Pandemic epistemology: discovery, feedback, ideological pomposity and banana peels.

I was going to forbear from posting on the Covid-19 pandemic, but this post by Arnold Kling prompted some more general observations about social dynamics.

He refers to a podcast by biologists Heather Heying and Bret Weinstein where they, in his words: 

... cite instances in which odd corners of the Internet are outperforming mainstream science and mainstream journalism. This comes through most in the last few minutes of [t]he podcast.

Those most against federalism or free speech (and there tends to be overlap in antipathy to each) tend to systematically under-rate the importance of discovery processes. This includes under-rating the dispersed nature of effective discovery processes. 

People are not all one thing. Someone can be batshit crazy in one area of life (a colloquialism with a bit more bite nowadays) and incredibly perceptive in another.  Sir Isaac Newton was deeply interested in alchemy and the weirder end of biblical exegesis. This does not stop him being a source of amazing breakthroughs in physics and mathematics (and, for that matter, coin production). 

Not only does one not preclude the other--being so wrong about X does not preclude being highly perceptive about Y--being willing to consider wild and wacky possibilities may actually help one be brilliantly creative, provided there is the requisite attention to evidence and careful reasoning (or whatever effectiveness constraints operate in the relevant domain). 

The discovery value of gentiles

So, those alienated from the mainstream whatever, for good or bad reasons, may well be more inclined to pick up things that the mainstream is blind to or weak on. In his excellent Nobel memorial lecture (seriously, if you haven't watched it, you really, really should) on how to do social science, Paul Krugman talks about the importance of "talking to the gentiles". Yes. (See also his essay here.)

Which is why the current penchant for identifying the gentiles, the "evil" infidels, and driving them out of public spaces is so dangerous. Our global civilisation is in utterly uncharted waters for our species and the last thing we need to be doing is seriously damaging our discovery processes, which is precisely what this penchant for cancelling the heretics does. Such burn-the-witch hunts are patently prestige-and-dominance plays but they are profoundly dangerous and destructive prestige-and-dominance plays. 

As an aside, I very highly recommend the online lectures available via the Center for Academic Research and Training in Anthropogeny (CARTA) at the University of California. Top scholars in the various fields germane to the study of our origins as a species lecturing to other scholars as cross-disciplinary exercises (so easily followable by a lay audience, because very discipline is a lay audience to other scholarly disciplines). It is fascinating, and profoundly informative. 

Problems with models

Arnold Kling also observes that:

... I bristle when someone says that based on a computer simulation, a certain policy for dealing with the virus can save X lives. I presume that there are some key causal assumptions that produce the results, and I want to know what those assumptions are and how they relate to what we know and don’t know about the virus.

and

The most widely-used models don’t differentiate the population by age. Blinded by these models, policy makers focus excessively on maintaining hospital capacity and inadequately on protecting the elderly.

We tend to selectively over-rate models. That their assumptions are often opaque helps with this process and can make their use rather too close to using maths and computing to replicate what previous ages did with sheep entrails.

Models in themselves are very weak discovery processes, as they discover the implications of the assumptions of the model, not reality. They have their uses, in working out what our assumptions imply and making our thinking more systematic. Alas, it is very easy to see them as doing something in themselves, without the testing against reality. Genuine discovery power always comes from exploring reality, which models do when they are tested against reality. If used for that, models can be profoundly useful, by forcing us to be consistent and systematic in our thinking. (Krugman discusses the importance of models for clear thinking in this essay.)

[A nice discussion of the performance of the Imperial College and University of Washington models is here.]

We know a lot more about the Covid-19 virus in late April than we did in late January. It is perfectly reasonable  to question whether decisions made early in the pandemic are still valid given what we now know. Particularly, how well the models used in those decisions have stood the test of reality. Unfortunately, there are all sorts of status considerations now built into those decisions, which may well be inhibiting effective use of the expanded knowledge. 

Having good feedback is vital to systems functioning properly. It is likely that much of the chronic health problems advanced societies are increasingly prone to are due to people developing  damaged or suppressed feedback regarding what we eat and drink. Aided and abetted by damaged, suppressed or pathological feedback systems in the provision of health and nutritional information. 

