Helena Bachmann files from Geneva:
According to government records, 502 expatriates renounced U.S. citizenship or permanent residency in the fourth quarter of 2009 — more than double the number of expatriations in all of 2008. And these figures don’t include the hundreds — some experts say thousands — of applications languishing in various U.S. consulates and embassies around the world, waiting to be processed. While a small number of Americans hand in their passports each year for political reasons, the new surge in permanent expatriations is mainly because of taxes…
“Cutting my ties with America hasn’t been easy,” says Ben, who as a foreigner can now spend only 90 days a year in the U.S. “My family and friends think I am a traitor. But the financial burden was killing me.”
We previously covered the rising costs of leaving the U.S. here.
Watch Dogs For the Envy of the Gods
Every baseball fan knows the first rule about a no-hitter is not to talk about the no-hitter. It’s sacrilegious. To speak of the “no no” is to jinx it. Lord knows what kind of causation is at work here, but only a fool wants to claim responsibility for ending it with blasphemous talk. Even fans on an opposing team know this and honor it. (For the uninitiated, a “no-hitter” is a rare event in baseball when a starting pitcher holds the opposing team hitless for a complete game.)
Odd as it appears, this irrational fear of ruining a good thing by making it known to what…gods?…the vast mysterious unknown?….is deeply rooted in human nature. Some knock on wood after expressing optimism about an object or an event or a relationship in the belief that this knock will protect their wish. Again, protect them from what?–not sure, but you’d be an idiot to tempt fate, a phrase even the secular take heed of. At weddings, Jewish custom requires breaking a glass to remember the destruction of the Temple during your highest joy. And similarly, in many Mediterranean and Middle Eastern cultures, it is inauspicious to celebrate the beauty of a baby and many other good things, lest the public compliment irritate and draw the attention of a lurking “evil eye” who will level all those who embody beauty and excellence.
The ancient Greeks institutionalized this crypto-religious sentiment in their concepts of fate, hubris, and nemesis. The Greek for fate is “moira” a term that also means portion or allotment. It suggests a sense of distribution, something fate doles out according to her measure. In a literal sense hubris ought to be understood as taking more than the share fate has alloted you, a portion so large it arouses the envy of the gods. To satisfy them, fate then calls forth Nemesis, the enemy of too much happiness, to rightfully restore the natural balance.
The Greeks took their envy very seriously. Part of the appeal of Greek tragedies rests on this theme and seeing its logic made vivid, however irrational that may be. And if your success was too much to bear in Athens, 6,000 citizens could vote to exile you for 10 years.
In his book Human Universals, the anthropologist Donald Brown catalogued behaviors found in nearly every human culture. It’s no surprise that he lists envy. What I find more interesting is this–every culture also develops a symbolic means for coping with envy. Envy and the fear of arousing envy are two very different phenomena. There is an old, but good criticism of egalitarianism and other left-wing progressive doctrines that they are motivated by envy. And it is true that many politicians have found success in pandering to and fomenting the envy of the rabble against the well to do. But I now think that this criticism is a bit misguided, since the perennial philosophy in human history involves a fear of arousing the envy of the gods. It’s not the envious that matter so much nowadays. Instead, I think we ought to beware of the watch dogs for the envy of the gods and the engineers of envy-avoidance. For it is far easier to convince the many that the successful few might arouse envy not in you, but in the gods or in others, and thereby cause social instability. The Greek gods had their leveling lightning bolts. The left has progressive taxation. Human nature is very clever at bottling old wine in new bottles.
Envy, afterall, concentrates on a definite target, someone who is our social proximate. It arises in its greatest intensity against someone from the same class, the same profession, or the same status group. Worst yet, in the family. The more equal we are, the more envious we may become. “Beggars do not envy millionaires,” Betrand Russell once said, “they envy other beggars who are more successful.” Whereas the primeval fear, our anxiety about another person’s envy, is not so local and no where near as definite. Surrounded by innumerable, potentially envious people, we look everywhere for rivals. Our fear attaches to no one in particular, but much more efficiently instead, assumes it of everyone and calls them the gods. People come to believe something has to be wrong because times are so good.
