Bryan Caplan  

Human Capitalism: Comments on Brink Lindsey's Draft

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China's Economic Growth... Brink Lindsey, in case you mis...
Brink Lindsey sent me a draft of his just-released Human Capitalism (now available for purchase) back in February.  Here's what I told him then, reprinted with his permission.  From what I understand, Brink took some of my suggestions to heart, so these criticisms may not apply to the final version.

Then again, they may. :-)



Hey Brink, finished your book.  Overall, you've got lots of good material, but the ending needs to be stronger.  Detailed comments:

1. (chap 2) On premodern mortality: Robin Hanson keeps telling me that pre-farming violence was actually low.  I'm skeptical, but if I were writing a book I'd want to follow through on this claim.

2. (chap 3) Is it really only recently that human capital became 70% of all capital?  I've often heard that 70% of income has been going to labor for a long time.  Not true?

3. (chap 3) Heckman's claims on the GED have been challenged.  This paper is very careful: http://www.jstor.org/stable/10.2307/2586999

4. (chap 4) "People raised in the upper-middle class are far more likely to stay there than move down..."  Unless you're using non-standard definitions, this can't be right.  If the upper middle class is above the mean, then mean-regression guarantees that its members tend to move down.

5. (chap 5) You're misstating Charles Murray.  Murray is careful not to base his argue on the genetic origins of IQ differences; his point is that *whatever their cause* IQ differences are very hard to change.

6. (chap 5) One of the biggest flaws in your story: you're not addressing the broader literature on the heritability of income.  Yes, as Bowles and Gintis show, the heritability of IQ can only account for a small fraction of the inter-generational income correlation.  But there are *many* hereditary traits that could affect income; IQ is just the tip of the iceberg.  And twin and adoption evidence on the heritability of income shows that - whatever these traits might be - heredity accounts for virtually ALL of the inter-generational income correlation.  See the section on "Success" in my kids book - especially all the citations, which were very complete c.2010.  (You should also discuss twin evidence, not just adoption evidence).

Take self-discipline.  You're right to mention it.  It's important.  But it's also hereditary!  Indeed, heredity accounts for roughly 100% of the (modest) family resemblance we see.  This is straight out of mainstream personality psych textbooks and lit reviews; see the section on "Character" in my kids book.  The heritability of self-discipline doesn't mean self-discipline can't be changed; there's also a big role for non-shared family environment (the residual).  But heritability estimates for self-discipline do mean that existing differences in upbringing have little effect on adult self-discipline.

3. (chap 5) You correctly note that studies of kids' IQ find higher effects of upbringing than studies of adult IQ.  This is true for almost every trait: The short-run effect of parenting is larger than the long-run effect.  But then you cite the French adoption studies, which as far as I know are ALL studies of kids.  How do these in any way undermine the standard behavioral genetic view: Upbringing matters in the short-run for IQ, but not in the long-run?

The studies about how many words kids hear are at best another example of the *short-run* effect of parenting on IQ.

4. (chap 5) Who are the "genetic determinists" you're attacking?  Every serious behavioral geneticist will happily tell you that since identical twin correlations are less than 1, genetic determinism is demonstrably false.  What you're really arguing against is what I call "parental irrelevantism," which does indeed have many well-published proponents:

http://econlog.econlib.org/archives/2011/06/genetic_determi.html

5. (chap 6) If the relative supply of college graduates is rising by 2%, how can you call that "stagnation" of human capital development?  This is analogous to Tyler's claims about "stagnating" growth that you rightly criticized.

6. (chap 6) Even if the French adoption studies you cite reveal a large effect of working- versus middle-class parenting, adoption evidence still strongly undermines the view that parenting style matters much *within* the middle-class range.  But you seem to believe that elite parents' "relentless" approach is having big long-run effects.  Why? Readers need to hear that helicopter parenting is *not* the source of success.

