China: Why Was 'Kung Fu Panda' Made in the U.S.?

Via Slate Star Codex...

"The blockbuster success of an American animated movie that's set in ancient China, highlights Chinese culture, mythology and architecture and stars a kung fu fighting panda has filmmakers and ordinary Chinese wondering: Why wasn't this hit made . . . in China?"

I find it interesting that I would expect such a piece today to be written using the "cultural appropriation" frame, while this piece was mostly framed with/as/as on "free market's creativity" when it was written in 2008.

Political Coalitions, Personal Grievances, and Tribalism

I hope personal animus among members of potential coalitions doesn't lead to squandering chances for big reforms.

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While the disparate treatment and tactical patience employed against the Bundys and their accomplices in Oregon is painfully unfair and a blatant double standard compared to those employed against racial and criminal justice activists in so many instances, the conviction motivating those in Oregon and shared by their conservative supporters across the country, that mandatory minimum sentences are deeply unjust, may suggest that a/the broad coalition that is necessary to actually effect this reform maybe newly possible.  This potential opportunity not be neglected or dismissed unexplored.

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Similarly, the fight to protect the shrinking middle class and instead grow it by fighting for the betterment of poor and working-class people maybe bolstered by leveraging the fissures in the conservative and Republican base that,
while always obscured but present, have become starkly clear of late.

The neoliberal view, that people's incomes earned in the market reflects not only their marginal product value but also what they deserve and are nearly on the level of natural fact, and that to facilitate otherwise by affecting either their market or transfer incomes would be to distort the market mechanism to the detriment of both the intended beneficiaries and us all, has long been openly wielded to oppose helping some segments of society economically (and covertly wielded against others for the same purpose).  This deployment of ideologyThe deployment of this ideology has long been successful; the neoliberal view has long enjoyed broad support.

But now that it has been openly turned against has openly been turned against; has been turned openly against many of those who, previously, it had opposed only covertly, and who previously comprised the bulk of its broad support, the dominant neoliberalism may see the struggle against it, to promote the economic interests of those it has stymied, reinvigorated by the support of newfound allies and growth of the opposing coalition.

Efficient Market Hypothesis and Government Intervention (Especially Fiscal and Other Discretionary Counter-Cyclical Action)

Hoisted from the draft cue from 1/21/14:

Some of the disagreement over gov’t intervention in the economy is likely the result of disagreement over the Efficient Market Hypothesis.  

The EMH has a lot of forms:

-from the strongest forms (claims like the market is always exactly right at all times, either by definition or by a necessary causal link, and maybe even produces a pareto optimal outcome, or an optimally efficient outcome, or a welfare-maximizing outcome, or a distribution ally fair outcome in which people are compensated exactly in proportion to their contribution, or any combination thereof, etc.)

-to the medium forms (claims like the market tends toward these desirable features)

-to the weakest forms (claims like the market tends towards one, or some, or all of these features only more than any individual or group intentionally could; so the market could be wrong, but in all possible cases [even in those cases of the market being wrong], we have more reason to believe the market than any individual or group [after all, assuming only that there's isn't anything new under the sun/i.e. that it's pretty rare for people to be totally unique or do things totally uniquely, as opposed to like Newton and Leibniz independently coming up with calculus, it is more plausible that there are other bits of knowledge elsewhere in the world that would integrate into the market not included in the centralized expertise than that this single centralized expertise came up with all the knowledge the market already has, and then some it hasn't.  In other words, how likely is it that any individual or group (defined sufficiently small to conform to our purpose of technocracy; i.e. you can't define a 'group' as half the world population because that couldn't work to give expert advice) could come up with some knowledge the rest of the world hasn't come up with yet? 

when we address the findings/recommendations of any expert or group of experts, 

Those who support gov’t intervention tend to disagree with the EMH and argue instead that markets can be inefficient/irrational, and that gov’ts can be less so.

For example, what exactly changed so rapidly in 2007-2008 (or even just over a few months in 2008 and into 2009) that the market was rational/efficient to cut aggregate spending and economic activity?  Did some real shock precipitate it?

No.  Well, what could have changed?  Preferences?  What preferences?

Not for any particular commodity or asset.  

What about leisure, or saving/putting off consumption?  It seems pretty unlikely that enough people changed their preferences so much all together to be lazier that caused it.

What about the preference to carry or offload risk?  This is the candidate most EMHers point to as the preference change most likely to have caused the crisis and recession (us Cochrane, for example, I believe.  Maybe Fama…).

