Thursday, July 22, 2010

Assault of Thoughts, Scientific Progress Edition - 7/22/2010

"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK

- Scott Kuhagen provides an update on the Commonwealth of Virginia's travesty of an Attorney General and his witch hunt in Charlottesville. AG Cuccinelli is tossing the very notion of academic freedom aside and targeting scientific progress at the University of Virginia. It's a cliche, I know, but it fits the bill: Mr. Jefferson must be rolling in his grave over this. It would be bad enough with any university, but the ideals and the mission on which the University of Virginia was founded make this especially sad.

- Andrew Sullivan links to interesting research that suggests that the technological gap between Europe and sub-Saharan Africa explains the majority of the difference in per capita income between the two regions today. Very powerful stuff, and I would say not surprising. But then they write: "78 percent of the difference in income today between sub-Saharan Africa and Western Europe is explained by technology differences that already existed in 1500 AD – even BEFORE the slave trade and colonialism." This seems like bad reasoning to me. Presumably, the reason why the Atlantic slave trade took off, and the phenomenon of "white slavery" fizzled had a lot to do with the very technological differences this research has identified as important. So it doesn't really make sense to say (or really, simply to imply here) that "the difference in per capita income is due to technological differences, not slavery," because slavery itself is probably a very important mechanism through which technological differences made their impact. The two are very closely related. And not only that, but the damage to African society from the slave trade probably locked-in the technological discrepancy.


- Alex Tabarrok at Marginal Revolution has an interesting post on private space exploration. He reviews private contributions to space exploration in the early years, and notes a few different ways to think about the data. He concludes the obvious - that private space exploration is a very, very good thing. With shock only a person that believes or suspects Obama is a socialist could manage to muster, he also notes that it is "surprising" that President Obama has been pushing American space exploration in this direction too. I have a few issues with how Alex approaches this issue.

He starts out by quoting Matt Ridley, who says "Can you doubt that if NASA had not existed some rich man would by now have spent his fortune on a man-on-the-moon programme for the prestige alone?". This seems to me to miss the entire point about the nature of the public-private split in space exploration. First, there was nothing preventing private individuals from going for it on their own, which (since we haven't seen a man privately put on the moon) would suggest that there are substantial entry barriers. Second, private and public efforts at this sort of thing aren't really conflicting. Presumably the aerospace industry would benefit from scale economies, and there are almost certainly going to be knowledge spillovers; public and private space exploration are complements in this sense, rather than substitutes. So this whole implicit premise that "if only X" we could have had an even better private space exploration history seems (1.) wrong because there was nothing substantial preventing such private endeavors, and (2.) wrong philosophically because it inappropriately juxtaposes the public and the private as something we have to choose between.

OK, so I don't think this is an either/or situation - but what are the benefits of public exploration? The answer to that question is implicit in the record on private exploration that Alex shares. A lot of these exploratory initiatives where not motivated by profits at all. Of course we also have ample examples of advances in space exploration that are attributable to the profit motive, usually attributable to communications technology (in the future probably attributable to mining, etc.), but the point is exploration itself isn't necessarily going to be a profit-making endeavor. As a result, we shouldn't logically expect the price mechanism and the market to be able to zero in on an optimal level of space exploration. This is a mistake that you see in a lot of areas where externalities are important, like road building. Opponents of publicly provided infrastructure will point to examples of privately built roads as if that proves advocates of public infrastructure wrong. The externalities argument is never (or should never be) that there will be no private provision, because to say that important costs and benefits are externalized isn't to say that no costs and benefits are internalized. Obviously some are and there will be some private activity. But pointing out that banality does nothing to demonstrate that an optimal amount of private effort is being invested. That's my reaction here, too. It's fantastic and not surprising that there are privately funded observatories, satellites, etc. - it doesn't mean it's sufficient. Knowing how much of a good with fully internalized costs and benefits is "sufficient" is easy - the market will tell you. When the costs and benefits aren't internalized it's harder to say. John Stuart Mill, writing on colonies, made fundamentally this same externalities argument for public exploration and colonization:

"If it is desirable, as no one will deny it to be, that the planting of colonies should be conducted, not with an exclusive view to the private interests of the first founders, but with a deliberate regard to the permanent welfare of the nations afterwards to arise from these small beginnings; such regard can only be secured by placing the enterprise, from its commencement, under regulations constructed with the foresight and enlarged views of philosophical legislators; and the government alone has power either to frame such regulations, or to enforce their observance."

