 30% “Yes” if you are A0.

Then out of 100 districts:

(0.6)(0.9)^4*100 = 39 will be A1, B1, C1, D1, E1 partisans.

You will still not be able to win a majority of seats using only hardcore partisans.

Of course, you could assume even higher partisanship rates, but then it really wasn’t fair to assume that there are only five issues to choose. Even with 95% partisanship on each issue, if there are 20 issues:
(0.95)^20*100 = 36

The moral of the story is that if there is any heterogeneity across districts at all, any meaningful deviation from the party lines, you will only be able to reliably win a majority of the legislature if you cast a big tent. Even if the vast majority of people agree with you on any given issue, odds are that the vast majority of people don’t agree with you on everything.

Moreover, you are not sacrificing your principles by accepting these candidates, as you are still only accepting people who mostly agree with you into your party. Furthermore, you will still win votes on most issues—even those you felt like you were compromising on.

I therefore hope the Democratic Party makes the right choice and allows anti-abortion candidates into the party. It’s our best chance of actually winning a majority and driving the legislative agenda, including the legislative agenda on abortion.

Our biggest oil subsidy is called the Interstate Highway System


August 13, JDN 2457979

In last week’s post I proposed an infrastructure project that probably sounded quite expensive. $410 billion for maglev lines? We’ve never spent anything like that on infrastructure, have we?

Actually, we have. The Interstate Highway System, in inflation-adjusted dollars, cost $526 billion. Of course, road is a lot cheaper than maglev rail, so that covers a lot more miles than the maglev system I’m proposing.

Of course, the maglev system would produce a lot less carbon emissions and be a great deal safer; while the Interstate Highway System has about 60% (91 log points) fewer traffic fatalities than the road system that came before it, the Shinkansen high-speed rail system in Japan has not had a single passenger fatality in over 50 years and 1 billion passengers. No system built by humans will ever be perfect, but the Shinkansen comes about as close as we’re ever going to get.

Assuming we could even get close to that level of safety, replacing the highway system with high-speed rail would save about 2,000 American lives every year. (Of course, we’d still lose over 30,000 Americans every year to non-interstate car accidents.)

But what I really want to talk about this week is how the Interstate Highway System is in fact an implicit oil subsidy. We currently spend over $140 billion per year in public funds to maintain highways (about one-fourth of which is specifically the Interstate Highway System). For those of you playing along at home, that’s about half what it would take to end world hunger.

The choice to spending this money maintaining highways instead of bike lanes, rail lines, or subway systems makes this spending an implicit subsidy for the car industry and the oil industry.

Of course, that’s only half the story; there’s also the gasoline tax, which is a pretty obvious tax on the oil industry. But the federal gasoline tax only raises about $35 billion per year, and state taxes add up to a comparable amount; so only about half what we spend on highways is actually covered by gasoline taxes. This means that even if you never drive a car, you are paying for the highway system.

Even including the gasoline tax, this means that this implicit oil subsidy may be the largest oil subsidy in the United States. Standard estimates of oil subsidies in the US range around $30 to $40 billion per year. Assuming that 3/4 of the benefit from the $140 billion in highway spending goes to the oil industry (the other 1/4 to the car industry), and then subtracting the roughly $70 billion paid in gasoline taxes leaves about $35 billion per year in net oil subsidy from the Interstate Highway System—which is to say about as much as all other oil subsidies combined.

Moreover, when you do drive on the highway, you usually don’t pay. You pay for gasoline, but that’s quite cheap, especially if your car is at all fuel-efficient; and most of us (in an entirely economically rational way) avoid toll roads when we have the time. Most of what you spend on driving is paying to buy, insure, and maintain your car—because cars are extremely complicated and expensive machines that take an awful lot of knowhow to build. The annual cost of driving a typical midsize sedan 15,000 miles per year is about $8,500. Of that, about $3,000 is depreciation (I’m assuming half the depreciation was inevitable, and the other half was due to mileage), registration fees, and finance charges that just come from owning the vehicle and would still happen even if you hardly ever drove it. This means that your marginal cost of driving is only about $0.36 per mile. (This makes the $0.54 per mile deduction the IRS will give small business owners actually quite generous.) You have a strong economic incentive not to drive at all, but in many places it’s hard to even get by without a car; and once you have one, a substantial portion of the cost is already sunk and you may as well drive it.

Compare this to how we fund public transit. Most of the spending on public transit is privatized, and federal funds for public transit are about 1/6 of federal funds for interstate highways. Then we charge every single passenger for every single trip. Except for the recent transition to transit cards instead of cash, this whole system almost seems designed to minimize the salience of the cost of driving and maximize the salience of the cost of public transit.

We also spend far more on our public transit projects than is really necessary, because corruption and excess bureaucracy in the subcontracting system dramatically raises the price. This is actually rather strange, as overall the US has less corruption than Spain or France, yet we pay substantially more for our infrastructure than they do. Indeed, capital costs per kilometer for US urban rail lines consistently rate above all but the most expensive European projects—notably, usually above that $100 million per mile threshold I estimated for maglev rail done right.