So, to these EMHers, the crisis and downturn does not disprove the EMH because the market rationally responded to changing preferences.  Thus, the market did not act irrationally, and consequently the crisis and downturn do not prove the necessity of gov’t intervention. 

This is correct as far as it goes.

But if this analysis is correct and a change in preferences of carrying or offloading risk (really, in the risk of a downturn) justifies the market contraction, then these EMHers are missing the forest for the trees.  

If the only real change is from confidence in a continuing good economy to skepticism of it, then gov’t should still intervene.

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Copied from email drafts folder, for comparison (not sure which one is most updated/comprehensive version):

Some of the disagreement over gov’t intervention in the economy is likely the result of disagreement over the Efficient Market Hypothesis.  

The EMH has a lot of forms:

-from the strongest forms (claims like the market is always exactly right at all times, either by definition or by a necessary causal link, and maybe even produces a pareto optimal outcome, or an optimally efficient outcome, or a welfare-maximizing outcome, or a distribution ally fair outcome in which people are compensated exactly in proportion to their contribution, or any combination thereof, etc.)

-to the medium forms (claims like the market tends toward these desirable features)

-to the weakest forms (claims like the market tends towards one, or some, or all of these features only more than any individual or group intentionally could; so the market could be wrong, but in all possible cases [even in those cases of the market being wrong], we have more reason to believe the market than any individual or group [after all, how likely is it that any individual or group small enough for technocratic purposes could come up with some knowledge the rest of the world hasn't come up with yet? ]). 

Those who support gov’t intervention tend to disagree with the EMH and argue instead that markets can be inefficient/irrational, and that gov’ts can be less so.

For the market to be rational, there would have to be a reason for the recession.

What exactly changed so rapidly in 2007-2008 (or even just over a few months in 2008 and into 2009) that the market was rational/efficient to cut aggregate spending and economic activity?  Did some real shock precipitate it?

No.  Well, what could have changed?  Preferences?  What preferences?

Not for any particular commodity or asset.  

What about leisure, or saving/putting off consumption?  It seems pretty unlikely that enough people changed their preferences so much all together to be lazier that caused it.

What about the preference to carry or offload risk?  This is the candidate most EMHers point to as the preference change most likely to have caused the crisis and recession (us Cochrane, for example, I believe.  Maybe Fama…).

So, to these EMHers, the crisis and downturn does not disprove the EMH because the market rationally responded to changing preferences.  Thus, the market did not act irrationally, and consequently the crisis and downturn do not prove the necessity of gov’t intervention.  

This is correct as far as it goes.

But if this analysis is correct and a change in preferences of carrying or offloading risk (really, in the risk of a downturn) justifies the market contraction, then these EMHers are missing the forest for the trees.  

If the only real change is from confidence in a continuing good economy to skepticism of it, then gov’t should still intervene.

The rationality of the market's action does not refute the desirability of market intervention to change that action if that action's rational status is contingent on its being performed.

The actions of market participants, in changing their investment profiles to reflect their decreased optimism and increased pessimism about the coming state of the greater macroeconomy, i.e. to become more risk-averse, that together make up the actions of the market as a whole, are a rational response to a coming contraction.  

Gov't intervention advocate: we need to intervene in the economy to mitigate as much as possible the contraction resulting from the financial crisis and generate a strong recovery.

EMHer: you're saying the gov't knows better than the market does.  

GIA: The market is behaving irrationally right now, so yes, the gov't can do better at the moment.

EMHer: the market isn't behaving irrationally.  

GIA: Well, just a few months ago, GDP was much higher and better distributed, and unemployment much lower, and now the economy is a wreck.  What happened between then and now to make this economy so bad for people despite still behaving rationally/efficiently, as you allege?  There were no wars or natural disasters, or other hindrances to our productive capacity.  

EMHer: But technological facts of production are only part of it.  That stuff determines the possibilities, and human preferences determine which of those we actually go for.  And human preferences have changed.

GIA: What?  Have 9 mm people all become significantly lazier, and decreased their preference for work and increased their preference for leisure, and decreased their ability to put off consumption, all at the same time?  

EMHer:  No, but the preference to bear risk has changed.  People are less willing to bear risk.

GIA: Risk of what?

EMHer: Risk of losing their assets.  People are willing to bear less risk on their assets in a bad economy.  

GIA: So, the market contracting is a rational/efficient response to the [prospect of] market contracting?  

