When the University of Chicago polls 50 top economists on subjects like fiscal stimulus and the minimum wage, I am often appalled by the results.  In contrast, I wish Eliezer Yudkowsky were made King of the World (assuming there was a King of the World, which I’m opposed to).  This is from Scientific American:

Horgan: If you were King of the World, what would top your “To Do” list?

Yudkowsky: I once observed, “The libertarian test is whether, imagining that you’ve gained power, your first thought is of the laws you would pass, or the laws you would repeal.”  I’m not an absolute libertarian, since not everything I want would be about repealing laws and softening constraints.  But when I think of a case like this, I imagine trying to get the world to a condition where some unemployed person can offer to drive you to work for 20 minutes, be paid five dollars, and then nothing else bad happens to them.  They don’t have their unemployment insurance phased out, have to register for a business license, lose their Medicare, be audited, have their lawyer certify compliance with OSHA rules, or whatever.  They just have an added $5.

I’d try to get to the point where employing somebody was once again as easy as it was in 1900.  I think it can make sense nowadays to have some safety nets, but I’d try to construct every safety net such that it didn’t disincent or add paperwork to that simple event where a person becomes part of the economy again.

I’d try to do all the things smart economists have been yelling about for a while but that almost no country ever does.  Replace investment taxes and income taxes with consumption taxes and land value tax.  Replace minimum wages with negative wage taxes.  Institute NGDP level targeting regimes at central banks and let the too-big-to-fails go hang.  Require loser-pays in patent law and put copyright back to 28 years.  Eliminate obstacles to housing construction.  Copy and paste from Singapore’s healthcare setup.  Copy and paste from Estonia’s e-government setup.  Try to replace committees and elaborate process regulations with specific, individual decision-makers whose decisions would be publicly documented and accountable.  Run controlled trials of different government setups and actually pay attention to the results.  I could go on for literally hours.

And I also liked this, which makes the current political circus seem pretty unimportant by comparison:

There is a conceivable world where there is no intelligence explosion and no superintelligence.  Or where, a related but logically distinct proposition, the tricks that machine learning experts will inevitably build up for controlling infrahuman AIs carry over pretty well to the human-equivalent and superhuman regime.  Or where moral internalism is true and therefore all sufficiently advanced AIs are inevitably nice.  In conceivable worlds like that, all the work and worry of the Machine Intelligence Research Institute comes to nothing and was never necessary in the first place, representing some lost number of mosquito nets that could otherwise have been bought by the Against Malaria Foundation.

There’s also a conceivable world where you work hard and fight malaria, where you work hard and keep the carbon emissions to not much worse than they are already (or use geoengineering to mitigate mistakes already made).  And then it ends up making no difference because your civilization failed to solve the AI alignment problem, and all the children you saved with those malaria nets grew up only to be killed by nanomachines in their sleep.  (Vivid detail warning!  I don’t actually know what the final hours will be like and whether nanomachines will be involved.  But if we’re happy to visualize what it’s like to put a mosquito net over a bed, and then we refuse to ever visualize in concrete detail what it’s like for our civilization to fail AI alignment, that can also lead us astray.)

I think that people who try to do thought-out philanthropy, e.g., Holden Karnofsky of Givewell, would unhesitatingly agree that these are both conceivable worlds we prefer not to enter.  The question is just which of these two worlds is more probable as the one we should avoid.  And again, the central principle of rationality is not to disbelieve in goblins because goblins are foolish and low-prestige, or to believe in goblins because they are exciting or beautiful.  The central principle of rationality is to figure out which observational signs and logical validities can distinguish which of these two conceivable worlds is the metaphorical equivalent of believing in goblins.

I think it’s the first world that’s improbable and the second one that’s probable.  I’m aware that in trying to convince people of that, I’m swimming uphill against a sense of eternal normality – the sense that this transient and temporary civilization of ours that has existed for only a few decades, that this species of ours that has existed for only an eyeblink of evolutionary and geological time, is all that makes sense and shall surely last forever.  But given that I do think the first conceivable world is just a fond dream, it should be clear why I don’t think we should ignore a problem we’ll predictably have to panic about later.  The mission of the Machine Intelligence Research Institute is to do today that research which, 30 years from now, people will desperately wish had begun 30 years earlier.