Feedback and incentives are deeply intertwined in human systems. Here is a question to think about: do the revenues of Western health departments go up if we get sicker or healthier? What incentives does that create? Then ask yourself if the answer to those questions, and considering what incentives health departments face, what the actual feedback systems they operate within are, affects how we might think about the response of those same health departments to the current pandemic. Such as what we did, and did not, have stockpiles of. Remembering that in most Western countries, health departments have (much) bigger budgets than defence departments.

Addiction to conflict narratives

The mainstream media sees itself as our central, and indispensable, information system. How well does it perform at that, really? Is mainstream media not somewhat addicted to conflict narratives, as they provide easy and "exciting" framings to present "news"? What does that do to the the signal-to-noise ratio in mainstream news?

Consider two doctors who own and run various clinics in California talking about their experience of* [now available here] the pandemic and what they, as relevant experts, glean from the available data and talking to their colleagues. This is a discovery briefing. The journalists the doctors are briefing, however, are not in discovery mode, as is revealed by the tone and content of their questions. They are in identifying-conflict mode. Discovery is messy, identifying conflict simplifies and excites. They don't want messy discovery, they want simple, exciting conflict.

[ADDENDA: *YouTube took down the video of two doctors briefing journalists and reporters about their clinical experience of Covid-19. There is an obvious irony for such a link in an essay on feedback and discovery.]

Moreover, it is a very easy shift to go from being addicted to conflict narratives to moralising about (and then within) those conflict narratives. It is very easy to turn conflict narratives into goodies-versus-baddies stories, with the journalists and reporters both identifying "the goodies", and identifying with and as "goodies". They then become part of the conflict narratives themselves, and the signal-to-noise ratio gets way worse.

There is a reason why public trust in the media has become so disastrously varied. The Donald's approval rates as US President were rather poor and are now consistently mediocre, in accordance with my view that he is demonstrably an electorally weak candidate. (He seems rather obviously personally high in (dis)agreeability; a wildly unusual characteristic for a senior elected political figure, though rather more common among those highly effective in other spheres of life.) And a disagreeable President makes an unusually potent figure in conflict narratives. Even more so in moralised conflict narratives. The noise-to-signal ratio in mainstream media coverage of The Donald's Presidency has rarely been less than toxically high.

Shifting to US public opinion of the media, the standing of the media as a source of news is relatively good among Democrat voters, poor among independent voters and abysmal among Republican voters. In terms of operation as a shared feedback system, this is a disastrous pattern. Not only is the mainstream media not trusted by large parts of the US populace, but the mainstream media are so often patently participants in their adopted goodies-versus-baddies conflict narratives, which actively encourages them to be generators of more noise and less signal. To be actively hostile to the processes of discovery -- seeking to block information which undermines the goodie-v-baddie narrative they have inserted themselves into while elevating information that feeds it -- against more careful considerations of significance and accuracy. 

Ben Goldacre's book Bad Science provides depressing chapter and verse on how very bad the media can be in reporting science, just from problems of not understanding science and statistics, limitations in human cognitive patterns, and the media's addiction to conflict and 'ghee whiz' narratives. Indeed, the media tend to be particularly bad on nutrition as that combines (1) obvious public interest, (2) deeply vested corporate and other interests, (3) the benefits of publicity for scam artists, along with all the above problems that reporting on science already has.  

The media's self-insertion into goodie-versus-baddie conflict narratives, and already poor performance in science reporting, is not a good pattern in general, and particularly not in a heavily science relevant matter such as a global pandemic. 

Discovery and feedback

Discovery and feedback systems matter. Both in response to short term events and in long term prospects for our civilisation and our species. Does this help or hinder discovery processes?, help or hinder effective feedback systems?, are good questions. And if you are not even asking the questions, that is a problem. Indeed, there is an excellent likelihood you are part of the problem.

