I continue to write these days beneath the shelter of my “drafts blog“. A big benefit of that is almost nobody reads it, so I feel much freeër to write. A downside is, well, almost no one reads it.

I thought I’d excerpt some bits from posts I’ve written since the last “drafts” roundup.

There are not yet comments on the drafts blog, so please feel encouraged to offer comments here. (I do mean to add comments to the drafts blog! But I am now desperately allergic to surveillant or potentially surveillant tech platforms, so I will have to implement them myself. It won’t be instant.)

Without further ado, some excerpts!

From Banks should fail much more often (2023-03-26):

The most important reason to prefer small investent funds, however, is because large-scale funds are stupid. Large banks and investment funds are stupid in a very particular, very destructive way. They rely far, far too much on “hard information”. They are evidenced-based. Fucking idiots!

At a large bank, it will never cut it to go before the loan committee and say “Yes there’s no collateral, and limited credit history. But I’ve known Duane and his family for a long time. They are serious and connected to the community, and the business plan is promising.” But it is exactly this kind of loan that creates the greatest social returns. The true source of economic development is speculative but discriminating monetization of human aspirations and capabilities. You turn people with nothing but a work ethic and a great idea into proud pillars of the community by making available the resources they require to succeed. The more a borrower lacks — the less collateral they have to offer, the further they are from holding a sexy degree from Stanford — the more social upside there is in their success.

The very best loans are the ones that cannot be justified at all in terms of hard information, but are made anyway on the basis of very good soft information. Big banks are simply unable to lend on soft information, due to bureaucratic imperatives, and a need to manage legitimate ethical concerns. (Is this “soft information” just nepotism? Are we “discriminating” on the basis of some hypothetical je ne sais quoi of investment quality, or is it really just race?)

From Financial regulation is just debt covenants (2023-03-24):

Fundamentally, private debt covenants and public financial regulation are the same thing. They are means by which creditors of leveraged firms try to ensure shareholders can’t loot them by building tripwires that allow creditors to usurp control from shareholders when shareholder risktaking threatens creditor interests. They look different, they take different forms, because private creditors can regulate within debt contracts that they sign, while the public sector offers finance primarily via guarantees, and so must impose its regulation outside of the contracts that borrowing firms and their notional creditors devise.

From Banks are not private (2023-03-21):

[P]eople spend far too much energy worrying about the cost of bank failures, and far too little worrying about the cost of bank survival… [T]he most costly forms of state support take the form of subsidies that the state can pretend are not “taxpayer funded”, but that impose quiet costs on the public anyway. Do you remember when the Fed retroactively rewrote millions of lending contracts so that banks could charge more interest and recapitalize? Do you remember when the nation debt doubled in less than four years, precisely so that large banks would not have to be resolved? Yes, Virginia. Bank failures, actually, are much less expensive than the things we do to fill holes in bank balance sheets so we need never acknowledge their failures.

From Unlimited deposit insurance (2023-03-12):

Treasury/Fed/FDIC say no losses will be borne by the taxpayer because they will levy a “a special assessment on banks, as required by law” to recover FDIC’s losses. But who, pray, will pay for that “special assessment on banks”? It is not an assessment on the personal wealth of bank managers or shareholders… Sure, there will not formally be a new tax to cover these costs. But in substance, the tax-paying public will experience higher expenses or foregone income. This habit of declaring “no new taxes” in form, while tacitly imposing taxes in substance, deprives the public of any capacity to design the tax, to shape its incidence, and to hold accountable those who provoke the costs the tax must recover.

From Libertarians and hierarchy (2023-03-08):

Libertarians share exactly the same pathology as university professors and the smiling residents of Marin County: They flatter themselves that they stand in opposition to vicious social hierarchy, and find true-enough narratives by which to spin their allegiances into support for equal dignity. But their actual practices, the institutions they inhabit and animate and from which they earn their succor, belie all that… [U]nder actually existing capitalism, Matthew effects rule the day. Markets may be notionally “free”, but past winners (humans, not just firms) have tremendous advantage. Certain classes of people understand that market arrangements are likely to continue to deliver to them security and abundance, but will sadly deliver those goods less adequately to other groups whose ongoing misfortune, despite occasional bootstrap stories, we can pretty well predict.

Markets, under these circumstances, become a locus of hierarchy, rather than a challenge to it.

From Dilution of faction requires voting system reform (2023-03-08):

David French argues we can “dilute the disruptive power of faction by allowing factions to bloom.” …[James] Madison counseled that factions should be small and many. But our single-winner, first-past-the-post voting system exerts a social gravity that pulls us into two, gigantic factions of similar size… If we want multiple factions, we understand how to design voting systems that encourage and support that, rather than the voting system we have, which punishes any divergence from two major parties… If you think democracy would work better with a more pluralistic ecosystem of factions…please specifically advocate voting system reform!

From Economists are such scoundrels (2023-03-06):

But when you learned about [Arrow’s Impossibility Theorem], I bet you didn’t learn that its original object was the impossibility of authoritative technocracy. Social actions cannot in general be ranked under the ordinal utility constraint economists impose upon themselves. Instead, you learned that it was about the impossibility of a good voting system… In other words, after struggling for decades to come up with a basis to make authoritative claims beyond politics, the economics profession realized by about 1950 that, at least on the terms they had prescribed for themselves, it was impossible. They had no criterion, and could have no criterion, by which they could elevate their conclusions as “scientific” and above the fray. What was to be done? Well, we know what they did.

They took the weapon they invented, this theorem that damned their own authority, and they pointed it at the rest of us. They stopped talking about the impossibility of ranking social actions, but loudly proclaimed their theorem foreclosed the possibility of coherent democratic choice.

From What is fascism? (2023-03-25):

The use of fascism as an epithet, as a kind of rhetorical “cooties” that discredits whomever can be somehow associated with it, prevents us from thinking clearly about a phenomenon whose roots go too deep to simply shun away.

Fascism…represents an approach to solving the key problem of modern nation-states: How do we build and sustain a capacity for effective social coordination over scales so large that people’s interests and identities are likely to be diverse and conflictual? …Fascism can be understood as a means of rendering permanent the clarity, conformity, and collective decisiveness that publics usually tolerate only when they perceive exceptional threat.

As they say, read the whole thing!

If you have nothing better to do. If you read this stuff at all, please understand that I am desperately grateful to you. Thank you always for your company.

Drafts (meta)

For the past week or so, I’ve been running an experimental “drafts” blog.

The first post there is a long-winded take on why, but to boil it down, I want to blog like the early days. When some thought crossed my mind, I just wrote it down as best I could and hit publish.

Over the years, because interfluidity had a readership for a while, which engenders caution, and because the blogosphere evolved from a conversation to a cacaphony of competitive resumés, I stopped giving myself license to do that, and largely stopped writing.

So, I’ve undertaken to call my new posts “drafts”, then just write shit and hit publish again. I’ve really enjoyed it.

Here are those “drafts” so far, in reverse chronological order:

I’m not sure where I’m going with all this, and would welcome your feedback. Should I revise and promote some “drafts” to posts here, or just acknowledge that the whole drafts thing is a conceit, and let it become the chattier successor to this site?

You can subscribe to the drafts blog by RSS. You can’t yet subscribe by e-mail. I think I’ll continue to do round-up posts like this one, so if you are subscribed by mail here, you’ll indirectly get mailed digests. Eventually I mean to implement subscriptions by e-mail directly on the drafts blog, but that too will take the form of a roundup, not more frequent than weekly. Knowing each post gets spammed out as e-mail has been a discouragement, on the margin, from just fucking writing.

