"Creative Destruction" and New Orleans

One of the favorite phrases of economists is Joseph Schumpeter's "creative destruction":

the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. [Schumpeter sees it as a virtue.]

But non-economic forces do the same job of revolutionizing structures. Following Katrina/Rita there have been a scattering of media reports on people who are settling into new lives in new places and doing better, finding the schools are better, jobs better paid, etc. The NY Times today has an article on the New Orleans school system, pre-Katrina one of the worst in the country, post-Katrina being converted to mostly charter schools. Of course, I think a conservative economist should argue that people should have left New Orleans before the hurricanes if they could find better lives elsewhere. And politicians should have pushed the charter schools if that's the way to better education.

But the reality, often not recognized by economists, is that people get in ruts and don't act rationally, at least in the terms that economists can calculate and count. They like tradition and community, they fear change, they find it simplest to do today what they did yesterday. Hurricanes, like economic change, uproot. The law of averages says that some people end up better off, some end up worse off. Over two centuries farm children have been leaving the country for the city: some made fortunes, some failed miserably. (That's an example of Schumpeter's creative destruction--moving resources from uneconomic uses to higher uses. ) By the nature of media, we tend to hear more about the successes than the failures. We must remember both sides: good and bad came out of the disaster, just as good and bad come out of the migration to the city.

Pornography and the Bureaucrat

Sorry, the title's misleading. My interest in porn has waned over the years.

Today in the Times Nick Chiles attacks black "street lit" in Their Eyes Were Reading Smut -:

"As a black author, I had certainly become familiar with the sexualization and degradation of black fiction. Over the last several years, I had watched the shelves of black bookstores around the country and the tables of street vendors, particularly in New York City, become overrun with novels that seemed to appeal exclusively to our most prurient natures - as if these nasty books were pairing off back in the stockrooms like little paperback rabbits and churning out even more graphic offspring that make Ralph Ellison books cringe into a dusty corner."

(He reminds me a bit of the reaction to "Peyton Place" in the '50's.) If he's correct, publishers have discovered that young black women will buy racy books. Presumably the bodice busters of the Barbara Cartland school are too tame, but books with "street cred" appeal. [Warning: I'm so out of it the phrases in quotes may be totally inappropriate.]

How's this speculation: pornography is often linked with masturbation, the topic that got the great bureaucrat Dr. Jocelyn Elders fired. Masturbation is often correlated with a lack of sexual intercourse. Lack of sexual intercourse is correlated with a lack of partners. Young black women lack partners because racial prejudice tends to limit their choices to young black males, a huge proportion of whom are locked up. (There's also the possibility that women prefer to marry above themselves, see my blog on Tierney's column.) So young black women turn to porn on Saturday nights as a result of our drug laws and culture. (If this extended chain of argument has any validity, porn in India and China should be exploding among the men.)

NSA and FISA--Bureaucracy at Work?

I've followed the discussion of the NSA's efforts with interest, both in the NYTimes and by Orin Kerr at Volokh.com. (Orin's a law professor who has mixed opinions about the legality of what Bush authorized. See his new discussion of James Risen's book (Risen being the reporter who got the story originally) and search the site for a number of interesting posts and comment threads.

Today the Post and Times report this development: Files Say Agency Initiated Growth of Spying Effort - New York Times: "The National Security Agency acted on its own authority, without a formal directive from President Bush, to expand its domestic surveillance operations in the weeks after the Sept. 11 attacks, according to declassified documents released Tuesday." Adm. Hayden briefed Congressional members and Rep. Pelosi challenged him on whether he had Presidential authority to broaden his eavesdropping after 9/11.

Perhaps influenced by Kerr, I tend to be somewhat sympathetic to the NSA (full disclosure--I passed their test in 1964 for employment, but the draft intervened). As I understand it, the Reagan administration in 1981 laid down the rules for what NSA could do in this area and the rules were followed until 9/11. Right after 9/11 NSA expanded their efforts on their own authority and then Bush authorized an expansion (not clear whether he authorized what NSA had already done, or whether it's separate expansions).

But the question that arises is, if the current expansions are legal and constitutional, why didn't the Reagan administration, no shrinking violet itself, authorize the steps in 1981? I have to think that Reagan thought Communism was a deadlier foe than most believe Al Qaeda to be, so it wasn't lack of motive. DCI Casey prided himself on breaking rules, so why play on a narrower field than you have to?