EMHers say that we should go with the market response/action, a contraction, because, in virtue of it being the response/action taken by the market, it is the most rational/efficient way to go.  But contraction is only the rational/efficient action of the market because the market expects contraction, making that expectation of self-fulfilling prophecy.  (Obviously, there is some CAP here, too).

Desert and Distribution of Income: Agglomeration Effects and Labor Productivity Growth

Who deserves the additional economic value that results from higher labor productivity?  

Let's consider some cases: how about when it results from agglomeration effects?  How about instead when it results from technological capital improvements?

Agglomeration effects occur under conditions of agglomeration, like in cities, wherein more people live in closer proximity to greater numbers of other people than do people who live outside of cities, and increase the productivity of city dwellers.

***

A recent Noah Smith tweet putting forward the proposition that "agglomeration gives windfalls to landlords. Raise efficiency with a Land Value Tax."

So Noah's asserting (likely to enlighteningly start an argument and go through the dialectic) that the premiums to land/real estate values enjoyed by cities’ land-/real estate-owners is a windfall, undeserved by the landowner because they’re not results of the landowner* but of the agglomeration effect--the fact of the property's location in a higher-density area, which is dependent on the actions of many others and not due to just the choices/actions/work/responsibility/accomplishment of the property-owner himself--and therefore cities’ land-/real estate-values ought to be, or are justifiably, taxed more than those outside of cities.

Interesting enough, and seems to accord with my tentative general principle of trying to accord people's compensation with their work/effort/labor. 

***

Let’s apply this same logic now to wages.  Some argue that the fact that wage growth has lagged behind labor productivity growth in recent decades means that wage-earners have received less than they deserve and that income that has been accruing to the owners of capital is undeserved by them and represents income that rightfully belongs to workers.  

However, to the extent that the growth in labor productivity is the result of capital investment, and not, say, more education, training, and experience of the workforce, the workforce did nothing to earn the additional income the increased productivity enabled, and so does not deserve it.

***

Therefore, it seems to me that one cannot simultaneously hold that the premium derived from agglomeration effects are not deserved by urban real estate-owners and that the additional income derived from labor’s increased productivity is deserved by labor.

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*Of course, this only holds perfectly/fully if the agglomeration effects happened entirely since the real estate was purchased by the landowner; otherwise, he paid for the agglomeration effect’s premium on the real estate’s value by paying a higher price for the real estate when he bought it.  Rather than all or nothing either way, it’s most likely that some of the premium from the agglomeration effect was paid for by the real estate-owner and some was not, provided how much the agglomeration effect grew, i.e. how much the city (and therefore its residents’ productivity) grew since the time of purchase.  The longer ago the real estate-owner’s purchase (assuming continuing agglomeration and productivity growth), the less the value premium was paid for; the more recent the real estate-owner’s purchase (similarly assuming continuing agglomeration and productivity growth), the more the value premium was paid for.

"Kansas and Missouri fight for corporate investment and jobs"

2 states in a tug-of-war for workers that's costing millions

Perfect example of a collective action problem.  

(In this case) the dynamic forces them both/each to expend a lot of resources, which each only negate the other's; thus, both sides incur substantial cost(s) while providing basically no net gain.  This outcome is suboptimal for both as there are better possible outcomes for both sides, indeed a single alternate possible outcome that would be better for both sides.    

But if such a universal improvement, a pareto improvement in other words, is possible, then how both sides still experiencing this avoidable problem?

But both sides are also essentially forced into it; it's the rational thing to do.  After all, if they don't do it but the either side does, then they'll lose out even more.  Only if both sides stop doing it is the outcome better for both.  Thus, some agreement and coordination, presumably with mutually-acceptable/accepted enforcement provisions/measures in case of cheating/going back on,--in other words, law--is necessary for the best possible outcome in these kinds of cases.

***

As a typical/paradigmatic case/example of a common collective action problem, this example is important because it may be able to illustrate to those not otherwise sympathetic to centralization and government action/intervention/activism the soundness of the deductive case for it's being optimal policy in some circumstances, namely when the conditions sufficient for a collective action problem are present and the benefits yielded justify the costs incurred (and also maybe necessary is that no other pathology of government is worse than freedom's/market's pathology in this case/area).  

***

Hopefully states and localities can recognize this problem and band together resolved not to compete with other states and localities for economic activity by bidding with taxpayer money.  If federal legislation is not possible, then states should band together in the model of Common Core or National Popular Vote plan.  

