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Sunday, 25 March 2018

Even Stevens? No, Says Amy Stevens

I have a degree in economics.

I'm frontloading this not to show off but to make it plain you really ought to consider what I am about to say. I'm not your usual armchair commentator.

There is a lot of bad economics out there that is promoted as not only good economics but orthodox economics. This actually goes as far as the very discipline itself: what economics is, is very misunderstood.

Economics is a very flexible discipline. It's not quite as adaptable as statistics but the economic frame of mind is highly portable. There are a lot of subjects to which economics goes, "Well, obviously we should think about them this way". It's actually quite rare that you have to coerce a topic into a format understandable via economic concepts.

Education, as it happens, isn't just readily understandable through economics, it's one of economics' favourite subjects. Yes, that's right. Education is just as interesting to Economics as trade. In fact, it might be more interesting. The point is, there's a debate to be had. If this surprises you, you don't know anything about economics.

There are several ways economics likes to understand tertiary education or aspects thereof. It's often seen as a form of signalling, a way of indicating that you (the student) are a good type and worthy of purchase (employment). It's probably more commonly understood as human capital investment; tertiary education improves quality. More obscure angles include bubbles, bundling and bellwetherism. In popular discourse what you often find is things like Amy Stevens' "thinkpiece" entitled, "The millennial problem with free tertiary education."

Let's do a largely paragraph by paragraph take on that... been a while since I've done so.
While typically a National voter, like many I decided 2017 was time for a change. Given I'm at the higher end of the tax bracket spectrum, some might ask what I had to gain from the employment of 'Taxinda'.
If you're a typically National voter you must be voting National's way more than 50% of the time, right? Which would imply that Stevens is old enough to have voted since 2011. Alternatively, this is more likely a misleading way of interpreting the text. That's probably more likely. I went the other way though because because being more precise in the use of language is important. Let's take a look at NZ's tax brackets:
Up to $14,000...................................... 10.5%
Over $14,000 and up to $48,000......... 17.5%
Over $48,000 and up to $70,000......... 30%
Remaining income over $70,000........ 33%
So, we assume that Stevens is pushing $70,000 but isn't quite there? And is paying... not very much on that somewhat less than $22,000? Is this an entry level salary? It doesn't seem like it? What stage of life is Amy Stevens at anyway? Remember this as we skip some paragraphs to get to...
However, one policy that concerns me is free tertiary education, and the extra $50 a week students are getting in their pockets for living costs. 
It hurts that those just out of university - with student loan debts of  $50,000 to $70,000 to our names - are left to foot the bill. 
Okay, I don't believe Stevens for a moment, here. Neither should you.

The typical degree in NZ is three years long. I did a conjoint so it took four. In fact, I did a conjoint purely funded by Studylink and with more courses than required. I managed $42,000-ish. That's quite some way off Stevens' lower range. It might even include what I am doing now... which is a fifth year of study. Let's see some aggregate data.
Students were leaving university with an average of between $16,600 and $17,220 of debt, with bachelor students tending to have the largest volume of borrowing, the report found.
That's like half of what I've got. But the same article also includes:
The average loan balance at June 30 was close to $21,000, the report said, while the average time it takes a graduate to repay their loan is now 8.4 years.
Presumably by average they're reporting means, which they shouldn't be. Mean values are highly sensitive to outliers and skewed data... both of which are to be expected with money related variables. If we go to the actual report, the median is more like $15,000. And if you look at page 32 you'll see that on 30 June 2016 only 6.3% of students had loans of more than $50,000. And that number barely changed for 30 June 2017 (page 38).

Amy Stevens... you are talking out of your arse.

Now, it obviously follows that people are getting hysterical the other way. Student Loan Doom is a feature of the USA a lot more than it is here.

I have $40,000 in debt, yes, but it's interest free. And I am in a small minority... 85% of people have loans of less than 40k and 50% less than 15k. We're not loading up people with debts so great as to cause access problems. And given that these are interest free... well, ask a financial adviser if there's a difference between $40,000 with and without interest.