Vote Eliezer Yudkowsky, King of the World

PS. Long ago I used to read the paper version of Scientific American, and their economics articles were consistently awful. Have things improved?

This Onion story from 2001 proved to be highly prophetic:

WASHINGTON, DC–Mere days from assuming the presidency and closing the door on eight years of Bill Clinton, president-elect George W. Bush assured the nation in a televised address Tuesday that “our long national nightmare of peace and prosperity is finally over.”

The political situation in the US, and indeed much of the world, has deteriorated steadily since the beginning of the century. And just when you think things can’t get any worse, they do.

This new story in Vox is the best piece of political analysis that I’ve read in years. The bottom line is that a group who believe in “authoritarianism” is on the rise in the US.  I won’t go into all the details, but suffice it to say that if you are a libertarian like me, you should be very worried.  They are essentially the exact opposite of libertarianism.  If they take over the GOP, then the situation for libertarians will be the bleakest since at least the Nixon era.  The silver lining (and it’s a very slim one) is that it might give a boost to the Libertarian Party.

Here’s something by Jim Geraghty of the National Review:

Let me offer a thought that every conservative should contemplate, even though it’s one we would rather avoid: What if the American people don’t want smaller government that spends less?

This is where we usually hear talk about how small-government conservatives need “better messaging.” Or someone will insist that there’s a broad desire for a smaller government that spends less, but those Washington insiders and establishment sold out the conservative agenda. But what if Americans have heard the arguments for smaller government, understand the arguments — or understand them as well as they’re ever going to — and have rejected them?

Does a country where the popular vote in the last six elections went for Clinton, Clinton, Gore, Bush, Obama and Obama really crave smaller government?

Polling indicates that 70 percent want a smaller deficit . . . but the only spending cut that gets anywhere near a majority support is to foreign aid — about one percent of the budget — and even that’s close to an even split. “For 18 of 19 programs tested, majorities want either to increase spending or maintain it at current levels.” People want smaller government right up until the point where it actually affects them.

The current Republican front-runner is running against entitlement reform:

Trump opposes any cuts to Social Security and Medicare — and Medicaid, for that matter. In April, at the New Hampshire Republican Leadership Summit, Trump criticized his fellow Republicans for proposing reforms of the entitlement programs that are bankrupting the country: “Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid. And we can’t do that.” Medicare and Social Security alone face more than $69.1 trillion in unfunded liabilities, but Trump insists that the programs can be saved without cuts. “All these other people want to cut the hell out of it,” Trump said of Social Security. “I’m not going to cut it at all. I’m going to bring money in, and we’re going to save it.

1. It’s meaningless to talk about public opinion on “big government.”  The public doesn’t even understand what the term means.  You might think that big government means Social Security, Medicare, tariffs on Chinese goods, etc., but I assure you that this is now how Americans view the concept.  And since their views on taxes and spending are impossible to meet, in a very real sense they have no opinion.  Or you could say that their opinions could never be enacted, so politicians might just as well ignore them, and instead consider how the public would react to various options that the policymakers are actually contemplating.  That’s where public opinion matters.

2. To a libertarian like me, conservatism that discards the “small government” component represents 100% pure unadulterated evil.  But it would make life much simpler.  I could simply go with the liberal tribe, and no more lame explanations that “I’m conservative on economics and liberal on other issues.”  In my view, Trump is running on a platform of pure evil.

3.  It’s common for the policy preferences of candidates to not add up.  But I’ve never seen a gap anywhere near as large as with Trump.  His statement that he’s going to “bring money in” is almost comically at variance with his tax plan, which basically says “no one should have to pay any taxes“, or at least something pretty close to that.  Since he also favors much more government spending, his plan would bankrupt the country far faster than the plans of Bush, Rubio, etc.  So it’s a nonstarter, which means we basically don’t know anything about what a President Trump would actually do.  Probably the best way to try to figure that out would be to look at what he said before he was a candidate.  I recall he praised Hillary, and thus suspect a President Trump would be essentially an even more macho version of President Hillary Clinton. Or even Obama. Obviously I may be wrong, but whatever he does, it clearly won’t be the issues he’s campaigning on. He won’t expel the illegals (who would pick the fruits and vegetables?) or stop imports from China.

