Deirdre McCloskey's Bourgeois Dignity, and Anthropology and Science

In her new book, Bourgeois Dignity, iconoclast economist Deirdre McCloskey makes an eloquent case for capitalism’s virtues.  It is at once erudite and fun truly fun to read—perhaps a first for the dismal science.  At times she may press forward with a Leibnizian optimisism, an enthusiasm that can brush aside serious critiques and shortcomings.  But she rightly reminds us of the enormous wealth created, and the drop in absolute poverty worldwide—the hockey stick of income levels of the last centuries.  And, for an anthropologist, she makes the important observation that the capitalist revolution was driven not only by technology and new modes of capital accumulation but more importantly by ideas and ideals, particular cultural traditions and values, and a rhetoric that valued bourgeois dignity. 

In the book, she uses the word “science” in its older, wider sense of “systematic inquiry,” which, as she notes:

Is what it means in every language except the English of the past 150 years: thus in Dutch wetenschap, as in kunstwetenschap [“art science,” an English impossibility], in German Wissenschaft as in die Geisteswissenschaften [the humanities, literally a very spooky sounding “spirit sciences’], or in French science as in les sciences humaines [serious and systematic inquiries concerning the human condition, such as studies of literature or philosophy or anthropology, literally “the human sciences,” another impossible contradiction in modern English], or plain “science” in English before 1850 or so.  Thus Alexander Pope in 1711: “While from the bounded level of our mind / Short views we take, nor see the lengths behind: / But more advanced, behold with strange surprise: / New distant scenes of endless science arise!”  He did not mean physics and chemistry.  John Stuart Mill used the science word in its older sense in all his works.  Confining the word to “physical and biological science,” sense 5b in the Oxford English Dictionary—which was an accident of English academic politics in the mid-nineteenth century—has tempted recent speakers of English to labor at the pointless task of demarcating one kind of serious and systematic inquiry from another.  McCloskey 2010: 38-39

 

McCloskey is writing of economic science and the ways that economists have fetishized a particular kind of hard science.  What she says, however, also applies to recent controversies among anthropologists about the scientific aspect of their discipline.

At last year’s annual meeting, the AAA voted to take out the word “science” from a long-range plan (although it remains in the statement of purpose, as long as we are splitting hairs).  

The New York Times reported: “The decision has reopened a long-simmering tension between researchers in science-based anthropological disciplines — including archaeologists, physical anthropologists and some cultural anthropologists — and members of the profession who study race, ethnicity and gender and see themselves as advocates for native peoples or human rights.” (Nicholas Wade in the NYT 12/9/2010; Anthropology a Science? Statement Deepens a Rift: http://www.nytimes.com/2010/12/10/science/10anthropology.html )

This is a broad stroke description, and many of us anthropologists would resist such easy categorization, but it is revealing.  Anthropologists are often well positioned to advocate for native peoples or decry human rights abuses—it is the nature of where we tend to work and with whom we tend to study.  

But ethnography and cultural anthropology is not about reifying a priori political positions but rather the dialectical construction of knowledge through engagement with the field.  It is as much inductive as deductive. 

What we cultural anthropologists do is certainly serious and systematic inquiry—science in this common sense of the word.  And what could be more appropriate for the discipline than to embrace this folk terminology.          

Happiness and Income

Would you rather be rich or happy?  You might think the one naturally brings the other, but it turns out not to be so simple.

One important factor is how we frame the alternatives.  Would you rather make $80,000 a year or $140,000?  It’s a no brainer.  But if framed, as Daniel Benjamin, Ori Heffetz, Alex Reese-Jones, and Miles Kimball did in a recent study: would you prefer to earn $80,00 a year and sleep 7.5 hours a night or $140,000 and sleep 6 hours?  When framed this way, 70% of folks said that would prefer more sleep. (see http://www.economist.com/node/17578888)

 

Or, as my colleague Bob Frank has present it, would you prefer to live in a 4000 sq. ft. house with a 45 minute commute or a 2500 sq. ft. house with a 10 minute commute?  Or what about if the smaller house were closer to friends and family?  Often, what seems at first blush to be an obvious choice (bigger is better) becomes much more complicated considering all of the (often social) implications.  And lots of research shows that investment in social relations has a big impact on long-term happiness.

In the mid 1970s, economist Richard Easterlin made a remarkable observation that seriously challenged the simple equation of money=happiness.  The Easterlin Paradox holds that overall hedonic happiness within countries does not correlate with higher GNP per head between counties (above a certain level, often cited by Richard Layard as $15,000). 

But a lot rests on what “happy” means.  Folks who try and measure such things distinguish between an immediate here-and-now happiness (“hedonic” happiness: how happy are you right now?) and longer term life-satisfaction (wellbeing: how satisfied are you with your life as a whole these days?).

