Links to Consider, 1/25
Caplan, Hymowitz and Kling on less-educated men; Lorenzo Warby on power and parliaments; Martin Gurri on information control; Matt Levine on regulatory arbitrage
Bryan Caplan, Kay Hymowitz, and I discuss the problems of less-educated men. We start with Richard Reeves’ book, but we go on to a broader, more provocative discussion, particularly during the Q&A. Someone in the audience mentioned Joyce Benenson’s Warriors and Worriers. I thought that I had already reviewed that book, but I had not. I will have a review out soon.
On Helen Dale’s substack, Lorenzo Warby talks about power and parliaments.
Across the long haul of European Christian civilisation, Parliaments went from consent makes taxing easier to taxing only possible if have consent. Bargaining over taxation via Parliaments evolved into bargaining over imposing accountability on the state apparat. The push for putting political bargains into law (which made them worth doing) evolved into imposing accountability on the ruler and his state apparat.
He talks about the circle of justice from Islamic political theory of centuries ago.
Citizens need the state to provide security. The state needs military power. That requires wealth, which comes from citizens.
In some ways, this reminds me of the “square of power” discussed by Niall Ferguson in The Cash Nexus. Ferguson says that to support the military, a state needs a tax-collection apparatus, the ability to issue debt, and a central bank to undergird the market for government debt. Parliaments or legislatures help to legitimate the imposition of taxes by putting everyone under the rule of law.
Warby points out that a tradition of popular control through representative legislatures helps to constrain rulers.
The level of domestic Marxist murderousness was much less in countries with Parliamentary histories (Poland, Bulgaria, Romania, Yugoslavia, Hungary, Czechoslovakia, East Germany), so histories of political bargains being put into law. Or in countries adjacent to same (Albania).
Marxist murderousness was worse, often much worse, in countries with deep histories of autocracy (Russia, China, Vietnam, Cambodia, Ethiopia, North Korea), so without a serious history of entrenching political bargains in law.
The elites own most of the nation’s institutions, but they have a lock on the institutions of communications and messaging. They can marginalize Republicans and conservatives simply by keeping them out of the shared spaces in the public sphere—by condemning their opinions as a threat to democracy and deriding their facts as wild conspiracy theories or “misinformation.” As in the medieval Jewish ghetto, a wall was built around conservative figures and media, making them inaudible to a wider public. Though many Republicans read The New York Times, Democrats caught perusing Fox News are in danger of losing their souls. It doesn’t happen. As matters now stand in this country, the left speaks to everyone, but the right speaks only to itself.
People of either tribe tend to be deliberately blind to the best arguments made by the other side. Instead, the left will cite the worst of Fox News, and say, “See how crazy they are?” And the right will cite the worst of the NYT or WaPo and say “See how biased they are?” But I agree with Gurri in the sense that there are some important stories and reasonable perspectives that circulate among people right of center that otherwise informed people who only consume mainstream media never see. But the mainstream narrative inevitably reaches informed people on the right.
Finance is, in large part, about finding new ways to slice cash flows that will get better regulatory treatment than the old ways to slice cash flows. And financial regulation is, in large part, about noticing the new ways that people are slicing cash flows, and adjusting the regulations so that the new ways get treated the same as the old ways.
This is no small thing. The Financial Crisis of 2008 was at bottom the result of this activity. Mortgage cash flows were sliced to enable banks to hold risky securities without have to hold the capital that would have been required had the cash flows not been sliced. The game was exposed when a lot of the underlying mortgages started to default, and the rest is history.