Category Archives: Economics

May 26 2010
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Economics, politics

From the comments: On Rand Paul’s naive libertarianism

A friend who wishes to be identified only as “PhantomOutlaw” from www.cross-x.com writes to me in response to my posts (here and here) on Rand Paul’s naive libertarianism:

Can you expound on this “I could say alternatively that racism by businesses has serious negative externalities in practice and I’m ok with government regulation on those grounds.”

An externality is (very useful) economic jargon that just means a spillover cost or benefit of a transaction affecting people who weren’t involved in the transaction. An example would be a coal-burning power plant, where customers purchase electricity but the plant gives off pollution that affects non-customers. That would be a negative externality (which is bad). An example of a positive externality is if my neighbor hires a security guard for his house; if the guard deters thieves from the whole area, not just the neighbor’s house, I benefit from something I haven’t paid for.

In the context of this discussion, I think that government has a role in regulating away the bad things that come with a business actually engaging in racist business practices. Imagine if the steakhouse next to my house began only serving white people. That would probably prompt demonstrations and riots outside my house (negative externality). Now I face increased safety risks and the quality of the time I spend at home decreases.  Additionally, other businesses around the area now face decreased business because the area has a reputation for being racist, something that they weren’t responsible for but suffer from. Clearly these are all legitimate reasons why a government would seek to enforce content-neutral regulations against racism.

PhantomOutlaw continues:

Also, I don’t really understand this argument: “It is not unreasonable that a government seeks to actively curate a city’s image (to enforce voter-expressed preferences) and regulates the business climate with that in mind, nor is it unreasonable that government should seek to prevent the public disorder that inevitably follows racist practices.”

I hear you saying that if a municipality doesn’t want to be seen as racist, then its OK for them to regulate against racism if that is the will of the electorate. I may be missing something here but it seems like Paul would concur with this line, since it would be a state/local law. Additionally, isn’t there an argument for why civil liberties are key and shouldn’t be trampled on by the will of the people.

Sure. The first paragraph just says that a government has the right to shape a city’s image to express what voters want. For instance, if the voters of Columbia want to attract big software companies, they might vote for policies like bike trails and more downtown police officers walking the beat. They might pass new zoning regulations that tell people what they can and can’t do with their property. Sometimes these policies are hotly contested, but generally the ability of city governments to enact those content-neutral regulations is well established.

I agree with a stronger version of your second paragraph. I would say something like this: representative governments represent all citizens, and we don’t allocate citizenship by race or sex. So it is intrinsically a function of government to protect the interests of everyone and a violation of this social contract to allow businesses to be racist. Everyone is represented by government, so the businesses that we allow to exist should not be allowed to discriminate. Otherwise we’d be taxing people for governmental goods and services that flow to businesses that aren’t willing to serve everyone for some arbitrary and wrong reason. No taxation without representation, basically. These are the implicit protections of representative democracy.

The notion of representative democracy justifies federal action. Citizens of all 50 states are affected by the racist policies of one state much in the same way businesses close to a racist business are affected. So I think there is room for the functions of different levels of government to curb bad decisions or policies of other levels of government, and this is not inconsistent with libertarian principles. Hopefully that is a sufficient answer?

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May 25 2010
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Economics

The winner’s curse: would more a more competitive bidding process ‘undermine Columbia’?

The Columbia City Council held a special council meeting last night over the proposed deal with IBM which would bring an IBM datacenter + jobs to Columbia. Christine Harbin at the Show-Me Daily has a good cost-benefit analysis on the state and local incentives IBM is receiving to bring their datacenter here; she notes that each job IBM brings to Columbia is subsidized to the tune of about $51,000.

Abby Rogers in the Columbia Missourian today covers last night’s City Council meeting. She notes:

If REDI or other city officials had shared news on the deal with IBM, competing cities might have been able to sweeten their offers and undermine Columbia. In addition, the confidentiality of the proceedings allowed Columbia and IBM to talk business, Brooks said.

It seems obvious to me that letting another city “undermine Columbia” is not necessarily a bad thing. Think of the bidding process as an auction: cities submit “bids” in the form of incentive packages, and the highest bid gets IBM and the datacenter. But consider this: the city with the highest “bid” is also the city that is most likely to have overvalued IBM’s datacenter.

