Aslund on the Post-Soviet Transition

ArtirKel has been writing a series of posts on the economy of the Soviet Union, including a set of "brief remarks on the transition". For anyone entirely new to the topic, the conventional wisdom is that following the fall of communism eastern Europe underwent a massive economic depression. This was not a recession of the sort that we experienced in 2008; rather, we're talking Greece-times-two double-digit-recession-for-several-years-on-end. For those of us who advocate capitalism, then, this seems like evidence either for the superiority of communism or at the very least for the need for gradualism. Immediate moves risk severe collapse.

The main point of Artir's article is that while shocks resulting from transitions to capitalism may very well exist and in the short-run be quite significant, they do little to disrupt long-run trends - and in the long-run we are all dead communism is as we all know a terrible system.

At the time I mentioned Anders Aslund's doorstopper Building Capitalism: The Transformation of the Former Soviet Bloc. Aslund makes the case in a section entitled "The Myth of Output Collapse" that the conventional wisdom is actually quite wrong about the magnitude of the collapse. Moreover, the countries which weathered the transition best were those which were swiftest to reform. Now that I have access to my copy again, it seemed worthwhile to write this post summarising Aslund's arguments in this section.

Economies were already in chaos (p. 122)

Aslund argues that the conventional wisdom ignores how weak the communist economies were at the time of their collapse. During the years 1989-91, the average former Soviet republic (FSR) economy contracted by around 11%. So to claim that without the transition there would have been no turmoil is straightforwardly false.

Changes in the way output was recorded (p. 122-4)

It's commonly believed - though I don't know if José himself would accept this - that Soviet economies had a persistent problem with over-reporting of output. The prospects for promotion of many people in the production chain depended not upon profitability but on recorded output, so there was a strong incentive to make over-exhuberant claims about the total product of one's empire. Aslund estimates, quoting some of his other research, that added around 5% to the reported GDP of the USSR.

More significantly, under capitalism there was significant under-reporting of output. There were two key reasons for this: firstly, massive expansion of the black market, which had been severely repressed under communism. Secondly, the splintering of industries into large numbers of small firms often left government statisticians unable to keep up. For example, for many years Hungarian statistics left out all firms with fewer than 50 employees, with the result that through the late 80s into the mid 90s the unrecorded economy never went below 27% of GDP.

Move to measuring Consumption over Production (p. 125-6)

When measuring GDP in market economies, we have a simple way to assess the value of a good: we look at how much people are willing to pay for it. Where the good is one that people do not pay for - policing, for example, or education, we move instead to looking at how much is spent.

The USSR had this for everything. The problem was that this allowed and even encouraged the production of many things that nobody wanted. Similarly, it encouraged excessive processing of products even when this failed to make the end-product any more useful or enjoyable. These useless products were counted as output in Soviet statistics, but if we are honest they were sheer waste. The move to capitalism merely exposed this.

Shocks to foreign trade (p. 126-31)

Communist countries traded almost entirely with each other. This meant that the distorted trade patterns which they had on a domestic level were amplified at the level of international trade. For example, under communism Hungary had a nice little export industry in machinery and buses. After the collapse of communism, suddenly no-one wanted to buy these - for reasons which will be obvious to anyone who has travelled on the Budapest Metro Line 3 (right).

Furthermore, much of the trade involved "implicit subsidies" from one Soviet nation to another, and particularly from energy producers to non-energy producers. The end of these subsidies didn't hurt the Soviet bloc as a whole, and indeed the central case of Russia it meant a substantial gain (amounting, if I'm reading Aslund right, to 17.7% of its GDP!). But it does add more knots to post-Soviet statistics.

Collapse of Military Spending (p. 131-2)

How to achieve full employment:
conscript the unemployed!

As mentioned above, when assessing the contribution of government spending to GDP we have no better option than simply to look at the amount being spent. The USSR spent an inordinate amount of its resources on the military - Aslund suggests 22% of GDP, Artir thinks it was probably about 18%. Either way, this was several times the international norm of around 3%, to which Russia reduced its spending following the collapse of communism (most other countries reduced their military spending even further).

This would lead to a massive fall in measured GDP, possibly as high as 20%. Yet with the exception of those directly employed by the military, it will have had no effect at all upon people's standard of living. This is one of the weaknesses of GDP - it is perhaps the best proxy we have for living standards, but it is ultimately only a proxy.

Wasteful Investment (p. 132-3)

The otherwise great economist Paul Samuelson predicted in 1961 that, since the USSR was pouring a greater proportion of its output into investment in further capital, it would overtake the US GDP some time in the 1980s or 90s. In hindsight this is an amusing story, but it also poses an important question: why didn't the USSR overtake the USA?