Eventually I hope to make a “unified” RSS feed that points to anything I write anywhere, but for now, please consider subscribing by RSS to both feeds.

On this main blog I laboriously track any changes I make (after a “grace period”, maybe an hour or two after posting) in “update histories” you’ll find after most posts. I’m not doing that in the drafts blog. I’m tweaking at will. But the drafts blog is a static site published via git, everything published will have been a commit. You can keep me honest by rolling back history here.

Whoever reads this, please know I am incredibly grateful that you do. I welcome any feedback on all of this in the comments.

As a reminder, interfluidity still hosts chat-about-anything drop-in “office hours” via Zoom, Friday afternoons, lately at 12:30pm PST / 3:30pm EST / 8:30pm UTC. If you are interested, please say so in a comment and provide a real address (it won’t be published) in the e-mail field of the form. I’ll send you an invitation. Or you can send me an e-mail directly, or message me on Mastodon.

Tackling inequality from the demand side

We often think about inequality in terms of supply of wealth to the wealthy. Interest rate declines contribute to inequality because they cause the real estate and financial assets held by the rich to appreciate. Monopoly contributes to inequality because it enables the owners of dominant firms to extract rents from the rest of us, increasing their already large hordes. To reduce inequality, we could break up monopolies, or stop enabling them with ever expanding “intellectual property rights”. We could get rid of the carried interest loophole that lets hedge fund plutocrats pay very low tax rates on their labor earnings, or get rid of the tax-preference for capital income entirely.

Trying to suppress inequality by identifying wealth flows to the already rich and blunting their supply is God’s work. But it risks a certain whack-a-mole quality. You fix this tax loophole, the accountants come up with that one. The rich are clever, or at least they hire clever people, and they have lots of resources. Also, the rich create hostage situations to protect their wealth flows. For example, by preventing the enactment of generous automatic stabilizers by which the state would stimulate the economy through downturns, the rich ensure that the only way to prevent welfare-catastrophic employment losses is for the central bank to collapse interest rates and bid up the price of the financial assets and real estate, which the rich very disproportionately own. If you try to stop the rich getting richer, the story goes, you will just hurt the poor and marginalized. And the story is often true! Because the rich organize our institutions so that it will be true!

Staunching flows of wealth that the rich “entrepreneurially” invent, then assiduously protect, is like fixing a leaky roof by putting your hands on the cracks. You run out of hands pretty fast. We should think a lot more in terms of suppressing inequality from the demand side. What would it take for the very rich not to want to get richer?

I have no intention to address deep questions about human nature here. Are we in fact homo economicus, innately and insatiably greedy? Who knows. Even if we are not, I think we can presume that there exist people, whether they are most of us or just a few sociopaths, who will behave as if they are insatiably greedy. And once there are such humans, if they succeed, it sets off arms races. We have to compete, for essential positional goods, for zero-sum insurance against systematic risk.

I don’t know whether, in some deep sense, we can make people want money less or not. But we can change the legal environment so that the things people do to augment their hordes come with lower payoffs and higher risks. The rich then come to behave as if they want money less.

The classic example is the 90%+ top tax rates that prevailed for much of the period between FDR and JFK. The most common critique of that policy is it didn’t raise a lot of money, as very few people ever paid those rates. Why did no one pay those rates? Because it was dumb to earn incomes into a tax bracket from which funds would just be confiscated. So the rich, so good at gaming to pay themselves more money, also proved adept at gaming to pay themselves less. They behaved as if they were less greedy, regardless of whether in some deeper sense they were or were not.

During this period, the wealthy left funds in firms rather than realizing incomes. With the funds that accumulated, managers bought perquisites and prestige research labs rather than endowing for shareholders huge personal balances at BlackRock. Workers find it easier to bargain for better wages and conditions when their firms are flush, rather than when they are kept “lean” or even leveraged by whisking cash flows to investors as soon as they are earned. Indeed, during the barbarism of the “shareholder-value revolution”, firms were advised to stay leveraged in order to discipline managers against the temptation they might be generous to workers rather than funders. With the knife of hard interest obligations at their throats, managers behave as if they are greedier than when they have a great deal of financial slack. Conversely, when investors let firms accumulate cash, managers behave as if they are less greedy, whatever generosity is or is not in their unobservable hearts.

So, one way to suppress inequality from the demand-side is just to have high top marginal tax rates. Similarly, high corporate tax rates can reduce firms’ demand for accounting profits, rendering shareholders more open to “expenses” that might build off-balance-sheet, long-time-horizon assets. Like resiliency. Or a capable and loyal workforce. Do shareholders and managers in their hearts become more generous, or do they just pretend to be, because devoted and experienced workers are necessary to preserve wealth that they can no longer quickly extract? Does it matter?

One way the rich demand wealth flows is by accumulating market power, escaping or restraining competition, whether as sellers of outputs or buyers of inputs. The extent to which our economy is now controlled by monopoly is extraordinary. The rich have demanded, and we have accommodated, an era of “chokepoint capitalism“, as Rebecca Giblin and Cory Doctorow put it.

But we can make them want to do that less, if we make the costs and risks of engendering chokepoints higher. In the previous post, I suggested nationalizing the freight rail industry. (I’m not alone!) But won’t that turn us into Soviet Russia or something, if private assets can be force-purchased arbitrarily by the overweening state? Well, not if it isn’t arbitrary.

The legitimacy of private sector economic power is based on the claim that competition will discipline it in the public interest. When that claim holds, then the state generally should leave firms in the private sector. But as soon as competition becomes perhaps less than vigorous, municipalization or nationalization should be on the table, front and center. We need to flip the incentives surrounding “antitrust”. Under the status quo, firms seek to limit competition as much as they can get away with, while regulators play whack-a-mole with very proportionate (usually much less than proportionate) remedies. Instead, what we want is for industries themselves to ostentatiously ensure they are open and competitive, because the threat of eminent domain hangs above dominant firms if it seems like they are not.

Would Bill Gates, in his heart, have been less of a rapacious monopolist if market domination carried the real, proximate threat of nationalization? I have no idea, but I bet that Windows’ “openness” in the 1990s would have been less of a marketing sop and more of a fact, regardless. Do network effects mean that, really, there can be only one dominant search engine? I bet Google would figure out how to share some of the benefits its users create for it with other firms, if failure to do so risked making Google (reasonably enough!) a public utility. Etc.

High top marginal tax rates, or perhaps even a wealth cap. Taxes on firm payouts, higher corporate profits taxes, an excess profit margins tax. Normalizing the nationalization of monopolies. All of these interventions might lead wealthy investors and managers to behave as if they are less greedy.

Alternatively, we might say the status quo — under which the already rich can endlessly extract ever more funds via ever less competitive firms with little cost or penalty, while as individuals we are locked in competition with one another for essential positional goods — encourages people to behave as if we are more greedy than we in some sense truly are. The fact of inequality, and a legal environment that permits and promotes it, can be understood as a tax on virtue. Let’s tax money instead. Let’s reshape our laws so that endlessly extractive behavior just makes less sense.

Whether the humans in our heart of hearts are generous or greedy, naughty or nice, I leave to you dear reader. Regardless, we can build a world in which people just want to do the things that divide and impoverish us a great deal less. Let’s.

Update History:

  • 7-Dec-2022, 11:30 a.m. EST: “Workers finds find it easier to bargain for better wages and conditions…”


There is no other word for what the Democratic Party has just done to railworkers than betrayal. I am sorry, dear reader, if you don’t like to hear that.

I don’t think that’s how President Biden sees it. He’s a process guy, he got union leadership and the railroad companies to hash out a deal a couple of months ago, he thinks it’s fine and good. Historic even.