This combination of high prices and low funding means our public transit system provides far worse service. Combined with the fact that the rent is too damn high, this gives Americans some of the longest commute times in the world.
What we should actually be doing of course is taxing the oil industry, at the social cost of carbon—the monetary value of the marginal ecological damage done by extracting and burning oil. If we did this, it would raise the price of gasoline by about $0.20 per gallon; since the $70 billion in gasoline taxes is currently raised by a tax of about $0.50 per gallon, that means we would raise an additional $30 billion from gasoline alone (not quite, as people would reduce their gasoline consumption a little). This means that by not doing this, we are effectively subsidizing oil by an additional $30 billion—making our total oil subsidies over $100 billion per year.

Of course, there is a case to be made that this is not the largest US oil subsidy after all. There is one quite plausible candidate for US oil subsidies that might actually be larger, and that is US military spending. Obviously not all military spending is an oil subsidy; but when you include both the absurd amounts of fuel that tanks and fighter jets consume (the DoD accounts for 93% of all US government fuel consumption!) and the fact that several of our most recent wars were at least partly about securing oil reserves, it’s not hard to see how this might be benefiting the oil industry. Estimating this effect quantitatively is very difficult, but if even 5% of the US military budget amounts to an oil subsidy, that’s over $25 billion per year—just shy of the Interstate Highway System.

What will we do without air travel?

August 6, JDN 2457972

Air travel is incredibly carbon-intensive. Just one round-trip trans-Atlantic flight produces about 1 ton of carbon emissions per passenger. To keep global warming below 2 K, personal carbon emissions will need to be reduced to less than 1.5 tons per person per year by 2050. This means that simply flying from New York to London and back twice in a year would be enough to exceed the total carbon emissions each person can afford if we are to prevent catastrophic global climate change.

Currently about 12% of US transportation-based carbon emissions are attributable to aircraft; that may not sound like a lot, but consider this. Of the almost 5 trillion passenger-miles traveled by Americans each year, only 600 billion are by air, while 60,000 are by public transit. That leaves 4.4 trillion passenger-miles traveled by car. About 60% of US transportation emissions are due to cars, while 88% of US transportation is by car. About 12% of US transportation emissions are due to airplanes, while 12% of US passenger-miles are traveled by airplane. This means that cars produce about 2/3 as much carbon per passenger-mile, even though we tend to fill up airplanes to the brim and most Americans drive alone most of the time.

Moreover, we know how to reduce emissions from cars. We can use hybrid vehicles, we can carpool more, or best of all we can switch to entirely electric vehicles charged off a grid that is driven by solar and nuclear power. It is theoretically possible to make personal emissions from car travel zero. (Though making car manufacturing truly carbon-neutral may not be feasible; electric cars actually produce somewhat more carbon in their production, though not enough to actually make them worse than conventional cars.)

We have basically no idea how to reduce emissions from air travel. Jet engines are already about as efficient as we know how to make them. There are some tweaks to taxi and takeoff procedure that would help a little bit (chiefly, towing the aircraft to the runway instead of taking them there on their own power; also, taking off from longer runways that require lower throttle to achieve takeoff speed). But there’s basically nothing we can do to reduce the carbon emissions of a cruising airliner at altitude. Even very optimistic estimates involving new high-tech alloys, wing-morphing technology, and dramatically improved turbofan engines only promise to reduce emissions by about 30%.

This is something that affects me quite directly; air travel is a major source of my personal carbon footprint, but also the best way I have to visit family back home.
Using the EPA’s handy carbon footprint calculator, I estimate that everything else I do in my entire life produces about 10 tons of carbon emissions per year. (This is actually pretty good, given the US average of 22 tons per person per year. It helps that I’m vegetarian, I drive a fuel-efficient car, and I live in Southern California.)

Using the ICAO’s even more handy carbon footprint calculator for air travel, I estimate that I produce about 0.2 tons for every round-trip economy-class transcontinental flight from California to Michigan. But that doesn’t account for the fact that higher-altitude emissions are more dangerous. If you adjust for this, the net effect is as if I had produced a full half-ton of carbon for each round-trip flight. Therefore, just four round-trip flights per year increases my total carbon footprint by 20%—and again, by itself exceeds what my carbon emissions need to be reduced to by the year 2050.

With this in mind, most ecologists agree that air travel as we know it is simply not sustainable.

The question then becomes: What do we do without it?

One option would be to simply take all the travel we currently do in airplanes, and stop it. For me this would mean no more trips from California to Michigan, except perhaps occasional long road trips for moving and staying for long periods.

