RWCG


Caplanomics
November 13, 2012, 9:35 am
Filed under: Uncategorized

Tenured economics professor Bryan Caplan has been entertaining us all with some fascinating hypotheticals designed to challenge Steve Sailer and similarly-evil immigration restrictionists to examine how far they would go. These hypotheticals offer a fascinating insight into the economics mind of Professor Caplan. For example, he asks:

Would it be morally permissible for the U.S. to impose a tariff on imports that raised median U.S. income by 1% but reduced mean non-U.S. income by 10%?

From this hypothetical, we learn among other things that in Professor Caplan’s expert (and libertarian!) economics view, tariffs are a reliable means of raising income. We also learn that the rest of the world could take a (real, I assume?) 10% hit to its income and that wouldn’t affect our income. If you can follow along with these premises of Caplan’s, then perhaps you can answer the question, and prove to him that you’re not evil like Steve Sailer.

But I’m still just fascinated by the questions themselves. Here are some earlier hypotheticals Caplan raised:

1. If conquering and enslaving Canada would increase American per-capita GDP, should we therefore conquer and enslave Canada?

2. If we could forever end world poverty by reducing American per-capita GDP by a penny, should we refuse to end world poverty?

3. If we could costlessly exterminate all Americans who produce a below-average quantity of GDP, should we exterminate them?

Ah such fascinating economic insights to be mined! Apparently you can, conceivably, exterminate half your population without affecting the individual-GDP of any of the survivors (who, I infer, each have unchangeable ‘individual-GDP’ statistics attached to them, like a D&D character). Apparently there is such a thing as ‘forever ending world poverty’ – scarcity can just be abolished, ‘forever’, if we can figure out the right policy. (And for only 1 cent of U.S.’s per capita GDP too!) And apparently there are great economic gains to be reaped by conquering and enslaving Canada. Who knew?

I just gotta audit this guy’s macro class!

The problem here is that, because he’s so desperate to try to expose the evil of Steve Sailer, Caplan seems stuck on offering hypotheticals that are either infeasible or unstable.

Infeasible means we can’t-get-there (or, at best, can’t-get-there-from-here). It is to posit a state of affairs that is basically not possible. Think of questions like,

“If we could build a warp-drive starship by reducing our GDP by 99.999%…” Sorry, if you reduce our GDP by 99.999%, I don’t see a warp-drive starship in our future anytime soon.

“If we could make ourselves instantaneously 1000x richer by killing Joe Schmoe…” Hold up, unless God or a genie or (more likely) Mephistopheles is somehow involved, I know of no valid economic theory according to which killing Joe Schmoe is a reliable method of doing that.

“If we could eliminate hunger by banning agriculture…” Yeah, no, I don’t think the latter will actually do the former.

Unstable means that, even if I could perhaps envision Caplan’s hypothetical on Day One, it just wouldn’t stay that way. For example he wants Steve Sailer to tell us whether he would (via tariff policy, LOL) trade a 1% increase in U.S. median income for a 10% reduction in mean income in the rest of the world. But wouldn’t the resulting world depression come back to bite us? and eat away that supposed “1% increase” we thought we had banked? Of course it would. These unstable scenarios are all the equivalent of asking me to imagine putting snowman on the surface of the sun; ok I can imagine arranging it for a micro-microsecond, but things are gonna change pretty fast as soon as I ‘let go’. Yet usually the hypothetical implicitly invites us to pretend everything just stays as described.

Contra Caplan, there is nothing meaningful to be learned from peoples’ answers to these hypotheticals – except perhaps that the person answering them is economically ignorant – because any real, informed attempt to take such hypotheticals seriously makes them disintegrate. What is really odd is the spectacle of an economics professor who doesn’t understand that, or pretends not to for some obscure didactic reason.

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10 Comments so far
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“I just gotta audit this guy’s macro class!”

Well you know for sure that you wouldn’t be spending much time on comparative advantage.

I’m not sure why Caplan persists in this. He’s getting his lunch eaten, and to mix metaphors, he keeps digging deeper. A recent comment at his own blog:

“Don’t know if it was your intention but you have successfully moved me from an open border guy to a closed border guy.” Lol.

I’ve never totally been enamored with Caplan but I’m starting to feel bad for him here.

Comment by Redd Kross Matt

I’d say hats off to him for providing a public service, at least as far as that commenter goes.