Only the rank and file did not agree. It was unacceptable to the unions representing a majority of railworkers. Biden seems to view this as workers reneging on his deal. That is bullshit. A deal is not a deal until the principal signs on the dotted line, not when some lawyer says it’s the best he could do. Sorry if you think it was your deal, Joe.

The deal was unacceptable not because railworkers are greedy. The “historic” raise in the tentative agreement will barely exceed inflation over the period of the contract. Railworkers are treading water on wages. The unreasonable commie militants seem just fine with that.

The dispute is over how railworkers are treated. Which, in a word, is like shit. For decades, the rail industry has been achieving “efficiencies” by in large part by dumping nonfinancial costs onto its workforce. It’s great when productivity increases because of some new invention: A construction firm buys a steam shovel, and becomes genuinely more efficient. It accomplishes the same work with fewer workers. But it’s a different thing entirely when the same firm buys a whip, and then is able to accomplish the same work with fewer workers by beating the crap out of those desperate enough to remain. Both get scored as “productivity increases” by statisticians, but the second one is a regressive transfer from workers to shareholders, not an actual efficiency. Railroads’ vaunted “precision-scheduled railroading” is the whip rather than the steam shovel. It puts ever fewer workers on ever longer trains, magnifying the responsibility and hazard each worker must bear. Railworkers are on call to be dragged from home for days or weeks 75% of their lives, and harshly penalized if life supervenes and they can’t show up. You try living that way.

The unions were asking for up to fourteen paid sick leave days, rather the one that the current deal provides. Fourteen was an opening bid. Had Congress actually done what Democrats only pretended they were trying to do, and included seven paid days in the Congressionally imposed deal, it would have been fine. Congress would have been taking away railworkers’ leverage to strike, but giving much of their very modest ask in compensation. Instead, Congress stole all of railworkers’ bargaining power and gave them nothing.

Pacino as Godfather offers Nothing.

Besides just how just plain wrong this is, Democrats are in real danger of repeating their 2016 hubris. Yes, no matter how many formerly Republican-ish affluent suburbanites Democrats pick up on abortion or concern about saving democracy — really important issues! — if the working class, the majority of our citizenry, continues to abandon the party, Democrats will lose, and they will deserve to. The party is riding high at the moment. Hey, they said inflation would kill us in the midterms, that our key issues weren’t “bread and butter”, but they were wrong! We did great (at least grading on a curve). But last month, Biden could still claim to be a pro-worker, pro-union President. Now, not so much. No matter how much historians tell us (grading on a curve!) he still might be the “most union-friendly President in history”, it becomes like Malcolm X and taking out the knife half way. The populist wing of the Republican Party — Marco Rubio, John Hawley, Ted Cruz — may never actually deliver the goods to workers, but for people who want to throw out the bums that just fucked them, the rhetoric (like Donald Trump’s before them) may offer just enough hope to win their votes.

All is not lost. As Steven Greenhouse and Harold Meyerson point out, President Biden can remedy this just by eliminating an exemption for railroads in an executive orders that already requires Federal contractors to offer workers seven days paid leave. Embedding social desiderata in Federal contracting requirements is a bad way to do policy. It imposes an “efficiency” wedge” from customers’ perspective between the private and public sector, discrediting government action. But in this case, with the railroad industry consolidated into joint duopolies that already behave extractively towards customers, little would be lost. Certainly there’s no reason this rapacious sector of our economy should be exempt from an obligation of Federal contractors in every other sector!

If you want to save democracy, or just do the right thing, let Joe Biden know. Railroads that wish to transact with the Federal government must meet the same obligations that bind every other industry. That means seven days of paid sick leave. Right this wrong, conspicuously.

Alternatively, freight rail is an essential utility that is not meaningfully regulated by competition. It is persistently extraordinarily profitable, and not a locus of technical innovation beyond shifting costs and risks to workers. Perhaps we should simply nationalize the industry.

Update: Here are my letters to Joe Biden and Marco Rubio on this issue.

Update History:

  • 2-Dec-2022, 9:45 a.m. EST: “…their the rhetoric (like Donald Trump’s before them) may offer just enough…”
  • 5-Dec-2022, 9:45 a.m. EST: “…a regressive transfer from workers to shareholders, not an actual a real efficiency gain.”
  • 5-Dec-2022, 12:10 a.m. EST: Added bold update with links to Biden and Rubio letters.

Some thoughts on Effective Altruism

I’m not going to get into the more contested parts of Effective Altruism, like whether AI safety is an urgent problem, or whether we should accept stronger-than-conventional views about animals’ moral weight.

There’s a hard core of Effective Altruism that has an obvious broad appeal. Nearly all of us agree that preventing malaria deaths and addressing severe poverty are good, important goals. But lots of people (like me!) find themselves really put off by Effective Altruism, even though we may know and respect people in the movement.

There’s a stereotyped conversation that goes something like this:

EA proponent: How can you not see that encouraging people to fund bed nets and so prevent unnecessary malaria deaths is a good thing? EA has saved thousands of lives, how can that not be good?

Person like me: Well, holding all else constant, that is good! I certainly don’t object to people buying bed nets to prevent malaria. But it also strikes me that buying bed nets doesn’t really get at the problems that render so many people vulnerable to malaria in the first place. We need a kind of systemic change that simple philanthropy can’t overcome.

EA proponent: Of course we do! We totally agree, and EA-aligned entities are interested in research towards effective development solutions. Obviously people have different views at a political level, but many EA-aligned individuals fund organizations that advocate for reform and better governance in both the developing and developed world, in order to pursue systemic change. We adopt a “both/and” approach! And surely it is better to help at the margin than not to help!

Yet I walk away still unconvinced. I’m trying to interrogate for myself why. It’s easy to argue that, under a better system, much of what the EA community does would make no sense. Essential goods like public health and basic succor should be ensured by states. In general, in a reasonably arranged society, philanthropy would finance civil society in spheres very local to donors, where they have better information and enjoy the kind of fine-grained feedback that states are ill-placed to perceive and react to. But if Give Well knows how to solve development problems, state actors are perfectly capable of allocating resources according to its recommendations. Philanthropists have no comparative advantage.

But we’ll all agree we don’t live in a better arranged society right now. So shouldn’t we divert resources to the places Give Well directs if our states are underdoing it?

In the dialog above, “person like me” used the mealy-mouthed phrase “holding all else constant”. If we were holding all else constant, the answer would be sure, of course. But I think the problem with Effective Altruism is that in social affairs you can hold nothing constant.

An obvious example is what was once one of Effective Altruism’s core recommendations (recently I think they’ve deemphasized it), “earn to give”. If it really is important to give, but a donor has her own requirements for a reasonable life, then she must increase her earnings some margin above that. If the need for charity is truly urgent, then of course a donor should earn as much as she possibly can, in order to give as much as she possibly can.

But earning large sums of money may not be neutral with respect to larger systemic questions that Effective Altruists generally concede are very important. There are ways of earning high incomes that are directly harmful, like hustling opiates or establishing monopolies. More broadly, industries that pay high incomes work to reinforce and sustain the status quo in which they thrive, rather than to evolve towards more egalitarian systems in which high incomes might be harder to come by, but philanthropic transfers would less necessary.

I think that the current emphasis in EA circles, perhaps as a response to this critique, is to focus on impactful careers rather than earning to give. But does that really address the issue? If, for example, you devote yourself sincerely to a great charity that does development work, and you allow yourself to be underpaid relative to what you might earn elsewhere, isn’t that laudable? At an individual level, it may be. But the crucial flaw in much EA-reasoning is that social outcomes are not arithmetic aggregations of individual-level scores. If you work for a development charity, the good work you do still depends on the high earners you forewent to become. Your work must be tailored to avoid approaches or choices that would upset the system that elevated them. Again, you are deeply tethered to the systemic status quo. If your organization is ambitious to increase its scale and thrive, it will likely be called upon to promote and reinforce questionable arrangements. Welcome to the World Economic Forum!

