The Tale of the Emperor

Gordon Tullock used to like to tell this little story to illustrate an important point, and I figured it should be on this blog.

The Roman emperor decided to hold a competition to determine the best singer in the whole of the empire. News of the contest was spread far and wide. On the appointed day, only two singers appeared. The first was presented to the emperor and began to sing. After a minor mistake or two, the emperor declared the competition over and awarded the prize to the second singer.

The lesson this was intended to illustrate was that when there were perceived market failures, the tendency for quite a long time in the economics profession was to say that the government should be used to correct them. In fact, in some quarters this persists to the present. The problem is that the second singer might have been much worse than the first singer, and it’s silly to look at only half of the problem before declaring the solution.

Government failure is every bit as problematic as market failure, and there are good reasons to believe that in the real world it’s likely to be worse. Since we do not live in a perfect world, some (market) failures might not be worth correcting; the cure might be worse than the disease.


Two facts about Irish people in America

Immigration from Ireland to what is now the United States can be broken down, essentially, into two waves. The earlier wave was mainly of Protestants from Ulster. Many of these were descendants of relatively recent arrivals to Ireland (~200 years prior, mainly from lowland Scotland), and not all were fully assimilated into native Irish culture.* This is one of the reasons why Northern Ireland remains separate from the Republic of Ireland to this day. The second wave is the one more familiar to Americans, that of Catholics from across the island fleeing economic disaster and the infamous Potato Famine. I recently watched the documentary The Irish Empire, which had interesting facts about both waves. They only link together by involving people from Ireland, but I’ll give them both here.

First, the series points that out among the largely Presbyterian Ulster Irish, a.k.a. Ulster Scots, Scotch-Irish, or Scots-Irish, the long training to become a preacher of that denomination led to shortages on the American Appalachian frontier. The gap was filled by Baptist preachers who required far less training, and to this day the Appalachian region is heavily Baptist. These immigrants were never really Catholic, and the Catholic Church was not a very influential presence in the English-speaking colonies. This phenomenon is partially addressed in Albion’s Seed, but I don’t remember that it presented the facts in just this way. This would probably help to explain a good deal of religious change in other times and places.

Second, in some American cities in mid 1880s and beyond, Catholic Churches used Irish cultural sentiment to maintain the interest of their heavily Irish congregations. These particular city folk belonged to the wave that made Irish and Catholic largely synonymous. A similar phenomenon happened in Australia, where almost all Catholic education was mixed with Irish culture. Interestingly, it was at this time that the term Scotch-Irish was used by the older wave to distance themselves from these new immigrants who were almost all at the bottom of the social ladder. Before the second wave, the first wave and their descendants were simply referred to as “Irish”.

* Exactly how assimilated they were is still something of a mystery to me. Judging by music alone they must have been at least partially assimilated. My paternal grandfather’s family came from this wave, if I’m not mistaken, and they considered themselves Irish, celebrated St. Patrick’s Day, etc. It wasn’t until later in history, i.e. after the first era of mass migration to the Western Hemisphere, that the apparently impenetrable cultural divide was driven between the territories that are now Northern Ireland and the Republic of Ireland. However, the fact that there was at least some religious and social difference in the first place demonstrates that the mixing was not 100%.

P.S. I didn’t include it at first because it was not new to me, but it’s relevant to point out that most people of Irish descent in the United States are descended from the first wave and not the second. When John F. Kennedy was hailed as the first Irish-descended president, what it really meant was that he was the first from the second wave. The interpretation is that he was the first authentically Irish-descended president, because by that time the descendants of the first wave had lost or given up the cultural battle in being seen by outsiders and by themselves as “Irish” pure and simple.

On doping in cycling

The economist in me says to allow performance-enhancing drugs in professional cycling, but the cycling fan says not to. On this issue, I’m siding with my cycling fan self. The continuous use of PEDs is harmful to the athletes in the long run, and it really takes the pleasure out of watching it when the best that sports medicine has to offer is a bigger factor than the rider’s will to compete. Granted, both are still important, and the Lance Armstrong era demonstrates that dope is not enough to win—all the top guys were doping, but not all the top guys won—but it’s just not as fun to watch a doped race as it is to watch a clean race. (I might make an exception for Floyd Landis’s stage 17 victory in the 2006 Tour de France, which was as majestic a sight as I can think of in sports, but it’s just that: an exception.)

I’m well aware of what happens when something that people really want to do is banned. They do it anyway and spend a lot of time and energy trying to evade the ban. It seems to me that there are a few rules that would mitigate most of this. First, the penalties for doping should be very high. Cycling is not something you can do forever, and missing two or three years in your prime is a pretty strong incentive not to dope. By itself, this rule is not going to be very effective, but a second rule should help. This second rule is that samples should be kept and re-tested every so often as new tests emerge to counter new doping techniques.

Both of these rules have been implemented already in the recent past, and it seems to me that both are helping to curb doping. The spectacular fall of Lance Armstrong should help to illustrate that though you may keep (most of) the money, the glory will be gone forever. Given that the commitment necessary to become an elite cyclist takes years and years—all of a cyclist’s adult life until he retires from the sport, and probably some before that too—cyclists become very committed to the glory aspect, even if the financial aspect would suffice. To know that one’s name is cursed is hard for most cyclists, and to the more antisocial types, well, it seems they’re usually brash enough to get caught early on anyway. (See: Riccardo Riccò.)