4.  The support for Trump is partly due to the tendency of GOP leaders in Congress to cave on spending issues.  They are viewed as “pussies”.  Trump avoids that problem by promising to be a big spender.  Seriously, where does his support come from?  It comes from those who want to turn the GOP into a European populist party—big government plus xenophobia and macho behavior.  Sarah Palin (who once nearly came to be one heartbeat from the Presidency) says Trump won’t “pussyfoot” around.  But we have a two party system, which is why I continue to predict failure for the GOP in 2016. The Dems can rally around utilitarianism, and politely disagree on whether to follow the Clinton or Sanders versions, whereas the GOP can’t even agree on core values.  Eventually this will sort itself out; in a two party system the two parties always take turns over the longer run.  But the “against utilitarianism” party has a really difficult time right now, especially given that many of its brightest members are approximately right wing utilitarians (at least on economics.)  Geraghty may think that Americans have turned away from small government, but a sizable bloc of the GOP most certainly has not.  A GOP that got rid of the small government faction would have little ability to attract talented people like Greg Mankiw.  (He’s already implied that Trump has a quasi-fascist approach to politics, and I’d guess that’s a pretty serious negative in Mankiw’s eyes.) Recall the recent election where Le Pen came in second in the first round of voting, and lost the general election 75% to 25%.  It wouldn’t be that bad here (Le Pen had to run against the moderate right) but they’d have a hard time getting to 50%.  It’s OK to have a party that’s toxic to intellectuals, and gets 20% to 30% of the vote . . . in Europe. That’s a pretty successful party in a multi-party democracy.  But in the US two party system that won’t work.  The GOP has a lot of work ahead of it.

5.  Someone will have to put Humpty Dumpty back together again in 2017.  I suspect that Paul Ryan will become the de facto leader of the GOP at that time.  It will be interesting to see what he tries to do with the remnants of the party (which might well still control the House.)

6.  You could argue that Ted Cruz is a small government version of Trump, and also a very skilled debater.  If in the end Cruz is not able to beat Trump, it wouldn’t necessarily mean GOP voters like big government, but it would at least suggest the issue is not very high on their radar screen.

7.  Just to be clear, I do not believe that the mainstream candidates (Bush, Rubio, Kasich, Christie, etc.) would bring smaller government to America.

PS.  Of course I was joking when I said Trump proposes to eliminate taxes.  But Trump also likes to clown around; indeed I’ve argued he’s running as a clown.  Here’s the actual plan:

1. If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.

The loss of revenue will be “offset” by massively lower taxes on the upper middle class and wealthy.  And a massive tax cut for corporations.  And more entitlement spending.  With Trump, we’ll all “win”, even the hedge fund guys.  A nation of winners.  Hey, what could go wrong?

Anyone who doesn’t see that Trump is a clown is not paying attention.  Read “I win” 100 times in a row, until it sinks in as to what his game is.  Yes, he’s quite smart when he takes the clown costume off, but so are many circus clowns.  If I wanted to call him dumb, I would not use the clown metaphor.

PPS.  I was completely wrong about Trump’s prospects a few months back (and Paul Krugman was right), so no one should take my views on politics at all seriously.

Here’s Kevin Drum:

And on another related note, the damage from the Oxy epidemic is worst among the poor and working class. It’s easy to favor drug legalization when you’re middle-class and well educated. Your social group probably doesn’t include many people who abuse drugs much in the first place. Moderate users can afford their habit. And when their use turns into addiction, they usually have a strong support network to help out. It’s a problem, but not a huge one.

In poor communities, none of this is true.

