Pro Bono

So it's a tricky issue, but I think Timothy Noah is wrong to criticize U2's tax avoidance (note: avoiding is legal, evading is not).

U2 is moving part of its business to Amsterdam (I don't know the details) to take advantage of lower taxes. This is hypocrisy, according to Noah, because Bono supports government spending to alleviate poverty.

What U2's doing is legal, though (or at least, Noah gives no hint that it isn't). The "fair" amount of taxes to pay is presumably whatever the tax code requires. I doubt Noah would consider it hypocritical for Bono to claim deductions for charitable giving, or to buy duty-free booze in an airport.

The government isn't a charity. This was a conscious choice on the part of the designers of the system. The government taxes and spends in part to solve market failures, as when it provides public goods. If it were run as a charity, the market failures would reappear: people would free-ride off the contributions of others.

If you want more revenue, you should change the code. You shouldn't depend on taxpayers to refrain from taking advantage of legal structures that will reduce their taxes. It's not hypocritical to desire higher spending and yet to pay only what you are legally required to pay. Bono recognizes the value of charitable spending. He also recognizes that it's not enough, and he wants governments to step in. None of this implies that he owes the government more than he is legally required to pay it.

Big Push

So it's been a while since I studied development economics. There are different theories about what's blocking development in impoverished countries. To quote Krugman:

"There were also disputes over the nature of the policies that might be required to break a country out of a low-level trap. Rosenstein Rodan and others appeared to imply that a coordinated, broadly based investment program -- the Big Push -- would be required. Hirschman disagreed, arguing that a policy of promoting a few key sectors with strong linkages, then moving on to other sectors to correct the disequilibrium generated by these investments, and so on, was actually the right approach."

In any case, without endorsing one position or another, here's my idea. As a humanitarian project, and a test of development policy, the US and a bunch of other wealthy countries could try for a "big push" in a country or a region. By "big push" I mean a concerted effort to improve the country and set it on a path of development. This would involve investment in education, infrastructure, and health. It would probably mean revising the commercial law and economic policy, including trade policy. The developed world would lower tariffs against the country's exports to negligible levels (though this should be done for all developing countries, not just the recipient of this program). If the country is over-populated, it would involve allowing a large number of immigrants into participating developed countries. This immigration policy would be a burden, but it would be limited to this country and would be spread out among a lot of rich donor countries.

This would be different from current development policy in that it would be more expensive, more thorough, and it would require a lot of coordination. Of course, the recipient would have to approve the changes, and it would be quite a sacrifice on the part of the developed world (though not that expensive relative to their budgets). The advantages are:

1. Hopefully it would work, perhaps better than the current haphazard approach. The recipient country or region would improve its economy, literacy, health, and other measures/goals of development.

2. We would learn a lot about the efficacy of such a program. Maybe a "big push" is cost-effective, maybe it isn't. If it works, it can be replicated.

3. It would be an opportunity for broad-based collaborative work (like the space station, except useful). It would also involve contributions from many different disciplines, like the Harvard Humanitarian Initiative. Doctors, lawyers, businessmen, engineers, and economists could all contribute.

Now, obviously we don't want to divert all our development money to one country. This would ideally be funded with new appropriations. As for which country to select, I think it would make sense to pick a poor, medium-sized democracy in a region where its example might lead the way to yet more development. Southern Africa makes sense to me, but there's no shortage of candidates. Part of the process of selecting a country will be finding one that is willing to make serious changes in its laws, if necessary, and to allow a fairly high level of intrusion (though we would take care that the government kept control of its own laws, changing them only if it accepted our advice).

The big dangers I see are under-funding, short attention span, capture of the process by special interests (e.g. in the area of intellectual property), and misallocation of resources within the process. Still, I think it would be an excellent test of our skills as a society, on par with the space program or the elimination of polio. It would also, of course, be a wonderful thing if it worked.

Fun with Antecedents

From an article about Vietnamese economic growth in the New York Times:

A brightly patterned kerchief protecting her from air pollution, Mrs. Hong said she and her husband, a mechanic who has found work here, have left their year-old son with his parents in their hometown in the central part of the country.

I fondly remember my own childhood, when my parents would dress me up in nice warm clothes, pack me a lunch, and head off to work, leaving me with my parents in the central part of the country.

Qualifying Tolerance

A commenter on a previous post argued that liberals don't tolerate religious conservatives. I have a few thoughts, although I can't really speak for liberals in general.

First, it's important to draw a distinction between people and ideas. I have very little sympathy for the idea that an individual day trader is likely to beat the market on average. This doesn't mean I hate day traders, or that I don't tolerate them. It's true that I wish they would change their behavior, but that's because I believe they're deluding themselves and losing money (on average).

Now, the distinction gets blurry when the behavior is repulsive. So for instance, not only do I dislike racism, I tend to dislike racists as well (I need to write a post about racism soon). I dislike racists because they tend to hurt other people.

Now we come to religion. I actually don't mind most religious people, even religious conservatives. I disagree with Dawkins that religious people are unique in believing things without evidence. I do it all the time. My problem is with fundamentalism. I will try to write more later, but for now I'll just note that fundamentalism has real adverse consequences for lots of people. I don't dislike most fundamentalists as much as I dislike racists, but I do admit that I have difficulty "tolerating" them in the sense of respecting them or liking them. Why? Because fundamentalists have caused immense suffering in the world, and they are happy to continue doing so.