For hedonic happiness, the immediate evaluation of one’s present state does not dramatically increase with income (below a certain level).  Daniel Kahneman and Angus Deaton (2010) argue that this is due to the psychological phenomenon of adaptation: we are adapted to our social contexts and measure of day-to-day ups and downs in terms of the norms of our lives and social worlds.  

But, it is a different story for overall life satisfaction.  This longer term view, assessing the full sweep of one’s life, tends to be correlated with income.  As Kahneman and Deaton observe, “high income buys life satisfaction but not happiness.” 

The geography of life satisfaction:

From: Wikipedia entry on Happiness Economics

Choosing Not To Choose

Can less choice make us happier?  I think so, at least in certain contexts.  Lately I’ve been trying to avoid making food choices.  If we go out to eat, I let someone else decide where and then order what they choose; at home, I eat what is laid out.  Since I spend all day making decisions, I find I’m happier making fewer choices in my free time.

And it is not just with food.  I think we would be more content, and have more leisure time, if we didn’t have to manage the dizzying array of choices we make all day, every day.  A recent essay on “choice” in The Economist (http://www.economist.com/node/17723028?story_id=17723028 ) notes that PepsiCo makes 20 different varieties of Tropicana orange juice alone.  Add in the other brands and their own variations, and just selecting the right juice for one’s tastes and pocketbook is almost overwhelming.  And we haven’t even gotten to the cereal aisle yet.   

It’s just too much.  That same Economist article notes that when Procter & Gamble reduced the varieties of Head & Shoulders shampoo (from 26 to 15) sales increased by 10%.  We average consumers don’t have the time or inclination to research and compare every product category—but that is what it would take to make the best choices, and so the plethora of choice constantly reminds us that we are probably not making optimal decisions a lot of the time.

A growing body of psychological research (from folks like Sheena Iyengar, Mark Lepper, and Barry Schwarz) find that satisfaction with a purchase (of jams, chocolates, and pension plans) decreases with the breadth of variety offered.  As Barry Schwarz notes, too much choice can debilitate and even tyrannize. 

At the same time, there is a deep skepticism and fear in U.S. popular discourse over taking away choice—especially having the government reduce individual choice.  Certainly, we should tread lightly where individual liberty is concerned.  Yet, the tone lately has been especially shrill, with Sarah Palin, Glenn Beck, and a growing chorus issuing dire warnings about the government stealing our freedoms, taking away choices, and the creeping socialist menace that represents.  Palin has attacked new student nutrition guidelines as a “school cookie ban.”  Beck warns that the Obama administration believes that “you’re incapable of making decisions” and (mis)reports on bans on soda and week-long detentions for eating a single Jolly Rancher.  (See Judith Warner’s essay in the NY Times Magazineat http://www.nytimes.com/2010/11/28/magazine/28FOB-wwln-t.html )

Protecting individual liberties against the state has a long and (mostly) illustrious history in the United States, as we are reminded, none too subtly, by the guiding analogies of tea party politics.

And choice is hard to argue against.  It is an expression of freedom, of liberty, of free will and self-determination.  More choice = more freedom.  Who could argue against that?

Yet, we must allow two big caveats.  First, our choices almost always impact others, and, living in a society as we do, we have to make allowances for others.  As economist Bob Frank has argued (discussed below), we must take into account the wide-ranging impacts (“externalities”) our decisions have when marking the boundary between individual liberty and government regulation.  Second, we are so overwhelmed with choices, choices with complex implications, that we often need help with our choices. Brand names and various labeling regimes help.  We rely especially on government evaluations in major purchases (of cars, for example, with safety, mileage, and other comparables). Or, take health insurance.  Those of us fortunate enough to have company provided insurance already have had our choices narrowed by HR folks.  Even then, the differences in my options are always complicated and opaque, and so I do whatever my friend Joseph does (since I trust his judgment and know that he researches such things).  

Personally, I think I would be much happier and relaxed if I had to make even fewer choices.  That doesn’t mean I want socialist style stores—long lines and little choice.  But I would like my choices better curated for me—by shopkeeps, producers, employers, friends, whomever, as long as they can be trusted.   

The trick, as always, is to safeguard the collective good while maximizing individual freedom.  It is a delicate balance.  But more choice does not automatically mean more freedom.

Dispatches from Guatemala: No Guns, No Smoking

The sign in front of the upscale steak house in Guatemala City used the familiar red circle and backslash to forbid guns and smoking.  Such signs are not uncommon in Guatemala, but one admonition is taken seriously and the other often ignored.  And therein lies a paradox of this complicated place: no smoking but plenty of shooting, a country that is crumbling while it is flourishing.  Violence is rampant and the state has largely abdicated control over the police and legal system; all the while, many social indicators are up, with infant mortality going down and education improving.  And, oddly, it is much easier to slip a gun into a bar than to get away with sneaking a cigarette.  