***

Similarly, but more controversially, the same collective action problem that applies to individual states in the whole country also applies to individual countries in the whole world.  For this reason (among many others), it seems necessary that some level of world government will be necessary.  

In the same way that individuals voluntarily surrender some rights and assume some responsibilities in order to live in society, and just also as states voluntarily surrender some rights (nuclear non-proliferation for instance, or use of land mines) and assume responsibilities (to defend other states) in order to enter treaties with other states, gaining alliances and allies, states will, at least will need to, establish a common world government.

Too many collective action problems otherwise: impossibility of universal currency devaluation, Piketty on a global wealth tax, financial regulation, etc.

The process of globalization is a one-time only phenomenon, though of course long and difficult and must be managed right.  But the costs are mostly related to the process (as in economic, distributive costs, as there are arguments for other social and cultural costs) and not the outcome, so the economic benefits of the hopefully-long-lived outcome likely outweigh the costs of the temporary process.  

***

This phenomenon should also be taken into account when evaluating the economic and employment performance of different states, for the purpose of discovering/learning what policy should be undertaken at the federal level to boost employment or economic performance otherwise, or adjudicating between which candidates for federal office are better for the economy and employment than others' (which now sounds similar, even identical to the last question).

Constitutional Protection for For-Profit Activity

Check out this cool episode: https://itunes.apple.com/us/podcast/planet-money/id290783428?mt=2&i=371766299

The question of whether a commercial interest/incentive is to terminal two, or matters at all to whether or not a given use of intellectual property/A copyrighted property  constitutes fair use

Whether this single factor is determinant of fair use, even if this legal standard is a bit outdated, echoes/recalls my idea that A commercial interest in something raises the standard of justification for it/that must be met for it to be justified/4 justification. For example, if people want to claim an exemption from a regulation out of a religious/ethical/or artistic position/police, they should be permitted to do so but at the cost of a higher tax rate. In other words, this idea about fair use is similar to the thinking that underlies my, perhaps counterintuitive, idea that nonprofit charitable enterprises should be taxed at a higher rateVan for profit Enterprises, not a lower one.

Higher standard for things that you engage in with a profit incentive means lower/less protection on free-speech grounds, religious liberty grounds, artistic and academic freedom grounds, etc.

Why Would a Conservative Support the State and Local Tax Deduction?

In this review of the tax proposal by Senators Marco Rubio (R-FL) and Mike Lee (R-UT), Amity Shlaes and Matthew Denhart criticize rolling back the deduction for state and local taxes without pointing to any reason at all.

Why exactly?

I know why liberals might support this deduction and oppose rolling it back. State and local taxes can be a lot more regressive than they might think best, so allowing them to be deducted from more progressive federal taxes (which implies that the difference in revenue to the federal government is made up for under the more progressive rates) alleviates that burden somewhat, among other more mundane reasons for it.

But what it also amounts to is low-tax states and localities subsidizing high-tax states and localities, so I don't know why conservatives would oppose scaling back this deduction or eliminating it.

Who's Not Paying Their Fair Share of Taxes, the Poor or the Rich?

Both many liberals and many conservatives believe that the tax code is unfair, with some not paying their fair share and others expropriated for too much. But of course, they disagree on who's who, with liberals viewing the tax code skewed toward the rich and conservatives viewing it as skewed toward the poor. Each camp has a sort of simple "just look out the window" common sense on its side: liberals can appeal to the fact that rich folks have all that money to enjoy a higher standard of living to argue that the system can't be tilted toward the poor and against the rich (or if it is, it's doing a terribly ineffective job), and conservatives can point to budget figures of the costs of different programs and tax payments.

Intuitively, I'm firmly in the liberal camp on this one; I mean, if the system is so biased in favor of the poor and against the rich, then why does everyone strive for wealth and to avoid poverty? But the conservative reasoning is so deceptively simple and persuasive that a lot of people believe it, so a more specific argument would be very helpful to cast doubt upon it and back up the liberal intuition. So let's examine this conservative view in depth and see where it takes us.

Does the Duty of Charity Extend to Public Programs?

I was going back through a series of posts to connect a point made there to one I've made previously, when this made me think very clearly about a view very commonly espoused in arguments over any aspect of political economy:

"But mightn’t the Good Samaritan’s general attitude of generosity towards strangers induce him to support paternalism and the welfare state? I doubt it.First, an immediate response to an unmistakable need is quite a different matter from a programmatic purpose of bettering the human condition, and I don’t think the psychological motives of the two are very similar."