I suspect what happened is in the nature of bureaucracy. As my old calculus teacher would say, it's the "delta", the change. In 1981 we still had vivid memories of the 70's investigations into abuses by the CIA and FBI. Reagan's bureaucrats wrote the executive order grabbing all the authority they thought they could get away with. That became the normal order over the next 20 years. After 9/11, by definition the bureaucracy needed to do something more and different so they did. There's no way the bureaucracy could testify before Congress that they were doing "business as usual". One change (9/11) had to be met by another change.

Of course, another answer could be that in 1981 the bureaucrats thought today's authorities were unconstitutional or illegal under FISA.

Results of Democracy and a Test for Iraq

The Washington Post's Federal page, carries the following excerpt in full:

VERBATIM: "Fred Schwien, the Department of Homeland Security's executive secretary, has sent out a new manual for correspondence standards and procedures, a portion of which follows:

4.3 Statement of Lateness (Note: Not in use until on or about Feb 1, 2006)

If a component response does not meet the five-day deadline for returning correspondence to the ES, a statement of lateness is required. The memorandum should be addressed through the component head to the Secretary or Deputy Secretary as appropriate, and signed at the office director level (normally the first Senior Executive Service level official in the chain of command). Proposed responses will not be accepted without the Statement of Lateness if the deadline has not been met and a valid extension has not been granted. At times, however, there are legitimate reasons for a response being delayed, e.g., a major decision affecting the response is about to be announced or the information simply not available. Workload and component priorities are not valid excuses. As stated previously, for the DHS employee tasked with preparing an item for the Secretary or Deputy Secretary signature, there are few, if any, higher priorities."

The Post seems to mock the content. I've mixed feelings. Based on my experience, most of this correspondence will be letters from Senators and Representatives, usually transmitting a constituent's letter. It is a truth universally acknowledged on the Hill that a person who is in possession of a seat must focus on constituent service to retain it. Thus the Hill believes that responding to their correspondence is the most important duty of every bureaucrat in the executive branch. And every executive assistant in every agency struggles to implement procedures that will ensure prompt answers.

We will know Iraq has become a representative democracy when such rules start popping up in their executive departments.

Mating Preferences

John Tierney in today's New York Times has an oped on mating preferences, citing some research in this century. He leads off:

"When there are three women for every two men graduating from college, whom will the third woman marry?

This is not an academic question. Women, who were a minority on campuses a quarter-century ago, today make up 57 percent of undergraduates, and the gender gap is projected to reach a 60-40 ratio within a few years. So more women, especially black and Hispanic women, will be in a position to get better-paying, more prestigious jobs than their husbands, which makes for a tricky variation of 'Pride and Prejudice.'"

We know, I think, that to a disproportionate degree intelligent women end up single. Tierney's discussion focuses not on intelligence but wealth/education/status, which isn't the same.
Tierney says that it's women's fault: studies show men are less bothered by having their mate earn more more than are women. That is, women are pickier than men. [Is that surprising--ed] There's also the implication that women are competitive. In other words, it's not just men who want trophy wives; it's women who want trophy husbands, or at least a husband who looks desirable to other women.

Real Estate Prices and the Problem of Averaging

Paul Krugman in No Bubble Trouble? writes on housing prices and the recent study that said, on average, Americans still spend a lower percentage of income on housing than at times in the past:

"Last summer I suggested that when discussing housing, we should think of America as two countries, Flatland and the Zoned Zone.

In Flatland [most of the country], there's plenty of room to build houses, so house prices mainly reflect the cost of construction. As a result, Flatland is pretty much immune to housing bubbles. And in Flatland, houses have, if anything, become easier to afford since 2000 because of falling interest rates.

In the Zoned Zone [Northeast coast, West Coast, etc.] , by contrast, buildable lots are scarce, and house prices mainly reflect the price of these lots rather than the cost of construction. As a result, house prices in the Zoned Zone are much less tied down by economic fundamentals than prices in Flatland."

His point is that discussion of averages misleads. It's a reminder useful not only in discussing housing, but in other areas of national debate.

