A Fire Burns in Stockholm

An astonishing 27% [1] of Swedish residents are first or second generation immigrants. They come to Sweden seeking a better quality of life, courtesy of Sweden's generous immigration system. But the Swedish economy has left immigrants behind. The unemployment rate for immigrants is at 16% compared to a total national unemployment rate that hovers around 8% [2]. Immigrants live in crime-filled, segregated neighborhoods and voice feelings of alienation from Swedish society. Over the last six nights, the tension and frustration in immigrant neighborhoods culminated in a series of riots in the streets of Sweden's cities.

How did Sweden get to such a troubled place? It wasn't despite good intention, but because of it. Labor in Western economies is expensive - labor regulations, minimum wages, and employer mandates (such as Obamacare in the USA) drive up the cost of hiring. In response to the high cost of labor, employers in these wealthy economies have become masters of automation technology. Education becomes a necessary piece of the middle-class lifestyle.  Knowledge workers find ever more generous wages as labor productivity is boosted by capital investment while low-skill workers have a hard time finding jobs. Allowing massive low-skilled immigration into such an economy risks importing an underclass with all the social problems and spontaneous urban bonfires that involves.

Walter Russel Mead makes a policy suggestion to the Swedes - give up the Swedish way of life:

Sweden’s famously progressive redistributionist model, with its high taxes and high rates of spending, seems to be failing its immigrants. Unemployment among the foreign-born is persistently high and upward social mobility remains elusive. A recent study pointed out that up to a third of the youth in Sweden’s poorest regions are neither employed nor studying. Entire communities are stagnating rather than integrating.

High immigration societies need to be high opportunity societies. Immigrants and refugees come in search of a better life, but blue model societies like Sweden are more focused on providing welfare rather than opportunities for growth. The blue model social worker mind sees ‘excluded youth’ and thinks about programs: more midnight basketball, more food stamps, and the like.

But what might be needed instead are things like less restrictive zoning laws to promote the kinds of construction jobs that young immigrants can get without a lot of paper qualifications. Less regulation and protection (though not zero!) means more opportunity. And creating opportunity ends up being the ultimate welfare program.

I bet Texas-style neoliberal labor reform isn't what progressive Swedes were thinking when they developed such an open immigration policy in the first place. But Mead is right that lowering the cost of labor regulations would help existing immigrants find a niche in the Swedish economy. Welfare states depend on high average labor productivity. High levels of low-skill immigration don't mix.

Sweden's experience is relevant in America where wholesale restructuring of immigration policy is being considered in the national legislature. As Yuval Levin points out, the recession economy has been brutal for low-skill workers seeking jobs, while high-skill workers are doing fine.

The unemployment rates don't tell the full story of the suffering of the American worker. Americans' participation in the labor force is the lowest it has been since 1979 [3]. People who have given up looking for work aren't included in the unemployment rate calculation.

American labor markets have a feature that Sweden's don't - a large black market in low-skill labor that allows employers to hire illegal immigrants at cheap wage rates. This is why pundits on the left brush off concerns that "hard-working immigrants" will be a burden on the welfare state - anecdotally, it seems that a vast majority of illegal immigrants do work and thrive in the American economy.

But we need to remember that illegal immigrants found jobs on the black market where the costs of minimum wages, labor regulations, and employer mandates don't exist. The black market is a free market. If the 11 million illegal American residents are welcomed into the more expensive and regulated legal labor market they will find an uninviting economy every bit as hostile to low-skill workers as Sweden's.

I live in an weird libertarianish ideological neighborhood that includes influential open borders absolutists like Bryan Caplan. One of his more famous essays is "Tell Me the Difference Between Jim Crow and Immigration Restrictions" - clearly not a guy with a taste for nuance. His case is laid out succinctly in  "Open Borders in 4 Easy Steps":

Immigration laws deny very basic human rights: The right to accept a job offer from a willing employer and the right to rent an apartment from a willing landlord.  The predictable result for people born on the wrong side of the border is severe poverty and worse.  This creates a strong moral presumption against immigration restrictions.