Guatemala is a violent place.  The first thing most visitors notice is the ubiquity of guns.  Guns, guns everywhere.  Armed guards are not only in front of banks but in office buildings, neighborhood pharmacies, and on coke trucks.  Alfredo, a middle-class businessman I know, carries a gun daily for protection—to get past the metal detectors in office buildings he has a pocket full of decoys: a ring of keys, a metal lighter, and finally a knife, which satisfies all but the most vigilant guards and leaves him with his 9mm. 

For Alfredo and his peers, such weapons provide a sense of protection against the violence sweeping the streets.  Guatemala City’s murder rate is 109 per 100,000; for comparison, New York’s rate is below 6.  This is a whole new magnitude of violence outside of war, and it affects all aspects of life for the city’s residents.  The papers are daily filled with gruesome tales of the slaughter, and everyone has their own stories to tell, every life having been touched.  

The most poignant examples for me are the most mundane—the little, often taken for granted, ways violence defines cultural norms.  Take window tinting, for example.  The fashion in Guatemala now is to tint all of a vehicle’s windows midnight black—even the front windshield.  This makes for dangerous driving, and for pedestrians, but potential thieves have no idea how much firepower might be inside.

Still, Guatemala is making great strides with a number of new social policies.  Starting in February 2009, Guatemala banned smoking inside of bars and restaurants.  One would have thought—and indeed I did—that in the context of such lawlessness and violence, such a prohibition would have little impact.  But, lo and behold, it has taken hold, and is widely enforced.  A justified cynic might say it is because smoking in bars would be an ideal target for mordidas (bribes), thus encouraging police to vigorously enforce the regulation, if for private as much as public gain.  But it also shows how quickly new ideas can take root, and how advances in public goods are being made even crime grows.

And there are many other signs of hope.  Riding buses in Guatemala City has become dangerous.  Last year, a bus driver was killed on average every other day, and gangs extorting money had taken to lobbing grenades at buses.  Borrowing an idea from Bogota (and a few other cities), Guatemala City has open a new Transmetro.  Often described as an above-ground subway, the Transmetro is a bus system that runs on dedicated lanes and makes stops only at fixed stations.  The stations require a prepaid card be swiped for entry (eliminating cash on the buses) and there are security personnel in the stations and on the buses.  It reduces traffic congestion, decreases crime, and speeds bus travel--another example of effective public policy.

The New Narco-State and Guatemala's Schizophrenic Future

*a longer version of this piece was published in The Guatemalan Times

I.
If Job were a country, it would have to be Guatemala.  Sure, there are other countries in worse shape-Haiti comes to mind, and Somalia and Afghanistan and all the rest-but rarely do we see the convergence of so many different sorts of disasters.

Geography plays a role in Guatemala's tumult; it is, literally, a turbulent country.  Stretching over breathtaking diversity, its terrain ranges from expanses of lowland rainforest in the north (once home to Classic Maya civilization, now the base for drug smugglers) to the dramatic peaks and valleys of the fertile highlands.  But seismic instability gives rise to the picturesque vistas and, looking beyond the colorful dress of the natives, we find crushing poverty.

The latest round of natural disasters includes volcano eruptions, floods, and catastrophic landslides, which have killed hundreds and left thousands homeless over the last few months.

Yet, the worst news coming out of Guatemala concerns not natural disasters but political ones.  The murder rate in Guatemala City is 108 per 100,000.  That is twice the rate for Baghdad.  Over one in every thousand people in Guatemala City is killed every year-and virtually no one is prosecuted.  A rate this high ripples quickly through the population, touching everyone in some way.  It is a whole new category of non-war violence.

In March, the national police chief, Baltazar González, was arrested along with the head of the anti-narcotics agency, on charges of aiding drug traffickers.  Six months earlier González's predecessor had been arrested on similar charges.  And in January of this year, the immediate past president of Guatemala was taken into custody for extradition to the U.S. on money laundering charges.

Such high profile cases have been pursued by the International Commission Against Impunity in Guatemala (CICIG).  Guatemala, which usually guards its sovereignty jealously, legally empowered this U.N.-sponsored commission of international jurists to initiate and carry out investigations and to help prepare cases to be presented through the national courts.

CICIG, despite the taint of international meddling, has proven to be hugely popular and one of the country's most trusted institutions.  It is seen as being above not only political infighting but also insulated from the effects of narco-money and organized crime influence.

Yet, Guatemala still teeters on the brink of becoming a failed state.  Even more frightening and likely is that the country represents a new sort of narco-state, one which is nominally democratic, shows moderately improving indicators of income and development, and yet which virtually abdicates its role in enforcing the rule of law.

II.
As the rainy season marched forward, the news from Guatemala became more gruesome.  In June, four severed heads were found in plastic bags in prominent spots around Guatemala City, from the National Congress to an upscale shopping center.  A note attached to one incongruously called for an end to impunity for corrupt government officials.