If you are asking and answering the questions in terms of a goodies-versus-baddies narrative, you are probably not really asking the questions and are very likely to be part of the problem. As Bret Weinstein observes (at 23minutes), utopianism (which tends to be a goodie-versus-baddie narrative set to a maximum) is perhaps the most disastrous idea Homo sapiens have ever had precisely because it is so intrinsically hostile to discovery and feedback. This is a result of absolutely prioritising a single value (for, as he says, that then creates "incredibly large costs for every other value") and because they "tend to imagine they know what the future state should look like", short-circuiting (indeed, typically blocking) open discovery processes. This combination is compatible with ruthless selection for what works for seizing and monopolising power and disastrous selection in who gains power and how they use it. As a series of tyrannies, and millions of corpses, demonstrate.

The Hurley model of humour says that humour comes out of our cognitive error identification mechanisms. This is why ideologues are so often humourless--they are unable to accept the possibility of error. (Cue that great definition of a fanatic--a person who can't change his mind and won't change the subject.) Extremists have a crippled epistemology that blocks discovery and feedback.

Ideologies tend to be pompous, they inflate themselves beyond the possibility of error, particularly errors of significance. They are the cognitive equivalent of the pompous fat man unable to see the possibility of the banana peel. The slipping-on-a-banana peel joke works so much better if the pompous man is fat because he is less likely to see the banana peel, his pomposity takes up more space, and he is more likely to bounce (boing, boing, boing ...).

Admit it, you laughed.

It was better if he was a man, because when the trope was established, male pomposity had further to fall. And if your reaction is to point-and-shriek "fat shaming!" un-ironically, you just outed yourself as a humourless ideologue.

The more morally grand one's vision of what one is about, the more entitled one can feel to suppress the views of those who disagree. (Herbert Marcuse's iconic essay on repressive tolerance rests on belief that some group reliably has such knowledge.) But such suppression automatically involve suppressing any discovery that might thereby be revealed. One's sense of moral conviction, precisely because it is so emotionally powerful and because moral concerns have inherent trumping value over other concerns, can be a profound barrier to discovery and to effective feedback.

The real convenience of money

I recently read Adam Fergusson's history of the early 1920s hyperinflation in Weimar Germany--which also covers contemporary hyperinflations of Austria and Hungary. (Well-spotted if you noticed that they were the losing Powers of the Dynasts' War--aka WWI; this was not a coincidence.) One of the striking things about the period is how misguided conventional wisdom typically was in the afflicted countries about what was causing the problem and how to solve it. People blamed almost everything except the actual cause--the flooding of the economies by the central banks with ever higher levels of currency. The rising flood of said currency having the consequence of rendering nugatory the war-debt incurred by patriotic citizens by inflating it into insignificance. (The losing-the-War reparations well in excess of the willingness to tax citizens were not, however, similarly eliminated: the history of the war reparations imposed on France in 1871 makes for an instructive comparison--the French paid theirs in full in gold before the due date.)

Getting money wrong

But getting money wrong is a recurring feature of commentary on matters economic. That the Great Depression was overwhelmingly a monetary phenomena was not a much accepted view at the time, and is still disputed. Worse, much conventional wisdom during the 1930s revolved around fears of imminent inflation which were profoundly misguided then and seem unbelievably obtuse in retrospect.

In our own time, that the stagnation of the Japanese economy, the problems of the eurozone, US and UK economies, and the Great Recession more broadly, all have monetary causes is very much a minority view, even among economists, while the fears of imminent inflation which so disfigured 1930s commentary is very much in evidence. Fears based, as were the same fears in the 1930s, on a profound misreading of monetary conditions and the significance of surges in the monetary base. (In particular, not apparently grasping that money not being used in transactions has no effect on the price level, nor any necessary effect on future price levels.)

The myth of the real economy

The fundamental error threading through much of the above--leaving aside the misguided inflation fears--is the notion that the "real" economy--the economy of goods and services--is much more causally important than mere money. Money is merely a means of transacting, it is the exchange of goods and services which really matter and have real causal power. (And even the overblown fears of inflation typically massively discount the significance of income expectations on economic activity.)