Comment by Callowman

Perhaps someone said it in a comment here, but the most fascinating part is how Libertarian Caplan has completely forgotten the distinction between negative and positive rights, normally something they cover in Liberty 101 at all the Libertarian Youth camps.

Comment by SkepticalCynical

I know! It’s as if the open-borders issue is Libertarian-Kryptonite that gives them Libertarian Amnesia and brings out the Bizarro Libertarian within (to mix a bunch of comic-book concepts).

In Bizarro Libertopia, macroeconomic outcomes can be indefinitely ‘guaranteed’ by turning the right central dials and switches! The economy is static and any change in income is permanent! It’s possible to conceive and speak of things like ‘forever’ ending poverty! Tariffs presumptively raise our incomes! GDP is an entirely individual phenomenon that doesn’t depend on things like organizational capital or economies of scale!

And: the distinction between negative rights and positive ‘rights’ is utterly unimportant!

Bizarre.

Comment by Sonic Charmer

I think it’s immigration specifically that gives people amnesia

Yglesias is another one who occasionally jettisons all of his prior convictions so he can make an open-borders argument.

Comment by Matt

In the neighborhood watch post, when people took apart your analogy you replied that your analogy was there to illustrate a specific point and that objecting to it on other grounds misses that point. Couldn’t the same be said here? The question about tariffs is there to illustrate a specific point about spending money and it’s irrelevant that tariffs actually don’t work that way.

Comment by Ken Arromdee

There is a difference between an analogy and a hypothetical. In an analogy you’re saying X is ‘like’ some aspect of Y (and people focused on the wrong aspects of my Y from what I intended). Hypotheticals don’t quite work that way because you’re supposed to do the thought experiment of actually imagining them (not something ‘like’ them). That said, if Caplan thinks my criticisms miss the point, and ever chooses to explain how/why, I’ll listen.

But in the event I don’t think that his hypotheticals can be salvaged, because the fact that they are unattainable/unstable necessarily destroys whatever illustrative value they might be thought to have for his point.

For example, I *think* Caplan’s tariff example is designed to get the respondent to eventually say “No, I wouldn’t trade X% world-income-decrease for a 1% increase in our income”. He thinks (I assume) that once he gets the person to answer No for some X, he has either established the point that we have to Draw The Moral Line Somewhere. Or if they always say Yes I’ll make that tradeoff, he’s shown that person to be a monster.

The problem is that I would answer his tariff hypothetical No, absent any moral considerations whatsoever. And that’s due to the factors already explained: although I don’t think it would increase our income to raise tariffs, and I don’t think such outcomes of policies can be ‘guaranteed’, even if forced to assume the +1-10 scenario magically did come to pass and this were known in advance, I don’t think it would be permanent, I think the 10% world income drop would come back and bite us, rendering the supposed ‘tradeoff’ inherently self-defeating no matter what. In other words, if I’m forced to take his hypothetical scenario seriously, it loses all appeal for me due to intrinsic reasons. So I answer No. But he can’t conclude, from my No, that I Draw The Line Somewhere. So his hypothetical intrinsically doesn’t work as intended.

He is always free to come up with better hypotheticals, of course. Indeed, I encouraged him to do so in his comments, by explaining that it’s better for his purposes to avoid hypotheticals that are unattainable and/or unstable. If/when he comes up with such a hypothetical, I’d be happy to entertain it, and then maybe indeed it would illustrate the point he’s trying to illustrate. Hasn’t happened yet though.

Comment by Sonic Charmer

There is a lot of “we” there for an all-of-us-are-individual-autonomous-units-of-consumption libertarian.

My question: who’s this “we” kimosabe?

Comment by Default User

What I find bizarre about Caplan is that his analysis is so obviously static, not dynamic.

In Singapore, the government allows immigration as long as you work, but you don’t get citizenship or a vote, and neither do your children even if they’re born there. As soon as you stop working, you have to leave. This system is stable.

Whereas in the US as Caplan advocates, you could immigrate to take advantage of the US’s relatively good institutions, but then you or your children get a vote and can and will vote for left-wing parties to destroy those institutions. Immigrants vote left wing. Basically, the US is full of descendants of white northern-Europeans. If you keep democracy and import a load of third-worlders (e.g. Somalians), the US will quickly turn into a third-world country.

Comment by James James

Yeah, I am curious to know just exactly what Caplan thinks about that. Haven’t seen him address it. Maybe the openborders.info guys will.

Comment by Sonic Charmer




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