Indeed, from the perspective of “person like me”, philanthropy and the plutocracy that, in dollar-weighted terms, must dominate it is so interwoven with all that is systemically wrong, trying to do net good in the world via donor-financed institutions is likely to be counterproductive. The trade-offs are hard! I suspect GAVI, chartered by the Bill and Melinda Gates Foundation, has saved many lives relative to a counterfactual where everything is the same as it is now except Gates never intervened. But Gates is famously supportive of an extremely strong and universal intellectual property regime that, from the perspective of “person like me”, helps condemn the developing world to dependence and poverty (and continued disease), that contributes to class stratification in the developed world, that could be replaced by better means of encouraging innovation. (During the COVID crisis, GAVI was notionally supportive of waiving intellectual property restrictions, but in practice the organization was understandably circumspect.)

If I am to restrict myself to “evidence-based” behavior, then surely it is a good idea to donate to, or even work for, GAVI! The evidence that it has done good things is real. But we can only gather evidence about circumstances very near to the status quo. Since we can’t run persuasive social science experiments about a world in which many variables would be different from the one we actually inhabit, “evidence-based” policy is a prescription for local optimization, fine-tuning. If we agree that the key source of the problems we wish to address are systemic, but we can also make clear marginal improvements to those problems at cost of supporting institutions that help reinforce the bad status quo, how does a good rationalist weigh the trade-off? You may be suckered in the way that a certain narrow economism tells you it’s irrational to vote. At an individual level, your vote almost certainly won’t make a difference, but it will certainly cost something in time and convenience. Similarly, your withholding contributions won’t lead to a new intellectual property regime or alternative forms of state action, while your contribution to GAVI really will do a bit of good at the margin. But that sort of individual-level rationality doesn’t compose to social outcomes. You should in fact vote. It might be wise to circumvent donor-financed philanthropy as a key element of an ultimately harmful constellation of institutions, rather than contribute to it, despite the real good it also does.

At an individual level, that’s a genuinely hard judgment call. But Effective Altruism is a social movement, not a collection of independent idiosyncratic choices. At a social level, to “people like me”, it is not so hard. A social movement should not reinforce reliance upon plutocratic finance. It should not encourage or help whitewash extractive wealth generation. It should not prod people into careers where they must adopt the perspectives of those who most benefit from systems that we seem to agree must fundamentally change. At an individual level, the tradeoff between the costs and benefits of voting may not seem clear, but it would be obviously dumb for an interest group to advise its own members not to vote. Effective Altruism is a movement of idealistic, unusually educated, often affluent and socially influential individuals. Is integration of this group into the philanthropic status quo a good choice?

Note that fundamentally, the problem here isn’t philanthropy. It’s discretionary donor finance. The same critiques apply to think tanks, activist collectives, publications, research organizations, and Congressmen. In theory they ought not apply to venture capital, as allocation should be based on objective valuation of prospects rather than investor discretion. In practice, though, valuation of startups is so dependent on contestable assumptions that the industry is best conceived as donor finance plus a lottery ticket. If you think plutocracy is an important component of our systemic problems, then working through institutional forms where relative advantage will be decided by plutocratic discretion seems less than ideal. Plutocratic money is fine. It’s as green (much greener) than anyone else’s. But it must be decoupled from the discretion.

I love Effective Altruists. They are people devoted to thinking carefully and clearly and creatively, and serving the greater good. But as a social movement, I think they’ve erred. They’ve succumbed to fallacies of composition on both the input and the output side. On the input side, they imagine total contribution can be measured as a sum of individual contributions, so it’s sufficient to ask people to maximize their own impact, holding the rest of the world constant. That’s partial equilibrium thinking, and mistaken in their domain. On the output side, well, the usual critiques of “aggregate utility” as a welfare measure apply. I’d love to see a larger menagerie of social welfare functions, as formalizations that try to approximate competing groups’ actual values (which we might compare, contrast, perhaps even average), or that capture our status quo revealed preference as a society. Summing putatively identical concave individual welfare functions is great for expressing egalitarianism as a social value, and it usefully captures individual risk aversion. But it doesn’t actually express our collective aspirations.

There is no “true” or “scientific” social welfare function. We have to make it up. There is no objective way to quantify how much good we are doing in the world. And even if we settle upon some measure that we acknowledge merely expresses our own particular values, we will find that our means are not separable from our ends. I think many Effective Altruists have not fully grappled with contradictions between the means that they adopt and the ends they hope to further.

Postscript 1: For the most part this essay has been critique. I try here at interfluidity to be constructive. If EA is getting it wrong, how should people, including the well-meaning very rich, actually work to do good? I’ll write more on this in a future post, soon, I hope! Also, I have presumed more than argued that plutocratically dominated, donor-financed philanthropy is important contributor to what is undesirable about the status quo. For now I’ll send you to Anand Giridharadas and Rob Reich, but maybe I’ll try to offer my own summary of the case. If I’m going to be constructive, it might help to first clarify the pitfalls to avoid. Kelsey Piper offers a measured take on billionaire philanthropy, but I perceive harms that she doesn’t discuss.

Postscript 2: I’ve been percolating this for a while, but it’s probably not coincidence that I’m getting around to it now, in the wake of the astonishing collapse of FTX, the crypto exchange led by Effective Altruist Sam Bankman-Fried. My original take was that FTX died like highly leveraged financial institutions that also take on risk for profit often die, so it would be unfair blame the shiny new thing for an old, common story. It turns out the FTX’s case is extraordinary even within its sordid genre, and a case can be made that SBF’s really immoderate utilitarianism contributed to it. Even if that is so, I don’t think SBF is representative of Effective Altruism, and it strikes me as cheap to blame the broader movement for SBF’s sins.

Disclosures: In the above (and here again!) I have nepotistically linked my brother-in-law’s book. I am an uncompensated board member and officer of a small, donor-financed nonprofit.

Update History:

  • 16-Nov-2022, 8:10 p.m. EST: “…philanthropy and the plutocracy that, in dollar-weighted terms, must dominate it is are so interwoven…”; “…at cost of supporting institutions that help reinforce a the bad status quo…”

Real inflation cycle theory

Noah Smith has a good post on what, from a certain perspective, is kind of a puzzle. Why do real wages usually decline during inflations?

In theory, some economists imagine, inflation should be neutral. The nominal price level is just an arbitrary unit. If tomorrow we redenominated cents as dollars, and passed a law that updated previously defined contracts and prices to the new unit and let people exchange old currency for new, we’d expect nothing much to change. Sure, in “dollar terms”, prices would have risen by 100 times! But so also would have wages, and bank account balances, and everything else, so who cares. If we think of the real economy as fundamental and inflation as just a slipping of the nominal price unit, we’d expect wages and prices to rise simultaneously. Absent formal redenomination, there are some rigidities. Unexpected inflation redistributes from creditors to debtors, as debt contracts made in nominal dollars fail to adjust. But as Smith points out, wages are not thought to be rigid (“sticky”) upwards. So why, in most durable inflations, don’t wages rise at the same pace as prices?

This is a puzzle if you think about inflation as basically arbitrary, a symptom of mismanagement by central banks of purely nominal units. But that’s entirely the wrong way to think about stubborn inflations. Demand mismanagement can lead to some inflation, but it’s rarely durable. When there are not fundamental reasons for the inflation, moderate monetary and fiscal tightening quickly ends it. That happens a fair amount. Team transitory wins.