The access problem that we actually have in NZ is regarding living costs. There are eight or something like that universities in NZ. All of them are in fairly major cities and two are in Auckland... across the road from each other. To go to university you need:

  • to move
  • to live within a reasonable distance of a university (in zone, if you will)
  • to live along a major transport artery and tolerate a long commute (me)
  • have a very, very long commute

Three of these options are burdensome. The first and fourth obviously induce pressures which can compromise the programme of study. That's not good from our human capital perspective. You might even argue that so does the third. To be honest, the train is a drag some weeks and some days.

Fees free education when divorced from compulsory education is the definition of middle class welfare. It makes living life according to middle class sensibilities free for the wealth (middle and upper) classes. For everyone else it doesn't materially impact the burdens that they actually suffer. Notice, for instance, which schools are close to university? High Decile and private schools.
My friends and I all felt relatively well off at university. In fact, we now appear less well off as entry-level workers.
With many of my friends working 'cashies' outside their 9-5 (we wish) jobs, I'm not sure there are enough hours in the day for the echo boomers to subsidise students for their study - or rather, their lifestyle.
A lot of people have a big problem with anecdotes. I don't. I know the actual issue with anecdotes is generalisability.

Most of the data that we talk about is just a collection of lots and lots of anecdotes. I have $40,000 of debt... that's an anecdote. If you add my anecdotal experience together with lots of similar ones in a systematic fashion? Now we have a dataset.

It's kind of okay to use anecdotes, then. So long as you're not talking about evidence gathering and let us know some basic details, the anecdotes can be used to shape a discussion.

Stevens isn't talking about evidence gathering. She's mentioning that her friends feel cash stretched. Well, okay, if we knew any details about you or them we'd be able to do something with this. But there's a big difference between someone who finished uni in 2010 and someone who finished in 2017. We need to know this sort of information. Especially when you've already made very, very misleading statement.

As it is, Stevens' friends have nothing to say.
What’s more, the extra students going to university for the 'free ride' will only devalue our education system and flood the New Zealand labour market. It will become more and more difficult to distinguish between a highly skilled worker and a free rider.
That's not what a free rider is.

In economics the free rider problem occurs when you have someone who is able to claim the benefits of a product without the producer's being able to exclude them. If you don't pay any taxes and your country gets invaded, you free ride off your defence forces. If you catch a train which has no fare control measures without paying, you're kind of free riding... even if that's what you're literally doing. Free riders aren't people who consume products that cost $0.

The jargon that Steven is actually after here is "good type" for "highly skilled worker" and "bad type" for "free rider". And the concept she's after is signalling. The introductory problem is known as the market for lemons (i.e. dodgy second hand cars).

The basic argument is that going to university and paying is something that only good types will do. In the extreme version, the fact of attending university does absolutely nothing other than affirm good type-ness. As long as we make a few assumptions about behaviour, the bad types will always prefer to do something other than go to university. As a consequence, anyone who has a university degree has to be a good type.

If you're paying attention you'll notice this isn't quite the same as saying "highly skilled worker". In fact, it usually means someone that will be a decent (not dodgy) employee.

If we start to believe that university education actually improves skills, then we believe that we can make good types into better types. And hence we believe that we can make bad types into better types too... medium or even good types, right?

Because university is only a signal, when you make it free you stop the good types from being able to indicate their superior quality. As a consequence, bad types are able to enter the market and vie for jobs they would previously have been totally shut out of. Worst case scenario, the good types don't even find it worth going to university any more and the whole house of cards (sorry, market) collapses completely. (Woah, you mean self interest can cause market failure? B-but National said... sorry, mate, National positioned itself as the economically aware party but that was just fake news; they're a bad type.*)

In the real world we know this isn't true.

Going to university doesn't indicate good typeness. Sticking with it for three years and passing courses, does. Making university free doesn't change this. And in the right contexts, we might find that good types and bad types are currently both motivated rationally and selfishly to go anyway. Which is to say, it's unclear if this will change anything.

Furthermore, you don't have to do just the three years. There are plenty of options which will leave you at university for a longer period of time. If university is strictly about signalling and costs, you're able to substitute time for money. This can be seen as a way of interpreting marks as well. Employers aren't stupid. They know that putting in the time is associated with good types only and better marks.