This is unappealing, though it is also not as harmful as you might imagine; most of the world’s population has never flown in an airplane. Our estimates of exactly what proportion of people have flown are very poor, but our best guesses are that about 6% of the world’s population flies in any given year, and about 40% has ever flown in their entire life. Statistically, most of my readers are middle-class Americans, and we’re accustomed to flying; about 80% of Americans have flown on an airplane at least once, and about 1/3 of Americans fly at least once a year. But we’re weird (indeed, WEIRD, White, Educated, Industrialized, Rich, and Democratic); most people in the world fly on airplanes rarely, if ever.

Moreover, air travel has only been widely available to the general population, even in the US, for about the last 60 years. Passenger-miles on airplanes in the US have increased by a factor of 20 since just 1960, while car passenger-miles have only tripled and population has only doubled. Most of the human race through most of history has only dreamed of air travel, and managed to survive just fine without it.

It certainly would not mean needing to stop all long-distance travel, though long-distance travel would be substantially curtailed. It would no longer be possible to travel across the country for a one-week stay; you’d have to plan for four or five days of travel in each direction. Traveling from the US to Europe takes about a week by sea, each way. That means planning your trip much further in advance, and taking off a lot more time from work to do it.

Fortunately, trade is actually not that all that dependent on aircraft. The vast majority of shipping is done by sea vessel already, as container ships are simply far more efficient. Shipping by container ship produces only about 2% as much carbon per ton-kilometer as shipping by aircraft. “Slow-steaming”, the use of more ships at lower speeds to conserve fuel, is already widespread, and carbon taxes would further incentivize it. So we need not fear giving up globalized trade simply because we gave up airplanes.

But we can do better than that. We don’t need to give up the chance to travel across the country in a weekend. The answer is high-speed rail.

A typical airliner cruises at about 500 miles per hour. Can trains match that? Not quite, but close. Spain already has an existing commercial high-speed rail line, the AVE, which goes from Madrid to Barcelona at a cruising speed of 190 miles per hour. This is far from the limits of the technology. The fastest train ever built is the L0 series, a Japanese maglev which can maintain a top speed of 375 miles per hour.

This means that if we put our minds to it, we could build a rail line crossing the United States, say from Los Angeles to New York via Chicago, averaging at least 300 miles per hour. That’s a distance of 2800 miles by road (rail should be comparable); so the whole trip should take about 9 and a half hours. This is slower than a flight (unless you have a long layover), but could still make it there and back in the same weekend.

How much would such a rail system cost? Official estimates of the cost of maglev line are about $100 million per mile. This could probably be brought down by technological development and economies of scale, but let’s go with it for now. This means that my proposed LA-NY line would cost $280 billion.

That’s not a small amount of money, to be sure. It’s about the annual cost of ending world hunger forever. It’s almost half the US military budget. It’s about one-third of Obama’s stimulus plan in 2009. It’s about one-fourth Trump’s proposed infrastructure plan (that will probably never happen).

In other words, it’s a large project, but well within the capacity of a nation as wealthy as the United States.

Add in another 500 miles to upgrade the (already-successful) Acela corridor line on the East Coast, and another 800 miles to make the proposed California High-Speed Rail from LA to SF a maglev line, and you’ve increased the cost to $410 billion.
$410 billion is about 2 years of revenue for all US airlines. These lines could replace a large proportion of all US air traffic. So if the maglev system simply charged as much as a plane ticket and carried the same number of passengers, it would pay for itself in a few years. Realistically it would probably be a bit cheaper and carry fewer people, so the true payoff period might be more like 10 years. That is a perfectly reasonable payoff period for a major infrastructure project.

Compare this to our existing rail network, which is pitiful. There are Amtrak lines from California to Chicago; one is the Texas Eagle of 2700 miles, comparable to my proposed LA-NY maglev; the other is the California Zephyr of 2400 miles. Each of them completes one trip in about two and a half daysso a week-long trip is unviable and a weekend trip is mathematically impossible. Over 60 hours on each train, instead of the proposed 9.5 for the same distance. The operating speed is only about 55 miles per hour when we now have technology that could do 300. The Acela Express is our fastest train line with a top speed of 150 miles per hour and average end-to-end speed of 72 miles per hour; and (not coincidentally I think) it is by far the most profitable train line in the United States.

And best of all, the entire rail system could be carbon-neutral. Making the train itself run without carbon emissions is simple; you just run it off nuclear power plants and solar farms. The emissions from the construction and manufacturing would have to be offset, but most of them would be one-time emissions, precisely the sort of thing that it does make sense to offset with reforestation. Realistically some emissions would continue during the processes of repair and maintenance, but these would be far, far less than what the airplanes were producing—indeed, not much more than the emissions from a comparable length of interstate highway.

Let me emphasize, this is all existing technology. Unlike those optimistic forecasts about advanced new aircraft alloys and morphing wings, I’m not talking about inventing anything new here. This is something other countries have already built (albeit on a much smaller scale). I’m using official cost estimates. Nothing about this plan should be infeasible.

Why are we not doing this? We’re choosing not to. Our government has decided to spend on other things instead. Most Americans are quite complacent about climate change, though at least most Americans do believe in it now.