Stubborn inflations occur when there are in fact deep reasons why the inflation, or else some alternative form of unpleasantness, is necessary. Generally, inflation is the answer to a question: What do we do if we are not as rich as we thought we would be? More precisely, what do we do when the expectations of the labor force, in real terms, cannot be satisfied by the output we are capable of producing? Then we have to cut real wages relative to prior expectations somehow. If the shortfall is large, given the reality of downward nominal wage rigidity, we must resort to some mix of inflation and unemployment.

Inflation bounces around. We have lots of little spikes, the central bank and the fisc fine-tune, over time wages usually do keep up with prices through all of it. But when we have a serious inflation, it almost always accompanies a mismatch between what the labor force expects and what the economy, on the “supply side”, is capable of delivering. The functions of serious inflations are to (1) reprice real wages downward; and (2) allow for redistributions within the labor force, via repricings of relative wages that downward nominal wage rigidities would otherwise prevent.

Until February of this year, team transitory was right. In 2022, the fiscal impulse of the COVID era was going to collapse as quickly as it had arisen (and it has). That, and some monetary tightening, and unsnarling some temporary supply-side SNAFUs, would have ended the inflation. Last winter, we were seeing some redistribution of real wages within the labor force (towards the lower end), but not a steep decline in real wages. Then shit happened. February and early Spring brought three big shocks: the Ukraine War, the impact of Omicron on COVID-Zero China, and, in response to the Ukraine War, accelerating mistrust and hostility between China and the West. As Wolfgang Munchau points out (ht E.E. Reed), the old factory we have relied upon is shutting down. Over the next few years, we may have to radically reorganize the global supply side. The global demand side will have to adjust, at best, to a pause in the growth we might have expected from iterative improvements to that once humming machine. More likely we will have to adjust to some impoverishment in real terms, as businesses try to build a new machine from parts of the old one while the old one is struggles to sputter on. Patterns of sustainable specialization and trade that we have long depended upon are likely to be, well, no longer sustainable.

Globally, real wage expectations are out of kilter with what the global supply-side will be able to deliver. Locally, there will be winners and losers from the changes, which will entail redistribution of real wages from prior patterns within the global labor force. We are enduring a global inflation now because we require one. We don’t like it, so we are countering it with fiscal and monetary tools. But those can’t restore real wages the economy is unable to deliver. What fiscal and monetary tightening will do is trade some of the inflation for unemployment. Instead of everyone’s real wages falling, if we destroy demand for some superfluities, we can cut some of the labor force out from a share of the impaired flow of core goods and services that the global machine is now able to produce. That leaves more for the rest of us, higher real wages. As long as the supply side of the economy is impaired, our choice is whether to share the burden more broadly (tolerate inflation) or concentrate it on subgroups of workers (accept unemployment).

We are likely to do a bit of both, and oscillate between the two, until expectations of the labor force are realigned with expected (and much less uncertainly expected) global output. We won’t solve our macroeconomic problem until we find patterns of specialization and trade that are, in this new era, actually sustainable, and then accommodate our expectations and arrangements (wages, rents, etc.) to the actual production those new patterns can manage. Our problems are real. Neither Jay Powell nor Janet Yellen can fix them. Governments can, by finding a durable peace and building politically sustainable foundations for international trade and migration (which, I think, will be quite different from the arrangements of the past few decades), or by spurring domestic production of core goods and services.

Besides wage earners, there is another group of claimants who can share the burden of the real product shortfall. People who receive capital income might also adjust their real consumption. Under inflation they do, to a degree. Inflation will cause people “on fixed incomes” to consume less, and that will “help” in the sense that their discomfort will contribute to the burden sharing. Crashing portfolio values, declining home equity, higher mortgage payments (for those not on 30-year fixed rate mortgages) will reduce expenditures of the global “upper middle class”, helping limit the inflation and the decline of real wages. But in dollar terms, the vast majority of capital income goes to the very wealthiest, who did not spend much of it in good times, but who won’t adjust their spending downward in bad times, absent near total collapse of their wealth. Perhaps the main privilege of being fabulously rich is, under almost all circumstances, you get to opt out of “adjusting”.

At a macro level, the problem with capital isn’t that firms raise prices to pad margins. Those funds get paid mostly to people whose spending is decoupled from their earnings, so who don’t put pressure on global production. The expanded profits are like a tax, directly inflationary but disinflationary going forward as wage earners will afford less and less. The problem is when capital has the ability to increase profit by raising prices, that displaces the alternative strategy of increasing profit by expanding production. Expanding production is the happiest way of addressing a shortfall of core goods and services relative labor force expectations, and reduces the need for inflation and unemployment. In economic (as opposed to political) terms, the problem with capital is not that it takes too much money, but that it takes all that money while delivering too few goods. Which is why antitrust, or, excess margins taxes, or public options, should be at the very top of our inflation reduction agenda.

Update History:

  • 7-Nov-2022, 4:10 p.m. EST: “Patterns of sustainable specialization and trade that we have long relied depended upon are likely to be, well, no longer sustainable.” [eliminate repetitive use of “relied upon”]
  • 7-Nov-2022, 7:15 p.m. EST: “We don’t like it, so we will are countering it with fiscal and monetary tools.”; “Crashing portfolio values, declining home values equity, higher mortgage payments…”
  • 9-Nov-2022, 11:00 a.m. EST: “Under inflation they do, to a degree. There are people whose marginal consumption is affected by capital income or wealth effects.

Immigration, exploitation, and social democracy

A simple, amoral, model of an immigrant is a pair of hands attached to a mouth. From the selfish, amoral, perspective of incumbents, in aggregate, immigration is desirable if the value produced by the pair of hands is greater than the value eaten by the mouth.

However, as always in social affairs, the phrase “in aggregate” is home to many devils. From the perspective of many incumbents, immigrants are undesirable not because they are lazy scroungers, but precisely because their hands are willing to work so hard relative to what their mouths are fed. Exploitable, exploited, immigrants compete with domestic workers, and threaten labor bargaining power writ large. Exploiting immigrants domestically then comes to parallel exploiting comparative advantage internationally (where, of course, comparative advantage often means exploitable labor in foreign lands). It creates a bigger (domestic) pie “in aggregate”, but creates winners and losers. In a political system that enfranchises the potential losers, especially one with lots of veto points, exploitative immigration that would be valuable in aggregate may be blocked.

This can be understood as a kind of coordination problem among incumbents. If the winners from exploitative immigration would compensate the losers for their loss of bargaining power and so income, then all incumbents could be made better off. But institutionally, what kind of mechanism could be made to do that? Well, suppose we tax the increment of real income that employers gain from both exploiting new immigrants and hiring native workers on more favorable terms, and use the resulting revenues to fund benefits for the poor? No, that wouldn’t do it. Domestic full-time workers, even under somewhat less favorable terms than they might have faced without immigration, are unlikely to qualify under the society’s definition of “poor”. Households anchored by such workers define the bulk of the public. In relative terms they are typical, median. So a state that redistributes from the richest to the poorest won’t solve the coordination problem that prevents incumbents in aggregate from seeking to exploit new immigrants. A “liberal welfare state” isn’t enough.

Suppose instead we tax the increment of real income that employers gain from both exploiting new immigrants and hiring domestic workers on more favorable terms, and use the resulting revenues to fund universal benefits? These do reach, and so can compensate, the incumbent workers whose bargaining power has been reduced by exploitative immigration. States that redistribute into universal benefits, rather than help for the poorest, we describe as social-democratic.