Twenty-five years ago Robert H. Frank proposed a thought experiment to show that libertarians would voluntarily accept progressive taxation to support side-payments to the unproductive and envious. (Chapter 6 of Choosing the Right Pond.) Frank believes people are self-interested, but instead of maximizing wealth, they chose to maximize their relative status. Envy-inducing status matters more than greed in his model, so people will tend to forgo higher wealth for the chance to obtain higher status.
With this in mind, he said libertarians who set off across the ocean in an ark would not be happy without poorer, less productive people hanging around them. Isolated rich people–on a seastead, we can imagine–are not as content as less wealthy folk who have poor people around, because isolated rich guys have no one to compare themselves to. Status matters more than wealth. So we can imagine the rich guys paying poor people to join their community. Now, tho slightly less wealthy, these libertarians get to bask in their superiority over the unproductive court of the envious.
Making these side-payments is the equivalent of a redistributive policy. So Frank says libertarians ought to accept progressive taxation. QED. That argument didn’t convince anyone 25 years ago, but Frank has decided to try to resuscitate it in yesterday‘s NYTimes. For one rebuttal, I recommend Angus’s analysis of Frank’s sophistry at Kids Prefer Cheese.
It is troubling that Frank ignores this human tendency to fear the envy of the gods. He seems to relish playing the role of its watch dog. You know this because like all other watch dogs in human history, he shifts the blame from the envious to the envied man or what is enviable. For Frank, it is no longer a vice to envy. It is a vice to arouse it. Disapproval falls upon those who have attained too much happiness and now society ought to be organized for envy’s benefit. Of course, none of the measures he suggests will do anything to actually assuage the sting of envy in the less productive. If you subsidize a behavior, you can expect more of it. Envy has never been eradicated, not even in the most egalitarian societies. So paying people off to publicly accept their inferiority doesn’t even pass the giggle test. It will only make their envy worse.
Frank is deservedly well known for incorporating status-seeking into a fruitful model of human behavior. Eric Falkenstein recently wrote about how this assumption better explains some anomalies in finance, positive psychology and other fields. H.L. Mencken found envy at the heart of democracy. Amy Chua credits it for the rise of exploitative demagogues in poor regions of the world. It is the keystone of Rene Girard’s philosophy. And Robin Hanson’s blogging at Overcoming Bias consistently returns to the topic of status and relative standing. There is much to learn here. But it’s important not to forget envy’s correlative: the symbolic systems we use to express our fear of those who might arouse envy not in us, but in others.
Paul Romer On This Week’s EconTalk
Russ Roberts interviews the Charter Cities founder. Self-recommending, as they say.
George Will on Entrepreneurial Federalism
A good column on Governor Chris Christie’s efforts to help New Jersey retain wealthy residents and entice businesses. He writes:
The bridge spanning the Delaware River connects New Jersey’s capital with this town where the nation’s most interesting governor occasionally eats lunch at Cafe Antonio. It also connects New Jersey’s government with reality.
The bridge is a tutorial on a subject this government has flunked — economics, which is mostly about incentives. At the Pennsylvania end of the bridge, cigarette shops cluster: New Jersey’s per-pack tax is double Pennsylvania’s. In late afternoon, Gov. Chris Christie says, the bridge is congested with New Jersey government employees heading home to Pennsylvania, where the income tax rate is 3 percent, compared with New Jersey’s top rate of 9 percent…
He inherited a $2.2 billion deficit, and next year’s projected deficit of $10.7 billion is, relative to the state’s $29.3 billion budget, the nation’s worst. Democrats, with the verbal tic — “Tax the rich!” — that passes for progressive thinking, demanded that he reinstate the “millionaire’s tax,” which hit “millionaires” earning $400,000 until it expired Dec. 31. Instead, Christie noted that between 2004 and 2008 there was a net outflow of $70 billion in wealth as “the rich,” including small businesses, fled. And he said previous administrations had “raised taxes 115 times in the last eight years alone.”