Auction theorists call this the winner’s curse (“you bid, you win, you lose, you curse”). The concept was first introduced by Capen et al in the Journal of Petroleum Technology in 1971 in an analysis of oil and gas leases in the Gulf of Mexico. I was unable to find a copy of the article I could link to but here is are a couple excerpts from their abstract:

If it is true, as common sense tells us, that a lease winner tends to be the bidder who most overestimates reserves potential, it follows that the “successful” bidders may not have been so successful after all. Studies of the industry’s rate of return support that conclusion. By simulating the bidding game we can increase our understanding and thus decrease our chance for investment error.

…

In recent years, several major companies have taken a rather careful look at their records and those of the industry in areas where sealed competitive bidding is the method of acquiring leases. The most notable of these areas, and perhaps the most interesting, is the Gulf of Mexico. Most analysts turn up with the rather shocking result that, while there seems to be a lot of oil and gas in the region, the industry probably is not making as much return on its investment there as it intended. In fact, if one ignores the era before 1950, when land was a good deal cheaper, he finds that the Gulf has paid off at something less than the local credit union. Why? Have we been poor estimators of hydrocarbon potential? Have our original cost estimates been too potential? Have our original cost estimates been too conservative? Have we not predicted allowables well? Was our timing off? Or have we just been unlucky?

Even though Columbia “won” the auction for IBM, we could still “lose” in one of two ways. First, if what Columbia “paid” for IBM to come here is far in excess of what IBM’s datacenter is worth to the local economy. The second way is just a weaker version of the first; we “lose” if the value of IBM’s datacenter is less than what we estimated, even if there is a net gain to be had. This scenario is viable in common value auctions with incomplete information, ie, when lots of cities are bidding for IBM but all of their negotiations are private, which means that the localized information available to policymakers in specific cities is confidential. IBM gets to negotiate from a position of strength and there is no incentive for them to not share confidential information amongst bidders, though individual bidders have incentives to maintain confidentiality. Each individual city thus never gets access to the common pool of information that IBM has, meaning IBM can easily leverage city against city to obtain optimal conditions for itself.

As you might imagine, this isn’t a pleasant thought for anyone who fought to bring IBM to Columbia. Everyone who supports the idea will tell you that their valuation of what IBM is worth to Columbia is excellent and robust. It is not a pleasant thought to think that even rational actors err and err often, and it is counterintuitive that we might benefit from an open and transparent bidding process because it is easy to point to other cities that won a bid and say “we lost”. But it is much harder to win well than we think, and ultimately people are shortsighted.

Suggested further reading on the winner’s curse: Here is Richard Thaler’s excellent 1988 article in the Journal of Economic Perspectives, and here is a good short essay Sfrom Levin and Kagel from Ohio State.

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May 25 2010
2 Comments
Economics, Intelligence

Sexual differences: mating behavior in high status and low status males

From the Guardian:

There is a large body of primate research on the evolutionary origins of aggressive male sexual jealousy, covering the strategies of rape, harassment, intimidation and monopolisation of time – referred to as “mate guarding”. Males usually behave in these sexually coercive ways around fertile females they want to impregnate. These strategies can be observed in all ape species, but less so among gorillas, who live in harems with a dominant silverback male. Sexually aggressive male behaviour has evolved as an adaptation to living in multi-male, multi-female societies where there is a lot of choice in mating opportunities but also a lot of sexual rivalry.

These sorts of sexually aggressive male behaviours are more often exhibited by low-status males. High-status males who have repeatedly shown kindness, and are high status due to their mix of good genes for intelligence and physical stamina, are more likely to have females soliciting them for sex rather than their having to harass or rape in order to mate.