It is important to keep in mind the vast benefits that immigration can bring to immigrants and the country that welcomes them. But importing immigrants into a troubled underclass is incompatible with good governance and maintaining a high quality of life for all who live in America. Instead, we should recognize that immigrants and current residents are best served by increasing the high-skill immigrants who will thrive in the modern American economy. One way to do this is by using universities as immigration portholes - "stapling a green card" to every degree earned and increasing the number of student visas. This will feed the American R&D industry with the high-skilled grads it needs, prevent social problems down the line, and give opportunity for millions of the world's poor.

I am not clairvoyant enough to be certain of the effects of the new immigration bill on American society. But I worry that a poorly designed policy crafted under the influence of ideological blinders and emotional rhetoric will create a country with higher inequality, government dependency, and dysfunction. Ultimately, it will no longer be the kind of country that people want to immigrate to. My concerns are well-stated by Ross Douthat :

What immigration reform’s conservative skeptics would prefer, rather than a society that welcomes as many immigrants as want to come and also expands the welfare state apace, is a society that maintains America’s historical balance between (at least relatively) limited government and (at least relatively) egalitarian arrangements of wealth, property and opportunity. If you don’t care about the first issue, then it makes sense to be an open-borders liberal; if you don’t care about the second, then it makes sense to be an open-borders conservative. But if you think that both matter, and that America’s historical balance between liberty and opportunity is a precious and fragile historical achievement, then it isn’t really much of a puzzle why you might favor admitting new Americans — especially those whose existing skill sets are a poor fit with the economy that we seem to be moving toward — at a somewhat slower pace (and in a somewhat different mix) than the Senate legislation contemplates.

Good governance dictates that countries allow immigrants who are likely to thrive in their new home. We shouldn't let the noise of political debate drown out that basic principle.


[1] http://en.wikipedia.org/wiki/Immigration_to_Sweden

[2] http://www.usatoday.com/story/news/world/2013/05/25/sweden-riots-violence/2360211/

[3] http://data.bls.gov/timeseries/LNS11300000

"The Player of Games", a review. Sort of.

Affiliate link here. This review is spoiler-free.

When science fiction author Iain Banks announced his terminal cancer a month ago the internet responded with an outpouring of concern and praise. I'd never read his books, or even heard of the man, so I belatedly picked up "The Player of Games" while travelling.

I study history to learn about human society. I often think about the essential or optional characteristics of a sustainable society where most people can live a good life. My gold-standard test for all political philosophy consists of two questions: 1) can a society built on these principles last? And, 2) does it allow for human flourishing?

For the modern liberal American consensus, I lean towards a "no" for the first question and a qualified "yes" for the second. This makes me a partial politico-cultural dissident and drives my interest in exploring alternative forms of society.

For the same reason that I enjoy history I also enjoy fiction that provides a culture shock. Science Fiction is a rich genre for cultural experimentation as authors are given the freedom to imagine ways of life far outside the normal boundaries. However, sociological evidence from fictional cultures must be treated more cautiously than evidence from historical ones. The apparent desirability of fictional societies are left in the hands of the author who always has an ideological axe to grind. Fiction can give us hypotheses about new ways to live, enriching our social palette, but it cannot give us evidence about the desirability of a particular way of life due to the author's inherent conflict of interest.

Iain Banks delivers a provocative vision of a future society in "The Player of Games". It is one of several books that take place in "The Culture", an advanced human society. The Culture is a place of great wealth where production is automated by technology including artificial intelligence. There is no need for work so instead people pursue their recreational and artistic interests. The Culture novels offer relevant food for thought in an America currently experiencing high unemployment rates and anxiety about automation technology displacing workers.

The theme is common in science fiction - what would life be like if we lived forever and had no need for work? Would life be enjoyable, meaningful, and fulfilling? The Culture books answer with a resounding "yes!", with just enough nuance to add believability without much weakening the conclusion.

And indeed the Culture is a pleasant place to live. Everybody is genetically engineered to be intelligent, beautiful, and healthy so they make good use of their wealth of leisure (we also have regions in our world where few people work, but they are not pleasant places to live). The political order is a kind of anarcho-communism. There is no property since there is no want. The abundance of friendly robot drones makes it near impossible to be killed or to harm another human, eliminating the need for a justice system. The culture has few rules and no politics. Rules are most often enforced by social sanction and norms of politeness. In the worst cases robotic drones prevent humans from repeatedly bothering others.