I have a theory, completely unsupported by any legitimate research, that New York City is the wealthiest U.S. city (as measured by GDP) and most populated, not only because of its location (where the Atlantic and Hudson meet), nor only because of historical path dependencies and agglomeration effects, but also because it’s located 35 miles from Connecticut and less than half a mile by bridge to New Jersey. If New York City had less competitive forces disciplining its governance–it would be even more like Los Angeles and San Francisco and far more in debt. (It’s early 19th century rivalry with New Jersey may have helped it gain an edge against cities like Boston and Philly, whose automobile-less citizens were much more stationary then.) So my totally unsupported theory would go. Among other prominent U.S. cities today, I see Chicago and Philadelphia fitting roughly similar profiles, Boston too, but less so. Cars and trains help. It’s hard to imagine these city halls being more corrupt than they are, but I’ll have to bite the bullet and accept that. Kansas City also sticks out as an outlier for me–it ought to have better governance sitting on that state line–but I haven’t really thought this out. If anyone can point me to some research on this topic, I’d appreciate it.
Will They Speak Esperanto In Charter Cities?
Of course not. But Sandy Ikeda offers some misgivings:
Yes, urbanization is crucial for economic development, as it always has been (despite the radio, the telephone, the car, and now the Internet). But there is a disturbing lack of appreciation, at least on the official website, of how the design of public spaces impinges on city life and economic activity, especially via the formation of social networks that facilitate entrepreneurial discovery. There is a certain “if you build it they will come” faith in the charter-city rhetoric that seems to discount what scholars such as Henri Pirenne and, more recently, Jane Jacobs have taught us about the evolutionary and emergent character of vital cities throughout history. It’s no more possible to construct a living city than it is to construct a living language, and for the same reasons.
Read the whole thing. Ikeda raises a host of concerns including commitment and incentive problems.
An Esoteric Bit of Anarcho History
I’ve previously touched on some of the ideas presented in James C. Scott’s Seeing Like A State. It’s a Hayekian account of failed attempts at centralized, technocratic command and control during the 20th century. Scott’s no libertarian–he deliberately sets himself apart from those free-wheeling rogues–but almost as if from scratch, he develops a conceptual framework that echoes Hayek’s discussion of local knowledge, planning, and emergent order. You say potato, I say potato.
At the Beacon Blog, Peter Klein has posted a thought-provoking excerpt from Scott’s newest book, The Art of Not Being Governed: an Anarchist History of Upland Southeast Asia:
At a time when the state seems pervasive and inescapable, it is easy to forget that for much of history, living within or outside the state — or in an intermediate zone — was a choice, one that might be revised as the circumstances warranted. A wealthy and peaceful state center might attract a growing population that found its advantages rewarding. This, of course, fits the standard civilizational narrative of rude barbarians mesmerized by the prosperity made possible by the king’s peace and justice — a narrative shared by most of the world’s salvational religions, not to mention Thomas Hobbes.
This narrative ignores two capital facts. First, as we have noted, it appears that much, if not most, of the population of the early states was unfree; they were subjects under duress. The second fact, most inconvenient for the standard narrative of civilization, is that it was very common for state subjects to run away. Living within the state meant, virtually by definition, taxes, conscription, corvée labor, and, for most, a condition of servitude; these conditions were at the core of the state’s strategic and military advantages. When these burdens became overwhelming, subjects moved with alacrity to the periphery or to another state. . . . And, finally, the early states were warmaking machines as well, producing hemorrhages of subjects fleeing conscription, invasion, and plunder. Thus the early state extruded populations as readily as it absorbed them, and when, as was often the case, it collapsed altogether as the result of war, dought, epidemic, or civil strife over succession, its populations were disgorged. . . . For long periods people moved in and out of states, and “stateness” was, itself, often cyclical and reversible.