7. (chap 6) There may be "no prospect for a return to the more authoritarian morality of yesteryear."  But what about a marginal move in that direction?  And if the breakdown is indeed caused by the absence of material scarcity, wouldn't drastic cuts in the welfare state - drastic enough to restore labor force drop-outs and unskilled single moms to material scarcity - revive the morality of yesteryear?  Why doesn't this lead to the very unliberaltarian view that the welfare state is the problem?

8. (chap 7) Talk about "reshaping the environment in which most Americans are born and raised" may sound creepy and totalitarian even to the typical statist.

9. (chap 7) You should talk a lot more about vocational education.  If the problem is our dysfunctional working class, why not focus on countries where the working class is employed and disciplined - and how these countries make it happen?

10. (chap 7) The section on early childhood intervention is weak.  You know the evidence is very mixed.  So why do you embrace this approach anyway?  Because it sounds good?

11. (chap 7) Your case against tuition subsidies really comes out of nowhere.  Almost everyone will think that it contradicts your previous embrace of Goldin-Katz, etc.  At minimum, you should delve into the literature on the varying benefits of college by major, quality, student ability, etc. to cement your case.  Of course, if you want to appeal to the signaling model, great!

12. (chap 7) If "progress will inevitably be halting and partial," shouldn't you try harder to lower readers' expectations earlier in the book?  Maybe even consider the possibility that we should just learn to live with rising inequality?

One last comment that probably won't be very helpful, but I want to get it off my chest: When I see the hard work and positive attitude of the typical immigrant, I find it very hard to sympathize with the problems of the American working class.  The so-called American poor are born with so many advantages, but they squander them through their own bad attitude and irresponsible behavior.  Yes, in a welfare state the problems of my country's working class are my problem.  But that makes me want to *attack* the welfare state, not expand it to help undeserving Americans even more.  The people we should be worrying about are immigrants and would-be immigrants who can't even legally accept a job offer, not Americans who can't bother showing up to work on time.

Keep in touch, Brink.



COMMENTS (19 to date)
Daniel writes:

"If the upper middle class is above the mean, then mean-regression guarantees that its members tend to move down."

"Its members tend to move down" is consistent with "its members tend to stay in the upper middle class." Intuitively, that's pretty plausible. Perhaps, if your parents were in the 80th percentile of income (is that upper middle class?) the probability distribution for your income percentile will peak somewhere in the 70s; you'll probably be poorer than them, and you'll probably still be a good deal richer than average.

Obviously I haven't read the book so maybe context rules out this interpretation, but given that it's true and plausible, I'd gravitate towards it rather than the less charitable interpretation on which his claims are inconsistent with regression to the mean for income.

liberty writes:

Bryan,

I'm having problems squaring some of your thoughts.

You say: "And twin and adoption evidence on the heritability of income shows that - whatever these traits might be - heredity accounts for virtually ALL of the inter-generational income correlation."

But then at the end you say that the poor have only themselves to blame for not becoming rich like the immigrants.

If what I quote above is the case, wouldn't it make more sense to assume that the immigrants have the right genes to help them earn good incomes upon arrival (or after years of using their good genes to work and earn high incomes) while the poor in America do not?

liberty writes:

(Note that I am not assuming that people from other countries have better gene pools, but rather that those who migrate to America to get rich are self-selected from the gene pools of the other countries, with the genes for determination, physical and/or metal strength, and whatever other traits might help, whereas the poor in America lack those. Again, just working from your own thesis, not mine).

Dent writes:
But that makes me want to *attack* the welfare state, not expand it to help undeserving Americans even more.

I may be wrong about this. So correct my if I am. But: Isn't George Mason University largely tax-funded? Doesn't this mean that Bryan Caplan's own income is largely tax-funded?

If he writes books that people voluntarily buy, that's one thing. But did the American taxpayers ever contract or consent to paying for Caplan's work as a professor? By what standards does he decide that he himself is *not* an "undeserving American"? Because he is an academic, and academics have high status? That would be simple classism.