What about transcontinental travel? There we may have no choice but to give up our weekend visits. Sea vessels simply can’t be built as fast as airplanes. Even experimental high-speed Navy ships can’t far exceed 50 knots, which is about 57 miles per hour—highway speed, not airplane speed. A typical container vessel slow-steams at about 12 knots—14 miles per hour.

But how many people travel across the ocean anyway? As I’ve already established, Americans fly more than almost anyone else in the world; but of the 900 million passengers carried in flights in, through, or out of the US, only 200 million were international Some 64% of Americans have never left the United States—never even to Canada or Mexico! Even if we cut off all overseas commercial flights completely, we are affecting a remarkably small proportion of the world’s population.

And of course I wouldn’t actually suggest banning air travel. We should be taxing air travel, in proportion to its effect on global warming; and those funds ought to get us pretty far in paying for the up-front cost of the maglev network.

What can you do as an individual? Ay, there’s the rub. Not much, unfortunately. You can of course support candidates and political campaigns for high-speed rail. You can take fewer flights yourself. But until this infrastructure is built, those of us who live far from our ancestral home will face the stark tradeoff between increasing our carbon footprint and never getting to see our families.

Social construction is not fact—and it is not fiction

July 30, JDN 2457965

With the possible exception of politically-charged issues (especially lately in the US), most people are fairly good at distinguishing between true and false, fact and fiction. But there are certain types of ideas that can’t be neatly categorized into fact versus fiction.

First, there are subjective feelings. You can feel angry, or afraid, or sad—and really, truly feel that way—despite having no objective basis for the emotion coming from the external world. Such emotions are usually irrational, but even knowing that doesn’t make them automatically disappear. Distinguishing subjective feelings from objective facts is simple in principle, but often difficult in practice: A great many things simply “feel true” despite being utterly false. (Ask an average American which is more likely to kill them, a terrorist or the car in their garage; I bet quite a few will get the wrong answer. Indeed, if you ask them whether they’re more likely to be shot by someone else or to shoot themselves, almost literally every gun owner is going to get that answer wrong—or they wouldn’t be gun owners.)

The one I really want to focus on today is social constructions. This is a term that has been so thoroughly overused and abused by postmodernist academics (“science is a social construction”, “love is a social construction”, “math is a social construction”, “sex is a social construction”, etc.) that it has almost lost its meaning. Indeed, many people now react with automatic aversion to the term; upon hearing it, they immediately assume—understandably—that whatever is about to follow is nonsense.

But there is actually a very important core meaning to the term “social construction” that we stand to lose if we throw it away entirely. A social construction is something that exists only because we all believe in it.

Every part of that definition is important:

First, a social construction is something that exists: It’s really there, objectively. If you think it doesn’t exist, you’re wrong. It even has objective properties; you can be right or wrong in your beliefs about it, even once you agree that it exists.

Second, a social construction only exists because we all believe in it: If everyone in the world suddenly stopped believing in it, like Tinker Bell it would wink out of existence. The “we all” is important as well; a social construction doesn’t exist simply because one person, or a few people, believe in it—it requires a certain critical mass of society to believe in it. Of course, almost nothing is literally believed by everyone, so it’s more that a social construction exists insofar as people believe in it—and thus can attain a weaker or stronger kind of existence as beliefs change.

The combination of these two features makes social constructions a very weird sort of entity. They aren’t merely subjective beliefs; you can’t be wrong about what you are feeling right now (though you can certainly lie about it), but you can definitely be wrong about the social constructions of your society. But we can’t all be wrong about the social constructions of our society; once enough of our society stops believing in them, they will no longer exist. And when we have conflict over a social construction, its existence can become weaker or stronger—indeed, it can exist to some of us but not to others.

If all this sounds very bizarre and reminds you of postmodernist nonsense that might come from the Wisdom of Chopra randomizer, allow me to provide a concrete and indisputable example of a social construction that is vitally important to economics: Money.

The US dollar is a social construction. It has all sorts of well-defined objective properties, from its purchasing power in the market to its exchange rate with other currencies (also all social constructions). The markets in which it is spent are social constructions. The laws which regulate those markets are social constructions. The government which makes those laws is a social construction.

But it is not social constructions all the way down. The paper upon which the dollar was printed is a physical object with objective factual existence. It is an artifact—it was made by humans, and wouldn’t exist if we didn’t—but now that we’ve made it, it exists and would continue to exist regardless of whether we believe in it or even whether we continue to exist. The cotton from which it was made is also partly artificial, bred over centuries from a lifeform that evolved over millions of years. But the carbon atoms inside that cotton were made in a star, and that star existed and fused its carbon billions of years before any life on Earth existed, much less humans in particular. This is why the statements “math is a social construction” and “science is a social construction” are so ridiculous. Okay, sure, the institutions of science and mathematics are social constructions, but that’s trivial; nobody would dispute that, and it’s not terribly interesting. (What, you mean if everyone stopped going to MIT, there would be no MIT!?) The truths of science and mathematics were true long before we were even here—indeed, the fundamental truths of mathematics could not have failed to be true in any possible universe.