Often social democracy and immigration are thought to be in tension with one another. The assumed basis for the tension, however, is that social democratic benefits will enable immigrants’ mouths will eat more than their hands produce. When immigration and immigration policy are framed in humanitarian terms, and if immigrants are provided social democratic benefits immediately and on the same terms as incumbent citizens, then yes, there are tensions between social democracy and immigration.

But if immigration and immigration policy are framed in selfish terms, then soft, pink social democracy becomes a hard-nosed solution to the coordination problem that prevents enrichment of incumbents by exploitative immigration. The mistake made by actual social democracies, with respect to immigration, hasn’t been their openness to it. On the contrary, it’s been their passivity, allowing mass immigration to be defined in reaction to humanitarian crises elsewhere rather than designing voluntary pathways for large numbers of people to migrate under terms that support rather than undermine the social democratic benefits enjoyed by incumbents.

What might these pathways look like? First, in order to minimize their effect on incumbent worker bargaining power and so discontent, immigrant workers might be employed in domains that are distinct from the occupations of incumbents, “they only do the work that we don’t want to.” Then, in oversimplified, completely amoral and antisocial terms, you might imagine a permanent, growing corps of guest workers, who come voluntarily to be employed on openly exploitative terms, because despite the exploitation they still earn more when employed productively in developed countries than they would earn at home.

We do see this kind of policy, in Middle Eastern countries especially. However, wiser polities will not craft policy in completely amoral and antisocial terms. Antisocial policy might make a polity wealthier temporarily but also weaken it, increasing the costs (economic and social) of maintaining domestic security and cohesion, while creating reputational and diplomatic vulnerabilities. Social democracies in particular flatter themselves as solidaristic and virtuous polities. Policy that undermines that often self-fulfilling self-perception should be scored as very costly.

So a canny social democracy will craft institutions of gradual integration. New immigrants would begin highly exploited in sectors of the labor market segmented from incumbent workers, but over time exploitation and segmentation they face would decline. Second generation immigrants, or those who migrate as children, would be integrated as fully and quickly as possible. Incomplete integration and continued exploitation of second generation immigrants is a source of social instability and often a security concern, as unlike first generation immigrants, second generation immigrants have not chosen their status and have no lived experience of opportunity or escape, gratitude for which might compensate for the fact of exploitation.

Slow integration out of segmented, exploitative labor markets into the more comfortable mainstream is a tried and true formula for value extraction by immigrant-accepting nations. It’s been the formula the United States has used, when it has best succeeded as a “nation of immigrants”. Interestingly, it is also a formula urban China has stumbled into, accepting internal migrants from rural areas on exploitative terms, but working increasingly to integrate their children. Usually this strategy is tacit rather than open. In the United States, some categories of legal immigrants have full rights, but nevertheless wield limited bargaining power due to language barriers and various forms of ghettoization. Some categories of legal immigrants (seasonal workers, H-1B visa holders bound to a sponsoring employer) face formal restrictions that limit their bargaining power and constrain the domains in which they work. Illegal immigrants, of course, lack nearly all legal protection and so work under extremely exploitative terms.

It would be better for all concerned if de facto policies of exploitative immigration were formalized and their terms rendered explicit. So long as immigration into developed countries is perceived by incumbents as costly and altruistic, the large fraction of such countries’ populations that struggles to afford the costs they face already will oppose it. While the terms of exploitation-until-slow-integration remain tacit and denied, societies will be needlessly riven by conflict between justice-oriented activists, who will point to the exploitation and proclaim it illegitimate, and business interests whose capacity to benefit from exploitation drives the opportunity to immigrate in the first place. Developed country populations should understand how accepting and in fact competing for immigrants is in our direct material interest. With segmented labor markets and social democratic benefits, that “our” can include the whole incumbent population. Immigration is what makes universal health care affordable, one might point out, if inexpensive nurses’ assistants are drawn from the new arrivals. Migrant construction workers let us build social housing. Immigrants should understand in advance the exploitation they will encounter, but also its duration and limits. If the terms of both temporary exploitation and eventual full integration are explicit, they become a basis for competition among destination countries to attract migrants. New immigrants might start off enjoying somewhat threadbare public benefits, but graduate into full citizenship with full benefits over an agreed period of time. A path to full citizenship is essential on social grounds, for societies that do not wish to become divided into oppressively sustained permanent castes.

Under this policy regime, developed countries come to compete over the rate of exploitative immigration they can attract and tolerate. Since the surplus from exploitation declines over time with each cohort of immigrants, sustaining the surplus requires continual new entrants. Different countries’ social capacity to accommodate or integrate immigrants will always be a limiting factor, and quite legitimately. But countries that find ways to ramp up their capacity to continually accept immigrants with minimal social or cultural disruption would benefit, directly and visibly, from doing so.

We began with a simple, amoral model of an immigrant, a pair of hands attached to a mouth, and a very economistic view of a polity as an aggregation of people seeking material value. We might add to our model of an immigrant a soul. An immigrant is not a mere object that produces surplus or costs, but a subject whose welfare we care about and whose fellowship we enjoy. Our polities are not mere aggregates of selfish people but also nations, groups that seek to thrive together and forge a common future. Accepting immigrants in ways that materially strengthen our polities is good for both the humans that join us and the nations that we constitute together. Obviously we can get it wrong. If we are too exploitative, or fail at our promise to integrate over time and (especially) generations, we can harm both migrants and the fabric of our societies. If we are too generous, or if we fail to distribute widely the surplus that immigrants generate, accepting newcomers may not be politically sustainable, and rather than integration we may end up with interethnic recrimination. But between those two hazards lies huge potential opportunity, for migrants, their children, and for the societies capable of accepting and, only temporarily, exploiting them.

Peace as war by other means

I remain adamantly in favor of ending the war in Ukraine now. I also adamantly favor Ukraine in the war. Despite apologetics from various quarters, Russia is straightforwardly the aggressor. A just settlement would repel the Russian Federation entirely from Ukraine’s internationally recognized borders, including Crimea. Russia plainly is not going to agree to a peace under which it slinks away from the territories it has just flamboyantly claimed to annex, let alone from Crimea, which it claims to have annexed in 2014. So how can I reconcile my continuing call for peace now with a just outcome for Ukraine (and the world)?

Let’s start with a commonplace. War is a profoundly negative-sum game. It kills and destroys. Whatever might be contested between the parties, if there were a form of adjudication that would yield the same distributional outcome as prosecuting the war, but without all the destruction, that would be strictly better for all parties. Of course, in real life, we never know what the outcome of warfare will be. When we think we know how a war is going to go, we often find ourselves catastrophically surprised. War is unpredictable. It compels an adversarialism so determined, our models are confounded. The contours of rationality itself curve like space at the edge of the event horizon.

We do not have some magic form of single combat guaranteed to yield the same outcome the war would have yielded, except without the mess. Alas. However, what we sometimes do have is a party with an upper hand. When one party in a conflict seems to have the upper hand, an extrapolatory expectation, unreliable and oversimplistic in fact, becomes nevertheless psychologically compelling. Party A has momentum! With determination, grit, time, and attrition, surely, say Party A partisans, we will win completely! Party B, during these times, is demoralized. Party B partisans cannot openly accede to extrapolatory logic. Instead, they must constantly work to persuade their publics, and their soldiers, that a corner is about to be turned. Somehow this darkest hour can portend a brilliant dawn. It’s hard work, for Party B propagandists. It often doesn’t work very well as, day by day, territory and lives are lost, national symbols are desecrated. Party B struggles to resist the gravitational pull of a joint consensus, the die is cast, we will lose, Party A will rout us.