If communism is ever to work, if it is ever to be the paradise Marx promised instead of the bloody butchery it became, then it will exist in a society that is already extremely wealthy like the Culture. It differs significantly from the theoretical communism where workers control the means of production, instead it is a society where production is too plentiful to worry about control.

Banks explores some of the potential flaws in his vision, but only briefly. One character upon returning home after several years worries that someone else will be using the house that he lived in for decades. Since there is no property rights in the Culture he does not have claim to the home he is not using and the Culture's norms of politeness allow someone else to make use of it. I suspect Banks underestimates people's attachment to things and places, and I suspect that concepts of property will always arise in a society that tries to get rid of it.

I respect Banks as an author with a sharp and honest mind. He never tries to sell us on a utopian vision without pointing out its flaws and dependencies. He's clever enough to see that his novel political order depends on novel technology and he avoids the mistake of selling a social order which would be falsified, or even falsifiable, by historical evidence.

The main character is the eponymous player of games named Gurgeh, the best game-player in all the Culture. People gather to watch his games and children study his strategies in school. In a world where medicine grants infinite life, could one be consumed by studying games for all eternity? Maybe. It is  Gurgeh's boredom with his life as the Culture's biggest gamer celebrity is the catalyst that kicks off the plot.

During the course of the novel we come into contact with a hierarchical, traditional alien empire that is compared unfavorably to the Culture. In terms of the Star Trek universe, think of it as the Federation vs. the Klingons or the Romulans. The book preaches the moral superiority of the Culture too much for my taste.

But Banks briefly points out some of the ways that life in the Empire is preferable to the Culture. The citizens of the empire feel more purpose in life. They are emotionally tougher than the decadent Culture and there is much to admire about them. It is a competent though biased meditation on the costs and benefits of a restrictive tradition versus an individualistic worldview that offers greater freedom and equality but that often leaves people feeling lost and adrift.

"The Player of Games" is worth your time. Banks' Culture is an appealing ideal form of the "enlightened" liberal worldview. Since I so often find myself in opposition to that worldview in present day politics, I enjoy being challenged with the best it has to offer. The Culture would indeed be a pleasant place to live if it were possible.

Links

You can learn a lot about how the American media works from the Kermit Gosnell case.

The world is warming a lot less quickly than we thought it would, which is great news for all of us. It turns out that 95% confidence intervals aren't worth a whole hell of a lot in climate science.

Declining participation in the workforce is one of the major economic story of the last 10 years. In related news, NPR's planet money reports on the burgeoning abuse of the USG disability program.

Margaret Thatcher, R.I.P.

The American left is in a period of waxing confidence and hostility.

Most Republicans under 50 years old now support gay marriage.

(I'm sorry for bringing this up)

Steve Jobs' mother gave him up for adoption as a baby. I'm happy that he was born before Roe v. Wade.

Why Bitcoin?

From Satoshi Nakamoto:

Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.

The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

A generation ago, multi-user time-sharing computer systems had a similar problem. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what.

It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.

Indian-Americans and the GOP Brand Problem

The most successful Indian-American politicians are Piyush Jindal and Nimrata Kaur Randhawa Haley, better know to voters as Bobby Jindal and Nikki Haley. They are two elected governors of southern states. And they are Republican.

Indian-Americans are the highest earning ethnic group in America, out-earning the majority white average by over 60%. And they tend to practice conservative social values - for example, single motherhood is much lower among Asian Americans than the American average. So this ought to be a promising Republican voting block.

But registered Democrats outnumber Republicans among Indians by a ratio of 4:1. The only Asian ethnic group that Republicans win are the Vietnamese, probably for the same reason that Cubans lean towards the GOP - they've seen enough of socialism to know they don't want more of it. From econlog:

I don't identify with Democrats simply because I think most of their policy proposals are bad. But there is much to admire about the political acumen of the American left. For example, they foster a spirit of inclusiveness that has drawn in immigrant voters. Obama put together a rainbow coalition that curb-stomped Republicans in 2008 and 2012. In the last election Republicans won the white vote with a 60/40 split, but lost all other ethnic groups by far larger margins.