Pursuit of Happiness, the Puritans, and Pragmatists

I posted earlier on two NYTimes oped columns which shared themes: happiness does not result from self-analysis, but from acting and being concerned with outside goals; and cited philosophers. I think there's a parallel there with the Puritans. Certainly they were concerned with analyzing the state of their soul to determine whether God had decided they were saints. But regardless of their belief in predestination, they acted and believed in action. Someone who was able to act as if he or she were saved was a better bet than someone who was palsied with indecision or who acted perversely. This whole analysis also fits William James, the philosopher of pragmatism.

Symmetrical Opponents and Freedom of Speech

I've run across the observation that opponents often become symmetrical. For example, in the NBA if your main opponent adds a good big man, you'll feel compelled to follow suit. In football, if the Giants get a tight end like Shockey(sp?), the Redskins need a big athletic safety to cover him. The same applies in the economy. In the 50's the big 3 automakers each felt compelled to have complete lines of cars--whatever GM did Ford and Chrysler were bound to follow. The same dynamic operates in international politics, as witness this quote taken from today's Post:

Justice Dept. Investigating Leak of NSA Wiretapping: "But Duffy reiterated earlier statements by Bush, who had sharply condemned the disclosure of the NSA program and argued that it seriously damaged national security.

'The fact is that al Qaeda's playbook is not printed on Page One, and when America's is, it has serious ramifications,' Duffy said, reading from prepared remarks. 'You don't need to be Sun Tzu to understand that,' he added, referring to the ancient Chinese general who wrote 'The Art of War.'

The argument is valid--see the examples from sports. But it's also invalid, because it logically leads to our becoming like al Qaeda. It's also too tempting to decide based on tightly limited considerations. Take the long view--which is more attractive: a society committed to violence and nurtured in secrecy or a society committed to open government and ambivalent about using violence? It's like saying the Detroit Pistons can't win the NBA because their center is undersized.

Why No Ethnic Restaurants in Israel?

David Bernstein at The Volokh Conspiracy today observes in a parenthesis:

"[Right now there are NO Ethiopian restaurants in the entire country, except a derelict takeout place for foreign workers, despite the presence of over 100,000 Ethiopian Jews Oddly, in Israel 'ethnic food' is considered something one eats at home, while to go out Israelis tend to favor routine Israeli food: humus/falefal/schwarma, dairy, shipudim ('skewers'), and schnitzel, plus hamburgers and pasta. What a crime that in a country with immigrants from over 100 countries that so few nations' cuisines are represented on the restaurant scene, especially since the Jewish cuisines of those countries were often unique! Someone send (ethnic food maven and occasional VC contributor) Tyler Cowen over there to straighten things out."

Given that in the U.S. one of the first areas for advancement of immigrants is the opening of a restaurant, this indeed seems mysterious. (Even in Britain, based on the Brit TV I watch it seems that immigrants focus on restaurant.) Does this difference result from different attitudes towards food in the mainstream culture in each country (Bernstein's implication), from the economy (does Israel have fewer restaurants per capita because per person income is lower), from religion (presumably religious Jews can't eat out on the Sabbath--reducing potential clientele-days, or am I showing ignorance), from security (restaurants get bombed) or what?

The Pursuit of Happiness, via NYTimes

Two of today's NYTimes opeds (not NYTimes Select) deal with happiness, and lean on old philosophers for their answers:

Don't Think Twice, It's All Right: "What can we do to improve ourselves and feel happier? Numerous social psychological studies have confirmed Aristotle's observation that 'We become just by the practice of just actions, self-controlled by exercising self-control, and courageous by performing acts of courage.' If we are dissatisfied with some aspect of our lives, one of the best approaches is to act more like the person we want to be, rather than sitting around analyzing ourselves."
In Pursuit of Unhappiness: "'Ask yourself whether you are happy, and you cease to be so,' Mill concluded after recovering from a serious bout of depression. Rather than resign himself to gloom, however, Mill vowed instead to look for happiness in another way.

'Those only are happy,' he came to believe, 'who have their minds fixed on some object other than their own happiness; on the happiness of others, on the improvement of mankind, even on some art or pursuit, followed not as a means, but as itself an ideal end. Aiming thus at something else, they find happiness by the way.' For our own culture, steeped as it is in the relentless pursuit of personal pleasure and endless cheer, that message is worth heeding."