This discounting of money having any "real" effects whatsoever is an odd claim. (To put it in economic speak, that money is not merely superneutral--changes in the rate of growth of the money stock have no significant long-run effects--but entirely neutral--changes in the money stock have no short-run effects at all. Though I am generally much more concerned with expectations than monetary quantities on their own.)

If we take the analogy of an engine being like a car engine, then money becomes like the oil which allow the parts of the engine to interact smoothly. And engines do not work too well if the oil is lacking, or if it floods the engine. In a monetary-exchange economy, money is half of almost all transactions. Surely something that is one side of almost all transactions might matter for the level of transacting? Adam Fergusson's above-mentioned history When Money Dies is full of very real effects from hyperinflation.

The underlying mistake is to assume that money does not affect either the level or nature of transactions. That the "real economy" is basic and money is just a convenient epiphenomena. But not so convenient as to have serious effects on that "real" economy of goods and services. Convenient, but not "really" convenient.

This is profoundly wrong-headed. A monetary-exchange economy is dominated by transactions that would not take place if it were not for money. That being so, shifts in the willingness to transact because of shifts in the willingness to spend money can profoundly affect the level of transactions. This without entering into the bizarre world of hyperinflation.

Wrong origins
Getting the role of money wrong is connected to getting the nature and significance of barter wrong. If we look as the standard "just so" story as set out by economist Carl Menger about how money evolved out of barter, we can see there is an underlying assumption that the self-contained (often one-off) transactions between otherwise unconnected individuals which are so much the stuff of exchange in monetised economies is the "basic", the "original", form of economic transactions. So transactions are either monetised or barter.

This is flatly wrong. If we look at the origins of human society (and so economic activity) in foraging (that is hunter-gatherer) bands, they were not barter economies. Barter was something that one did on the rare occasions that one traded with people you did not have on-going connections with. The overwhelming majority of transactions were embedded transactions. That is, transactions embedded in a web of personal connections and which were typically ways of fulfilling explicit or implicit obligations that were so much the stuff of said connections.

Barter is awkward for all the reasons Menger and others have identified. As Menger states, in foraging and simple farming societies barter has the difficulty:

each man is intent to get by way of exchange just such goods as he directly needs, and to reject those of which he has no need at all, or with which he is already sufficiently provided. It is clear then, that in those circumstances the number of bargains actually concluded must lie within very narrow limits. Consider how seldom it is the case, that a commodity owned by somebody is of less value in use than another commodity owned by somebody else! And for the latter just the opposite relation is the case. But how much more seldom does it happen that these two bodies meet! Think, indeed, of the peculiar difficulties obstructing the immediate barter of goods in those cases, where supply and demand do not quantitatively coincide; where, e.g., an indivisible commodity is to be exchanged for a variety of goods in the possession of different person, or indeed for such commodities as are only in demand at different times and can be supplied only by different persons! Even in the relatively simple and so often recurring case, where an economic unit, A, requires a commodity possessed by B, and B requires one possessed by C, while C wants one that is owned by A — even here, under a rule of mere barter, the exchange of the goods in question would as a rule be of necessity left undone.

Far too awkward to be the basis of any society, no matter how simple. Instead, people lived in a web of personal connections and obligations that dominated economic activity, since transacting outside said web of connections and obligations was so difficult and chancy.

The first step to expand transacting possibilities was to create units of account, as such formal precision greatly expanded the connection and transaction possibilities. Such units were generally based on weight (shekels, debens, drachmas and pounds are all originally weights), but cattle and slave girls (in Irish law codes) have also been used. That transactions could be formal rather than personal meant that they could be incurred outside existing webs of personal connections. This also allowed credit exchanges--barter exchanges without the time constraint of immediate exchange. Hence the use of tally sticks--the discharge of the obligation ended the transaction with the rejoining of the  tally stick. (Not coincidentally, tally sticks were also used in tax collection--taxes being a compulsory obligation.)