I am also not convinced that universities are nothing more than "signal mills". I believe that I know more and have more mental tools now than when I started this blog. I know for a fact that there are ways of looking at the world that I would never have encountered if it weren't for courses I've taken. And, sure, the content is available elsewhere (online etc.) but that doesn't mean that my awareness of these things didn't stem from uni.

In the ideal world, you start off not knowing anything and by the end of the process you haven't noticed that you know more. If you're doing a PhD, you probably didn't struggle much ever. And it's the people with PhDs who shape our understanding of human capital versus signalling theory more than anyone else...

tl;dr -- a university education has an absolute value, and that's never devalued by others having one too
The free education incentive should be focused solely on industries where workers are needed, for example construction and trade. Perhaps then we wouldn't have to resort to immigration measures and could continue growing New Zealand as a small and open economy.
Irony.

Amy Stevens, you're an idiot. And if anyone doesn't want me to call her that, she shouldn't say dumb things. And by extension, if I don't want people to call me an idiot, I shouldn't say dumb things. I don't think I have. Somehow, I think Amy Stevens thought that too, though.**


* Yes, our analysis does suggest that if a bad type is able to win the most votes in an election, it's very unlikely there are any good types.


**Note... there's another concept related to signalling (i.e. another key idea in the analysis of adverse selection) which I don't recall the name of. I have suppressed such cautionary disclaimers both out of confidence and also as a means of making this link make sense.

Sunday, 18 March 2018

Do Americans Understand Monarchy?

Do Americans Understand Monarchy? Probably not, no. I haven't come across one who I can say for sure does, actually.

An observation that I remember from year thirteen history is that in New Zealand there are very few memorials of the colonial past. Sure, there's the occasional historical site like the remains of a pa or a monument, but for the most part these weren't set up. In the USA this is... not the case. In fact, Americans are so keen on historical monuments and the like that a bunch of their lawyers buggered off to Runnymede and installed one for Magna Carta. Yet, recall the lesson of the History Boys:
[T]here is no better way of forgetting something than by commemorating it.
I'm not entirely sure I agree, but if you take this as a limited statement it is really rather defensible.

The US predilection for memorialisation has a major consequence in mysticisation. To the American Magna Carta isn't a contract. It isn't even a treaty. The American sees Magna Carta as the start of liberty, the original root of their vaunted, worshipped and unequestionable Declaration of Independence and Constitution.

Now, there's an alternative explanation for that latter symptom but it's scarcely better. Perhaps it is the supremacy of the US Constitution that makes Americans confuse paper (or, indeed, parchment) with Justice, Truth, Democracy and Freedom. These are just ideas and highly particular articulations of them are embodied in the work of the Founders and Framers. Jesus. It makes my skin crawl just to use these terms like that.

The American generally understands the point of their Revolution, i.e. an uprising. However, what they universally fail to grasp is that it was really more a rebellion. The revolutionary elements appeared after the fact, once victory has been attained. This happens quite often. The Civil War did not begin with the intention of executing Charles I: that was an idea that emerged out of the inevitable "now what?" The motivation of the Thirteen Colonies' War of Independence was, when you cut through the chaff, entitlement... they didn't want to pay taxes. That's it.

When you look at the relationship of those colonies to Britain at the time, you need to consider the way Britain worked. And the truth is that Britain was well on its way to the constitutionality we know today. Indeed, it had been since well before the Civil War... after all, Charles I and Parliament struggled largely over the issue of taxation. During Charles' personal rule he never instituted new ones, just resurrected old ones. There was a reason for this... he couldn't do much more than that. But what do Americans remember? They remember Evil George III and the Divine Right of Kings.

Social Memory isn't history. In fact, it's not even really compatible with history. One of the major implications of social memory is that people approach historical topics with deep seated prior beliefs. Usually these complicate, confuse and contest historical analyses. Which is why you find lay discourse in America about monarchy today which draws on the Divine Right of Kings. That was a philosophy of two monarchs: father and son. And it moved a long way from ministers on earth.

Another common American conception of monarchy is that countries with monarchs have subjects, not citizens. Sure, that has been true. But it's not at all something that is necessary to the idea. And that's why it doesn't exist today. If you ask me, the reason Americans make this mistake again and again is because they confuse paper with reality. Just because it is written down, doesn't make it right or why. We have the power and capacity to re-frame and re-articulate institutions. This is a lesson constitutional monarchy reveals far more clearly than any other form of government.