But the US dollar did not exist before human beings created it, and unlike the physical paper, the purchasing power of that dollar (which is, after all, mainly what we care about) is entirely socially constructed. If everyone in the world suddenly stopped accepting US dollars as money, the US dollar would cease to be money. If even a few million people in the US suddenly stopped accepting dollars, its value would become much more precarious, and inflation would be sure to follow.

Nor is this simply because the US dollar is a fiat currency. That makes it more obvious, to be sure; a fiat currency attains its value solely through social construction, as its physical object has negligible value. But even when we were on the gold standard, our currency was representative; the paper itself was still equally worthless. If you wanted gold, you’d have to exchange for it; and that process of exchange is entirely social construction.

And what about gold coins, one of the oldest form of money? There now the physical object might actually be useful for something, but not all that much. It’s shiny, you can make jewelry out of it, it doesn’t corrode, it can be used to replace lost teeth, it has anti-inflammatory properties—and millennia later we found out that its dense nucleus is useful for particle accelerator experiments and it is a very reliable electrical conductor useful for making microchips. But all in all, gold is really not that useful. If gold were priced based on its true usefulness, it would be extraordinarily cheap; cheaper than water, for sure, as it’s much less useful than water. Yet very few cultures have ever used water as currency (though some have used salt). Thus, most of the value of gold is itself socially constructed; you value gold not to use it, but to impress other people with the fact that you own it (or indeed to sell it to them). Stranded alone on a desert island, you’d do anything for fresh water, but gold means nothing to you. And a gold coin actually takes on additional socially-constructed value; gold coins almost always had seignorage, additional value the government received from minting them over and above the market price of the gold itself.

Economics, in fact, is largely about social constructions; or rather I should say it’s about the process of producing and distributing artifacts by means of social constructions. Artifacts like houses, cars, computers, and toasters; social constructions like money, bonds, deeds, policies, rights, corporations, and governments. Of course, there are also services, which are not quite artifacts since they stop existing when we stop doing them—though, crucially, not when we stop believing in them; your waiter still delivered your lunch even if you persist in the delusion that the lunch is not there. And there are natural resources, which existed before us (and may or may not exist after us). But these are corner cases; mostly economics is about using laws and money to distribute goods, which means using social constructions to distribute artifacts.

Other very important social constructions include race and gender. Not melanin and sex, mind you; human beings have real, biological variation in skin tone and body shape. But the concept of a race—especially the race categories we ordinarily use—is socially constructed. Nothing biological forced us to regard Kenyan and Burkinabe as the same “race” while Ainu and Navajo are different “races”; indeed, the genetic data is screaming at us in the opposite direction. Humans are sexually dimorphic, with some rare exceptions (only about 0.02% of people are intersex; about 0.3% are transgender; and no more than 5% have sex chromosome abnormalities). But the much thicker concept of gender that comes with a whole system of norms and attitudes is all socially constructed.

It’s one thing to say that perhaps males are, on average, more genetically predisposed to be systematizers than females, and thus men are more attracted to engineering and women to nursing. That could, in fact, be true, though the evidence remains quite weak. It’s quite another to say that women must not be engineers, even if they want to be, and men must not be nurses—yet the latter was, until very recently, the quite explicit and enforced norm. Standards of clothing are even more obviously socially-constructed; in Western cultures (except the Celts, for some reason), flared garments are “dresses” and hence “feminine”; in East Asian cultures, flared garments such as kimono are gender-neutral, and gender is instead expressed through clothing by subtler aspects such as being fastened on the left instead of the right. In a thousand different ways, we mark our gender by what we wear, how we speak, even how we walk—and what’s more, we enforce those gender markings. It’s not simply that males typically speak in lower pitches (which does actually have a biological basis); it’s that males who speak in higher pitches are seen as less of a man, and that is a bad thing. We have a very strict hierarchy, which is imposed in almost every culture: It is best to be a man, worse to be a woman who acts like a woman, worse still to be a woman who acts like a man, and worst of all to be a man who acts like a woman. What it means to “act like a man” or “act like a woman” varies substantially; but the core hierarchy persists.

Social constructions like these ones are in fact some of the most important things in our lives. Human beings are uniquely social animals, and we define our meaning and purpose in life largely through social constructions.

It can be tempting, therefore, to be cynical about this, and say that our lives are built around what is not real—that is, fiction. But while this may be true for religious fanatics who honestly believe that some supernatural being will reward them for their acts of devotion, it is not a fair or accurate description of someone who makes comparable sacrifices for “the United States” or “free speech” or “liberty”. These are social constructions, not fictions. They really do exist. Indeed, it is only because we are willing to make sacrifices to maintain them that they continue to exist. Free speech isn’t maintained by us saying things we want to say; it is maintained by us allowing other people to say things we don’t want to hear. Liberty is not protected by us doing whatever we feel like, but by not doing things we would be tempted to do that impose upon other people’s freedom. If in our cynicism we act as though these things are fictions, they may soon become so.