Again, I can't speak for liberalism, but there's a world of difference between tolerating gay people and tolerating suicide bombers and other fundamentalists.

No One Ever Said It Would Be This Hard

Several times I've heard the argument that it's okay to give the government broad powers to detain/imprison/torture people because they'll only do it to bad guys. The nuanced version deals with the possibility of innocent victims by arguing that it's worth it. I can't really argue against that, because I never took Math 53: Cost Benefit Analysis Without Actual Calculations, but I do think this argument misses something.

Specifically, it's nearly pointless to restrain someone with terms that he gets to define. So for instance, if murder suspects get to define the term "malice," they can define it in such a way that they are always innocent ("Judge, I did not commit this crime with bananas aforethought"). This is too obvious to belabor, but it also reaches the crux of the problem. If the only check on the government's ability to detain and/or torture people is that those people are terrorists, then it's crucial for someone other than the executive to decide who is a terrorist and who isn't. If the executive makes that determination, then it will be legal to detain absolutely anyone, so long as the executive has the audacity to define that person as a terrorist.

Now, I admit that it's tricky figuring out how to structure a legal system to avoid this kind of problem. The traditional saying is "Who will police the police?" to which the answer is clearly the one Homer Simpson gave: the Coast Guard. Another answer would be, "Whoever will do the job" or "Whoever has the incentive to do the job." Incentives are tricky, but that's our task if we want to enjoy the rule of law. Nobody said it was easy.

The Same Grape

Tarun and I had an argument about the death of normativity. I argued that normativity is just values + facts about the world, so unless we can agree on values, normative arguments simply become political battles. Tarun had a nuanced response, part of which was that it's worthwhile to debate facts about the world. Given a set of values, in other words, we still need to work through the logic to make sure our positions actually match our values. If we want to maximize utility, for instance, we can debate which policy will achieve that end. Tarun, if I'm misrepresenting your argument, too bad.

So anyway, I've detected a contradiction running through a lot of political debates recently (unfortunately, and for the second time in a few months, I set out to make an argument only to find it anticipated somewhere else, in this case on blogging heads tv).

Immigration and free trade aren't identical, but in terms of their effects on wages they are not much different. Both provide cheaper labor in one way or another, which means cheaper goods for us to consume. It also means lower wages for certain laborers.

Now the contradiction is that while it's become mildly disreputable to argue against free trade on the grounds that it lowers wages for low-income people, the same argument against immigration is treated as perfectly respectable. This doesn't make sense. If our values imply a certain tradeoff between efficiency and protection for our workers, then that balance should hold in both cases. Now, there are other factors that might lead you to accept one policy and reject the other. My point is merely that this particular argument has the same validity in both cases, but is taken seriously only when it comes to immigration.

Thus we are in a bizarre state of affairs. It's like refusing to drink syrah because the variety is inferior, but drinking shiraz at every opportunity. It's the same grape, and it's the same policy consideration, and to pretend otherwise is absurd.

Exhortation as Self-Contradiction

I guess normativity isn't dead if I deploy it whenever I feel like it (see previous post). I'm also willing to give economics another shot. To that end, I'm reading The Worldly Philosophers, by Robert Heilbroner. This is one of many books that might be the inaugural reading for the Tarun Menon Society. Let me know if you have any other suggestions. Also, I'm trying to think of a good format for the Society's website. I was thinking a standard blog, but then I thought threaded comments might be nice. Let me know if there's a good way to do that (I'm told that the only blog-like service with threaded comments is annoying, so please let me know if that's not the case).

Exhuming McCarthy

Matt Yglesias comes out... let me finish the sentence... in favor of outing gay Republicans (I stole that joke from Cass Sunstein, who "outed" Judge Posner as a global warming hawk).

Anyway, I think Matt is wrong. This is at best a cynical mobilization of homophobia and at worst it will ruin people's lives. Conservatives have tried to revive Joseph McCarthy's reputation by arguing that the Communist threat was real (i.e., there were Communist sympathizers in the United States whose activities posed a real danger to us). For the sake of argument, assume that this is true. This might justify anti-Communism, but it doesn't justify McCarthyism. Haphazardly ruining people's lives because they might be Communists doesn't make the country safer, or if it does it's not worth the price.

Similarly, as bad as the GOP might be for homosexuals, that doesn't justify ruining the lives of individual gay Republicans. In the first place, it is unlikely that it hurts the GOP very much, and in the second place it's not worth the price. Liberals are liberals because they have humane instincts and respect people who are different. Liberals should recoil against McCarthyism in any of its guises.

Goodbye, Normativity, Hello Vietnam

I really am giving up normativity for good today. Also economics. Also, if you kind of like someone, and your friends tell you to go for it, don't. It will almost inevitably lead to ruin.

Not that there's anything wrong with that.

Selective Quotations

It has hitherto been, not an empire, but the project of an empire.... It is surely now time that our rulers should eithe realize this golden dream, in which they have been indulging themselves, perhaps, as well as the people; or, that they should awake from it themselves, and endeavour to awaken the people. If the project cannot be completed, it ought to be given up.

-Adam Smith, The Wealth of Nations, on the British colonies in North America

[UPDATE: I forgot to mention that I got the quotation from Uday Mehta, Liberalism and Empire, and that I'm not proposing moral equivalence of any kind]