Later that same month, Carlos Castresana, the Spanish jurist who headed CICIG, resigned, citing an inability to work with Guatemalan prosecutors.  The between-the-lines message was that the newly appointed Attorney's General's close ties to narco-traffickers was a mockery of the process.  Indeed, Attorney General Conrado Reyes was subsequently sacked by the Constitutional Court, which issued a vague statement citing threats to constitutional stability from illegal forces.

III.
    When people fear for their security, little else matters.  And such is the state of insecurity in Guatemala now.  A 2008 survey by the Latin American Public Opinion Project found that 63% of Guatemalans see security as the country's primary problem.

This is nothing new for Guatemala; the country has long suffered endemic violence.  The period in the 1970s and 1980s know as "la violencia" was especially brutal, marked by massacres, kidnapping, torture, and pervasive everyday terror.  

After Peace Accords were signed in 1996, the military retreated from its historically heavy-handed role in national politics.  This created a power vacuum that was filled by narco-traffickers (the most powerful group being the Mexican-based Zetas), international street gangs (such as MS-13), and mafia-like groups that emerged from corrupt military fraternities.

The DEA estimates that over 80% of Colombian cocaine bound for the U.S. is transshipped through Guatemala, financing the expansion of this dark network.

IV.
Guatemala is not a failed state.  Yet.  Economist Normal Bailey gives it 50/50 odds on surviving in the medium term, noting that the state's loss of control over the use of force and  breakdown of the rule of law already results in de facto state failure in large parts of the country.

Still, Guatemala does amazingly well considering the conditions.  Violence notwithstanding, a number of indicators are looking up.  Economically, the country is pretty stable for the short term; it is propped up with drug money, but that shows no sign of stopping anytime soon.  The schools function-more or less-and average years of education are on the rise.  Life expectancy is increasing.  Incomes are growing slightly.

Indeed, by the indicators the United Nations Development Programme (UNDP) uses, Guatemala is making significant gains in terms of overall human development.  But, as UNDP coordinator Linda Asturias points out, there is serious lingering inequality that is not improving.

Some suggest that Guatemala needs a military coup.  Others suggest a "Colombian solution," an all-out war on traffickers and gangs.  Given Mexico's experience, and Guatemala's limited resources, it is not at all clear if Guatemala could win such a war.  And calling for Guatemala to mount a major internal military action is unconscionable given the brutality and human rights abuses of military action during the civil conflict.   

The impressive improvements in social indicators will mean little if the country's corrosive violence continues apace.  The greatest danger for Guatemala, and for the rest of the world, is a continuation of the current trajectory, with moderate improvements in health and education placating concerns over the failure to provide physical security or legal recourse that allows drug traffickers and organized criminals to flourish.  This may well prove to be the model of a new, more sustainable, form of narco-state. 

Bob Frank and the Libertarian Welfare State

In a forthcoming book, economist Bob Frank advances a bold proposal for a "Libertarian Welfare State."  Following John Stuart Mill, Frank holds that behaviors can be legitimately regulated when they cause harm to others.  This is a position that, on its face, most libertarians would agree with (in ways that might make Mill uncomfortable, but that's another story). 

Frank is able to square this view with the apparent contradiction of a "welfare state" by (rightly) taking an expansive view of what constitutes "harm to others."  This is a brilliant jujitsu move, taking the libertarian stance seriously-individual freedom is paramount until it causes harm to others, and then it should be legitimately restricted in the least coercive way possible-and showing how it leads to counterintuitive solutions.

Frank deals with some classic "externalities," such as pollution and second-hand smoke, but he also takes into account coordination problems and competition driven by positional goods.

"The social environment profoundly affects individual decisions," Frank writes.  Wow!  There it is, out in the open, and straight from the mouth of an economist.

Recognizing this, then, radically shifts our conception of causing harm to others.  Frank writes of high school hockey players, whose ruggedly individualistic identities and competitive team culture would, absent enforced rules, lead most to forego wearing a helmet; individual players (and certainly their parents) might want to wear a helmet but would feel constrained by group norms.  Thus, hockey players and teenage cyclists need a mandate, a clear rule, to wear a helmet or perverse coordination problems will lead them (some unwillingly) not to wear one; both for a utilitarian greater good and to ensure freedom of choice, rules to wear a helmet are necessary.

Frank also takes on the issue of "positional goods," that is, goods whose value derives in (large) part from how much they are desired and consumed by others.  Status symbols are the iconic example of positional goods.  Elsewhere and in his new book, Frank has written of super-sized houses as examples of counter-productive positional goods.  A 30,000 square foot house may actually reduce a household's utility but it may also feel necessary in a keeping-up-with-the-Jones atmosphere of competitive positioning. 

Frank presents a revealing thought experiment: Which world would you choose?