But it would be a lot easier to get this across to people, I think, if folks would stop saying idiotic things like “science is a social construction”.

Will China’s growth continue forever?

July 23, JDN 2457958

It’s easy to make the figures sound alarming, especially if you are a xenophobic American:

Annual GDP growth in the US is currently 2.1%, while annual GDP growth in China is 6.9%. At markte exchange rates, US GDP is currently $18.6 trillion, while China’s GDP is $11.2 trillion. If these growth rates continue, that means that China’s GDP will surpass ours in just 12 years.

Looking instead at per-capita GDP (and now using purchasing-power-parity, which is a much better measure for standard of living), the US is currently at $53,200 per person per year while China is at $14,400 per person per year. Since 2010 US per-capita GDP PPP has been growing at about 1.2%, while China’s has been growing at 7.1%. At that rate, China will surpass the US in standard of living in only 24 years.

And then if you really want to get scared, you start thinking about what happens if this growth continues for 20, or 30, or 50 years. At 50 years of these growth rates, US GDP will just about triple; but China’s GDP would increase by almost a factor of thirty. US per-capita GDP will increase to about $150,000, while China’s per-capita GDP will increase all the way to $444,000.

But while China probably will surpass the US in total nominal GDP within say 15 years, the longer-horizon predictions are totally unfounded. In fact, there is reason to believe that China will never surpass the US in standard of living, at least within the foreseeable future. Sure, some sort of global catastrophe could realign the world’s fortunes (climate change being a plausible candidate) and over very long time horizons all sorts of things can happen; but barring catastrophe and looking within the next few generations, there’s little reason to think that the average person in China will actually be better off than the average person in the United States. Indeed, while that $150,000 figure is actually remarkably plausible, that $444,000 figure is totally nonsensical. I project that in 2065, per-capita GDP in the US will indeed be about $150,000, but per-capita GDP in China will be more like $100,000.

That’s still a dramatic improvement over today for both countries, and something worth celebrating; but the panic that the US must be doing something wrong and China must be doing something right, that China is “eating our lunch” in Trump’s terminology, is simply unfounded.

Why am I so confident of this? Because, for all the proud proclamations of Chinese officials and panicked reports of American pundits, China’s rapid growth rates are not unprecedented. We have seen this before.

Look at South Korea. As I like to say, the discipline of development economics is basically the attempt to determine what happened in South Korea 1950-2000 and how to make it happen everywhere.

In 1960, South Korea’s nominal per-capita GDP was only $944. In 2016, it was $25,500. That takes them from solidly Third World underdeveloped status into very nearly First World highly-developed status in just two generations. This was an average rate of growth of 6.0%. But South Korea didn’t grow steadily at 6.0% for that entire period. Their growth fluctuated wildly (small countries tend to do that; they are effectively undiversified assets), but also overall trended downward.

The highest annual growth rate in South Korea over that time period was an astonishing 20.8%. Over twenty percent per year. Now that is growth you would feel. Imagine going from an income of $10,000 to an income of $12,000, in just one year. Imagine your entire country doing this. In its best years, South Korea was achieving annual growth rates in income comparable to the astronomical investment returns of none other than Warren Buffett (For once, we definitely had r < g). Even if you smooth out over the boom-and-bust volatility South Korea went through during that period, they were still averaging growth rates over 7.5% in the 1970s.

I wasn’t alive then, but I wouldn’t be surprised if Americans back then were panicking about South Korea’s growth too. Maybe not, since South Korea was and remains a close US ally, and their success displayed the superiority of capitalism over Communism (boy did it ever: North Korea’s per capita GDP also started at about $900 in 1960, and is still today… only about $1000!); but you could have made the same pie-in-the-sky forecasts of Korea taking over the world if you’d extrapolated their growth rates forward.

South Korea’s current growth rate, on the other hand? 2.9%. Not so shocking now!

Moreover, this is a process we understand theoretically as well as empirically. The Solow model is now well-established as the mainstream neoclassical model of economic growth, and it directly and explicitly predicts this sort of growth pattern, where a country that starts very poor will initially grow extremely fast as they build a capital base and reverse-engineer technology from more advanced countries, but then over a couple of generations their growth will slow down and eventually level off once they reach a high level of economic development.

Indeed, the basic reason is quite simple: A given proportional growth is easier to do when you start small. (There’s more to it than that, involving capital degradation and diminishing marginal returns, but at its core, that’s the basic idea.)

I think I can best instill this realization in you by making another comparison between the US and China: How much income are we adding in absolute terms?

US per-capita GDP of $53,200 is growing at 1.2% per year; that means we’re adding $640 per person per year. China per-capita GDP of $14,400 is growing at 7.1% per year; that means they’re adding $1,020 per year. So while it sounds like they are growing almost six times faster, they’re actually only adding about 40% more real income per person each year than we are. It’s just a larger proportion to them.

