Bryan Caplan  

AMA Highlights

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Last night's Ask Me Anything was a treat.  Main surprise: I was expecting more weird and personal questions.  A few highlights:

[-]eliaspowers 

Hi Bryan,

There has been a lot of talk online recently on the merits of a Basic Income Guaranty or Negative Income Tax. I have two questions:

  1. Would you endorse something like a BIG?
  2. Why do you think the idea is so appealing to both libertarians and socialists? Should proponents in each group be worried that the idea appeals to their ideological opponents?
[-]BryanCaplan[S]

As a replacement for the status quo, maybe. As an addition, no.

Libertarians like it because they think it will be a replacement. Socialists like it because they think it will be an addition.

And:

[-]jtk3 

Bryan, What do you think about the viability of Bitcoin as money? If Bitcoin, or some crypto-currency, gets widely adopted as money what do you see as the most important economic ramifications?

[-]BryanCaplan[S] 

It's done 10x better than I expected, but I still don't expect it to be more than a niche financial instrument. It's long been noted that people around the world continue using their national currencies even in the face of 20 or 30% inflation because national currencies are more convenient and focal. Also, I expect regulators to crack down if Bitcoin becomes much of a threat.

But hopefully I'm wrong!

And:

[-]PeaceRequiresAnarchy 

You have written:

Economists' consensus estimate is that open borders would roughly double world GDP, enough to virtually eliminate global poverty (Clemens 2011).

This was huge news to me and I completely agree with your assessment:

What I can't understand is indifference to the mind-boggling potential benefits of immigration. The knowledge that we're sitting on an ocean of talent should haunt great minds day and night. They should pace around their offices telling themselves, "There's got to be a way to unlock these wasted trillions of dollars of human potential. There's just got to be a way."

My question is: Are there other libertarian policies that would result in similarly-massive benefits as open borders if implemented? If so, what are they?

[-]BryanCaplan[S] 

After open borders, the biggest policy change would be for Third World countries to fully open their doors to international investment. Work by van Reenen and many others shows that multinational corps in the 3rd World are vastly better-run than local firms. If multinationals could freely compete, they would quickly raise productivity. Back of the envelope calculate is that if all firms on earth were managed at multinational levels, global GDP would go up by 25-50%. Most of the benefit, of course, would be in the Third World.

And:

[-]jackson720 

Thank you for doing this AMA!

Do you believe that philosophy plays an important role in economics? For instance, you have promoted Michael Huemer's The Problem of Political Authority. Do the ethical arguments put forward by Huemer have any bearing on your work in or your views regarding economics?

[-]BryanCaplan[S]

Every economist who gives policy advise is implicitly relying on philosophy. Unfortunately, most economists want to rely on philosophy without really reflecting on it, so they're usually just crude utilitarians (with a heavy bias toward the status quo and democratic fundamentalism).

For my own part, I start with a strong presumption of liberty, but admit that we should override this presumption when the benefits of violating liberty heavily outweigh the costs. (See http://econlog.econlib.org/archives/2010/08/how_far_does_th.html) So economics ends up being a vital servant of political philosophy, but nothing more.

And:

[-]window5 

With the drought in Southern California is it possible the state is over populated? Meaning we have to halt immigration into the south west?

[-]BryanCaplan[S] 

No. Just raise the price of water!


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COMMENTS (22 to date)
Leo writes:

The RSS for this page doesn't include the questions.

[Leo: Email me at webmaster@econlib.org so we can figure out what's going on for you. You may be subscribing to the wrong RSS feed. Tech questions are best addressed via email.--Econlib Ed.]

Joel Aaron Freeman writes:

Q&A about basic income made me smile. You're the man, Bryan.

Mark Brophy writes:

Isn't amazing that Brian must explain that the solution to a water shortage is to raise the price? Why do high schools award diplomas to people who don't understand the basic laws of supply and demand?

Nacim writes:

[Comment removed for rudeness and for policy violations. Email the webmaster@econlib.org to request restoring your comment privileges. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

NZ writes:

As a redditor quoted Bryan:

Economists' consensus estimate is that open borders would roughly double world GDP, enough to virtually eliminate global poverty (Clemens 2011).
But then Bryan says the proper (and yes, I agree, obvious) response to increased population in an area with a water shortage is to raise water prices. Presumably this applies to other resources (like, say, living space) as well.

How would this lead to a doubling of GDP and the elimination of poverty? Has poverty been eliminated in Southern California?

BZ writes:

Although my question didn't make the highlights (the one about public choice), it had been burning a hole in my brain ever since I finished Myth of the Rational Voter some years ago, and I'm thankful he addressed it.

Since he teaches a course on public choice, I'm now hopeful he'll write a post some day elaborating on his position a bit. Still, I'm just glad I can stop emailing random people who mention the book and ask them "Did pages such-and-such seem like a criticism of public choice to you? What do you think he meant?"

Chris H writes:

@NZ

Define what you mean by "poverty." If you're talking about absolute $1.25 a day (or even $2 a day) poverty that has plagued humanity from the beginning of recorded history, then yes Southern California's done that quite handily.

BZ writes:

Oh! The last one on water was spot on. I live in a drought-stricken part of Texas where we endure utterly retarded restrictions on which day you can water your lawn or hand-clean your car. Meanwhile they are building an enormous water park down the street, and most industries bear no additional cost to their profligate use of the stuff. It's frustrating, but in my own local crusade, at least I can say flatly that I've an economist on my side. :)

NZ writes:

@Chris H:

You've sniffed out the key question: Whose definition of poverty are we talking about? I suppose it's relative.