World A: You live in a neighborhood with 6,000-square-foot houses, others in neighborhoods with 8,000-square-foot houses;

OR

World B:  You live in a neighborhood with 4,000-square-foot houses, others in neighborhoods with 3,000-square-foot houses.

The materially maximizing rational choice is, of course, World A.  But most Americans would choose World B.  This little exercise reveals that the value of house construction is not in its pragmatic utility as a home but in its relative size compared to others.

This leads Frank to the surprising conclusion that a highly progressive consumption tax would not only divert resources toward more productive ends but actually might increase the utility and wellbeing of those same high-income households.

It also makes me think of all the grumbling I hear these days from unhappy airline passengers.  With airline flights, most bought online, a particular framing of choice leads us to privilege low price over all else.  Comparing prices online, we reduce the value of the seat from here to there to price only.  We shouldn't complain about food and service as we are all part of the system that is pushing it in that direction.  Another coordination problem, although this might be the sort of thing that just needs a nudge, an emblem with more information easily understood for example.

In this book, Frank moves beyond the "choice architecture" and gentle nudges of Thaler and Sunstein, who are resistant to advocating clear mandates.  Frank advances a more radical proposal that takes into account the social and relational (positional context) as well, willing indeed to invoke legislation, regulation and higher taxes to most efficiently determine cost/benefit analyses (and under a Libertarian banner, no less!).

Indeed, I read his proposal even a bit more radically than he intends, I think.  If the economy is meant to make us better off, and if we understand "better off" to mean a more holistic, multidimensional, fulfilled life (in the Aristotelian sense, or the Amartya Sen-ian sense of freedom and capabilities), then we could go far beyond not doing harm to others in our mandates.

Frank's work, and that of Lynn Stout discussed below, is part of an exciting new wave of social science that brings high-level theory into conversation with real world problems and policies.  This is a book that should be read by policy makers and pundits as well as academics and students.

Laffer, Godard; Taxes and Property

The newspapers today were filled with incredible stories--incredible as in they strain our credibility, bordering on the absurd or surreal.  To paraphrase Chilean author and filmmaker Alberto Fuguet, why read magical realism when what is really happening in the world is so much crazier.

The French are manning the barricades again, resisting raising the retirement age from 60 to 62 and talk of tinkering with the 35 hour work week.  At moments, the French seem almost hopelessly out of touch with economic realities, a contrast made all the starker by comparisons to the other big E.U. economy, austere Germany.  But it is not all dreary economics and gritty protests.  Today's New York Times also reports that Paris has installed its first public fountain that spurts sparkling water.  What a wonderful idea, perfectly capturing bourgeois eco-consciousness.  Maybe the Germans, who mostly drink their (sparkling) water from glass bottles, do have something to learn from the French after all. 

That same issue of the Times reports on Jean-Luc Godard's rejection of intellectual property rights.  Godard proclaims that "there is no such thing as intellectual property."  He goes on to state that:
"Copyright really isn't feasible. An author has no rights. I have no rights. I have only duties."
Godard's statement exemplifies the best of professional virtue, vocations driven by intrinsic rewards.  Rejecting what has become a sort of neo-feudalism for the knowledge economy, Godard argues that IP is not a private property right from which he is entitled to collect rents. He writes movies because that is his calling, he has "only duties" to himself and his audience.  The extrinsic rewards are nice, but secondary.  We would all do well to follow Godard's example: living a good life based around the pursuit of meaningful (and not just lucrative) projects.  To realize this, of course, we need more jobs with dignity, but that's another issue. 

Turning to The Tennessean, the editorial page today ran an opinion piece by Arthur Laffer (the trickle-down theorists of the Reagan years) and his associate Ford Scudder titled "Raise taxes on all-except the wealthy."  I assumed the title was a touch tongue-in-cheek, if not fully ironic, and read the piece eagerly.  Alas, there was not satire or irony, but a case that high-income workers (having more control over their destiny and less daily need to work) will defer income or work less if taxes rise, which the authors claim would more than negatively offset the gains proposed by higher taxes.  But taxing the wealthy will not only reduce tax revenue, they argue, it will also lead the wealthy to "close down factories, hire fewer workers, invest less and move jobs offshore."  In short, raising taxes on the wealthy will produce more poor people.  It would be cruel to the poor, really, to tax the rich.

Where to start?  I would refer the author first to Lynn Stout's new book discussed below in which she looks at the many ways folks (even the wealthy) are motivated by factors beyond short-term financial incentives.  Maybe high-income earners wouldn't shutter up all the factories and reduce their productivity if they took home a few percent less--perhaps in fact these privileged folks also have the privilege of doing some they like, something they are committed to, something from through and on the society in which we all live and to which we must all contribute. 

In fact, we need to raise the number of high income tax brackets.  The top rate is currently above about $370,000.  We should have brackets of over $500,000 and over $1m.  And those should have a progressively higher rate.