The point is, private exploration is important and good for the same reasons the market is always good, but it's not sufficient. We know most private activity has been charitable, indicating there is little profit in space exploration. This is likely due to the externalities involved, which opens the door to public space exploration. Public space exploration should be flexible, though. It should draw on the private sector's ingenuity, it should leverage private interest with a prize-fund, and it should give the private sector considerable say in the goals and destinations. And while some externalities are unavoidable (i.e. - the externalized benefits to future generations), we should shore up the ones that are avoidable by establishing clear property rights in space.

28 comments:

  1. One of the main differences between some parts of Europe and much of sub-Saharan Africa was the inability in the latter to own land in something resembling fee simple. What happened instead was capital was invested in people as slaves.

    Some useful works on this subject are:

    Thornton, "Africa and Africans In The Making of the Atlantic World, 1400-1680"

    &

    Curtin, "Africa Remembered: Narratives by West Africans from the Era of the Slave Trade"

    "Presumably, the reason why the Atlantic slave trade took off, and the phenomenon of "white slavery" fizzled had a lot to do with the very technological differences this research has identified as important."

    One thing that is not often appreciated was that the Atlantic slave trade merely tapped into an existing slave trade - both internally in Africa and to the Arab/Muslim world.

    The "end"* of "white slavery" as well as serfdom in France and Britain (in much of Western Europe - such as the Netherlands and Spain - serfdom was not common, and slavery, as in the case of the Netherlands, was just unheard) had much to do with the Black Death.

    "And not only that, but the damage to African society from the slave trade probably locked-in the technological discrepancy."

    Well, slavery was used as a means to bargain for technology by African monarchs - so the issue is a little more complicated than this. African kingdoms were the masters of their own fate in these regards - the Europeans were the party at a disadvantage if either were.


    *There were holdovers - most of them in the mining industry - that still existed in the 18th and 19th centuries, much to the joy of those in Britain and France who defended slavery.

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  2. I agree with almost all of what you've written. I don't think too many people ignore the fact that the slave trade was vibrant within Africa these days. The implications of that, nevertheless, are still important to highlight.

    This, however, is a little too strong I think:

    "the Europeans were the party at a disadvantage if either were"

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  3. And by "a little too strong" I should have said "far too strong and patently absurd".

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  4. I guess my question is, how do you know what the "optimal level" of space exploration, etc. is?

    As for roads, there is no reason to think that absent the government that an optimal level of road building won't happen. Of course right now, because road building in the U.S. has become such an ideologically charged issue (e.g., cars are evil to the Obama administration, etc.), we clearly aren't reaching such an optimal level - instead we're wasting a lot of money on white elephant transit projects.

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  5. dkuehn,

    Well, I'm the person here who has read the literature on the subject, not you. African kingdoms were the suppliers of the slaves and they drove hard bargains. Europeans died in droves on the coasts waiting for the slaves to show up at the "factories."

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  6. "I guess my question is, how do you know what the "optimal level" of space exploration, etc. is?"

    How do any of us?

    We don't - but pretending this something where we can expect the market to give us the right answer is no solution. I could pose the same question to people who talk like that.

    The thing to ask is, what direction can we expect it to be biased in? Are we putting too much into space exploration or too little? We can get at that by thinking of the nature of the externality that we're dealing with. Are the costs or the benefits the primary thing that is externalized? Well, we'd have to pay the costs of exploration now, and presumably the benefits would accrue to future generations. The costs to future generations would be the opportunity cost of what we're giving up that would have happened if we had invested those resources from going into space in other endeavors on Earth.