The article cites this article from Animal Behavior. Here is the abstract:

In a wide range of animal species, males coerce females to mate with them, either by physically forcing them to mate, by harassing them until they mate or by punishing persistent refusal to mate. The first section of this paper argues that the possibility of forced copulation can generate arms races between males and females that may have substantial costs to both sexes. In the second section, it is suggested that sexual harassment commonly represents a ‘war of attrition’ between the sexes; existing game theory models that may apply to sexual conflict over mating decisions are reviewed. The third section develops a simple prospective model for the evolution of intimidation by punishment in situations where males can raise the probability that females will accept their advances in future by punishing them for refusal to mate. Where the benefits of sexual coercion to males are high, all three male strategies may develop to a point where they have substantial costs to females. In the final section, evidence that female behaviour is adapted to minimizing these costs is reviewed.

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May 24 2010
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Economics

What incentivizes government officials in Madagascar?

The NYT reports:

This accelerated plunder of the rainforest coincided with a military coup in March 2009. Andry Rajoelina, the mayor of Antananarivo, Madagascar’s capital, was installed as president and he has since led a weakened and tottering government that is unable — and perhaps unwilling — to stop the trafficking.

“The government does nothing because it shares in the money,” said Ndranto Razakamanarina, president of an association of Malagasy environmental groups and a policy officer with the World Wildlife Fun. “Many of the ministers think they’ll be in office only three or six months, so they decide to make money while they can. The timber mafia is corrupt, the ministers are corrupt.”

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May 24 2010
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Economics, politics

Extended thoughts on Rand Paul and naive libertarianism

So I want to expand on this argument that there is a difference between consensual relations between individuals and consensual relations between individuals and businesses. The thing that Rand Paul gets wrong is that business transactions don’t happen in a vacuum, they happen in a market. Markets (at least legal ones) have the feature that they feature a varied and rich legal architecture binding a business to the larger communities like the cities and states where they have business licenses. In some senses this is a very democratic notion: markets should be accessible to anyone regardless of race because it is only through the regulatory functions of representative governments that they are able to exist in the first place.

In other words, if we have to give everyone suffrage regardless of race, we have to ban racist business practices.

Think of the analogy to building codes. Businesses operate under the very real parameters that they have to conduct business in buildings that are physically safe. If these buildings were not physically safe, and were for instance in a negligent state that inappropriately risked catching on fire, then there are serious obvious negative externalities that exist. If one building is on fire, other nearby buildings are at risk, and there is damage to property and life that must be evaluated. Hence, we have building codes and fire codes (regulations) to mitigate these risks so that one business can co-exist with others in geographic space.

Regulation against racism is much the same. Has anyone ever proposed to Rand Paul that in a world where he refused to regulate racism, racist businesses risk being focal points for violence and riots? The public safety considerations are substantial and presumably justify quite a lot of government intervention (anyone remember the Rodney King riots?) You could come up with a variety of empirically relevant scenarios here.

I understand that part of Paul’s argument is that federal regulation is not necessarily good. That is conceded. But the part of his argument that says government shouldn’t intrude on private conduct does not extend to business conduct and I think it is important that people understand that.

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May 24 2010
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Economics

World Cup Watch: Why are American goalkeepers superior to the Europeans?

From the NYT:

In England, American goalkeepers have become as reliable as tea time. The theories for this are plentiful and speculative: Americans grow up playing sports that require use of the hands. The population of 300 million is bound to produce a high number of terrific athletes. The 6-foot-3 Howard, for instance, was a formidable basketball player at North Brunswick High School in New Jersey.

Bob Bradley, the United States coach, does not subscribe to the good-hands theory. He believes more in the ancestry of role models. In this view, Gianluigi Buffon’s impenetrability as Italy won the 2006 World Cup can be directly traced to the magnificence of Dino Zoff, who captained Italy’s 1982 World Cup-winning team at 40.

….

Hahnemann said he thought the goalie position was more prized in North America than it was in England, mentioning both soccer and hockey.

“After an N.H.L. game, what does everyone do? Skate over to the keeper,” Hahnemann said. “That sort of respect, they don’t really have over in England. For donkey’s years, they’ve always stuck the worst player in goal. No one wanted to play back there. Part of the reason is, the press is so ruthless with us. Anything happens, and they blame the keepers.”

The situation in England is changing, Hahnemann said, though he thinks Americans still hold a cultural advantage — comfort with athletic individualism. He speaks of goalkeepers and field players as “us and them.”