Speaking of intrinsic rewards rather than material incentives: The Tennessean today also reports on a Vanderbilt study that found  that offering teachers financial incentives for student performance had no impact on student test scores.  Again, as Lynn Stout argues in Cultivating Conscience, many professions, such as teaching, are perversely corrupting by financial incentive schemes.  We want to pay teachers well but we also want to accord the profession the dignity it deserves (and pay is a symbol of that) and attract teachers who are driven by a calling, by the intrinsic rewards of teaching and not just by instrumental financial incentives.

Lynn Stout's on How Good Laws Make Good People

Laws can oppress--for proof, we need look no further than North Korea, Turkmenistan, or, for many, Arizona.  Laws and regulations can also liberate.  They can liberate in the freedoms protected, we may all agree.  But they may also liberate in a more expansive, and counter-intuitive, way.  I have been writing lately about how, in some domains, regulations that reduce choice may improve overall wellbeing.

An even more powerful case is made in Lynn Stout's provocative new book, Cultivating Conscience: How Good Laws Make Good People (to be published by Princeton University Press in November).  Stout presents a powerful and compelling case for the role of law in promoting "prosocial" (conscientious) behavior.  (What she terms "conscience" is closely related to my use of the term "moral" in postings below.)

She convincingly shows the flaws in the current fetish for "incentivizing" certain behavior within organizations, demonstrating how the good-intentioned road paved with incentives and marked with accountability metrics can lead to the corruption of virtues and conscience.  (She also acknowledges that there are cases where these incentive structures seem to work well.)

She writes that
"Contemporary experts often assume the best way to get people to follow rules is to use material incentives and disincentives, much like a circus trainer who relies on sugar cubes and a whip to make an animal perform a trick.  Yet by assuming only incentives matter, they may be missing an essential ingredient in the recipe for changing human behavior.  This essential ingredient is conscience."

Since law "is mostly about promoting unselfish prosocial behavior," it follows that laws may act in ways that help us not only cooperate and compete better, but that help us be the sort of people we want to be.  Indeed, as Stout points out, there is a growing body of evidence that suggests prosocial behavior is positively associated with a holistic sense of wellbeing that includes economic prosperity and personal happiness.

This is an important message, and Stout makes a power and eloquent case.  Cultivating Conscience should be required reading for policy makers as well as academics.  

Love's Problems Lost

Medellín's El Combiano newspaper quotes my definition of romantic love to argue that love arose to solve problems we had before we became who we now are, a beneficial solution that has caused other problems.  My wife finds it funny that I am often quoted as an expert on romantic love.  Regardless (of the problems love may cause or of my personal failings), the benefits of love surely outweigh the costs.

But, as Deirdre McCloskey enjoins us, we should not reduce love to material cost/benefit analyzes--such an approach does violence to the very concept.  Rather, she argues, we should embrace love and incorporate it into economic models, for if we ignore the powerful motivation of love and regard for others we cannot begin to account for real human behavior.  

¿Que Pasa Nashville? Latin American Studies

On this episode of Que Pasa Nashville, Cristina is joined by Edward Fischer from the Vanderbilt Center for Latin American Studies who will tell us about a grant given to them to improve education and expand community outreach.

Would We Be Happier As Germans?

Tom Geoghegan argues that most Americans would actually be happier under German style social democracy.  I tend to agree, as the post below suggests.  He makes this case in his new book, Were You Born on the Wrong Continent? and on his blog. 

Although, I am not sure if "happier" is the right work--perhaps "fulfilled" would be better.  I went hiking with Andreas Weigend not long ago, and we agreed that if it had been raining, it would have been much more fulfilling in a uniquely German sense.

Other Explanations for Germany's Economic Performance

Below I have argued that Germany's "short work" (Kurtzarbeit) program, business culture, and frugal investment has led to its spectacular performance in the current downturn (lower unemployment than the U.S., healthy GNP growth, reasonable debt levels, etc.).

Perhaps there are other explanations, or at least other factors, at work.  Jon Shayne passed along this post from Naked Capitalism (which calls on a FT article), "Is the Eurozone Germany's Stalking Horse?"  In it Yves Smith suggests that the Euro zone's (led by the PIGS) debt troubles has kept the currency valued low, which in turn has led to increased demands for the now cheap German export products.

This certainly plays a role, although it is not a complete explanation.  Germany's labor, welfare, and monetary policies have also surely played an important role.

Our Future is Tied to That of Latin America

We are intimately tied to Latin America, economically, politically, and culturally.  We import more oil from Latin America than from the Middle East.  Salsa now outsells ketchup in the U.S.  Our discussion of immigration need to move beyond polarizing sound bites and stereotypes to look at our complicated relationship and work toward futures of mutual benefit.

See FOX 17's edited version of what I and others had to say about immigration today at a CLAS symposium.