Indeed, China is actually doing relatively well on this scale. Many developing countries that are growing “fast” are actually adding less income per person in absolute terms than many highly-developed countries. India’s per capita GDP is growing at 5.8% per year, but adding only $340 per person per year. Ethiopia’s income per person is growing by 4.9%—which is only $75 per person per year. Compare this to the “slow” growth of the UK, where 1.0% annual growth is still $392 per person per year, or France, where “stagnant” growth of 0.8% is still $293 per person per year.

Back when South Korea was growing at 20%, that was still on the order of $200 per person per year. Their current 2.9%, on the other hand, is actually $740 per person per year. We often forget just how poor many poor countries truly are; what sounds like a spectacular growth rate still may not be all that much in absolute terms.

Here’s a graph (on a log scale) of GDP per capita in the US, Japan, China, and Korea, from World Bank data since 1960. I’d prefer to use GDP PPP, but the World Bank data doesn’t go back far enough.

As you can see, there is a general pattern of growth at a decreasing rate; it’s harder to see in China because they are earlier in the process; but there’s good reason to think that they will follow the same pattern.

If anything, I think the panic about Japan in the 1990s may have been more justifiable (not that it was terribly justified either). As you can see on the graph, in terms of nominal GDP per capita, Japan actually did briefly surpass the United States in the 1990s. Of course, the outcome of that was not a global war or Japan ruling the world or something; it was… the Nintendo Wii and the Toyota Prius.

Of course, that doesn’t stop people from writing news articles and even publishing economic papers about how this time is different, not like all the other times we saw the exact same pattern. Many Chinese officials appear to believe that China is special, that they can continue to grow at extremely high rates indefinitely without the constraints that other countries would face. But for once economic theory and economic data are actually in very good agreement: These high growth rates will not last forever. They will slow down, and that’s not such a bad thing. By the time they do, China will have greatly raised their standard of living to something very close to our own. Hundreds of millions of people have already been lifted out of abject poverty; continued growth could benefit hundreds of millions more.

The far bigger problem would be if the government refuses to accept that growth must slow down, and begins trying to force impossible levels of growth or altering the economic data to make it appear as though growth has occurred that hasn’t. We already know that the People’s Republic of China has a track record of doing this sort of thing: we know they have manipulated some data, though we think only in small ways, and the worst example of an attempt at forcing economic growth in human history was in China, the so-called “Great Leap Forward” that killed 20 million people. The danger is not that China will grow this fast forever, nor that they will slow down soon enough, but that they will slow down and their government will refuse to admit it.

Several of the world’s largest banks are known to have committed large-scale fraud. Why have we done so little about it?

July 16, JDN 2457951

In 2014, JPMorgan Chase paid a settlement of $614 million for fraudulent mortgage lending contributing to the crisis; but this was spare change compared to the $16.5 billion Bank of America paid in settlements for their fradulent mortgages.

In 2015, Citibank paid $700 million in restitution and $35 million in penalties for fraudulent advertising of “payment protection” services.

In 2016, Wells Fargo paid $190 in settlements for defrauding their customers with fake accounts.

Even PayPal has paid $25 million in settlements over abuses of their “PayPal Credit” system.
In 2016, Goldman Sachs paid $5.1 billion in settlements over their fraudulent sales of mortgage-backed securities.
But the worst offender of course is HSBC, which has paid $2.5 billion in settlements over fraud, as well as $1.9 billion in settlements for laundering money for terrorists. The US Justice Department has kept their money-laundering protections classified because they’re so bad that simply revealing them to the public could result in vast amounts of criminal abuse.
These are some of the world’s largest banks. JPMorgan Chase alone owns 8.0% of all investment banking worldwide; Goldman Sachs owns 6.6%; Citi owns 4.9%; Wells Fargo 2.5%; and HSBC 1.8%. That means that between them, these five corporations—all proven to have engaged in large-scale fraud—own almost one-fourth of all the world’s investment banking assets.

What shocks me the most about this is that hardly anyone seems to care. It’s seen as “normal”, as “business as usual” that a quarter of the world’s investment banking system is owned by white-collar criminals. When the issue is even brought up, often the complaint seems to be that the government is being somehow overzealous. The Economist even went so far as to characterize the prosecution of Wall Street fraud as a “shakedown”. Apparently the idea that our world’s most profitable companies shouldn’t be able to launder money for terrorists is just ridiculous. These are rich people; you expect them to follow rules? What is this, some kind of democracy?

Is this just always how it has been? Has corruption always been so thoroughly infused with finance that we don’t even know how to separate them? Has the oligarchy of the top 0.01% become so strong that we can’t even bring ourselves to challenge them when they commit literal treason? For, in case you’ve forgotten, that is what money-laundering for terrorists is: HSBC gave aid and comfort to the enemies of the free world. Like “freedom” and “terrorism”, the word “treason” has been so overused that we begin to forget its meaning; but one of the groups that HSBC gladly loaned money to is an organization that has financed Hezbollah and Al-Qaeda. These are people that American and British soldiers have died fighting against, and when a British bank was found colluding with them, the penalty was… a few weeks of profits, no personal responsibility, and not a single day of prison time. The settlement was in fact less than the profits gained from the criminal enterprise, so this wasn’t even a fine; it was a tax. Our response to treason was to impose a tax.