The answer is that much of the investment was simply wasted. Apart from the vast problems of co-ordination (section III), there were vast problems of theft and of managers demanding more inventory stocks than they really needed. For this reason, a lot of what was counted as investment was failing to contribute at all to future productive capacity.

How much did GDP fall? (p. 136-7)

Aslund produces a chart giving his estimates of GDP across the former USSR in 1995, indexed to 1989 levels.

There's decline in many countries. However, this decline is highly variable, and some of the most reforming countries - especially what would later be the Visegrad Group of Poland, Czechia, Slovakia, and Hungary - even grow. This strongly suggests that to whatever extent there was indeed a collapse in the economies of the former USSR following the fall of communism, whatever caused it was neither capitalism nor the shock of transition.

Government House Democracy

Grief at losing the EU referendum is causing many people on the left of British politics to wake up to something libertarians have been saying for years: democracy is kind of a stupid system. I won't go over the many problems with democracy as it is practised, although it should be noted that they go far beyond the fact that sometimes The People make stupid decisions. My concern here is to ask: why do we have a democracy, and how could it work better?

Here is a simple suggestion for why democracy is a relatively good system: people accept it. That is to say, countries which are democratic are significantly less likely than non-democratic countries to experience violent rebellions or civil wars. This applies not only to the relatively mature and open democracies of Scandinavia and the Anglosphere, but also to the corrupt tinpot democracies which dominate Africa and South America. There is no particular connection between democracy and good governance, but if you can achieve good governance then democracy makes it much more stable.

In what way does it become more stable? Primarily because people feel, rightly or wrongly, that they have a voice and are being listened to. People will be less likely to oppose a system when they feel that they have some role of authorship in it. By voting, people contribute to two things: firstly, they help fool themselves into thinking they have a significant voice, and secondly, they make it easier for others to believe this idea.

By voting, you demonstrate your buying in to this collective myth and thus your membership in (and hence acceptance of) the political community. This is a falsity, and patently so: the idea that one ordinary person can influence a polity of sixty-five million is utterly ridiculous. But so long as everyone pretends to believe it, we can get along.

Unfortunately, this does not seem to be enough. Perhaps it was never enough, and we relied upon other signals that people were being listened to for stability - the close links between trade unions and the Labour Party, for example. Perhaps libertarians have been the little boy shouting that the emperor has no clothes (I don't think we're that influential, but who knows?). Either way, the fact is that enough people are feeling unlistened to that our political culture is under threat.

What, then, can be done to recreate the myth that people are being listened to? E-petitions are a valiant attempt at this, but are aimed at a fundamentally different audience from the one that voted for Brexit. E-petitions are a tool of the young and politically engaged; Brexit, as we have all heard repeatedly, was foisted upon the young by their unemployed and uneducated elders.

MP's surgeries are probably fairly effective for those people who are aware of how to attend them and have the forethought to book a session. But my suspicion would be that a very substantial constituency is simply unaware that surgeries are a thing - they're not something that we talk about a great deal, after all. And quite apart from that, there's the whole question of whether MPs could really handle a move towards mass use of surgeries. They have other things to do with their time, after all, and do you really want to spend every single Saturday listening to people, most of whom are expressing similar concerns in inarticulate (and often in an angry, perhaps even threatening, manner), concerns which you simply do not have the power to do anything about?

I don't really have a good answer to the second problem I'm posing. How do you get disenfranchised people to feel they are being listened to? (Should we care? What will they do if they don't - more shootings, or will it just contribute to what, in a vague sense, we call "the decline of social trust"?) My hope, however, is that by putting it in terms of perceptions of listening rather than actual listening, I can move us closer to a real solution.

Links, June 2016

Considering that 90% of the sixth Harry Potter film was just about teenagers being frisky and hormonal, they could at least have done it the proper way: as a teen comedy.

The current Republican party is depressing for a number of reasons, including its positions on immigration. There was a better time, though: see this 1980 video of soon-to-be-POTUS Ronald Reagan and his soon-to-be-VPOTUS (and successor as POTUS) George H.W. Bush discussing illegal immigration.

Have you heard that "Happy Birthday" is under copyright, and can only be used in films at great expense? Turns out the copyright has been overturned! (Yes, this is old news. It was recent at the time I added it to my list of links, dammit!)

Despite its lack of Euro '16 coverage, FiveThirtyEight.com remains one of my very favourite websites. One of the reasons is its coverage of questions which are not only important, but with answers that are applicable to daily life. To wit: when should you turn up for a party?

Zilla Van Den Born's holiday to Thailand was unlike any other: it took place entirely in her flat, through the medium of Photoshop.