    If we put the opportunity costs aside for the moment, then the answer is clearly that we're investing too little - because it's the benefits that are externalized.

    But let's consider the opportunity costs - if you think, like me, that uncertainty and fear force us to invest considerably less across the board than we should anyway, then this sort of crowding out is less of a concern for me and the opportunity costs strike me as negligible relative to the benefits.

    That's just how I would assess it. But like I said - who knows for sure?

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  7. Xenophon -
    You have no concept of what I've read on slavery. You're probably right on that, but you really don't know, and you should know by now that I don't put much stock in arguments from authority.

    But even that argument from authority seems to be morphing over the course of the conversation. At first, you said that African kingdoms had the upper hand over European colonizers. Now you seem to be focusing on the kingdoms minus those being sold into slavery. That's a different statement entirely. Yes, if I didn't count the slaves perhaps the Europeans suffered a little more than the African beneficiaries did. But that's not what you said initially, and honestly I don't really care about that comparison.

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  8. "As for roads, there is no reason to think that absent the government that an optimal level of road building won't happen."

    Ummmm... could you put a little meat on that?

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  9. From Thornton's work:

    "It was in this regard that Pacheco Pereira, in his survey of Portugese trade at the start of the sixteenth century, often complained that because the trade was not 'well managed,' the terms of trade in sale of horses for slaves were slipping in favor of the Africans. ... As Pacheco Pereira and no doubt the Portugese crown as well saw it, creating a monopoly on th supply of European goods in the hands of the crown or its designates would ensure a higher revenue position and increase the Crown's income. But, in fact, the Portugese Crown and all other agents who attempted it failed. With that failure also came the failure to exploit the Africa commercial community." pg. 57

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  10. Daniel,

    "You have no concept of what I've read on slavery."

    I have good idea given past experience.

    "At first, you said that African kingdoms had the upper hand over European colonizers."

    I guess I am just assuming a level of knowledge you don't have. In the context of Atlantic studies it is clear what I am getting at.

    "Now you seem to be focusing on the kingdoms minus those being sold into slavery."

    Of course I am. I mean, duh.

    Re-read what I wrote:

    "Well, slavery was used as a means to bargain for technology by African monarchs - so the issue is a little more complicated than this. African kingdoms were the masters of their own fate in these regards - the Europeans were the party at a disadvantage if either were."

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  11. On Thorton - that seems to be a positively mercantilist argument that Europeans were at a disadvantage. Just because the terms of trade change doesn't mean anyone is at a disadvantage. You risk overturning the whole idea of market efficiency if you push this one too far, Xenophon.

    I guess I am just assuming a level of knowledge you don't have. In the context of Atlantic studies it is clear what I am getting at.

    Excuse me, but I'm not going to let you hide behind "the context of Atlantic studies" when you phrase something inaccurately. It would have been clear if you made your point clearly.

    I'm newly suspecting you're mommsen1625 from Cafe Hayek, who I know has done a lot of work with Caribbean studies, Atlantic history, and the slave trade. I could be wrong - but you've got the same attitude and approach to commenting that mommsen1625 did.

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  12. "Yes, if I didn't count the slaves perhaps the Europeans suffered a little more than the African beneficiaries did."

    I think you have to in your head neutralize the fact that slavery is an awful institution and think about the relationship between Europeans and Africans as more than simply the relationship that existed between Europeans and enslaved Africans. It is hard for a lot of people to do that sort of thing understandably ... but it does help one understand just how voluntary (except for the enslaved) and on par that relationship was. That relationship changes in the 19th century, but up to that point Europeans did not dominate Africa.

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  13. I did make my point clearly and I continue to make my point clearly.

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  14. "I think you have to in your head neutralize the fact that slavery is an awful institution and think about the relationship between Europeans and Africans as more than simply the relationship that existed between Europeans and enslaved Africans."