It is during times like these that Party A has an opportunity, not to impose a victory but to propose a new, less terrible, form of conflict. From Party B’s perspective, this is a lifeline. We were losing the war, now here’s an alternative game, maybe this one we can win, at least maybe we will have a better shot. But of course this alternative proposed by Party A must be one Party A believes they are capable of winning. As long as Party A is pretty sure, they lose little in terms of the final outcome by shifting from war to this less destructive form of conflict. But they gain a great deal, because there will be much less destroyed when they eventually do win.

So the opportunity for peace here is not to propose a final settlement, or some precarious armistice that might, like the one that “ended” the Korean War, suppress hostilities cross-fingers indefinitely. The opportunity is to propose a new form of conflict, an alternative to and replacement of the war, by which the same issues can be adjudicated.

At the moment, in the current conflict, it is Ukraine that is Party A. Ukraine is the party that is winning and so can hope that some alternative game they propose will be accepted. So it’s Ukraine that could propose this sort of “peace”. But what would it look like?

I think it could be very simple. First, Ukraine and the West have a for-this-moment redline that Russia should not have gained by force any territory relative to the February 24, 2022 status quo ante. Russia has a for-this-moment redline that Crimea will not be surrendered. So, for this moment, we should revert to the February 24 status quo.

Russia claims that, by virtue of referenda, a merger into the Russian Federation of Crimea, Kherson, Zaporizhzhia, Donetsk, and Luhansk is legitimate. The first point to make is that even if those referenda were free, fair, and expressive of the “will of the people” (which, whatever that means, they were not), secession is not any people or geography’s unilateral right. Secession, like divorce, implicates long-standing commitments and investments by the broader nation-state, not just the prerogatives of the local population. Referenda may be a part of a secession process, but they are never sufficient to force one. Ultimately reorganization of national borders must be mutually agreed by all of the parties to it. A nation-state’s obligation is to uphold the rights of all of its citizens, in every geography and of every ethnicity. A nation-state has no obligation to accede to secession, although it may choose to agree to part ways with a territory under mutually negotiated terms.

I think that Ukraine, Russia, and these territories should negotiate something like the following terms: For a period of ten years, administration of the contested territories will be according to the February 24 status quo ante. Crimea and the portion of the Donbas then controlled by separatists will be administered by Russia. The rest of the disputed territory will be administered by Ukraine. Citizens of all of the territories shall have the right of dual citizenship. They can obtain Ukrainian passports, Russian passports, or both.

At the end of the ten-year period, the UN will supervise referenda as to the final status of the territories. As part of the settlement, Ukraine and Russia agree upon how that will work for each territory under either result. If Crimea chooses Russia, under what terms does Ukraine supply the peninsula with water?, for example. It might be prudent to merge Crimea and Kherson into a single territory for the purpose of the eventual referendum, in order to foreclose the possibility of a discontiguous Ukrainian Crimea, which would be provocatively vulnerable.

The war over territories and populaces then reverts to a war between the parties for hearts, minds, and bellies over a period of a decade. If Ukraine, with help from the West, is redeveloping into a new Poland or Czech Republic while Russia stagnates, then the territories, including Crimea, will likely choose to be a part of Ukraine. Russia, if it wants to actually win the territories it claims are its own, will have to compete with the quality of its own development, or else make its taunts of cultural superiority to the decadent West extraordinarily compelling to the publics it would rule. The terms of the conflict would now be positive sum. As with the war, eventually some party will win and some party will lose each of the territories. Whatever the outcome, it won’t be fully just from the perspective of parties who have mutually irreconcilable conceptions of justice. But the fight to win the territories will render the territories themselves and the countries that mean to host them better off, rather than catastrophically worse off. The parties will have to compete in their effectiveness at doing good, rather than doing evil, and either side might win.

Security arrangements will have to be negotiated, so that a party losing the fight for hearts and minds is not tempted to reneg in favor of what they perceive to be an easy military workaround. Ukraine will not be demilitarized. Ukraine will require reparations, given the destruction that Russia has wrought on its territories. Fortunately, there are hundreds of billions of dollars of Russian assets already seized by the West, already lost to Russia indefinitely absent a settlement. It should not be too hard to persuade Russia that surrendering these now hypothetical assets to Ukraine as reparations would be in its interest, if that will purchase an end to this war that is bleeding them and help restore tolerable relations with its most important historic trading partners.

The competition for territories between Ukraine and Russia will not have ended. Indeed, it will have just begun. This peace would not be the end of the Ukraine war, but rather its continuation by other, much better, means. It would only be the end of the killing.

Update History:

  • 15-Oct-2022, 2:20 p.m. EDT: “It would only be the end of the killings killing.”

Liberalism vs democracy

It’s a habit, almost a tic, for many of us to put liberalism and democracy together. We live, or like to think we live, in a “liberal democracy”. This combination has seemed so natural that Francis Fukuyama famously argued it might be “the end of history”, the telos towards which human affairs are inevitably drawn. In our current politics, it is people who think of ourselves as liberals in a broad sense of the term who feel like democracy is under attack by a motley mix of populists, reactionaries, post-liberals, integralists, and fascists. We are the democrats. They are threats to democracy.

Within the vanguard of that they, there are intellectuals and leaders who gleefully accept that role. Everything they say we are we are and we are very proud of ourselves. The neoreactionaries are overt monarchists. It is the law that must teach the public, rather than the other way around, according to “common good constitutionalists”. Right-wing pseudohistoricists proclaim “We are a republic not a democracy.” Peter Thiel, who bankrolls so much of this stuff, declared democracy and freedom incompatible, and that he was for freedom, as early as 2009.

This colorful troupe of outcasts and intellectuals would matter very little but for the fact that much of the public votes for political candidates enthralled by their ideas. But the vast majority of these voters — let’s call them the Trumpists — are not overtly antidemocratic. On the contrary. Trump doesn’t proclaim, as some of those intellectuals might, that democracy is a feeble system that should be discarded so that our betters can rise to the service of rule. Trump appeals to his supporters in the name of democracy. The election was stolen! The voice of the people was muzzled by the ventriloquism of a shady and, yes, liberal elite.

Many Americans, I think, perceive liberals as the enemies of democracy, and quite plausibly, because liberalism can yield plainly antidemocratic outcomes! Who voted for shutting down the mills and factories of the midwest and sending that work to China? I didn’t. Did you?

Liberalism, or at least the version of liberalism to which we’ve subjected ourselves over the last few decades, stands in real tension with democracy. In both economic and social affairs, it valorizes and places above interference by the demos certain freedoms that have profound effects beyond the individuals who consent and choose. The state could not pick winners and losers, with respect to the location of industry. That was for business leaders and shareholders to decide. Then they were the winners, and the rest of us losers. The state should not impose parochial norms over gender identity, and now the most basic stuff we used to take for granted — this is the Ladies’ Room, this is the Men’s Room, you are either he or she — is overthrown. Nothing makes sense and the governor says they are mutilating our kids. “If you like what you have you can keep it” is the claim liberals always make, you do you but let other people make very different choices. Fine, you said. It’s a free country! But we are not in fact atoms, we live in a society. The domain of privacy that liberalism constructs is artificial and always leaky. It is not neutral. Some freedoms are assiduously protected, while others must give way. It turns out you can’t actually keep what you had, you never can, even though you liked it. The bathrooms are changing. Aspects of humanity so fundamental they are embedded in the very structure of language are obsolete and offensive. Now you must learn new language or be relegated a bigot, by your own children even, whose schools (that your tax dollars paid for) have assimilated them into this brave new world you do not recognize and cannot navigate. That seems weird, ugly, just plain wrong. What happened to your freedom? Your choice? Your rights? Did some majority actually vote for this? No they did not, as far as you can tell.