Maybe Caplan's work is worth all the money coercively allocated to him. Maybe it's not. Who decides this, and by what right?

This is not meant to be a personal attack, and I could be wrong. But I find it hard to see how tax-funded professors are *not* effectively on welfare.

Finch writes:

Adding to Daniel's point, I think Bryan's criticism assumes a constant population composition. If more people were coming in at the bottom through births or immigration, we could have regression to the mean _and_ the expectation that people at the 80th percentile will have children who live at the 80th percentile because the distribution is shifting down.

I haven't read the book either, so maybe it's obvious this isn't what's meant.

A.West writes:

Yes!!!!
My wife from China didn't have books or much food until she was 7 or 8. She struggled with every ounce of effort to make something of herself, excelling in school, then work, and then to become a US citizen. She has no sympathy at all for people who play video games, watch tv until adulthood, and then ask her to pay for their pre-ordained "middle class American lifestyle". She knows many immigrants with the same attitude as herself, from executives to taxi drivers.

"One last comment that probably won't be very helpful, but I want to get it off my chest: When I see the hard work and positive attitude of the typical immigrant, I find it very hard to sympathize with the problems of the American working class. The so-called American poor are born with so many advantages, but they squander them through their own bad attitude and irresponsible behavior."

Finch writes:

> But I find it hard to see how tax-funded
> professors are *not* effectively on welfare.

I think the mortgage interest deduction is distortionary. But I still use it when I file my taxes, even though I'd vote for its removal if it could be removed for everybody.

Similarly, I think Bryan would sincerely prefer a better world, but he lives in this one and has to make choices based on that. If Bryan didn't take his job, the next grad student in line would, so his personal choice doesn't reduce the amount of welfare paid from coerced funds, it just affects who gets the spoils.

If Bryan was an administrator, or was involved in asking for more funds then it might get more ethically murky, I suppose.

Ken writes:

Dent,

Isn't George Mason University largely tax-funded? Doesn't this mean that Bryan Caplan's own income is largely tax-funded?

It is only partially publicly funded, with the majority of funding coming from the private sector. But, hey, why do any research, when you can just make blanket assertions, right?

Also, what does this have to do with the welfare state?

The rest of your really bad comment (like "By what standards does he decide that he himself is *not* an 'undeserving American'?" as if there is some comparison between someone who fails to show up to work and get paid, like a welfare recipient, and Bryan, a man who works very hard to get and keep his job) rests on bad assumptions, rather than, you know, actual facts.

Would you like to see just how bad your comment is by basing it on assumed facts: I assume that since your attacking Bryan for attacking the welfare state, you are a welfare recipient. Then as a welfare recipient, you are part of the the section of US citizens that has the MOST leisure time. Being a part of the welfare class, you expect others to support your lazy lifestyle, instead of getting an actual job.

Does the above describe you, at all? I'm guessing not and even if it was, I would simply be assuming facts to reach a preferred conclusion, rather than reaching a conclusion based on verified facts. But knowing this you make bad assumptions just to make sure you reached your preferred conclusions and dishonestly attacked Bryan.

But I find it hard to see how tax-funded professors are *not* effectively on welfare.

Really? By your very logic, you would have to conclude that policeman and fire fighters are effectively on welfare, right? I mean they get a paycheck from the government, so they *are* effectively on welfare.

It is clear you fail to understand the difference between the government paying its workers and welfare recipients.

Dent writes:

Ken,

I assume that since your attacking Bryan for attacking the welfare state

I recommend you learn to read before you write.

Dent writes:

Finch,

If Bryan didn't take his job, the next grad student in line would, so his personal choice doesn't reduce the amount of welfare paid from coerced funds, it just affects who gets the spoils.

On the one hand, this logic is (relatively) sound (minus some probabilistic effects depending on the number of qualified applicants). On the other hand, it is hard to not see it as hypocritical, since the practical choice effectively condones the system in a publicly visible manner.