A review of Brighouse and Swift's Family Values, a book which argued that the imperative of social equality places strong limits upon what parents can do for their kids. The book, for me, exemplified two of the great malaises of modern political philosophy: attempting to provide essentially consequentialist grounds for essentially deontological concepts like non-legal rights, and armchair psychology presented as moral principles.
(Worryingly, these seem set to continue. I recently had a conversation with a PhD student working in this area, and trollishly suggested that egalitarian governments should intervene to encourage non-assortative mating. Obviously you can't force people to marry outside their social class, but if you can require military service why can't you require them to occasionally go on a date with someone they otherwise wouldn't? If you can subsidise marriage, why can't you give a higher subsidy to cross-class marriage? Her objection was that "it would require us to identify some people as the least attractive, and this would be harmful to their self-esteem." Presumably the collection and publication of income statistics is impermissibly harmful to the self-esteem of those on low incomes, and if some independently of the government were to come up with an objective measure of which people are least attractive then as an egalitarian this PhD would have had no further objections to my proposed measures. But I digress.)
In any case, the review is worth reading as a critique of the book on its own terms.

The Independent (to which, RIP): "Christians are the world's most persecuted people".
Salon (to which, please also die): "The Myth of Christian Persecution".
Sort yourself out, left-wing media complex!

A fascinating attempt to portray anti-suffragism as it was seen by sensible, liberal, anti-suffragists. The argument about maintaining a non-politicised sphere of society hits very close to me: people should be able to avoid politics, and the current fashion of right-ons for insisting that everyone vote is not only dangerous and misguided as a way of improving the world, but deeply depressing. If you are interested in politics and you follow one of these links, make it this one.

Burn of the Day

From Stuart Ritchie's review of The Gene: An Intimate History by Siddhartha Mukherjee:

"This disappointing failure to grasp the genetic nettle can be illustrated by a quotation from Mukherjee’s section on IQ tests. ‘Is g [general intelligence] heritable? In a certain sense, yes.’ Alas, the ‘certain sense’ here really means ‘after much qualification’; in fact, after so much qualification that you’ll go away thinking the answer is actually ‘no’, and not worrying too much about it. So, in the same spirit: isThe Gene worth reading? In a certain sense, yes."

Some Thoughts on Gawker, Hulk Hogan, and Privacy

We know from Wesley Hohfeld that one person's possession of a right implies duties on the part of others. My property right regarding a bike implies that everyone else has duties to let me use it how I so choose, and not to use it themselves unless I have given them permission.

People sometimes talk about a right to privacy. I'm inclined to disbelieve in such a right, on the grounds of the duties it must imply. Suppose I have a right to privacy concerning an affair I have had. That implies a duty on the part of other people not to talk about the affair. In other words, it's a limitation on other people's free speech. Unless they have promised not to talk about the affair, I would not believe in such a duty.

For this reason, my inclination in the recent Gawker vs. Hulk Hogan case is to support Gawker's right to publish the video. They ought not to have done so, sure, but we should be very concerned about the law acting to punish them for this. Not because Gawker itself is worthy of defending - it most certainly isn't - but because government overreach must always be stopped at the first hurdle, before it can become tyranny.

That said, I think there may be an actual case for Hogan here, relying not on a right to privacy but on sexual consent law. Consider that consent to a sexual act is generally not taken to apply merely to the commission of the act in question, but also to the way it is performed. Julian Assange is currently hiding in the Ecuadorian embassy in order to dodge prosecution for rape; the claim is not that his alleged victim did not consent to sex, but that she did not consent to sex-without-a-condom. It used to be the case that women could sue men who promised them marriage, slept with them, and then abandoned them. A few years back, a man was imprisoned for rape by deception in Israel after it turned out he was not as Jewish as he had pretended to a woman before sleeping with her.

There are a variety of things which, if not revealed prior to sex, can cause any consent to the sex to become invalid. STIs are a familiar example; I would presume that being filmed is another. Hulk Hogan was not, I believe, aware that we was being filmed; it seems fair to assume that had he known that the resulting video would be made public, he would not have engaged in the sex act in question. This would imply that his sexual partner, and Gawker through their complicity, have engaged in rape.

"Rape" is a far-ranging term, of course, and not all rapes are equally bad. On a scale of one to ten, where Gilles de Rais is something around an 8 and Amnon somewhere in the region of 5-6, Hulk Hogan's story can't be worse than a 1.5. But there's definitely a case there.

The Shift from Polyamory to Monogamy

Today the following paper abstract has being going around Twitter:

The original paper, The Puzzle of Monogamous Marriage by Henrich, Boyd, and Richerson, is here. I intend to read the paper in full, but before doing so I intend to write out my own theory of why there has been a transition from polyamory to monogamy. This theory is one I have held for a while, and which is probably not original to me, but I have not seen it made fully explicit anywhere. (It is heavily influenced, however, by my reading of Matt Ridley's The Red Queen). The general thrust of my argument is that household structures are for the most part chosen by individuals - and especially by women - in a way that seeks (roughly) to maximise their genetic footprint. The key changes which cause different choices to be made are essentially economic: hence the dominant cause for the move to monogamy is the industrial revolution and associated rise in the incomes of the general population.