Klein notes, “The book traces the history of ‘Zomia,’ an isolated, upland region stretching across seven Southeast Asian countries. Scott’s thesis is that its inhabitants chose a particular culture and lifestyle — farming technology, housing, social structures, language, art, and so on — for the specific purpose of avoiding entanglement with the coercive state.”
Developing technology, housing, and social structures to avoid entanglement with a coercive state…I wonder where I’ve heard that before. Oh yeah.
Cory Doctorow thinks you shouldn’t buy an iPad. He gives five reasons. Many serve as good complaints against the lack of a competitive market in governance. Let’s make some analogies. Cory sez:
- Incumbents made bad revolutionaries: “They’re apt to take all the stuff that makes their products great and try to use technology to charge you extra for it, or prohibit it altogether.” I say: Substitute “force” for “technology” in that sentence and you have the modern State. Another way of saying this is to say that current industry leaders expend a lot of effort to maintain the rents they collect on their competitive advantage. For standard reasons of political economy, this is all too true in governance. Self-interested and envious status-seekers aim to keep their winning coalition in power. Sadly, that goal does not coincide with innovating new, socially desirable national rule sets.
- Infantalizing hardware: “There’s also a palpable contempt for the owner. I believe — really believe — in the stirring words of the Maker Manifesto: if you can’t open it, you don’t own it. Screws not glue…it seems like Apple’s model customer is that same stupid stereotype of a technophobic, timid, scatterbrained mother as appears in a billion renditions of ‘that’s too complicated for my mom.'” I say: This is all too true in terms of today’s soft paternalism. I hear echoes of de Tocqueville’s timid flock of sheep. Take Nancy Pelosi’s remarks after the passage of the 2074 page Demo-‘Bamo-Spendo-Rama Health Bill. She compared it to a refrigerator: ”It’s like the back of the refrigerator. You see all these wires and the rest,” said Pelosi. “All you need to know is, you open the door. The light goes on. You open this door, you go through a whole different path, in terms of access to quality, affordable healthcare for all Americans.”
- Wal-Martization of the software channel: “The iStore lock-in doesn’t make life better for Apple’s customers or Apple’s developers. As an adult, I want to be able to choose whose stuff I buy and whom I trust to evaluate that stuff. I don’t want my universe of apps constrained to the stuff that the Cupertino Politburo decides to allow for its platform.” I say: I want to choose what stuff I buy as well, even in the market for government service providers (GSPs). Like ISPs who favored walled gardens–AOL, Compuserve, and Prodigy, for example–GSPs in this mold are bad too. I don’t want my universe of social apps limited to one GSP.
- Journalism is looking for a daddy figure: “everyone in journalism-land is looking for a daddy figure who’ll promise them that their audience will go back to paying for their stuff.” I say: I propose “Who’s your Daddy?” as the new slogan in public choice economics. This is the question every special interest group knows the answer to.
- Gadgets come and gadgets go: “The iPad you buy today will be e-waste in a year or two.” I say: Unfortunately this last complaint doesn’t apply to current government goods and services. Bad services come in legions and almost never go. And under current conditions, don’t expect a competitor to come along and offer a better product at a lower price.
HT to Seth Roberts, who makes analogies to improving health care.
Rent Seeking Cotton Farmers of the World Unite!
It always warms my tender heart to hear about rusticating farmers who care about each other. Take these U.S. cotton farmers. About 20,000 of them. The U.S. government provides these tillers of the American pastoral with a subsidy of about $3 billion a year.