Vanderbilt Center for Latin American Studies receives $2m grant

The Center for Latin American Studies at Vanderbilt has been designated a comprehensive National Resource Center for Latin America.

Merle is Double Dippin'

Check out Merle Hazard's latest, Double Dippin'.  Merele, once again has the catchiest take on our current economic woes, and he fears a double dip recession.  And, alas, while we are double dippin', our social fabric is rippin'.

Let Them Buy Cake

Mark Zandi, chief economist at Moody's Analytics, writes in an opinion piece in the 15 August New York Times ("The Tax Cut We Can Afford") that since the top 3% of U.S. household income earners account for 25% of consumer spending, we should not spook them now by letting the Bush tax cuts expire.  We need them to keep spending to keep the economy going.

This is a surprising argument.  The traditional case for tax cuts for high income earners is that they will use their money to invest in productive activities-creating more jobs and more wealth to spread around (or trickle down).

But here Zandi asserts that we need the wealthy's spending to keep the consumer economy on the road to recovery.

It would seem that whatever they do with the money saved from taxes (spend it or invest it), we need the wealthy to be wealthy.  This would suggest that the dramatic tend in extreme concentration of wealth and income in the upper 1% and 5% of households (greater than any times since 1928) is healthy.

But is it really economically and socially healthy or sustainable to be so dependent on such a small (and fickle) class of people?  Bob Frank, for example, has written on the positional goods arms race that emerges from such situations of inequality and aspiration.  Making money is well and good--I wouldn't mind making more myself--but extreme inequality tears at the social fabric that gives the good life meaning.

Less Choice, More Happiness

In previous posts and elsewhere, I have made the case that in certain contexts, limiting choices may improve individuals' overall wellbeing.  This is somewhat counter-intuitive-less choice making one happier-but it is in line with a number of recent studies in behavioral economics.  We may in fact want limits on our choices to help us pursue long-term goals that are vulnerable to being thwarted by short-term temptations.

Ron Lieber (writing in the 14 August New York Times) looks at MasterCard's new "inControl" service.  This allows customers to set spending limits on your card or restrict charges from certain sorts of vendors.  Lieber is "convinced that the ability to cut yourself off from certain kinds of spending will become a standard card feature sooner rather than later."

Another case of less choice leader to a more fulfilled ("happier") life.

Desires, Aspirational Capabilities, and the Missing Dimensions of Poverty

In thinking about the multiple dimensions of poverty and wellbeing, we should not underestimate the role of aspirations and desires.  Often there is an implicit distinction between the "desires" of the developed world (us) and the "needs" of the rest (Them), and this can seduce us into an easy and well-intentioned paternalism that discounts the dreams, hopes, and aspirations that motivate and orient long-term thinking, even among the poor.

This is not to say that material poverty doesn't matter.  It does, and the crushing material conditions of lived poverty shape the options and capabilities open to the poor.  But, as my friend Bart Victor always reminds me, "the poor" are not singular, as much as we may talk about them as such ("what we need to do to help the poor is . . . "); the poor are different not just from you and me but from each other as well, and poverty is always experienced in myriad quotidian and local ways.  And, even those suffering the worst sorts of absolute poverty say that they don't want their children to be poor-they dream of something more, something better for them, however that "better" might be defined.          

This speaks to the aspirations and desires that fuel self-determination.  It is odd, as Arjun Appadurai (2004) points out, that so much of anthropology defines "culture" in terms of the past when the folks we interact with are just as eager to talk about the future.  Appadurai outlines a "capacity to aspire" that provides a sort of dynamic metapreference structure for individual choices; it is a "navigational capacity" that orients horizons of desire and visions of alternative futures.  And the capacity to aspire is diminished, Appadurai argues, in conditions of poverty.

Appadurai characteristically does us a great service, giving us a conceptual language to think about local desires in the context of international development.  In fleshing out that project, we should stress the verdant landscape of desires and aspirations that do exist, even among the poor.  In Broccoli and Desire, Pete Benson and I make the case for taking seriously Maya farmers' desires for the future, even when those are at odds with our own distant moral projects.  Taking a capabilities approach, after all, means giving up some power, opening the possibility that those we seek to help will make choices we may see as counter-productive other otherwise "bad."

Debraj Ray (2006) important work notes that "poverty stifles dreams, or at least the process of attaining dreams."  She introduces the concepts of the "aspirations window" and the "aspirations gap," both explicitly defined socially in terms of relative standing to and relations with those with whom one interacts.

The role of aspirations and desires are seen clearly in times of boom and bust.  James Ferguson (1999), in a powerful account of the aftermath of the copper boom in Zambia, shows how expectations of a particular modernity had become important, internalized motivational forces; the aspirations window of ordinary Zambians opened wide and provided new points of reference for dreams of the future.  After the bust, these dreams became unviable, and new outlooks, disconnected from the modernist aspirations of the global ecumene, emerged: the material conditions shaping the form and limiting the range of aspirational capabilities.