Hahnemann said: “There’s only one of you. You can’t do it if you want to be like everybody else. We enjoy being a little different. As Americans, we don’t mind that, so we strive as goalkeepers.”

The cultural argument strikes me as the most compelling, though not exclusively. If you’re a keeper in England, especially in the lower leagues, it really is the least glamorous position. It suggests many good goalkeepers are undervalued by a large sector of the market, which means many high status offensive players are overvalued. The implications for teams looking to move up in the rankings are obvious.

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May 23 2010
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Economics, law

Sandra Day O’Connor on merit selection of judges

Her op-ed in the NYT is here. I think it is worth reading:

In our system, the judiciary, unlike the legislative and the executive branches, is supposed to answer only to the law and the Constitution. Courts are supposed to be the one safe place where every citizen can receive a fair hearing.

In a merit selection system, a nonpartisan nominating commission interviews and investigates applicants for judicial vacancies, and ultimately recommends a few candidates to the governor. The governor appoints one from the list. Regular “retention” elections are held to allow voters to decide whether to keep the judge in office.

There are those who assert that this system benefits legal insiders, because lawyers will inevitably dominate the nominating commissions, which would hold their meetings in secret. But to the extent that this could be a real problem, Arizona has already demonstrated how to avoid it. In that state, nominating commissions are dominated by non-lawyers, and their meetings are open. Candidates’ applications are available online, and the public is invited to comment.

Another argument against this system is that it deprives voters of the chance to choose their judges. But the truth is, in those states that elect judges, candidates often run unopposed, so voters are left with no options, and little information about the people who are on the ballot. In a system where judges are evaluated before they are put on the ballot, voters can make their decisions more knowledgeably — with relevant information about the judges’ performance on the bench.

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May 22 2010
3 Comments
Economics, law

Thoughts on Rand Paul, racism, and naive libertarianism

I think Rand Paul is absolutely right when he defends the ability of people to engage in private, consensual relations, even if the content of those relations is offensive and wrong, like racism. He is however absolutely incorrect by extending this analysis to businesses like Whitworth’s, and here’s why.

I tend to think of laws against racist business practices in the same way I think of building codes, or food safety regulations. This is because a business implicates more than just the business owner and a customer; the community that the business exists in provides legal sanction for that business’s operation, and with that legal sanction is attached the variable requirements for building safety and good conduct that individual communities deem important and necessary for the operation of business. Regulations preventing racist business practices are no different from the health code or zoning laws in some important ways: they have a branding function that implicates both the business and the community the business is situated in, and they create dangerous environments that require intervention by law enforcement. It is not unreasonable that a government seeks to actively curate a city’s image (to enforce voter-expressed preferences) and regulates the business climate with that in mind, nor is it unreasonable that government should seek to prevent the public disorder that inevitably follows racist practices. I would add that regulations should also be content-neutral as a matter of fairness, but stipulation doesn’t meaningfully change my argument.

I could say alternatively that racism by businesses has serious negative externalities in practice and I’m ok with government regulation on those grounds.

So I think that Rand Paul, as much as I like his robust defense of civil liberties, is guilty of being delusionally naive about these questions.

Here is a couple of other worthwhile reads from Volokh Conspirators Ilya Somin and David Bernstein on the subject.

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May 22 2010
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Economics

Binge drinking and risky sex among college students

The always interesting Jeff DeSimone has a working paper with the American Association of Wine Economists titled “Binge Drinking and Risky Sex Among College Students.” Here is the abstract:

This study examines the relationship between binge drinking and sexual behavior in nationally representative data on age 18–24 four-year college students. For having sex, overall or without condoms, large and significant positive associations are eliminated upon holding constant proxies for time-invariant sexual activity and drinking preferences. However, strong relationships persist for sex with multiple recent partners, overall and without condoms, even controlling for substance use, risk aversion, mental health, sports participation, and sexual activity frequency. Promiscuity is unrelated with non-binge drinking but even more strongly related with binge drinking on multiple occasions. Results from a rudimentary instrumental variables strategy and accounting for whether sex is immediately preceded by alcohol use suggest that binge drinking directly leads to risky sex. Some binge drinking-induced promiscuity seems to occur among students, especially males, involved in long-term relationships. Effects are concentrated among non-Hispanic whites and are not apparent for students in two-year schools.