And all was good. But then, the WTO had to get nosy–I know, the nerve!–because as part of a big bad trade agreement, the U.S. promised not to harm farmers elsewhere in the world, like in Brazil. Et in arcadia ego, those Brazilians say. I guess they had trouble competing against a heavily subsidized American way of life. Go figure. So anyway these cotton farmers in Brazil sued the U.S. for breaking its trade agreement. And they won.
What would be the sensible thing to do here? Keep your trade agreement and end the subsidy to U.S. farmers, right? No, instead, the U.S. agreed to subsidize the Brazilian farmers. Yes, you read that correctly. Rent seeking has gone global. Time reporter Michael Grunwald is on the case:
What could be more outrageous than the hefty subsidies the U.S. government lavishes on rich American cotton farmers? How about the hefty subsidies the U.S. government is about to start lavishing on rich Brazilian cotton farmers?
If that sounds implausible or insane, well, welcome to U.S. agricultural policy, where the implausible and the insane are the routine. Our perplexing $147.3 million–a-year handout to Brazilian agribusiness, part of a last-minute deal to head off an arcane trade dispute, barely even qualified as news; on Tuesday, April 6, it was buried in the 11th paragraph of this Reuters story. (The New York Times gave it 10th-paragraph play.) If you’re perplexed, here’s the short explanation: We’re shoveling our taxpayer dollars to Brazilian farmers to make sure we can keep shoveling our taxpayer dollars to American farmers — which is, after all, the overriding purpose of U.S. agricultural policy. Basically, we’re paying off foreigners to let us maintain our ludicrous status quo.
HT: Tim Worstall
Very Good Sentences From Matt Ridley
For the first time in my life, I’ve seen a political manifesto based on bottom-up, emergent-property thinking throughout. Not like the old right wing, which wanted bottom-up for business and top-down for society. Not like the old left wing, which wanted top-down for the economy and bottom-up for society. Not like today’s Labour party, which wants top-down, authoritarian dirigisme for everything. Well, almost throughout. The Tories still seem to be thinking top-down on energy, marriage and a few other things.
Do check out the rest of his blog. I’ve only just keyed into it (which is named for his forthcoming book, The Rational Optimist: How Prosperity Evolves.) And yet–surprise, surprise–I think Ridley’s passion for bottom-up, emergent order is still too tame. I would add a couple more topics that nations inveterately use top-down management for–namely, controlling their size and demographic composition. Competitive governance fueled by a market for national rule sets would loosen things up a bit. No reason orders wouldn’t emerge at that level, either. But I suppose you have to start somewhere. Here’s another interesting post on emergent order based on a study of flock movements:
Right, so can we now get away from the absurd dichotomy between autocracy and anarchy? If you say you favour bottom-up, emergent solutions with nobody in charge, because that’s how both evolution and economic progress (and the internet) generally work, then then most people react by saying: well, somebody’s got to be in charge or you’ll end up with anarchy. No.
Exactly!
Giving People Reasons to Leave the U.S.
Venture Capitalist Bill Frezza asks, “What do we do if the rich start to leave?” He enumerates the reasons people will increasingly have over the next few years for leaving the U.S. He also warns any would be foreign investors and entrepreneurs about the dangers of obtaining U.S. citizenship. ‘Cause, just when you think you’re out, they drag you back in:
How dare they leave after all we did for them! If expatriations keep growing Congress should triple the exit tax. In fact, why should we let deserters take any money with them at all? They should be thankful we let them out with the clothes on their backs. Didn’t they enjoy the benefits of this great country while the getting was good?
Maybe we can’t put up walls but there are ways to keep people from fleeing, lots of countries do it. We can lean on foreign governments to deny economic defectors citizenship. If anyone tries to sneak out the IRS can hold their children hostage. We have so many complicated laws and regulations, surely we can find some obscure rule that they broke, and if we can’t we can pass more laws and make them retroactive. Even better, let’s pass enough laws to make sure that no one is allowed to get rich in the first place! That’ll solve the problem once and for all.
Let A Thousand Nations Bloom 