If we actually thought the nature of the position is wrong, we would not condone the behavior. For instance, if we thought being a police officer in a totalitarian state was wrong, we would not accept the same argument from such an officer. By fulfilling the role, and accepting the money, he creates public acceptance for the system that gave him this role, as well as consenting to the authority that gave it to him.

Ken writes:

Dent,

Do you have a substantive reply to my post?

You start you first comment with a verifiably false assumption of fact, then proceed as if it were true. Then you make the bizarre claim that Bryan is a welfare recipient because of your false assumption of fact.

Further, can you defend your claim that you "find it hard to see" that "tax-funded [workers] are *not* effectively on welfare"? Can you defend the claim the police and firefighters are effectively welfare recipients?

Do you understand what welfare is and the difference between public employees and welfare recipients?

Your recommendation that I learn to read would be valid if what you wrote cannot be reasonably interpreted to mean that you don't know the difference. By your own words, you "find [that difference] hard to see". In other words, your pleas that I learn to read is mere evidence that you learn to write well.

Dent writes:

Ken,

according to my information, GMU is a public university. Even if it is only partially tax-funded, it is still tax-funded. This is correct, no?

Again: Who decides what tax-funded workers are worth their money, and by what standard? Certainly not the consent of the individual taxpayers.

Policemen and firefighters do practical work that is somewhat measurable. But I have indeed seen police officials who received money for not doing their job properly. I would indeed call them welfare queens, except with higher status than ordinary welfare queens. I have seen the same phenomenon in university professors whose major contribution to society was ideological programming of students and unwarranted self-importance. What's the measurement device for who deserves their income and who doesn't? Clearly not the consent of those who pay.

However, I didn't fundamentally object to tax-funded workers. The police have a social function. Firefighters have a social function. University professors have a social function. But of course, so does the welfare state.

The basic point is that you can't consistently criticize coercive redistribution and then derive a significant proportion of your own income from it.

Finch writes:

> The basic point is that you can't consistently
> criticize coercive redistribution and then
> derive a significant proportion of your own
> income from it.

Then nobody can criticize coercive redistribution.

For a clear example, I have been kept alive, in peace, and earning money in no small part due to the existence of a substantial and expensive American nuclear arsenal that was paid for entirely with coerced funds. Do I lose the right to object because I benefit from this arrangement? I might not be getting welfare checks, but I'm seeing some of the spoils of the system.

Let's not lose sight of reality in pursuit of ideological purity.

Mr. Econotarian writes:

Hunter-gatherer violence was (and still is) high:

"In ancient graves excavated previously, Bowles found that up to 46 per cent of the skeletons from 15 different locations around the world showed signs of a violent death. More recently, war inflicted 30 per cent of deaths among the Ache, a hunter-gatherer population from Eastern Paraguay, 17 per cent among the Hiwi, who live in Venezuela and Colombia, while just 4 per cent among the Anbara in northern Australia.

On average, warfare caused 14 per cent of the total deaths in ancient and more recent hunter-gatherers populations."

http://www.newscientist.com/article/dn17255-ancient-warfare-fighting-for-the-greater-good.html

Daublin writes:

Arnold's "income escalator" explains how the bottom 4 quintiles of income can and do stay in the same quintile or move up. Basically, the basis of people being measured changes. America has a lot of immigrants, and they start at the bottom.

Paul writes:

I think that liberty made a good observation, so I will try and take it a step further. I do wonder about the combination of libertarian political views and the belief that heredity drives life outcomes.

Does this make Caplan a Social Darwinist? This is not to disparage Caplan's views. If heredity has such a strong influence over our lives, only drastic changes could make a difference in the behavior of large groups of people. Caplan illustrates the consequences of this view when he suggests that abolishing welfare in order to usher in a "return to material scarcity" could change the behavior of the poor. The other extreme suggested by this view would be massive interventions by the government.

Ken writes:

Dent,

according to my information, GMU is a public university.