And this of course was not the result of some newfound leniency in American government in general. No, we are still the nation that imprisons 700 out of every 100,000 people, the nation with more prisoners than any other nation on Earth. Our police officers still kill young Black men with impunity, including at least three dozen unarmed Black men every year, many of them for no apparent reason at all. (The precise number is still unknown, as the police refuse to keep an official database of all the citizens they kill.) Decades of “law and order” politicians promising to stop the “rising crime” (that is actually falling) have made the United States very close to a police state, especially in poor neighborhoods that are primarily inhabited by Black and Hispanic people. We don’t even have an especially high crime rate, except for gun homicides (and that because we have so many guns, also more than any other nation on Earth). We are, if anything, an especially vindictive society, cruel, unforgiving, and violent towards those we perceive as transgressors.

Except, that is, when the criminals are rich. Even the racial biases seem to go away in such circumstances; there is no reasonable doubt as to the guilt of O.J. Simpson or Bill Cosby, but Simpson only ended up in prison years later on a completely unrelated offense, and after Cosby’s mistrial it’s unclear if he’ll ever see any prison time. I don’t see how either man could have been less punished for his crimes had he been White; but can anyone seriously doubt that both men would be punished more had they not been rich?

I do not think that capitalism is an irredeemable system. I think that, in themselves, free markets are very useful, and we should not remove or restrict them unnecessarily. But capitalism isn’t supposed to be a system where the rich can do whatever they want and the poor have to accept it. Capitalism is supposed to be a system where everyone is free to do as they choose, unless they are harming others—and the rules are supposed to be the same for everyone. A free market is not one where you can buy the right to take away other people’s freedom.

Is this just some utopian idealism? It would surely be utopian to imagine a world where fraud never happens, that much is true. Someone, somewhere, will always be defrauding someone else. But a world where fraud is punished most of the time? Where our most powerful institutions are still subject to the basic rule of law? Is that a pipe dream as well?

This is a battle for the soul of America

July 9, JDN 2457944

At the time of writing, I just got back from a protest march against President Trump in Santa Ana (the featured photo is one I took at the march). I had intended to go to the much larger sister protest in Los Angeles, but the logistics were too daunting. On the upside, presumably the marginal impact of my attendance was higher at the smaller event.

Protest marches are not a common pastime of mine; I am much more of an ivory-tower policy wonk than a boots-on-the-ground political activist. The way that other people seem to be allergic to statistics, I am allergic to a lack of statistics when broad claims are made with minimal evidence. Even when I basically agree with everything being said, I still feel vaguely uncomfortable marching and chanting in unison (and constantly reminded of that scene from Life of Brian). But I made an exception for this one, because Trump represents a threat to the soul of American democracy.

We have had bad leaders many times before—even awful leaders, even leaders whose bad decisions resulted in the needless deaths of thousands. But not since the end of the Civil War have we had leaders who so directly threatened the core institutions of America itself.

We must keep reminding ourselves: This is not normal. This is not normal! Donald Trump’s casual corruption, overwhelming narcissism, authoritarianism, greed, and utter incompetence (not to mention his taste in decor) make him more like Idi Amin or Hugo Chavez than like George H.W. Bush or Ronald Reagan. (Even the comparison with Vladimir Putin would be too flattering to Trump; Putin at least is competent.) He has personally publicly insulted over 300 people, places, and things—and counting.

Trump lies almost constantly, surrounds himself with family members and sycophants, refuses to listen to intelligence briefings, and personally demeans and even threatens journalists who criticize him. Every day it seems like there is a new scandal, more outrageous than the last; and after so long, this almost seems like a strategy. Every day he finds some new way to offend and undermine the basic norms of our society, and eventually he hopes to wear us down until we give up fighting.

It is certainly an exaggeration, and perhaps a dangerous one, to say that Donald Trump is the next Adolf Hitler. But there are important historical parallels between the rise of Trump and the rise of many other populist authoritarian demagogues. He casually violates democratic norms of civility, honesty, and transparency, and incentivizes the rest of us to do the same—a temptation we must resist. Political scientists and economists are now issuing public warnings that our democratic institutions are not as strong as we may think (though, to be fair, others argue that they are indeed strong enough).

It was an agonizingly close Presidential election. Even the tiniest differences could have flipped enough states to change the outcome. If we’d had a better voting system, it would not have happened; a simple plurality vote would have elected Hillary Clinton, and as I argued in a previous post, range voting would probably have chosen Bernie Sanders. Therefore, we must not take this result as a complete indictment of American society or a complete failure of American democracy. But let it shake us out of our complacency; democracy is only as strong as the will of its citizens to defend it.