Monday, June 26, 2017

There is no zero lower bound on the effects of coercion.

Here is an article at about how occupational licensing keeps former criminals from getting work after they are released.

Consider these two proposals:

1) To protect consumers, felons should be prevented from getting occupational licenses.

2) To protect workers, employers should be prevented from asking about criminal records.

Isn't it funny how these are both popular positions, yet they are contradictory?  There are many places where both of these policies are in place.  The reason they are both in place is because politics, at its base, is about status, not about outcomes.  Consumers beat producers.  Employees beat producers.  What about employees and consumers?  That is just a relationship that we don't regulate.  Indirectly, licensing is a constraint on consumers.  You can't hire who you want to hire for a job.  But, the decision point is made at the point of the person becoming a professional, not at the point of sale, so in practice, we generally don't experience this constraint directly, as consumers.

If we thought about that relationship, it would force us to come to terms with some of our unconscious motivations.  Should it be illegal for a couple planning a wedding to discriminate against a gay baker?  Should it be illegal for a plumber to refuse to work for a jewish employer?  Should it be illegal for a family to disown their daughter for marrying a Muslim man?  Should it be illegal for that daughter to consider race, creed, ethnicity, or religion when she chooses a husband?

On this, I feel a bit like Richard Dawkins when he said, "“We are all atheists about most of the gods that humanity has ever believed in. Some of us just go one god further.”

We are all extremists about the liberty to be outrageously discriminatory and prejudiced in our private actions.  Some of us just go one private act further.  If you wonder how anyone can be so heartless to let employers and producers discriminate against employees and customers, you really don't need to look beyond your own conscience and the countless private acts of discrimination that you have never even remotely thought to regulate.

Think of the difference in how we react, even to the words.  If we say that the financial crisis was due to deregulation, and that we need to enact new regulations to keep banks on the right path, this seems so obviously true that it is almost an aphorism.  Of course regulating something is a net benefit.  The first dictionary definition is "control or maintain the rate or speed of (a machine or process) so that it operates properly."  But, think of how differently we react to, "Our deregulated marriage system has such a high failure rate.  We need to regulate marriages."  "So many kids are not served well by our deregulated classrooms.  We need a comprehensive set of teacher regulations to force teachers to work for the benefit of all of their students."  "Studies overwhelmingly show that time spent reading and speaking with children has huge benefits.  Our deregulated family system has failed us.  We need comprehensive regulations about the time and activities that parents engage in with their children."

Our different reactions to these regulations has nothing to do with our needs or with their potential for good.  It has to do with which identity groups in our society retain a sense of liberty and respect in what remains of our liberal heritage.  When we identify with our targets, it makes us uncomfortable to explicitly lower their status.  Commercial regulations tend to have the same second-order problems and costs as these other regulations.  In all of these cases, as "regulation" gets more comprehensive, opaque, and detailed, the costs outweigh the benefits, even though in every case there are certainly good reasons to wish for "regulation" in the dictionary definition sense.  In most of our private lives we intuitively understand that these are the (high) costs we bear for living in a civil society - for being human, really.  It is only in those realms where we identify a sure "other" that we become confident that control and coercion will create benefits.  And, then our policies are more a reflection of who is "other" than they are of any concerted effort toward progress, as with the two contradictory policies that frame this post.

These regulations have more to do with pushing against the status of employers and producers than with the damage of discrimination.  These are "you can'ts".  You can't use your own judgment to hire the person you want.  You can't enter the profession you choose.  You cans, where the policy might raise the status of its target, are hard.  They usually require functional cooperation from the target of the policy, which leads to frequent failures and problems.  You can'ts are easy.  It is easy to lower someone's status, and it doesn't require their cooperation.

And, in this case, we can see the damage of the consequences of policies that are imposed based on our subconscious biases.  And, these regulations are pretty useless anyway.  Most white collar fraud has to be handled in the civil courts, because our criminal system is just too busy with important stuff like keeping you from smoking a mild hallucinogen to bother with things like fraud.  And, if you run the gauntlet to get a civil judgment, that probably won't apply to occupational licensing, because it isn't a criminal judgment.  So, someone running a fraudulent operation will frequently not have any problem getting a license to do business in your state.  But, if they got a DWI, then they are probably out of luck.