Tally sticks

It was entirely possible to create highly sophisticated economies based on formal and otherwise embedded connections. That is the way manorial economics work, for example. Landlord and peasants are connected by a web of ongoing obligations, often involving a basic exchange of protection-for-labour. To call such transactions "barter" merely because they were largely non-monetary is to profoundly mistake their nature.

Add in credit, and the mixture of embedded transactions, credit transactions and barter (often implicitly using units of account) plus commodity media of exchange (e.g. silver) is how societies from Pharaonic Egypt to the Khmer Empire operated for millennia. Merely having units of account greatly expanded transaction possibilities (and likely reduced conflict even for many embedded transactions because they could be made more precise and so determinant.) What means of transacting are available profoundly affect the level and form of transactions which become practical.

The next step was to create media of account; things that were a medium of exchange that also instantiated the unit of account. That is money--originally in the form of coins. Suddenly, the transaction possibilities expanded greatly. One-off transactions discharged on the spot with people you had no connections with became much easier. Rulers were no longer stuck with "use or lose it" labour service as their dominant income source. They could gain revenue now and spend it later. Not to mention that collecting coins takes a lot less administrative effort than organising labour service. And can be levied on any agent or transaction.

Coins make the world transact a lot more

Once one grasps that money actually greatly expands transaction possibilities, and so the level of transactions, then the notion that money is some transparent epiphenomenon that cannot have "real" effects makes much less sense. The convenience of money is a "real" convenience affecting profoundly the level and nature of transactions.

That one can gain revenue now but spend it later also means that Say's Law does not apply. That, in Say's words:

it is production which opens a demand for products. . . . Thus the mere circumstance of the creation of one product immediately opens a vent for other products

is not correct (at least not in the same time period). So monetary causes can have "real" effects. Indeed, are much the most plausible culprit for the business cycle, of what used to be called "general gluts" (an overall fall in demand for goods and services; that is, in willingness to spend money to buy goods and services).

Monetary austerity--driving down income expectations--can and does affect the level of economic activity, the willingness to exchange in transactions. Particularly given that debt obligations are the ultimate "sticky" price, so adverse income expectations can drive people to cut back spending to service (or reduce) their debt while other "sticky" prices (notably wages) lead to spending having effects on quantities demanded that are not immediately "cleared" by price changes.

If central banks drive down income expectations, or fail to counteract a fall in income expectations, then the level and form of transactions will be affected. As the convenience of money is a real convenience, expectations about money income affects the level and form of transactions in a monetised economy. So money matters and can profoundly affect the "real" economy.

[Cross-posted at Skepticlawyer.]

Debt and Boom

The slogan for this post is: don't think debt, think safe assets.

(This post is partly provoked by this post by Paul Krugman responded to by Scott Sumner and by Marcus Nunes.)

In my Debt, Doom and Despair post I noted that a hugely debt-burdened post-Napoleonic Wars UK (where the national public debt was probably about 250% of GDP or about 25 times the revenue of the British government) went on to an amazing surge in population and mass prosperity.  (In fact, by far the most remarkable in all of human history up to that time.)

What if it was not a coincidence? What if the debt burden actually encouraged said surge?  After all, WWII left the British, Australian and US governments all highly indebted (at about 240%, 150% and 120% of GDP respectively) yet all experienced amazing postwar surges in population and prosperity. All surges marked by high rates of productivity increases from expanding technology and global trade.

One's persons debt is another person's asset.What were the British, US and Australian governments doing in running up such huge debts? They were creating a huge level of safe assets, given that none of these three governments have defaulted on their bonds, ever.  One reason why Britain went back on gold in 1925 at the pre-war (over-valued) parity was to "keep faith" with its bondholders.

So, those high levels of public debt were also creating high levels of income from safe assets. If you are, for example, 1815 Britain, and debt is 250% of GDP, then a significant amount of income, compared to total production, is flowing from said safe assets.

Expropriating risk managers
There are two basic things states do: they expropriate and they manage risk. The latter is necessary for the former and goes back to the origins of rulership--dead farmers cannot pay taxes.  In ibn Kaldun's definition, cited and admired by Ernest Gellner, government is:

an institution which prevents injustice other than such as it commits itself.