Many people hold this combination of positions: opposition what they call welfare programs or redistribution, those policies intended to reduce poverty and ameliorate its effects, accompanied by adherence to an ethical system, often religiously based, that affirms a duty to help others in need including strangers and the poor. They argue that private, voluntary charity is what this duty calls for, not a communal, government coordinated action intended to be a comprehensive solution; indeed, some argue that the obligatory nature of such a communal endeavor might even negate the generosity's moral worth.

Progressive Taxation, Arbitrariness, and Justice

I'm glad that someone like Mike Konczal is analyzing the claim that our U.S. system of taxation is already very progressive by the standards of international developed economies.  (Thanks for the notice, Andrew.) In this post, he demonstrates the serious flaw in some (easily and commonly cited) measures of tax progressivity, specifically those that are based on the share of total tax revenue paid by certain economic segments of the population without also addressing their shares of national income and wealth. I wanted to highlight his post because he point can't be made enough, and because it reminded me of a normative line of thought I've been meaning to articulate for a while.

Conservative Healthcare and Insurance Ideas?

Greg Sargent reports on the prospects of further reform to insurance and healthcare policy, now that the full range of benefits of the Affordable Care Act have kicked in and more and more people start to use them, making outright appeal more and more difficult.

According to Kaiser Family Foundation Larry Levitt, one possibility for a policy change both sides could embrace, assuming that "Republicans do get to a point where crippling or eliminating the law is not the only acceptable outcome," is "allowing insurance sales across state lines... if the law's uniform federal minimum coverage standards are kept".

This would indeed be a great improvement to the law, but let's not pretend that it's a newly suggested proposal that liberal proponents of the law haven't supported in the past, or that it's a conservative idea that liberals would only accept for a trade.

Bloomberg is the Worst Kind of Pro-Regulation Liberal

Bloomberg is the worst kind of liberal because he validates the libertarian and conservative accusation that liberals want to regulate more and more the private lives of citizens, but he does so not for the cause that most liberals would find worth that cost of validating the opposition, but for a cause that most liberals would assign a lower priority.  In other words, I am (and I believe most liberals are) willing to defend government regulation in finance against objections that it's illegitimate paternalism before I am willing to defend nutritional regulation from those same objections.

Is the Fight Against Inequality or Poverty?

As the Iron Lady did in very quotable fashion, many conservatives today continue to accuse liberals of fetishizing economic equality to the point of willingness to sacrifice the living standards of all, including the poor, to promote it. As Margaret Thatcher put the charge, liberals "would rather the poor were poorer provided the rich were less rich".

This accusation made towards liberals is false almost without exception. For just one example, here's Matt Yglesias refusing to trade living standards for equality. In this case, even though economic recessions may reduce income inequality by cutting the incomes of the rich more than those of the poor, Yglesias nevertheless opposes recessions and so declines the living-standards-for-equality trade because absolute living standards for all outweighs income equality.

Yet, many liberals have indeed claimed the struggle against economic inequality as their own. How ought their position be interpreted? While there might be other valid reasons to oppose inequality, the most undeniable reason to do so, and thus the most effective grounds on which to make the case, is that inequality implies inadequate living standards and poverty that are avoidable.  

Economic Growth and Stocks vs. Flows

I think I know what Matt Yglesias (one of the best bloggers out there, especially if you like to analyze economic and political issues with a philosophical approach) is getting at here (in the closing parenthetical):

"For the record, I think tax policy in a rich country is much more likely to affect the level of economic output than the sustainable growth rate of output but I cannot prove that with a chart"

Advocacy for some policy proposal or other, most often a tax cut or regulation roll-back, by appealing to economic growth is often muddled thinking and not at all clear whether the purported increase will happen to economic growth or economic activity (i.e. there is a danger of the common stocks-vs-flows fallacy here).  Imprecise words here (will the policy ‘increase economic growth’, ‘grow the economy’? etc.) leave a lot of room for both intentional and unintentional misrepresentation of the case for a policy change, especially given that some level of growth is the normal status quo for most economies under consideration.

Economic Problem of Self-Reference

What goods should government provide for, directly like public schools or indirectly like health insurance and mortgage subsidies, and what goods should be left to the free market?

In a concrete instance of a problem of self-reference, the government should provide for the prerequisites of the market.  The market itself cannot provide these things by definition.

What are such prerequisites?  One example, one that is uncontroversially provided for by the public sector, is the protection of negative rights, i.e. to bodily autonomy and property.  But what else is needed for a functioning free market?