To survive in a rapidly un-whitening America, Republicans need to present a vision of conservatism that appeals to Christian, Hindu, and Buddhist alike. White christian conservatives just won't have the numbers to get to 51%.

The more numerically literate readers will note that Asian-Americans are a small slice of the electorate - just 3% in 2012. But Asians are the largest group of legal immigrants to America. And poor Republican performance in demographics that they ought to win are symptomatic of the larger brand problem of the Republican party. Fair or not, Republicans have been painted by their opponents as the party of old white people, and the stigma is hurting.

Creating a universal conservative vision won't be easy. It will mean deemphasizing cultural wedge issues like gay rights and abortion that are much more meaningful for Christians than for Buddhists and Hindus. For what it's worth, my favorite conservative thinker Charles Murray agrees with me on this.

But there are many pieces of the conservative vision for America that do have universal appeal. All three groups should be concerned about the dissolution of the American family under five decades of "progressive" policy. They want good schools for their children, and they are jilted by Democratic politicians who kill any innovative education reform that threatens union jobs. And all of the upper-middle class ought to be upset that they are on the hook for higher taxes to pay for ultimately unsustainable entitlement spending and reckless union pension benefits passed by Democrats at the state level.

But most of all, conservatives of all backgrounds want a country that is built to last. They want to build something that will be there for their children and their children's children. They don't want a country that ignores terminal deficit problems while peddling short-term policy fixes.

Republicans are much better at policy than they are at politics. If they don't fix that deficit, America is going to be in for a rough century.

Where are the black Republicans?

In 2004 President George Bush (R) signed into law the DC Opportunity Scholarship program, and over the next four years the program would help thousands of mostly black students from low-income families in Washington DC attend the private schools of their choice. These students escaped some of the worst performing, and most well-funded, public schools in the nation.

The program was wildly popular with parents, drawing four applications for every available slot. Early data showed significant gain in graduation rates among students who received the scholarships. And the district saved money from the program - the scholarships cost less than half the amount the district pays to (mis)educate public school children.

In 2009, Barack Obama (D) swept into office with his party taking both houses of congress. One of the Democrats' first actions was to defund the DC Opportunity Scholarship program. District parents, almost all of whom supported the Obama campaign, were stunned. 

In 2008, the Democratic candidate for President received 95% of the black vote and over 90% of DC scholarship recipients are black. Why were politicians from the Democratic Party working directly against the interests of their voters? To answer that question, we need to pause for a lesson in Modern American Politics 101 - the school house rock remix for the 201Xs. From opensecrets.org, here's the top three spenders on political campaigns over the last 22 years.

#2 and #3 on that list are public sector unions, #3 is the major national teacher union, and they give almost exclusively to Democrats. When it comes to school choice, Democratic politicians have to choose between the interest of a fiercely loyal voting block and their number one source of campaign funding and muscle. 

Their choice was easy: throw the kids under the (yellow) bus. More money for schools is the alpha and omega of school reform in the Democratic party. That's a policy that unions can get behind. More substantive education reforms might threaten tenured union jobs. 

Over the months following the cancellation of the DC scholarships, a successful public campaign led by the minority Republican leadership in the House and Joe Lieberman (I) in the Senate reinstated funding for the program. 

Despite good results, the program has never been allowed to grow and to show the full power of parent choice in reforming education. It still serves only a small sliver of the DC student population. 

In 2011, DC's aggressive education reformist mayor Adrian Fenty (D) lost his reelection campaign to the union's candidate. In 2012, Barack Obama (D) won re-election with 93% of the black vote. Republicans lost almost every non-white ethnic group by large margins. 

In 2012, the Obama (D) administration tried to kill the program again. This time a majority Republican house was ready to go to war to stop him.

How long can Democrats push policies that hurt minority populations but still win their votes? Why can't Republicans make inroads among non-white voters? Perhaps the 2% shift of black voters towards Republicans in 2012 is the beginning of a bigger movement.

My belief is that Republicans are getting beat mostly on marketing. Barack Obama (D) is a mediocre President but a master marketer. When Republicans fight for opportunity for minority Americans, they need to shout it from the rooftops.