If I make $52,000 per year, I'm making the median household income for Americans. If you cut that in half, it's still more than double the global median ($10,000 according to Gallup).

Do you think it's an appropriate thing for your national leaders to reduce your real income so that foreigners can enjoy a higher standard of living than they get in their home countries?

Andrew writes:

Why isn't halting immigration considered an increase in the price of water?

Finch writes:

Isn't it extremely aggressive to call Clemens 2011 a consensus? I thought it was considered to be a fringe upper bound?

Also, a doubling of world GDP, which occurs roughly every 25 years at 3% growth, won't necessarily have any effect on the world poverty rate which is essentially a distribution and human capital problem. It's not that there isn't enough productivity, it's that there's not enough productivity over there or from those people.

Chris H writes:

@NZ

Yes I do (I'm rather anti-nationalist which of course is a whole other argument), though I also suspect that you and I would disagree on the extent to which that would be expected to happen under open borders.

Dan King writes:

I've written some thoughts about Bryan's theory of signaling in higher education here: http://trotskyschildren.blogspot.com/2014/02/college-signal-vs-substance.html

BC writes:

"If multinationals could freely compete [and] if all firms on earth were managed at multinational levels, global GDP would go up by 25-50%. Most of the benefit, of course, would be in the Third World."

If that's the case, then why isn't there enough potential value-add to pay off whatever public officials are necessary to allow multinationals to freely compete? Or, is such competition blocked not by corrupt officials but by well-meaning, but unenlightened, officials. Do Third World public officials suffer from too much corruption or too much ignorance?

NZ writes:

@Chris H:

Most libertarians are against forced redistribution. That is, if I've earned $52,000 this year and you've only earned $25,000, it is wrong and/or disutilitarian to take some of my earnings and give them to you simply because I have more.

I don't know if you're a libertarian of course, but maybe you at least comprehend the logic in that position.

So, why abandon this stance at the international level?

Steven Kopits writes:

Nice format. You should do this sort of q&a more often.

Doug writes:

@BC

"If that's the case, then why isn't there enough potential value-add to pay off whatever public officials are necessary to allow multinationals to freely compete? "

This is a classic case of the Kidnapper's Dilemma. Let's say Nike could build sweatshops in low-wage Zimbabwe. Nike could earn substantial profit with its lower cost basis, enough to pay the ruling regime handsomely and still make good return.

But there's no way for Nike to guarantee that after they've invested the money in building the factory that it won't just be looted. At 10% return on assets and a 50/50 split with the government, the government can make in one day looting what it would make in 20 years taxing.

Consequently Nike doesn't build factories, and the ruling regime is worse off than had they done so. In short Zimbabwe's regime lacks credibility. And to build it would take a long-time and a lot of impulse control. The immediate reward of looting has to be forsaken for the much longer-term reward of building the taxable capital base.

And the problem is even if the regime tempers its thirst to loot, other factions have an impetus to try to capture control of the state. They can promise their supporters large payouts by campaigning to loot the amassing capital pool. It's much safer to continuously loot and pay off competing threats.

mucgoo writes:

@NZ

Many libertarian agrees with equal opportunity as a completely different thing to equality of outcome. Opportunity certainly isn't equal globally and borders are a huge reason.

Peter Schaeffer writes:

Here is what Vivek Wadhwa said about Caplan, Open Borders, and the inevitable tragic implications.

"My team lost by a landslide. :( On reflection, this is not surprising, given the point we ended up having to defend: that anyone, anywhere, should be allowed to take a job in the U.S. The image that our opponents very skillfully planted in the minds of the audience was of 20 million poor Haitians begging on the streets of New York City.

Brian Caplan, who is a George Mason University professor and who was on my side, strongly believes that we should let anyone go anywhere--that it is a basic human right. I have reservations about importing poverty. I believe in exporting prosperity. I agreed with our opponent Ron Unz, who is publisher of The American Conservative, that we need a much higher minimum wage--to rebuild the middle class, stop shifting the burden to government and welfare, and create market forces that limit immigration to the country's needs."

Peter Schaeffer writes:

Open Borders are such a wonderful idea. Let’s import the entire population of Haiti into the United States where they will make a vast positive contribution. After all, the values and culture of Haitians have been a stunning success story in Haiti. Why shouldn’t those values and culture be a big plus in the United States?

Immigration isn’t fundamentally about economics, its about people. People who bring their flaws, failings, burdens, and weaknesses with them. The Swiss author Max Frisch once wrote

“We imported workers and got people instead”

If Haitians had the social cohesion and human capital to make a positive contribution to the United States, we wouldn’t be discussing this, because Haiti would already be a success story. It isn’t.

That’s really the big story here. Michael Clemens implicitly assumes (but never dares to state) that people in the third world lack the culture/values/human capital to achieve economic development at home. However, they can exploit the superior social structures of developed nations. If these people really can’t develop their own countries, why would anyone assume that they won’t undermine the existing developed nations?

Note that painful experience to date shows that they will. For fun look up the definition of “tournantes”. Check out immigrant PISA scores around the world.

Rather thank looking from trillion dollar bills, how about ten trillion dollar bills? Hundred trillion dollar bills? Raising world per-capita output to the level of the G7 would increase world output by 207 trillion dollars. Makes emigration / immigration look pretty trivial. If that not happening (207 trillion in growth), why not?

CIP writes:

Naturally water pricing is oddly distorted, but it's restating the trivially obvious to point out that increasing water prices would do nothing about the water shortage. It would merely reallocate the existing water.

Bernie writes:

CIP, are you assuming that the supply of water is fixed?

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