This system does little to actually protect you, but it does a great job of keeping people from turning their lives around and aspiring to a middle class ethic once they have a criminal record.  It doesn't matter how dense a web of regulations and rules we concoct.  None of them will grow a conscience for the state.  These examples from coyoteblog are a window into this problem.  The state defaults to rules, not to an emergent common sense, so it tends toward being arbitrary and capricious.  I think this is obvious to anyone who has ever worked in corporate compliance departments.  At some point, you come to terms with the fact that certain forms need to be filed, certain t's need to be crossed and i's need to be dotted, and that it is pointless to busy yourself with anything beyond that.  (To some degree, this is a product of bureaucracy in general, not just the state.  But, this is where the difference between the right of voice and the right to exit is important.)

The basic motive of liberalism should be overturning the ancient human legacy of "you can'ts" or "you musts", many of them patently and intentionally unfair, with "you cans".  This is not a common political intuition.  This is why it is so depressing when politics becomes a center of attention.  Politics is usually about lowering the status of others.  Compare the archetypical political advertisement with commercial advertisements.  The comparison isn't even close.  In the sectors that are strangling us, housing, education, and health care, there are innumerable "you cans" that should have fairly universal support.  You can build a condo building or a house.  You can build or expand a hospital.  You can be a doctor.  You can choose a school for your children.  There are a lot of obstacles to all of these "you cans" that reasonable observers should be able to agree on.  We need to rediscover a "you can" intuition.


  1. Mostly agree.

    In fact, I bet most people, in theory and platitude, agree.

    The most powerful group is the "except fors."

    I believe in free markets, except for do not build my neighborhood.

    I believe in no occupational licensing, except for my occupation.

    I do not believe in communist health care programs, except for the VA.

    Less government, but do not mention the USDA.


    Oddly enough, parts of education seem to be going bonkers on their own, in somewhat free markets. The cost of college at the private Harvard, Yale, Princeton etc. is unbelievable. As private institutions, they have become the most pedantic and illiberal when it comes to speech or PC-ism. In this case, the private sector makes Berkeley look good (well, probably).

    Side note to nobody: There is now yet another pair of dueling studies on the impact of minimum wage laws on Seattle.

    Property zoning is not an issue--even in context!

    From Capitol Hill Seattle Blog

    "With Capitol Hill commercial rents also soaring, Seattle looks at tax breaks for landlords with small biz tenants
    Posted on Thursday, September 29, 2016 - 7:03 am by Bryan Cohen

    Since 2008, commercial rents have risen 42% in Capitol Hill’s 98122 zip code, making it the third most expensive zip code for businesses in the city. The second most expensive retail rents are now in 98102, while other neighborhoods, like Ballard, have seen retail rents increase by more than double.

    To ensure small businesses are not drowned out in the rising tide, Mayor Ed Murray convened a task force in April to explore what the city could do to help. The results, released during a Wednesday morning media conference, are relatively modest compared the mayor’s housing affordability plan, but Murray said it was an important starting point.

    Recommendations from the Commercial Affordability Advisory Committee include a new entity to support small businesses, tax incentives for property owners to keep small businesses as tenants, and “fast track” permitting requirements for small business projects. Defining what exactly constitutes a small business would still need to be determined, but the recommendations appear to target support for micro-business projects like Melrose Market.

    In the short term, the city will be directing $122,000 annually to a low-cost lending program for businesses with five or fewer employees and fund a commercial affordability consulting team to give businesses and small property owners technical advice. Not included in the recommendations — commercial rent control."


    Obviously, with a limited supply of retail space, Seattle could be rapidly gentrifying, and prosaic low-wage business moving out, forced out by higher rents.

    Add on very tight housing markets, restricting the supply of labor.

    So wages may rise in Seattle, and minimum wage workers decrease as a share of the total, due in part to rents and the changing, mostly upscaling of the labor force and types of business that can afford Seattle, and not due to minimum wage laws.

    As I have posited before, property zoning is an effective way to shove riffraff outside city limits. Works so well in Southern California that the riffraff has been pushed into Palmdale and Bakersfield. I did not say Phoenix.

    A quick review of both Seattle labor studies indicates rents and property zoning were not even thought of. So what are these studies worth?

    Another note to nobody: I have been banned by three "libertarian" blogs for mentioning property zoning.

    Property zoning is not a topic libertarians like to talk about.

    1. I'm a plaintiff in Arizona civil courts. Believe me, Arizona, in practice, is pro-riff raff.