Defining monarchy is pretty difficult. The child's definition of "parent to sibling" sounds attractive, but hereditary monarchy isn't the only kind. I mean, we could say, "Yeah, they called themselves monarchies, but they weren't really". We definitely can do that. But, at the same time, if you're North Korea do you look like a monarchy? None of the tropes we associate with monarchy are present beyond emperor cultism. Which is certainly as Big Thing to notice, but where are the crowns? Why aren't siblings of the "emperor" afforded "of the blood" status? It seems to me that the only reasonable definition of monarchy is one burdened by self-description and self-use of standard tropes.

It follows pretty immediately that the formative power of the mind is a lesson laid bare by constitutional monarchy. After all, in an absolute monarchy, the formative capacity still exists, but the power is arbitrarily suppressed. And in a republic, there's a a substitution of the "divine right of kings" with the "divine right of the people"... and frequently also a suppression of the power. Which is to say... constitutional monarchies aren't just republics by another name, or fake monarchies as some (including Americans) like to say. Constitutional monarchies are post-modern government structures. They are the cutting edge when it comes to theories of state, government and society. And this impression only gets truer when you realise just how old republicanism is.

The paradox of America is that it happily believes in Evil George whilst hungrily eating up every gossip story it can get its hands on. The British Monarchy, in some sense, is to Americans is more different to the Kennedys or the Bushes than it is to the Kardashian-Jenners. The reason for this is probably that they're not at all exposed to the Big differences. There's nothing stopping Kim Kardashian from taking big political positions in public. There is something stopping Charles or the Queen from doing that. It's very strange to Americans, I think, to imagine an official public life which is completely apolitical. After all, they even elect judges in the US. This stems from their institutional settings, as I have already alluded.

Naturally, Harry and William and co. are gossip mag staples here as well. There really are important parallels between celebrity and royalty in the 21st Century. The difference is that there's a wider appreciation of what William and Harry are (i.e. lizard people*). Even if the only reason this exists is because the organisation of our society is an active question in NZ, it still exists. What Americans (as a whole, because individuals always will) don't seem to get is that monarchy is just a thing. The Queen is as meaningful as The Plumber. The difference is that more people know the Queen. That's it. That's the relationship of citizen and monarch.

As a final thought let's spoil the end of Legend of Korra: Book Four and Thor: Ragnarok.

The relevant character arc of Thor between the three Thor films is from over-eager would-be King to reluctant King. This is superficially similar to Prince Wu's arc in LoK. The difference is that Thor actually takes the throne where Wu denies it... proposing some sort of republican structure instead (LoK also features Republic City, so this is probably to be expected).

In the original Avatar run, Zuko eventually takes up the throne because his uncle says it would be a bad look for brother to fight brother for the throne. Even though Ozai is still deposed, the replacement of the father with the son is thought to be better. Yeah, well, probably not. In real life, it doesn't matter what kind of relationship we're dealing with... throne seizures tend to be destabilising. This gets more and more true depending on the institutional and other extra-personal features of the polity.

The Earth Kingdom, as it is depicted in Avatar and LoK other than Book Four, has poor institutions but symbolic leadership in the Earth King/Queen. Wu's decision is ultimately incredibly selfish... he chooses to replace a brief tyrannical regime with an imposed republican structure whilst removing the stabilising symbolism of the Throne. It stands in a stark contrast to Thor's acceptance of the Throne in a somewhat more troubling time for his people. When you see Monarchy as a thing suddenly removing it is just as radical, dramatic and destabilising a change as pulling the rug out from under you.

Don't get me wrong, Wu is a terrible person to be a king... he's deeply immature, selfish and air-headed. There have been many, many examples of poor monarchs and a lot have shared Wu-traits. But the lesson to be learnt is not that monarchy is all about personal power, but that those monarchies were. The logical lesson of Wu's arc in Book Four was that he should be symbolic... allow himself to be constructed in the way his bodyguard's Grandma did, to allow people like his bodyguard to do the work supported by that symbolism. In other words, he should have recognised that the problem was what his predecessor did, not what his predecessor was. Which, you know, would also have been consistent with the overall theme of LoK re: the nature of the Avatar.