The issue, to be very clear, isn’t that there is anything wrong with trans rights. It’s that what begin as private rights claims under liberalism carry social implications that create wedges between outcomes and democratic preferences. This divergence becomes especially acute subnationally, within communities upon whom the rights claims themselves are imposed in the name of universality rather than embraced democratically. Illiberal political entrepreneurs will predictably polemicize these ruptures between democratic choice and outcome, rather than work to manage and reconcile them.

Liberals say they — we — are the democrats, on procedural grounds. Yes, we had the elections and wanted everybody to vote. But we constructed a system that took much of what the demos might care about out of reach. Vote for whom you like, it’s a free country! But whomever a majority chooses, government has no right or capacity to deliver the society that a majority actually wants. In both the economic and social sphere, every liberalism (many are possible) carves out particular, critical domains and makes them exempt from deference to the public. Liberalism emasculates democracy even while it sanctimoniously attends to the bureaucracy of it. Should this really count as democracy, or just a fig leaf for its opposite? The system is rigged. Perhaps Viktor Orban’s “illiberal democracy” is the more natural conjunction after all, and “liberal democracy” an oxymoron?

I don’t think so. I am still a strong enthusiast of liberal democracy, and would argue that “illiberal democracy” in practice collapses to ugly autocracy. But we have to continually work to reconcile these ideas, liberal and democracy. They are not mutually reinforcing. Quite the contrary. Respecting and celebrating individual choice while also tethering broad outcomes to the interests and (evolving) values of the demos is, I think, achievable. But it is not automatic or preordained. We have to be clever, and much more careful than we have been, if we hope to mitigate and manage the contradictions. Who knew that preserving the end of history would demand from us so much agility?

But if we don’t do this work, much of the public will perceive liberals to be the real threat to democracy. And they won’t be entirely wrong.

Update History:

  • 9-Oct-2022, 11:55 a.m. EDT: “But whomever a majority chooses, government has no right or capacity to deliver the society that a majority actually wants.” [comma inserted]
  • 11-Oct-2022, 11:20 a.m. EDT: “…what begin as private rights claims under liberalism carry broad and powerful social implications that create wedges…” [too wordy (ha!)]

What is not separable from how

Like most of what I write (when it is not satire), this should be an obvious point. Nevertheless. In social affairs, what should be done cannot be separated from how we choose to do it. A policy that would succeed and be widely lauded if chosen in one manner might crash and burn if chosen in a different way. This is a problem for technocracy, for the notion that academics and think-tankers can work out the best policy, persuade politicians via white papers and working groups to implement it, then watch the public enjoy virtuous outcomes. Even when (much more rarely than proponents claim) research is good and reliable, social affairs just do not work this way.

For identifiable policy choices that are high-stakes in terms of values or outcomes, it’s pretty obvious why this approach often fails. It is a old joke in politics that whatever choice you make will be wrong. After the fact, the sun will set, the sun will rise, and stuff will happen. Humans being humans, the good stuff will seem normal, what ought to happen, what might have happened anyway, who knows?. The bad stuff will seem like something somebody did wrong and should be held accountable for. And your political opponents will be driving that home and blaming you for the choice.

There will be corruption. There is no human enterprise of significant scale in which people do not or do not appear to sometimes place self-interest above the broader mission to which they are ostensibly engaged. This is as true in the private sector as in the public. But in the private sector people are supposed to be pursuing their self-interest. “Agency problems” are ubiquitous, and understood to be a cost of doing business. If excessive, they reflect error by management or shareholders who should have arranged incentives more cleverly or built a more cohesive culture. However, in the public sector, the same behavior is corruption, sin, contagion. Even a drop potentially rots the foundations of our institutions. Every public enterprise is corrupt, while private enterprises are just well or poorly managed.

Identifiable, consequential policy choices must be resilient to the likelihood that salient bad outcomes will be linked, in good faith or bad, to the policy, while positive effects will be vigorously contested. Absent either strong ideological “buy in” from the mass public or concrete, material benefits to a politically influential constituency, opponents will often succeed at undoing or undermining the policy, however successful your honest research suggests the nascent outcomes to be. Of course opponents will have their own disingenuous research. In the public mind and most history books, your policy will have failed.

Durable policy requires either populism ex ante or payoff ex post (or effective use of institutions like a judiciary that can remove issues from political contestation, for better and for worse).

Among liberals and technocrats “populism” has become a bad word, a synonym for a kind of vicious, collective id that demagogues like Donald Trump destructively conjure. (Thomas Frank usefully demurs.) It's much better to understand that populations are subject to systematic passions. Models that treat human groupings as mere aggregates of agents with isolated preferences and interests are badly incomplete. We must design institutions that productively accommodate what we might bloodlessly call correlation. Markets civilize greed, marriage civilizes lust. Democratic institutions are supposed to civilize populism.

Marriage is not a chastity belt, and markets do not demand vows of poverty. It is not enough to blunt or “check” the passions of the masses, as the US Senate is ostensibly designed to do. Good democratic institutions encourage a productive populism, give it effect through intelligent action then succeed in part because of the legitimacy and durability and adaptability enabled by the public’s enthusiasm. There must be traction, some channel of transmission, between public passions and the actions of governing institutions (state and parastatal). And vice versa! “Burn it all down" populism results from a loss of this traction, from a sense that governing institutions are alien, imposed, that rather than mechanisms of cautious transmission there are bales of insulation thrust between public passions and political outcomes.

Governance is a whole-of-society enterprise. It’s not enough for the metaphorical head to be smart. (That the metaphorical head tries so often to outsmart its own metaphorical body suggests that it is not really very smart at all.) Policy choices that will succeed when there is legitimacy—a sense of collective agency, widespread “buy-in”—will not when there is not. Under the institutions of contemporary liberal democracy, it is political parties and their coalitional choices that reify and render legible the passions of the public, that bind those passions to choices by government, and also reshape them as a consequence of their choices. It’s symptomatic of a failure of our institutions that more than 40% of Americans have no political party to which they are willing to make the (bidirectional!) link of identification. And no, a “none of the above” party will not solve this problem.

Technocrats do the best they can and we are where we are. Sure, we’d be better off with a multiparty democracy designed to engender four-to-six medium-tent parties. That’s not the country we live in. But your research is so promising! If it’s true that salient, controversial policy choices are unlikely to be durable without popular passion or ex post payoffs, maybe the way to go is the "submerged state”? Kludgeocracy may not be so bad after all?

You can take heart, I suppose, in my defense above of the public sector from unfair double standards surrounding “corruption”. But in a kludgeocracy you’d at least expect a lot of mismanagement. Looking at the existing submerged state, there do seem to be patterns of stakeholder payoffs that might not accord well with most of of our understandings of the mission of the state. Last year, liberals invested a lot of hope in “secret congress” (which, unfortunately, did not refer to the sort of thing that needs to be civilized by marriage). In this moment's fallen world, when you want to get some particular smart thing done, quiet may indeed be the way to go.

But there is an accountability problem. We’ve been doing the submerged state a lot, and it’s brought us to the crisis of democracy that we're in. In aggregate our skein of tax expenditures form a misshapen blob from which the broad public feels excluded and alienated, but each one was somebody's idea of smart policy. The best lobbyists have a talent for persuading themselves that the interests of their employers and those of the public are happily aligned. If only the public could be made to understand. Of course you are different.

There is no alternative to an effective state, which both makes good choices and makes them via institutions that recruit broad legitimacy for those choices, within which members of the public feel a sense of collective agency.

If you are about getting policy right, good on you. (Really!) But it isn’t enough. We need a better state.