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May 18 2010
1 Comment
Economics, law, politics

On reasserting civilian control of law enforcement

I spoke yesterday to the Columbia City Council presenting my white paper on how to reassert civilian control over law enforcement in Columbia, Missouri. I was part of a group of people who might be variously labeled as libertarians who were at the council meeting to speak out against the policies implicated in the February SWAT raid of a suspected cannabis dealer that resulted in two small dogs being shot in front of a seven-year-old child, with nothing meaningful to show for the subsequent search or arrest.

Video of the city council meeting is here. I speak at 2:52.40. Mitch Richards, a libertarian member of Keep Columbia Safe, addresses some of the same issues that I do at 2:27.35 and I recommend listening to his speech as well.

Addendum: Greg Young comments on my white paper and posts it in full here. Coverage from the Columbia Missourian is here. Coverage from the Columbia Tribune is here.

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May 17 2010
1 Comment
Economics, law, politics

I’m going to be on the radio tomorrow!

At 5pm tomorrow, I’ll be on KOPN 89.5 FM in Columbia, Missouri with with hosts Steve Spellman and Mitch Richards, who will be interviewing me about a white paper I wrote on the topic of of re-asserting civilian control of domestic law enforcement. I will be talking very specifically about civil asset forfeiture laws and the constitutional issues involved. Radley Balko from Reason Magazine might also be joining us for the discussion. You can listen live on your Iphone using the Public Radio Player app.

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May 10 2010
1 Comment
Economics, politics

The connections between ethics reform, lobbying, free speech, and markets

Over at the Missouri Record, Dave Roland criticizes the ethics bill SB 844 in front of the Missouri Senate, presenting five specific arguments as to why the bill is constitutionally untenable. He has this to say on the subject of the bill’s provisions to expand the scope and breadth of lobbyist registration and reporting requirements:

The current version of SB 844 would also expand section 105.470’s definition of “legislative lobbyist” to include “any natural person who acts for the purpose of attempting to influence the taking, passage, amendment, delay or defeat of any official action on any bill, resolution, amendment, nomination, appointment, report or any other action or any other matter pending or proposed in a legislative committee in either house of the general assembly, or in any matter which may be [italics added] the subject of action by the general assembly and in connection with such activity… attempts to influence any elected official other than an elected official who represents the legislative district where the person resides.” Under the currently-existing section 105.473, anyone who meets the definition of a lobbyist is required to file a registration form, pay a registration fee, and on a continuing basis provide to the designated authorities a significant array of information about the resources expended in their efforts to communicate with elected officials.  The law treats a lobbyist’s failure to register with the state or keep current on the required reports as a criminal offense.

The Missouri Constitution, states that “every person shall be free to say, write or publish, or otherwise communicate whatever he will on any subject” (Article I, section 8), establishes the will of the people themselves to be the basis of all proper governmental authority (Article I, section 1), and guarantees the right to “apply to those invested with the power of government for redress of grievances” (Article I, section 9).  By classifying as a “lobbyist” any person who expresses their political ideas to a legislator other than the one elected to represent them, the General Assembly would unconstitutionally stifle political speech and erect barriers that would prevent the people of this state from making their opinions known to those vested with the powers of government.

The impacts of this kind of legislation are real and represent a serious threat to the channels of communication between people and their government. I argue that the real problem with lobbyists is not that they exist, but rather that the cost of lobbying is too high. When the cost of communicating with your elected representatives is relatively high, only powerful vested interests are able to afford lobbying services. When the cost of this communication is relatively low, powerful vested interests have to compete for access and even privileged access becomes less meaningful as politicians gain leverage from being able to choose from more variable coalitions in a dynamic political landscape. In more direct terms, the cheaper it is to be a lobbyist, the more democratic the results of the political process. Lobbying in a sense is the act of proxying speech for dollars and dollars for votes; when votes are cheaper and the population is large and more heterogenous the influence of any single political coalition faces very real limits from competition.