This the paradox of politics or the paradox of rulership--we need the state to protect us from social predators but the state itself is the most potentially dangerous of social predators. It is a paradox that can never be fixed, only managed more or less well.

One of the tricks of rulership, refined by medieval rulers such as Alfonso IX of Leon, and Edward I of England, is that, if you get consent for your taxation, you can do a higher level of taxation because it lowers the "resistance cost". Democratic welfare states have taken the consent-benefit trade-off up to record levels (for any non-patrimonial or totalitarian polities; i.e. for societies with any free element). Welfarism is the domestic aggrandisement of the expropriating state as imperialism is its external aggrandisement. (One of the ways we can tell that welfarism is, at least in part, an excuse for state aggrandisement is how weakly expenditure is tested against effectiveness in improving social outcomes; conversely if there is less inherent nobility in welfarism than appears, there were also positives in imperialism, albeit at wildly varying levels.)

But the public goods, and latterly welfare, provided by the state in return for implicit or explicit consent for its expropriations are overwhelmingly about risk-management. And risk management is a genuine service. Consider protection of life, person and property; or mitigating the risks of unemployment, sickness, disability, old age.

Balancing risks
For any given level of risk aversion by potential investors, creating a safe income stream raises the risk threshold for further investment. People will be more willing to tolerate higher levels of risk in their other investments.

Such as in highly uncertain investment in new technology. True, that leaves one open to asset booms and busts (pdf). Nevertheless, net economic outcome is likely to be a long term acceleration in productivity (pdf). And the surge in population and prosperity such involves.



[Read the rest at Skepticlawyer or at Critical Thinking Applied.]

The taxman cometh (but only for what he can see)

There have been two great transformations in human affairs. One is the Neolithic Revolution, the transition from foraging to farming. This is a transformation which is still going on, as there are still some foraging groups around the planet (though it is a vanishing way of life). The second is the Industrial Revolution, the shift from reliance on what is produced by land (farming), a factor of production managed but not created by humans, to reliance on factors of production produced by humans, the produced means of production (capital), such that farmers change from being about 80% of the workforce to less than 5%.

Compare and contrast
Both transformations are technological and involve expanded use of energy, setting off dramatic population increases (the second much faster than the first). In the foraging-to-farming transition, humans no longer merely took food from the environment around them; they deliberately grew food. This food was typically storable, so able to cope with variations in food production across the seasons.  Farming both increased the (food) energy to humans and allowed it to be stored for later use, to be actively managed across time. (Hence the very different attitudes to time between foraging and farming cultures.)

Industrialisation used wind, water and (particularly) steam energy to produce things which produced things. Increased agricultural production allowed increased production in general, with expanding sources and use of energy, ushering the creation of, not merely mass prosperity, but increasing mass prosperity. This is in stark contrast for the foraging-farming transition, where it is likely that general standards of living actually fell and, with some exceptions, remained stagnant for thousands of years.

Another contrast is that the foraging-farming transition lead to hierarchical societies with elite-dominated rulerships--whether autocratic, monarchic (i.e. containing powerful noble elites) or deliberative. The last were polities run by elite assemblies, the most democratic of these being some Mediterranean city-states where as much as a third of the adult population got to vote--i.e. male citizens; women, slaves and resident foreigners being excluded. Outside the Mediterranean, assemblies were also important in cities in Lower Mesopotamia and in the kshatriya republics of India. Conversely, with some hiccups, the Industrial Revolution has led to much more broadly-based forms of political life. Another contrast is that the share of output taken by taxation tended to be fairly constant across farming rulerships but has been steadily increasing in modern states.

Why did farming lead to hierarchical societies dominated by controlling elites? The standard answer has been increased production of food led to a surplus above subsistence which allowed a more differentiated society. The problem with this is, why there was any such surplus? Why did not population just increase to consume the surplus? What blocked population increase sufficient to allow the creation of the food surpluses that sustained these elites?