Thor: Ragnarok takes that position. Thor puts aside his personal response to the Throne in order to be what his people need from it. The symbol subsumed the god. It's a vastly less American interpretation... and one wonders if it's related to the vastly less American nature of the production.




*An old joke made funny.

Thursday, 8 March 2018

Why Jennifer Lawrence is a Literal Nazi

Let's say you see a photo of a woman on a bitterly cold day.

At first glance there's not much wrong with it. It's just some random chick in a black dress. Happens all the time. But then you notice that the dudes standing next to her are all wrapped up. Like seriously. They might as well be Cossacks, you know?

Then you start thinking about the contexts of the photo. It's not a bunch of randoms. It's a bunch of famous people.

Now, you're not stupid. You know that "candid" photos of famous people are posed. And this photo actually looks posed. This is a calculated photo. Everything that we see happening in it reflects some sort of purpose.

The conclusion you reach isn't inevitable. It isn't even the most likely one given this framework. But it is reasonable.

You start to type...
Gender expectations force actress to endure bitter cold whilst male co-stars get to be nice and snug.
This was all a real story but that quote isn't. And the reason it isn't, is because people love to allude, imply and suggest. But that's not good enough here. I need something which explicitly articulates its thoughts. And because this is a brief distraction, I'm not going to conduct a more thorough search. So I wrote that. But the story is real.

I've talked before about how context isn't a smoking gun. It can do a lot to make an argument more or less plausible but the challenge as a ThinkerTM is to decide what context... and how to incorporate it.

The truth is pretty obvious... men and women are expected to wear different things. If we want to be crude about things we'd say that Feminine Dress Sense doesn't exist. Clothes are objects of purpose, but how women are "meant" to look disregards all purposes other than "beautification". That's not sensible. Not in the way we say "wear sensible shoes" when we write permission slips for school trips.

Now, we might say that these standards are sexist. They fairly clearly are. Men can't dress stupidly and women can't dress sensibly. That's sexist. But is Jennifer Lawrence's beautiful/risque/black/choose your adjective dress evidence of this social problem? Couldn't she just choose to look that way? It's not as if "fashion" doesn't have, e.g. fur coats.

Of course Jennifer Lawrence can choose to wear a particular dress. She felt like the dress was "gorgeous" and wanted to show it off. She says she "love[s] fashion". It could have been even colder and she'd still wear it. (Although I do wonder how often this dress is worn/will be worn again.) All very personal, right?

Except it's not really.

The truth is that nothing about any of us is entirely endogenous.

I go to university because I want to. But the reasons why I want to are shaped by a great many cultural narratives. And past experiences. And structural settings which allow me to take on an interest free loan.

Similarly, Lawrence is a 27 year old woman raised in a society which (a) praises physical appearance, (b) values her specific appearance, (c) expects women to look good, (d) says wanting to look good is good (and not caring is bad) and (e) says the kind of dress she wore is "gorgeous". These are vital contexts which we shouldn't really ignore.

On the other hand...Lawrence (a) was the most prominent victim of a nude photo hack a couple of years ago, (b) would count as a "plus size" model if she started doing (more of?) that and (c) has a track record of speaking her mind. Again, vital contexts we shouldn't ignore. It's just that this time they suggest agency rather than automation.

The truth is that the argument from context reveals that every decision every single one of us makes is conditioned by "civilisation". We are all, every day, Roger on the beach, throwing rocks. And we are all Bernard, not Helmholtz. But we shouldn't see this as saying we have no agency. Rather we should see it as affirming that all agency is conditional. That yes there are all sorts of reasons why you'd expect Lawrence to wear something like that dress, but that it matters enormously that within those dynamics she's still able to choose. And did. And does.

This is a very, very scary point of view. It's why you'd be a Nazi in 1930s Germany. It's why I'd be a Nazi in 1930s Germany. It's why Lawrence would be a Nazi in 1930s Germany. But it's also a reminder of why this doesn't make us evil... only human. And in that respect it's time we frighten ourselves. A lot.




Disclaimer... I don't think I've ever seen a movie with Jennifer Lawrence in? I have seen her on the Graham Norton Show, though. Also, lol, clickbait. But at least I explained the damn headline.