And there is empirical evidence these kind of requirements exert a stifling effect on free speech. University of Missouri-Columbia economist Jeffrey Milyo describes the real ways of in a recent paper published through the Institute for Justice, “Mowing Down the Grassroots: How Grassroots Loobying Disclosure Suppresses Political Participation“:

However, 
as 
this 
report 
documents, 
sweeping 
lobbying 
laws
 in 
36
 states
  to 
strangle
 grassroots
 movements
 in 
red
 tape 
and 
bureaucratic 
regulation.
Twenty‐two
 states
 explicitly 
include 
grassroots
 lobbying 
in
 the
 definition 
of
 lobbying,
 while
 another 
14 
consider
 any 
attempt
 to 
influence 
public 
policy 
to 
be
lobbying,
 as
 long
 as 
a 
certain 
amount 
is 
spent. 

Thus, 
such 
common 
activities 
as
 publishing 
an 
open 
letter, 
organizing 
a 
demonstration 
or 
distributing 
flyers 
can
 trigger 
regulation 
and 
force 
organizers 
to 
register
 with
 the
 state
 and
 file
 detailed
 reports on
 their 
activities,
 as
 well
 as 
the 
identities 
of 
supporters.
  These regulations
 raise
 the 
costs 
of
 political
 activity
 and 
set
 legal 
traps 
for
 unsuspecting
 citizens,
 thus
 making 
it
 more 
difficult
 for
 ordinary 
citizens 
to
 participate 
in 
politics—all 
with 
little 
or 
no 
benefit 
to 
the
 public. 

As 
this 
report
 finds:

  • Lobbying 
regulations
 are
 not 
intended 
to
 be
 understood
 by
 ordinary
 people.

 The
 first
 paragraph 
of 
Massachusetts’
 new 
lobbying 
law, 
for 
example, 
scored
 0.9
 on 
a 
100‐point 
scale 
in 
a 
readability 
test. 

Going 
by 
such 
tests, 
it 
would 
take
 34
 years 
of 
formal 
education
 to 
understand
 that 
paragraph; 
not 
even 
a 
doctorate
 from 
MIT 
or
 Harvard 
would
 be 
enough.
  • The 
red tape 
would‐be
 grassroots 
lobbyists 
must 
navigate 
to 
properly 
disclose
 activities 
and 
financial 
support 
is 
complex 
and 
burdensome. 

In 
previous
    research,
 ordinary
 citizens
 who 
tried 
to 
fill 
out 
similar 
forms 
correctly
 completed
 only
 about
 40 
percent
 of 
tasks.
  • Running 
afoul
 of 
these 
regulations
 could
 bring
 stiff
 penalties,
 including
 thousands 
in 
civil 
fines
 and
 in
 some
 states 
criminal
 penalties.

 In
 New York,
 the
    maximum 
criminal
 penalty
 is 
$5,000 
and 
four 
years 
in 
jail, 
equivalent 
to 
arson
 or 
riot;
 in
 Alabama, 
it
 is
 $30,000 
and
 20
 years,
 equivalent 
to
 kidnapping.
  • The 
public 
likely
 gains 
little 
from
 these 
regulations. 

Previous
 research
 suggests few
 will 
seek
 out 
the 
disclosed
 information, 
but 
many 
will 
be 
deterred 
political 
activity 
by 
the 
public 
disclosure 
of 
their 
personal 
information.
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May 04 2010
1 Comment
Economics

Cross cultural theories on the substitutability of televison and sex

1. Survey of British men: 72% of bachelors would rather play games than have sex, for men in relationships the rate is 32%.

2. Indian Health and Family Welfare Minister: We can reduce population growth by 80% in rural areas by introducing televisions.