The second problem is, even if there was a food surplus, why did that not just lead to increased specialisation? What happened such that population was blocked from rising to consume the food surplus and that surplus was largely appropriated by a narrow, controlling elite? And, moreover, elites of differing sizes, with different land tenure systems.

Expropriating what you can see
Three Israeli economists have produced a paper (pdf) which provides an elegant answer. Their argument is that the key element is transparency; both in stored food and in expected production. Food had to be stored across the seasons, which made it more vulnerable to expropriation. In their words:


[Read the rest at Skepticlawyer.]

Taxation is not (necessarily) theft

This is based on a comment I made here. (It is a little bit of a work in progress, as I have updated it over the course of the day.)


That taxation is coercion does not mean that taxation is theft.  Taxes as a compulsory levy to enjoy more expansive use of one's property rights does not make much sense as a notion of theft if it leaves people better off. In other words, if it enhances one enjoyment of various rights, it is hardly a violation of them. Taxation is then part of a compulsory exchange (taxes for services, notably protection) rather than merely a taking. All those folk who are not anarcho-capitalists subscribe to some version of this view.

Of course, it is possible for taxation to be theft, if it is merely for the gain of a ruler and his or her agents without any commensurate benefits. But, while that may be true in part (and historically almost always was, in part), it is almost never true in whole because it is in the interests of a ruler to provide certain protections in order to both gain more revenue and enjoy more benefits from existing revenue. And the longer the time horizon of the ruler, the more true that tends to be. (Which is a benefit for hereditary rule over more uncertain forms of autocracy.)

Whenever there is collective action, there is politics in the weak sense. If one or more agents habitually defer to another, you have domination. But rulership proper rests on the existence of the compulsory exchange of taxation. If it is not an exchange, if it is merely a taking, then it is banditry; but see previous comments about ruler incentives. After all, the perception of some compensating benefit reduces enforcement costs.

Of course taxes can fund violation of rights. And interest politics is about makimising the returns of the compulsory exchange for you or some group you belong to. While normative politics is about maxismising the overall net benefits from the compulsory exchange. But if you do not understand that taxes are usually part of an exchange, for entirely rational reasons, however compulsory, you do not understand the nature of taxes.

We are stuck with the paradox of politics: we need the state to protect us against social predators but the state itself is the most dangerous of social predators. This is a paradox that can never be resolved (for reasons which I discuss here), only managed more or less well.

Housing bubbles and social mercantilism

A two-part essay on the problems of social division and failures of urban planning and management using Sydney and Melbourne as "compare and contrast" examples is here:

Since 1990, owner-occupied and investment property credit has expanded its share of total credit from 23 per cent to 58 per cent. (Business credit has dropped from 63 to 34 per cent.) Australians have been taking on large amounts of debt to invest in houses whose prices are largely a product of quantity controls: Australia has become a country highly leveraged on regulatory approval

and here:

Sydney’s land policy in particular is based on the social mercantilist model—with the inequality, conflict, inequity and corruption that model is inherently prone to. Melbourne can be thankful that its better social dynamics have ameliorated the ill-effects of the same disastrous ideas.

The author should have made it a bit clearer that you can have housing bubbles without quantity controls, they just make them more likely (and possibly more severe).

Grasping the past: the American Civil War - people do not secede over trade policy

I find having a perspective from Downunder can sometimes be a useful one to have on American debates. For example, the experience of Australian monetary policy makes the fears of inflation that seem to grip large slabs of American opinion just bizarre. (As such fears, as Scott Sumner points out, manage to both replicate 1930s debates and completely ignore current market signals, they become even more bizarre: if you want to follow Scott's excellent monetary economics blog, start with his FAQs.)

A strain of opinion I find more bizarre still is the claim that the American Civil War was not over slavery, it was “really” more over trade policy—in particular, tariffs. Actually, no: people do not secede, and go to war with their fellow countrymen, over tariffs—they simply do not matter that much.

How can I tell? Because the tariff issue bitterly divided Australian politics in the late C19th and early C20th. The great divide in politics was between free traders (who wished to use income and wealth taxes to fund government) and protectionists (who wanted to use tariffs as a protective device and prime source of government revenue). Not only did the issue never even remotely threaten to lead to war within or among the Australian colonies; while the debate was raging, Australia managed to federate to form a single Commonwealth of Australia.