Turning to another corner of the southern hemisphere, take the case of Maya farmers in Guatemala growing broccoli and snow peas for export to the United States.  Some argue that Maya farmers need to focus on subsistence production, growing corn and beans to ensure their own food security.  And there is good reason for such concerns.  But, talking to Maya farmers we hear a different vision of their future, one unironically modern.  Farming is hard work-something we sometimes forget from our distant studies-and Maya farmers want algo más (something more, something better) for themselves and their children.  They see export agriculture as the risky business that it is (fragile crops, fickle markets), but they also see in it hope for a better future for their kids.

In contrast to the methodological individualism of much of neoclassical economics, a notion of "desires" and "aspirations" should see them as shaped by collective experiences, cultural images, and political economic structures.  As Pete Benson and I have written, desires move individuals to take up stakes in certain activities that are compelling because they embody moral, economic, or symbolic values. As such, desires are specific to local worlds, which are themselves part of larger systems of production and affected by large-scale processes.

In this way, desires and aspirations form a key "capability" in the Senian sense.  Sabina Alkire, James Foster, and others at the Oxford Poverty and Human Development Initiative (OPHI) have developed an innovative framework that incorporates the "missing dimensions" of poverty: employment, physical safety, the ability to go about without shame, agency, and subjective wellbeing.  While agency and wellbeing capture certain aspects of an aspirational capability, there is value in treating aspiration as a capability in its own right, mutually constitutive with agency, for example, rather than subsumed to it. 

German Leisure and Missing Dimensions of Poverty (and Affluence)

Thomas Geoghegan, writing in the New York Times blog, writes of the German system that values leisure time (in relation to work) more highly than we find in the U.S.  Here, and in a recent Harper's article and presumably in his new book (which I have only just ordered), Geoghegan makes a case similar to the one I outline in the posts below-rethinking the values of the European system.  (Indeed, reading his work, I have that sinking feeling that comes when one thinks he has a clever, original idea only to find that it has already been done, and more eloquently.)

In the NY Times exchange, Peter Baldwin takes issue with the figures Geoghegan uses.  But, the fact remains that Germans work significantly less than Americans, and they work differently.  There is a clearer division among the professional classes, for example, between work and leisure, and one that is not lightly violated.  And, as the commentator Panicalep noted on the NY Times blog, Germans tend to work the hours that they do more efficiently and productively.

Baldwin is certainly correct when he writes about women in the German workforce: for the most part, Germany is not a women-friendly work environment.  This is not so much because of sexual harassment and old boys networks (if both are surely present, as they are here), but because of structural constraints.  Indeed, Germany companies are working hard to correct executive gender imbalances from a demand side.  But supply still lags due largely to lack of childcare, short school hours, and a cultural notion of proper motherhood.

All in all, I find the German system better promotes overall wellbeing even given all its problems.  This is to some degree subjective, my preference for a certain leisure/work balance.  But we find it in more objective measures as well.  Take life expectancy: the Germans born today are expected to live about 1.5 years more than Americans.  They smoke and drink more, and still live longer.

Speaking of "wellbeing" calls to mind recent innovative approaches in measuring poverty (and affluence) that go beyond GPD per head or absolute income. Inspired by the work of Amartya Sen, Sabina Alkire, James Foster, and the folks at the Oxford Poverty and Human Development Initiative (OPHI) are promoting holistic, integrated measures that take into account what they call the "missing dimensions of poverty."  These include agency, employment, physical safety, the ability of go about without shame, and psychological and subjective wellbeing.  Now, the danger is such holistic approaches is that they can minimize the importance of material conditions ("sure, they are poor, but they are happy, rich in so many other ways).  But the Alkire/Foster OPHI approach recognizes the role of absolute poverty while also accounting for these other elements (which, in fact, often directly impact material conditions).

A recent article in The Economist illustrates some of the OPHI's surprising results (which will form a key part of the UNDP's 2010 Human Development Report).

See also the debate between Sabina Alkire and Martin Ravallion (of the World Bank) at the OXFAM "From Poverty To Power" blog.  And James Foster's intervention at this World Bank blog.

It seems clear that we need to account for multiple dimensions of poverty to fully understand it--and to create policies and programs that can create the greatest good in terms of overall wellbeing.

It also occurs that another missing dimension of poverty has to do with the desires and aspirations of the folks we seek to help.  Pete Benson and I, in our book Broccoli and Desire, argue that we must take Maya farmers' desires (as well as needs) into account.  Maya subsistence farmers have clear aspirations for themselves and their children.  And, for the most part, they don't want their kids to be subsistence farmers--they would like for them have have a better life, algo más, however "better" may be defined.  It is precisely such aspirations for something more or something better that drive the capabilities Sen and Alkire and Foster rightly see as being central to leading a fulfilled life.