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May 04 2010
3 Comments
Economics, law

Daniel Sokol on evolution, law, and institutions

Here is Daniel Sokol at the Conglomerate in 2008:

I believe that LLSV makes certain assumptions about history and political economy in legal origins that are not exactly supported by the underlying historical record.  A number of scholars have attacked LLSV on these grounds. Nevertheless, I still find myself strangely attracted to LLSV. In many ways, the results are what you would intuitively expect if you were on your own to attempt to rank countries based on investor protection or other similar features. More importantly, a number of the variables that LLSV uses are a bit squishy but we have yet to come up with better cross country measurements. Indeed, as a result of the critiques, LLSV have gotten better as to how they measure shareholder protection. From a policy perspective, the key to change to various bottlenecks requires not merely a top down approach in the change of the legal system but a bottom up approach by the users of these legal systems to overcome various bottlenecks that are regulatory. This makes me believe that over time the common law/civil law distinction will be seen as a rather false one where instead you will find countries lumped into categories based on their ability to respond to local and changing conditions (even the United States, which in recent years may have created increased regulatory bottlenecks such as SOX). This evolutionary approach is what I believe holds the key to understanding how to think about law and institutions.

LLSV refers to the seminal papers by La Porta, Lopez-de-Silanes, Schleifer, and Vishny in 1997 (Legal Determinants of External Finance) and 1998 (Law and Finance) which establish a thesis linking common, civil, and hybrid legal regimes to economics development and financial growth. The internal story has to do with the different kinds of investor protection that emerges under these regimes.

Sokol’s argument here resonates with me quite a bit and while it means that policy work that tries to draw conclusions of strict classification runs into some fairly tangible walls, I think the intuition that says that markets and institutions work together in complex and adaptive ways provides some rather good insights into where analytical work might be useful. I’ll be developing this in a post later this week so stay tuned…

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May 04 2010
1 Comment
Economics, law, politics

Why Cameras? The Market Solves Better!

Here is the text of an op-ed I submitted to the Columbia Tribune about 2 weeks ago. They have not gotten back to me on whether or not they will publish it, but I think that it is worth reading so I’ll post it here. Key knowledge for people who don’t live in Columbia: Proposition 1 was an initiative to give the police chief the option of placing surveillance cameras downtown.

As a libertarian who identifies politically with Democrats, my initial feelings toward Proposition 1 were mixed. I have a deep-seated distrust of government surveillance, but in some respects I regard surveillance of any kind of public activity an unavoidable consequence of being in public. This takes on more meaning when you consider the leaps in portable surveillance technologies that have happened over the last decade that make surveillance by private citizens in public spaces inevitable.

Consider this. Almost everyone who walks on the street of Columbia has a cell phone with an embedded camera. A lot of these phones, particularly smartphones like Android or the Iphone, have embedded video cameras. These cameras are deployed ubiquitously by citizens recording events in their daily lives: the food they eat, the street performers they see, the accidents and crimes they witness. Citizens without training in journalism are now the most important asset we have in terms of breaking news. As an example, remember the plane that touched down in the Hudson last year. The first footage from the scene wasn’t captured by any government camera or any media on the scene, but rather by a man with his Iphone.

We live in a world where Google is driving cars wired with recording equipment down every road in America to capture pictures and video for Google Street View. This world also includes numerous ways to share information, both audio and video, easily and at practically no cost over the internet. Facebook is a good example of how pervasive social networking is and how easy it is to perform de facto surveillance on people in your social network.

More generally, surveillance technologies are extremely cheap and pervasive. I would hazard a guess that it might cost less than $10,000 to wire downtown Columbia with cheap video cameras. You would even be able to stream videos online live 24/7/365. It is not illegal (and impossible to regulate) the surveillance performed by private citizens, particularly those who own or access property located in Columbia.

The revolution in search also factors in. Google, Wolfram Alpha, and Bing all represent large-scale efforts to make all kinds of data instantly computable. I think that within a year or two we will be able to search in real time the media created by people as they go about their daily lives as the technologies that aggregate and compute data become cheaper and more available.

So this is my argument. Proposition 1 was a non-starter for me because I think it is true that in the next couple of years the availability and usability of surveillance technologies will be so pervasive that government surveillance is unnecessary and indeed irrelevant. I voted against Proposition 1 because I don’t see a need to uniquely grant government with these powers; citizens acting of their own free accord in their daily lives perform practically the same functions.

I also recommend this post on surveillance in New York City from Volokh Conspirator Stewart Baker which contains some related insights that I think function well as an extension to my argument.

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