Country bitterly divided by trade policy unifies!

Yet some Americans insist on trying to claim that no, the Civil War was not about slavery, but far more about trade policy. About what level tariffs would be (if any).

Let me think: slaves represented about one-third of the total wealth of the South. Freeing the slaves would wipe out at a stroke one-third of the total wealth of the South and reduce the value of the labour and vote of free (mostly white) men. Tariffs would reduce the income of exporters. Which one of these is an issue worth fighting over?

The question answer itself. People at the time knew what the real issue was. It was slavery. This reprinted opinion piece from 1860 makes this quite clear. Tariffs are worth but a passing mention, slavery and Westward expansion are the entire focus of the piece.

For if you add in the issue of who would get access to the new lands being opened up Westwards, the wealthiest group in the US, or the hard-scrabble migrants, then there are lots of issues worth fighting about: none of which hinge on tariffs and trade policy but all of which get their power from the implications for the institution of slavery.

(It was also why a lot of Amerindians supported the South: the last Confederate general to stand down was Brigadier-General Stand Watie principal chief of the Cherokee nation.)

In the words of the writer of 1860:

Republicans come to Washington not just with an eye to stopping the expansion of slavery. Their program also includes lower tariffs, which will increase the power of Northern manufacturers; support for the railroads, which will lead to the settlement of the West and to the creation of who knows how many anti-slavery states between the Mississippi and the Pacific; and unrestrained immigration. Eighty percent of new arrivals settle in the North, swelling its power with their labor and their votes. The Constitution may prevent the Republicans from abolishing slavery now, but Southerners are concerned that the great unsettled Dakota prairies will be carved into a dozen states that will become full of Republican-loving Italians and Poles and Irishmen and escapees from the revolutions of 1848. See what happens then.

But it all came down to the threat all this posed to slavery.

As the 1860 article reminded its readers, there was a long history of Southern agitation threatening secession prior to the election of Lincoln in November 1860:

Southerners, of course, have called this tune before. They threatened to bolt in 1820, floated the divisive theory of nullification in the 1830s, and angrily convened in Nashville in 1850.

One seen at the time as being all about the issue of slavery:

Whatever the time and whatever the provocation, the story has always been the same: threats, indignation and outrage, followed in the end by placations from the North and reconciliations that left the South wealthier and the institution of slavery more entrenched.

We can see this concern in the rhetoric coming out of the South at the time, as quoted in the 1860 piece:

Here [is] a present, living, mischievous fact. The Government of the Union is in the hands of the avowed enemies of one entire section. It is to be directed in hostility to the property of that section.

Or even grander claims:

Let the consequences be what they may — whether the Potomac is crimsoned in human gore, and Pennsylvania Avenue is paved ten fathoms deep with mangled bodies, or whether the last vestige of human liberty is swept from the face of the American continent, the South will never submit to such humiliation and degradation as the inauguration of Abraham Lincoln.

Dr Johnson used to wonder “How is it that we hear the loudest yelps for liberty among the drivers of negroes?”. The observation of the servitude of others may make one’s own liberty sweeter, but thought of the power of the votes of former slaves if they were freed would surely be at least as much a concern.

One commenter in an online debate on the causes of the American Civil War put it pithily:

Regarding tariffs, etc., this could always be compromised over. Slavery couldn't. You were either for it or against it.

And the implication of the voting rights of freed slaves was a very real one. After all, Jim Crow was all about stopping people from voting, and justifying a sense of one’s own superior—and the excluded’s inferior—status that went with that.

The American Civil War was over slavery and its implications. People thought so at the time, all the serious scholarship since provides further confirmation of that. Trying to pretend it was more over trade policy is the worst kind of historical “revisionism”.

ADDENDA As commenter Fred notes below, Marx had some things to say at the time about pretending the issue was tariffs instead of slavery. Such a claim was evasion then and it is evasion now.