Monthly Recommendations (February 2022)

The month of February is before the end of the financial year and the month that many governments release their budgets for the next financial year. They also talk (at length) about the policies that they are going to implement. To commemorate this annual exercise in long-term decision making, this month’s list of recommendations is about politics and government policy. We see examples of government policy gone wrong and those that worked out well. There is an interesting new theory about conservatism and the feeling of disgust (not just at liberal ideas, but a more generic form of disgust.) And there is an article about degrowth from Vox, which has been making the rounds periodically since 2019. It is worth looking back on this article periodically to understand how futile unilateral action can prove to be.

  1. Liberals and Conservatives React in Wildly Different Ways to Repulsive Pictures (McAuliffe)

    Atlantic (archived). Mar. 2019

    Political pundits offhandedly talk about liberals, conservatives, left/right, left of center, and so on. They keep stressing that we are all on some kind of spectrum between the extremes, and that our feelings about each subject are different. There is some agreement that political ideologies are sticky and that they are formed based on the household and the environment that one grows up in. There are exceptions, but it seems safe to assume that few people break out of their original political ideologies to make a dramatic shift.

    We like to portray ourselves as rational beings who started with a blank slate and ended up at our current political ideology through a process of reasoning. Even conspiracy theorists like to claim that their beliefs are based on evidence and facts. Jon Haidt’s theory says that the apparently rational reasons we have for our political ideologies actually come after we have decided which side to support. Based on this theory, Haidt’s view is that conservatism is “easier to sell.” There is a very strong temptation to believe this. Most people you know are probably conservative on social or economic policy issues, characterized by beliefs such as “Government spending is too high; taxes are too high; ‘culture / politeness / chivalry’ is dead because the current generation does not value ‘relationships / seniority / …’; society is changing too fast.” Haidt’s reasoning is flawless and likely the way things are. Yet, I hold out hope that there is nothing structurally tempting about conservatism and that there is still a way for politicians to sell liberal ideas and have success doing it. So, I found this article about the relationship between conservatism and the feeling of disgust to be a great avenue of research which might help us understand if conservatism is explained by something much more fundamental than our environment: The evolutionary requirement to prevent contamination.

  2. New York’s Real Estate Tax Breaks Are Now a Rich-Kid Loophole (Melby)

    Bloomberg Businessweek (archived). Oct. 8, 2021.

    Badly done policy is hard to spot. I think the reason for this is that governments write policy documents and they happen to be the only ones with the resources to read the complete document and come to conclusions about its effects. Think tanks have agendas and donors. Polling firms have biases. Also, in most cases, the effect of a policy is not clear until several years after the policy has been implemented. (There are notable exceptions.) Once implemented, the government has little incentive to improve their implementation, irrespective of who is in power. Because if the same party is in power, then it is an admission that their original policy was not the best, an implication that the opposition will pounce upon. And if the opposition is in power, it is an admission that the original policy was good and simply needs to be made better. Both of these are anathema to politicians who want to win the next election. These are the conditions that lead to drawn out political matches, which the media covers with play-by-play coverage and politicians use to improve their standing among their base.

    As policies are hard to analyze thoroughly, they will contain loopholes which can be exploited only by large corporations, who have the resources to scour the documents for a thorough understanding. This has lead to a fetishization of “short-and-sweet” policy which doesn’t have as much fine-print. But there is no implicit guarantee that a smaller bill will be devoid of loopholes. This article chronicles one such policy which ended up benefiting exactly the wrong group of people: Children of rich parents with low personal incomes. Other loopholes which have made news in the recent past are related to billionaires evading the estate tax and demonstrate the lengths that the people go to to get out of paying taxes.

  3. ‘It’s a Godsend’: 9-Cent Taxi Rides in Rural South Korea (Sang-Hun)

    New York Times (archived). Sept. 11, 2021.

    Government policy can also bring about radical changes. There are many examples to be found in the Asian economies which caught up to the West in the few decades after the Second World War (Taiwan, South Korea, Japan and now, China). This article about South Korea’s “car-less population rescue policy” is a great example of how this spirit of good government policy remains alive, despite all the opposition that it is facing from a disengaged voterbase and a progressively shortening attention span. Public transport is outsourced to businesses that would like to make a profit on each customer. But when there are very few customers, it becomes hard for governments to incentivize the building and operating of public transport networks. This is happening both Japan and Korea, where the population is rapidly aging and most of the population is concentrated in the urban areas which grew rapidly in the 20th Century. One solution is to make private transport more attractive for rural residents by reducing taxes. Korea has gone in a completely different direction by providing affordable rides from remote locations to the closest towns and bus stops.

    This article also shows something very refreshing for people who are living in a bleak policy landscape, where the government’s priorities seem to be completely out of sync with the citizens’ priorities:

    When Statistics Korea conducted a nationwide survey in 2010, a lack of public transportation was one of the biggest grievances for older villagers in rural South Korea who had neither cars nor children who could drive for them.

    It shows that the government listened to people and their complaints. This, despite being the “way” that democracy is supposed to work traditionally, is becoming increasingly rare.

  4. Anyone Seen Tether’s Billions? (Faux)

    Bloomberg Businessweek (archived). Oct. 7, 2021.

    Cryptocurrency is weird and it is hard to explain to laypeople and aficionados alike that Bitcoin has become a speculative asset, with no future as a store of value, like a stable currency. The cryptography behind cryptocurrencies is great. When the Bitcoin paper became a big deal in the early 2010s, I read it and re-read it to understand how something that was decentralized could hold any value. That was a pivotal moment for the storage of value. Then, things went south.

    Stable coins are an instrument that is nearly the same as a government-backed currency, but mints the benefits of the current “completely decentralized crypto-currency” frenzy. Tether was one of the biggest stablecoins. This article is an investigation to find the cash that is supposed to be backing the stablecoin. It is an interesting piece that delves into the non-conforming characters that were involved in the development of this stable coin (and more generally across the crypto space.)

  5. Can we save the planet by shrinking the economy? (Piper)

    Vox (archived). Aug. 3, 2021.

    “Modern-day economies have grown too much and the people in them buy too many things / drive too much / eat too much meat / throw away too many clothes / et al. So, to reduce emissions, these people should be told to reduce their activity and return to life as it was a few years / decades / centuries ago.” That is a short summary of the degrowth movement. Activists lobby governments. Governments produce reports. World leaders go to annual climate conferences. Claims are made about having kept the “1.5 degrees Celsius” goal barely alive. I don’t know what that means. Most nations don’t want to do anything except pay lip service and get some “leading the charge” prestige. This is true of corporations as well.

    In this environment, a small group of activists suggest degrowth as the solution. Their goals are revolutionary: They think that people will voluntarily give up the luxuries that they have gotten used to. This is a strange thing to imagine and I am certain that it will not happen. But I struggle with the fact that the vegan movement has caught steam and is becoming more and more popular, especially in the advanced economies. Nevertheless, economies must grow and nations, where large parts of the population are still stuck in abject poverty, must reach the standard of living that is common everywhere else. If this growth leads to some warming, so be it. There are gradations of outcomes and we have to choose between a set of trade-offs which ask us how much we value the eradication of poverty against the loss of land and the increase in sea level. I prefer the former. The degrowth movement is an expression of the frustration that some activists have started feeling.

    Worth adding to this is David Simon’s counter to the “Less is More” cult:

    There are still people, getting up in newsrooms and saying “It’s alright, we are going to do more with less.” No, you do less with less. That’s why they call it less. – David Simon on the Future of Journalism