Let’s try to look at this from a different perspective:

It’s easy to favor drug prohibition when you’re middle-class and well educated. Your social group probably doesn’t include many of the 450,000 people currently imprisoned for violating drug laws. Nor does it include the thousands who die every year in developing countries, as a result of the US-led war on drugs.  Moderate users can afford their habit, without having to sell drugs. And when their use turns into addiction, they usually have a strong support network to help out. It’s a problem, but not a huge one.

In poor communities, none of this is true.

Sorry, but I’m not willing to imprison 450,000 people, let thousands die, and let millions suffer with untreated pain, just because some people abuse Oxycontin.  And isn’t this horrible outbreak happening despite our draconian drug laws?  If we legalize pot or cocaine, does the Oxy epidemic get even worse? The addiction center nashville is what one can count on when it comes to drug issues.

I hope this is not the beginning of a shift of opinion of progressive pundits in favor of the war of drugs. (“Liberal” politicians already favor the war on drugs.)  I grew up middle class, and have known lots of people who used drugs.  I don’t recall a single one of my acquaintances ever serving a minute in prison.  Nor did our last three presidents.

The 450,000 figure is misleading, as many serve only short sentences (this includes those in jail awaiting trial.)  Millions of people go through our prison system for drug law violations.  Why don’t I know any of them?  Is it perhaps because the system mostly punishes poor and minority drug users and sellers?  Isn’t this the sort of “disparate impact” that liberals (rightly) complain about? There are OrganicCBDNugs that people are into these days.

Some commenters were skeptical about my previous post, which claimed class bias in anti-rape policies.  But we see the same class bias in drug laws.  How many examples do we need to see?

Kevin Dowd, one of the early proponents of using futures markets in monetary policy, has a new paper on the (global) war on cash:

One of the most significant but least noticed developments in recent years has been a gradually escalating government war against cash: in fact, this war has already escalated to the point where the abolition of cash is now a very real possibility. At first sight, one might think that there is nothing too much to worry about: we are merely talking about technocratic issues related to payments technologies and the implementation of monetary policy, and cashless payments systems are already both commonplace and spreading. The reality is rather different: the issues at stake are of the most profound importance. The abolition of cash threatens to destroy what is left of our privacy and our freedom: we wouldn’t be able to buy a stick of gum without the government knowing about it. Besides making us all entirely dependent on the whim of the state, it would also undermine economic prosperity and literally devastate the extreme poor. Quite simply, the government’s war against cash is the state’s war against us.

The proposal to abolish cash has been supported by a number of prominent economists, including Harvard economist Ken Rogoff, Citi chief economist Willem Buiter, Paul Krugman, and Peter Bofinger, a member of the German Council of Economic Experts. Then, on September 18th, in a speech to the Portadown Chamber of Commerce in Northern Ireland, another prominent economist – Andy Haldane, the chief economist of the Bank of England – announced that he too was in favour of abolishing cash.

I don’t agree with all of Kevin’s views on monetary policy, but the second half of the paper (which criticized proposals to abolish cash) is excellent.  Unfortunately, I expect that we will lose this battle.  We are moving toward a “1984” type society, and it’s very clear that the public (on both the left and the right) is willing to trade in our freedom for the illusion of protection against all those scary “terrorists” in our midst.  The good news is that I won’t live long enough to see currency abolished—it’s still several decades away in the US.

On other topics, we saw another strong jobs report today.  I wonder if I am reading the linked document correctly.  It seems to suggest that we saw a huge upsurge in the number of people holding two jobs in 2015.  Is that correct?  With powerful growth in jobs during Q4, and anemic growth in output, expect more horrible productivity numbers ahead.  The Great Stagnation continues, and it’s not a demand-side phenomenon.

Let me also address some comments I have received about China.  I’m certainly no expert on the Chinese economy, but from the outside it seems like they have an excessively tight money policy and an excessively easy credit policy.  And indeed these two failures are related.  To ease monetary policy they’d have to let the yuan depreciate significantly (although not the 30% figure you see tossed around.)  But they are not (yet) willing to do this.  So instead they’ve run an expansionary credit policy, piling up debt.  I think they’d be better off with a tight credit policy and an easier monetary policy–say 7% NGDP growth for 2016.  Under current policy, there may well be a debt crisis at some point during the next decade.