And you assume that the rate at which academic departments at GMU are publicly funded is uniform? Do you really think that different departments do NOT attract different rates of private funding?

Even if it is only partially tax-funded, it is still tax-funded. This is correct, no?

No. This is an incredible distortion of what is meant by "publicly funded". To claim your statement to be true, then you would have to classify Microsoft as a publicly funded enterprise, since it has government funded contracts. You would be laughed at to suggest such a thing.

But of course, so does the welfare state [have a social function].

This depends on what you mean by "social function". By definition anything that involves two or more people has a "social function". If you mean, in this context, a net positive effect on the economy, this is false. The welfare state is certainly does not have a positive net economic effect. In fact, it's a negative effect. Redistribution is zero sum, if there are no transaction costs. Since it costs money to redistribute the money, it's negative sum. Additionally, the the redistribution of income has negative effects on the economy through distorted incentives.

And those most adversely affected by any negative affect on the economy are the less affluent. There are no poor people in the US, merely less affluent people; to be in the global 1% a household needs only an annual income of $34K. And the consumption level of America's "poor" is envied by most of mankind. It's obscene to say any American lives in poverty.

The basic point is that you can't consistently criticize coercive redistribution and then derive a significant proportion of your own income from it.

False. It is certainly not inconsistent to call you stupid for handing over your money to me, but accepting even as you do it. But even more than that Bryan is, you know, paid to discover the best economic incentives. Now you're claiming that since he is paid to do this by the government, he should lie and say that the government is a wonderful thing. Do you really think that all government employees, or any employee, should lie and say how wonderful their employer ALWAYS is, when his job is to find mistakes being made and suggest alternatives that he believes are better than the mistakes currently being made? Your argument is that science can only be correct if it's politically correct?

What you are saying is that any medical scientist in the employ of tobacco companies, to be consistent, MUST conclude that smoking cigarettes definitely will not cause cancer. Otherwise, what kind of scientist would that person be, right? In your view, inconsistent.

RAH writes:

The fact is that every university lives off government student loans and grants. Therefore, they're all publicly funded. Without direct funding and government student grants/loans, 99% of economics professors would probably be out of work.

A commentator writes:

For a clear example, I have been kept alive, in peace, and earning money in no small part due to the existence of a substantial and expensive American nuclear arsenal that was paid for entirely with coerced funds. Do I lose the right to object because I benefit from this arrangement? I might not be getting welfare checks, but I'm seeing some of the spoils of the system.
Well, there are degrees of how privately or publicly funded an institution is. I wouldn't say a hardware store owner derives his income from the government because people drive on roads to get to his store. Everything is on a spectrum. But anyone working in academia is pretty close to the "government funded" end of things.
Dent writes:

It is certainly not inconsistent to call you stupid for handing over your money to me, but accepting even as you do it.

This is an incorrect analogy. A better one would be if you knowingly accepted money from a thief who just stole it from me, while claiming that theft is immoral.

There are no poor people in the US, merely less affluent people; to be in the global 1% a household needs only an annual income of $34K. And the consumption level of America's "poor" is envied by most of mankind.

This is one way to look at it. But it depends on the definition of poverty. Maybe most of the world is just at a lower level of material consumption than humans should have available to them. And of course, the rest of the world would envy the consumption levels of Bryan Caplan, Robin Hanson etc. even more, who spend significant fractions of their time moralizing against redistribution and arguing that inequality is merited. I would respect this from someone who has become wealthy by creating a start-up and providing voluntary services that add value to people's lives. I find it harder to see it justified from people who live - at least to a significant fraction - on the taxpayer's dime.

To claim your statement to be true, then you would have to classify Microsoft as a publicly funded enterprise, since it has government funded contracts.

Of course it depends on the numbers. But if you see it like that, Microsoft is indeed partially publicly funded. Bill Gates certainly can't claim he never profited from coercive redistribution, ever. But then again, he doesn't moralize against it that much.

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