    An odd thing to be lectured on by someone that can't even talk about Weimar economic policy without crying fascist. Nevertheless, I think I'm doing this just fine - I've offered no sob stories here. You're the one that used vague language at first - don't push that off on me. I wasn't just focusing on Africans, I was comparing African society as a whole (slave and non-slave) to European society as a whole, and having a tough time figuring out where Europeans are the disadvantaged ones.

    I'm still having a tough time seeing how Europeans could be disadvantaged relative to African monarchs (your explanation so far is just mercantilist balance of trade logic) - but that is obviously considerably more plausible

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  15. Well look - if you're not, in fact, talking about African kingdoms and instead talking about a subset of an African kingdom, then we clearly agree with each other or at least find each other's perspective plausible.

    Which to me suggests there's not a lot more to bicker about.

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  16. Actually, I am talking about African kingdoms ... which of course preyed on other kingdoms and political entities in order to get access to slaves. Some African kingdoms benefited, and others not as a result of this dynamic. But it wasn't Europeans who were driving such - they were merely dipping into already existing markets in slaves that had existed for thousands of years (a trade that classical Romans and Greeks had been involved in).

    I still don't understand what you find so problematic about what I've written.

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  17. "But it wasn't Europeans who were driving such - they were merely dipping into already existing markets in slaves that had existed for thousands of years"

    Yes, we all remember this from middle school history, Xenophon.

    I really think we're on the same page at this point.

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  18. "Ummmm... could you put a little meat on that?"

    There are lots and lots of papers, etc. written on how an entirely private system of road networks would work. There was also a pretty cool lecture on such at FEE a few years ago (I think you can listen to it via podcast).

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  19. OK, but once again - I'm not arguing that a private road system couldn't work, and the externalities argument doesn't say it won't work.

    It says it will work but there will be a sub-optimal level of investment.

    I'm not sure what's so unclear about this.

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  20. I don't know what page you are on. I remain on the same page I was on to begin with.

    I also doubt your middle school claim ... the slave trade is something that is rarely taught in the U.S. until upper division courses at university - except in the most cursory manner about the horrors of the middle passage.

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  21. dkuehn,

    Well, if it is 'sub-optimal,' then it really isn't 'working,' is it?

    The counter-argument would be that it would be optimal and that it would superior to the current system.

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  22. I took "working" to mean "functioning" or "operating" smoothly. No serious person who cites an externality argument for any kind of infrastructure questions that private initiatives can "work" in this sense.

    If you truly have an argument that privately provided roads would provide the optimal level of infrastructure investment, I would be very, very interested in reading or listening to that.

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  23. FEE: Walter Block on "Privatizing Roads & Oceans"

    See also Block's _The Privatization of Roads and Highways_

    The Voluntary City: Choice, Community, and Civil Society (paper which expands a bit on the first chapter of the book of the same name): http://www-bcf.usc.edu/~pgordon/pdf/voluntary_city.pdf

    Beito on the private supply of infrastructure in the 19th century: http://www.as.ua.edu/history/html/faculty/beitofromprivies.pdf

    Like I wrote, there's a lot of literature on the subject.

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  24. Oh I know there is a lot of literature on the subject of private infrastructure.

    I would be very surprised if any of these make a plausible optimality case. I'll review them for it, though.

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  25. The FEE link: http://fee.org/media/video/privatizing-roads/

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  26. I assumed you'd be familiar with these works already.

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  27. Well I'm definitely familiar with Walter Block, Alex Tabarrok, David Beito, and FEE.

    I haven't read this literature in detail yet. My interest is in externalities more generally, and so far that interest hasn't been pursued formally in an academic or professional environment which means, no, I haven't had the opportunity to read on infrastructure, specifically, in any great detail.

    Could you summarize their optimality case? I really wonder whether this is them saying "private infrastructure works" or "private infrastructure works optimally". There's a big difference - I have zero doubt in the idea that private infrastructure works.

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  28. I have entered the heart of my day for the next five to six hours so I can't really do that except to say that Block is definitely making a claim about optimality.

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