The right way to present economic statistics

I've occasionally wondered why there isn't more anger at the looting of the economy by its upper echelons. Americans are violent, but they are also lazy and disorganized. So there hasn't been the kind of rioting in the streets that the situation really demands -- most Americans don't even have proper streets, just subdivisions and strip malls, not at all suitable for civil insurrection.

Then there's this guy. plenty of violent anger but apparently confined to his own garage:


He scares me a bit, maybe due to the trace amount of racism amidst the otherwise perfectly reasonable ranting.

Of course, this being 21st century America it's likely that this anger will result in nothing more than a viral YouTube video and 15 seconds of fame, rather than a mob of baseball-bat wielding crackers marching on Wall Street looking to break heads. Probably for the best.

via Matt Taibbi

Nobel Prize in Anarchy

For awhile now I've been saying that economists should be paying attention to open-source and other commons-based models of production. How often does a radically new way to organize production come along, after all? It seems like academic economists should be studying the hell out of it. There are some books by Yochai Benkler and Steven Weber but they barely scratch the surface.

I was making this argument to Herbert Gintis, a prominent political scientist with a good book-review blog on Amazon. Gintis is a smart guy but has some weird blind spots (Israel and open source, for starters) which I could not resist poking at. Anyway, in the middle of the conversation, the Nobels in Economics were announced. I had never heard of the awardees but it turns out that one of them, Elinor Ostrom, won it specifically work on the structures of economic governance for in-common resources such as fishery stocks, water resources, and also "knowledge commons" such as open-source software projects. Huzzah! Well, I felt somewhat vindicated and also somewhat embarrassed to find that the economics profession was actually ahead of my recommendations. On the other hand, Ostrom is not an economist, she's in political science, and apparently a couple of famous economists who write for the New York Times were unfamiliar with her as well. Gintis was very familiar with her work but for whatever reason that didn't seem to affect his view of open source as economically trivial.

One of the famous economists who had not heard of Ostrom, Steven Levitt said: "...the short answer is that the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama." I'm not sure that's true. I see many libertarians on the net trying to get in front of this wave, even though her work is essentially a complete refutation of the libertarian framework of thought.

Libertarianism is erected on a foundation of individual rights, private property, self-interest, and markets. Notice what's missing? Any notion of society and in particular institutions, the very thing both of this years laureates were studying. People like Somin would like to think that because the institutions Ostrom is studying are not (in general) states that she's on his side. But Ostrom's work (OK, I haven't actually read it yet so I'm just going on net commentary) has more in common with critics of capitalism such as Karl Polanyi and left-anarchist theorists of cooperation like Kropotkin.

On reading some more of the Hayekian blogs I fear I may be doing an injustice to them (and maybe Ostrom), probably because I tend to conflate idiocies of net.libertarians with the more sophisticated theories of academics. Perhaps her work transcends left and right, which wouldn't bother me, those categories from the French Revolution seem to be increasingly stale. Not that they don't have some validity but for the last hundred years or so the two sides seem to spend most of their time taking on each other's worst characteristics. It would be nice to have some new ideas about how society should be governed and it would be nice to have those solidly grounded in empirical research. Ostrom's work seems to fit the bill.

One question I have is how these cooperatively-owned resources enforce their rules. For things like fisheries, there are community and peer enforcement of rules, but at some scale this turns into a state or something indistinguishable from it, I would think. Of course, with informational commons like Wikipedia or open-source their is no scarcity and hence no need to patrol for cheaters. Unfortunately we can't yet eat information, so the extension of open-source models to the physical world is questionable.

Some links:
Ostrom's win is a blow against simplistic private, market-based economies.

Academics debate just how Hayekian Ostrom's work is.

Creative Commons notices.

Here's Ostrom talking on "Beyond the Tragedy of the Commons":


I note she cautions against "top-down solutions".

Random Bits

Clay Shirky on the dismal future of newspapers.

Origins of the Vagina (SFW, includes platypodes)

Thelonious Monk's creative advice (his birthday was yesterday)

1/4 of the world's population is Muslim, going on 1/3 by 2050

This is quite disturbing. Germans ought to not attempt humor involving mass murder even in a good cause (NSFW).

Wanted for Treason (wingnuts of 1963).

The ritual function of the Olympics

When I read this piece by Phil Greenspun on the economics of the Olympics I had contradictory reactions. On the one hand, I agree with his conclusion (that hosting the Olympics is a terrific waste of resources) and his argument is based on the idea that political leaders have different and conflicting motivations from the populace at large, an explanation dear to my heart[*]. But I also thought it was missing something, was too reductive, but I wasn't sure why. Here's the meat of his argument:

...if the Olympics were guaranteed to lose money, how come any city would bid on them? My response was that bidding for the Olympics highlights the conflict between rulers and subjects, or "œpoliticians" and "taxpayers" as we might refer to these groups in the U.S. The mayor of a U.S. city wants to get the Olympics so that he or she can be in the national and international spotlight for a few months, which might result in being able to obtain a more powerful job. The mayor has the ability to spend taxpayer's™ money, and borrow billions more on their behalf through construction bonds, for personal advancement.

That's fine as far as it goes. But it doesn't go far enough. In general, leaders can't lead without the support of a significant fraction of the led. In Chicago, somewhere betten 45% and 75% of the population was in favor of hosting the Olympics. Would this be the case if it was really so inimical to their interests? Are people simply easily conned by their leaders?

I submit that the purpose of the Olympics (or indeed any other sports event or public spectacle) needs to be understood as symbol and ritual -- an occasion for the expression of the People's Romance, aka civic and national pride. It's a chance for ordinary people to feel like they are part of something larger than themselves. This is something people seem to want desperately. It's delivered most explicitly by religion but the rituals of civic life seem to offer the same thing in alternate forms. Sports fandom (entirely foreign to me) in particular seems to engender deep emotions, attachments, and occasional violence. The Olympics melds this with nationalism and the powerful echo of pagan rites to produce a pompous spectacle of ritualized warfare -- which at least has going for it that it is far preferable to actual warfare.

Historically, religion organizes a certain set of inchoate and irrational impulses to form the core of culture, and government was not separate from religion. Today we have, in theory, split off the religious functions into their own sphere and government is supposed to represent a set of common rational interests, but this Enlightenment surgery was only partially successful.

What Phil is asking for, that societies make their choices on an economically rational basis, is simply missing the point. Government combines the ceremonial with the functional, resulting in the peculiarities of architecture that seem to run from the grandiose (the US Capitol) to the stripped-down functional (your local DMV) without much in-between. But without the ritual and spectacle the state is nothing. And most people do not want to face the spectre of anarchy so are all too willing to support the state's ritual celebrations of itself.

What is the message of the above ritual? Any force capable of organizing that many people into synchrony is something that you better damn well pay attention to, whether or not you approve of such things. And going back to the original economic argument -- the apparent wastefulness and irrationality of such rituals is part of their demonstrative power. A country that hosts the Olympics is showing that it can afford to blow a few billion dollars on spectacle. It is, in short, a sacrifice, a public, hard to fake indicator of commitment. It's not supposed to be economically rational. And it is certainly true that political leaders get more out of it than the citizenry, but if they couldn't get people to join into these massive displays, they wouldn't be leaders.




[*] not sure if I've ever addressed it explicitly, but the idea is implicit in some pieces on polarization and violence entrepreneurs.