What do women want?

Females of sexually reproducing species require a male contribution in order to pass on their genes to the next generation. The contribution of males can be neatly divided into two parts: the genes, and what we will call "paternal investment".

Genes make a contribution firstly in the obvious sense that reproduction is sexual. But it is also important to not that not all genes are created equal: some are more useful than others for passing on genes, in that these genes will lead to stronger, healthier offspring. If a female is able to assess which of two prospective mates will give her more vigorous young, then this is a strong reason for her to favour reproducing with that one.

Anything which is passed on genetically from parents to children is a potential source of assessment for males. Height is a good example of this: if it is advantageous for a woman to have tall children, then she will be more attracted to tall men.

Paternal investment represents a vast array of things a male might provide for a female in exchange for her bearing his young; what he offers varies massively according to species and environment. If the female will be vulnerable while raising his child he might offer her protection against predators; if the environment is harsh then he might supply her with food; in humans, a considerable part of paternal investment consists in emotional support for the mother.


How do these affect family structure?

The more important genes are to the choice of male partner,the more likely a species or society is to be polyamorous. Imagine a group of women are asked to vote on who, in their personal opinions, is the most attractive out of a group of men - none of the men or women ever having previously met each other. The women will come to their personal choices based on a variety of metrics - height, looks, intelligence, charisma - and while it is unlikely that they will unanimously agree on the most attractive men, it is unlikely that they will disagree wildly either. In species where genes are the only contribution of the male to his children, the average "family" consists of a man, his harem, and their children.

In many species, however, there is some measure of paternal investment. The nature of this investment will effect how far the species moves away from monogamy. In particular, investments which are difficult to provide for multiple females tend to push in a monogamous direction.

An investment which is relatively easy to provide for multiple females is protection. Species where the sole contribution of the male after conception is protection are typically not so different from those where the male contributes only genes. Examples of this include many mammals, such as lions.

Resources such as food are rather harder to provide for multiple females. Food provided to one mate is food which cannot be provided to another mate; hence environments in which food is scare are often conducive to monogamy. Indeed, in some extremely barren environments, where multiple men are needed to support a single woman, we have seen polyandry: wives having multiple husbands. To give you a preview, my claim will be that changes in the availability of food and other such resources are the key reason for societies moving from polyamory to monogamy.


The changing economic environment

Prior to industrialisation, famine was an ever-present threat. A bad harvest might kill all of your children. This meant that your wealth could have a very considerable impact upon your ability to raise children to maturity. Since a lord or king could be hundreds of times richer than an ordinary peasant, then, he could maintain hundreds or even thousands of times more wives or concubines. These men would maintain harems consisting not only of their wife but also of servants and "ladies-in-waiting" - and perhaps also, to some extent, the wives of the men around them. Ordinary peasant men might not marry at all, and if they did it would frequently be only once they had been earning for some years.

Then, between the late eighteen century and the mid twentieth century, there developed what we now refer to as the first world: the wealth of the average man shot up, and in the 1900s there emerged welfare states which defrayed many of the financial costs of raising children. It was no longer important for a woman to marry a rich man, so long as she married a man who was gainfully employed. The choice between men, then, would be made on a number of metrics: men with good genes would typically have the first pick of women, but even those with poor genes obtained a wife. Wealth did not cease to be important, but higher wealth would now get you a more attractive wife rather than getting you multiple wives. Furthermore, paternal investment could take non-monetary form: being an interesting person to be around, for example, might aid a man in obtaining a woman of his choice.

One prediction I will make based upon this theory is that, as women increasingly come to out-earn men in the workplace, paternal investment in general will become less of a factor. Consequently, genes will rise in relative importance, and so we will see an increase in polyamory.


Advantages of my theory

My theory has, as I see it, two big advantages over the theory of Henrich et al. First, I avoid postulating group selection. Second, I have an explanation for why polyamory used to exist. Going by the abstract, Henrich and his collaborators have an explanation for why monogamy emerged but not one for why it took until a relatively recent point in history to emerge instead of being the natural human condition. Or perhaps they do - I'll have to read the article and update based on that.

Ken Livingstone watches a kid's movie

I'm watching Shrek for the first time since I was about 9, and there are things about it which seem really different once you've read Seeing Like a State and such things. Lord Farquad orders that all "fairy-tale creatures" should be rounded up and quarantined. Back then I thought that this was a slightly humorous, slightly dystopian thing. Now it seems like a remarkably panglossian interpretation of state process of state formation. In the real world they wouldn't have confined Pinocchio. the Seven Dwarfs et al to a swamp, they'd have killed them. See for example the Holocaust, the Balkan wars of the 90s, US treatment of Native Americans (and in particular the disease blankets).