It all boils down to what kind of entertainment the fans want. We all know that doping is not going to make a complete novice into a champion, but it may very well help an upper mid-tier rider become an overall contender. What’s fun to watch about cycling is how guys with natural talent train, strategize, and push themselves beyond what seems humanly possible. Winning the Tour de France seven years in a row is beyond what’s humanly possible, but it wasn’t because of Lance’s will and training. Essentially, it was like using magic, and that really drains the accomplishment of its inspiration. Imagine that Han Solo and Luke Skywalker were competing in the same task, and Luke Skywalker won. You’d think “So what? He can use the goddamn Force!”

It would be silly to deny that Lance’s success was the largest factor in my becoming interested in cycling. It clearly was, and I’m sure that’s the case for almost all American fans brought in since 1998. But once I passed the first stage of fandom, my preferences for the kinds of races I wanted to see started maturing too. The more recent Grand Tours are surely not entirely clean, but they have been a blast to watch and you don’t feel at the end that the winner gave more attention to science than to riding a bike as well as possible. Science is great, and I’ve enjoyed the many NASA launches I’ve watched. But sport is different. There needs to be an arena of entertainment that focuses on what a small team of guys can do, not on how the pharmaceutical industry can help them do it.

A Keynesian parable

During the Korean War, ten wounded American soldiers were taken to a special hospital ward. Each of the soldiers had lost a leg, and in this ward medical experts were testing a new treatment that they hoped could regenerate the legs. The soldiers were treated and left to recover.

A major battle happened up north and these doctors were transferred out and new doctors transferred in. The next morning, a bright young doctor with an Ivy League education took over the ward. In addition to medical training, he’d also learned the newest Keynesian economics and taken it to heart.

The experimental treatment had bizarre results. Five soldiers woke up to find their missing legs regenerated, but each of the other five awoke to find that the treatment had caused him to lose his remaining leg. Five soldiers clapped and cheered, and five moaned and cursed fate.

The new head doctor arrived on site and asked the nurses about the vital signs they’d been checking on throughout the night. All ten had normal temperatures and so on, but the nurses became alarmed by the commotion they’d just heard when the soldiers woke up. The doctor assured them he would take it from there.

As he entered, he saw five beaming faces and five grimacing faces. He checked under all the blankets, made notes on his clipboard, and left. The nurses were waiting for the news.

“I don’t see what all the fuss is about,” he told them. “Nothing’s changed. Ten men, ten legs.”

Today is a sad day for economics. I have learned through social media that James M. Buchanan has died. At Mason we are academically brought up in his intellectual heritage, but I believe his work is important for scholars of all persuasions across many disciplines. I regret that I never got to meet him.

Netflix and knowledge

Netflix dvd subscribers probably will all relate to this: you can put movies in way faster than you can actually watch them, so it’s easy to spend a few minutes putting movies in that will take you a year to get through. In this case, Netflix tells me I put in the 1966 western Django in the queue on 3/4/12. I’ve been either going through periods where I don’t watch movies much or rearranging the queue so that other movies have higher priority since then. All of a sudden, as a result of Quentin Tarantino’s Django Unchained, the demand for the older movie is through the roof. Netflix now adds a “Very long wait” note in the list. I have never seen this note before, only the “Short wait” note indicating that the Netflix distribution center nearest you does not have the movie in question and that it will take longer than usual because it is being mailed from another center. Undoubtedly, the “Very long wait” status of Django means that it must be in high demand right now even within my distribution zone.

There is a lesson here about equilibrium in the sense given in Friedrich Hayek’s marvelous essay “Economics and Knowledge”. Hayek writes that when equilibrium is described as a condition among multiple people, it must mean that the plans of each person are coordinated with the plans of the others—there must be a general harmony of plans. Disequilibrium happens when people realize that their plans cannot all come to fruition given the plans of others. In the short run of the economy, prices are bid up (or allowed to fall) so that the highest-valued uses end up being the ones to which resources are actually directed, and in the long run production of those is ramped up to meet the demand, attracted by high prices. The key point is that people have to adjust their plans to the reality they face, which they did not know when they made them in the first place. (Given that people don’t all make their plans together, and that the adjustments made to one plan necessitate adjustments to other plans in a continuous process, it is basically impossible ever to attain this kind of equilbrium.)

In the case of Django, it is quite obvious that there is no harmony of plans, and Netflix does the adjustment for you. If the movie is currently at the top of your list, they treat it as a lower priority by sending you the next one down. For customer satisfaction, they treat this fronted movie as a bonus, and the film you were originally waiting on is shipped as soon as it becomes available. The scope of the plans made on Netflix is very small, so it doesn’t really cause a lot of problems. In the economy as a whole, however, the scope of plans is tremendous, too broad even to contemplate. To think that any entity can rearrange the plans as Netflix does with its subscribers’ queues, as many smart people used to, is absurd.

Unofficial Soviet orphan policy in the 1930s

Over winter break I have started reading Robert Conquest’s The Great Terror. A lot of it is pretty shocking, even to someone who has read an above-average amount on the subject. It’s hard to feel bad for some of the victims of the purges; some of them had previously participated in atrocities like the Holodomor or in earlier purges. But many of the victims were innocent of any crime. After detailing changes to Soviet law allowing for the the imprisonment of relatives of people who fled, Conquest writes (pp. 86-87 of the 1968 edition):

More extraordinary still, and just as relevant to Stalin’s general plans, was the decree of 7 April 1935 extending all penalties, including death, down to twelve-year-old children.

This decree was noted in the West, where it made very bad anti-Soviet propaganda. Many people wondered why Stalin had made such a law public. Even if he meant to shoot children, this could be done without publicity. Indeed, an NKVD veteran [Orlov] tells how the bezprizorniye—homeless orphans of the wars and famines—had been reduced by indiscriminate shooting two or three years earlier.