"The Harm in Hate Speech," Jeremy Waldron

This is a well written, carefully argued, and astoundingly, even frighteningly given the author's position as an NYU Law Professor, misguided argument for the criminalization of what he defines as "hate speech."  

"Hate Speech" is here defined as speech intended to demean the dignity of an individual, "dignity" being the sense that a person is a "citizen in good standing" which itself is a phrase used to indicate whether or not a person can expect the government (or "society"...Waldren is, typically, vague on the subject) to defend the rights of the recipient of the supposed "hate speech."

Racist posters depicting black people as gorillas are the prototypical examples of hate speech used throughout the book, with one or two Islamophobic posters shouting "Muslims go home" thrown in for good measure.  

How often do you suppose Professor Waldren has encountered such things around his Greenwich Village digs?  I don't know, but I bet the number is somewhat south of one, and herein lies the rub.  Such speech is essentially non-existent in 2016 America.  The chance that a father, mother, and innocent children strolling down the street will turn the corner only to be confronted with a poster depicting people looking suspiciously like themselves as cockroaches is vanishingly small.   

I honestly have no idea what a realistic example of speech that would run afoul of the Jeremy Waldren Hate Speech Police would look like because no modern examples (as opposed to 250 year old examples) are given.  Surely he isn't angling to radically rewrite First Amendment jurisprudence simply to squelch speech that almost never happens.

Waldren's explication of the full argument for free speech is missing one of the key tenets.  He almost stumbles into it when quoting part of Geoffrey Stone's argument that failing to protect free speech "shows that the government does not trust its citizens to make wise decisions if they are exposed to the expression."  Turning Stone around fills in the argument:  free speech is necessary because the citizens can't trust the government to make wise decisions when deciding what speech to squelch.

The argument for unfettered free speech is in its essence an argument for the unfettered search for truth.  The lurid hypotheticals that Waldren tries to scare us with are surely not the truth.  But they are also vanishingly rare.  The government is a very blunt instrument.  It is not capable of identifying speech that is simultaneously common enough to present a genuine threat to the type of dignity he defends and not, at least, debatable.  I find it disturbing that a law professor doesn't quite get this.  

Businesses aren’t Consumers

On the list of popular conceptions that dumbfound economists is the notion that business decisions are analogous to personal consumption decisions.  Regularly businesses are described as being "rich" and various business decisions are attributed to businesses being "rich" or not being "rich."  That is simply not a sensible way to think about business decisions.  

As a strong first approximation, an investment will be made if it is expected to yield greater savings, or greater revenue, than it costs.  Whether or not the company is “rich” in any meaningful sense is entirely beside the point.  Even if a business isn’t particularly liquid, we have a very efficient corporate finance industry that will be able to loan the money necessary to make investments that will yield lower expenses or higher revenue in the future.  The best one can say is that corporate wealth might help incumbent managers hide inefficient investments from outsiders.   

John Siracusa is one of the most astute and assiduously logical commenters on the web, which is why his extended comments on Apple’s solar power initiatives, about 3 minutes into this podcast, are so peculiar.

At one point, Siracusa asks "Why doesn't every company use solar power?”  His answer is that solar power costs a lot of money.  

Not a good enough answer.  The question is “Does solar power hold the possibility of reducing electric bills by more than the solar power costs?”  The answer has to include costs.  Focussing only on the cost of solar power leads to the business decisions are made because businesses are or are not rich fallacy.  

Embracing the fallacy, Siracusa asks who can afford to make huge capital investments  if you can make it back slowly over the next 20 years, and answers Apple, because they have lots of money.  The economists' answer:  “Businesses who think it will save more that it will cost.”  Apple may be one of those companies, but the fact that it has $X billion in liquid(ish) assets doesn’t really have anything to do with it.  

Here’s another intriguing observation:  “Walmart’s razor thin margins wouldn’t let them think about doing this because that have to watch every penny.”  (Like every quotation in this post, this is a paraphrase).  Does Walmart’s "razor thin margins” say anything about whether employing solar power in their stores (or anywhere else) will lower their electric bills by enough to justify the investment?  I don't see how.

In fact, since Walmart's business model seems to revolve around exploiting every possible economy, they would be the first organization I'd expect to invest in solar power, if one of Siracusa's other assertions were true, namely, that the will make it back slowly over the next 20 years.  

Now, if they don't think it will pay it self back over 20 years, that's another matter.  Siracusa seems to think (although he doesn't come right out and say it) that Apple's solar power investment is a good thing even if it doesn't pay itself back.  Maybe, but what solar power enthusiasts (an environmentalists in general) don't seem to recognize, is that the effort and material that goes into building, installing, and maintaining solar panels are resources too, just like the electricity from the power grid that the solar panels is expected to replace.  

Too much of the solar power discussion seems to treat prices as some sort of arbitrary hurdle place in the way of the good guys trying to fix the world.  



Planet Money: Inflation Saviors


Planet Money is probably the best economics show on radio; consistently interesting and usually economically sophisticated in a way most other finance related shows aren’t.  This episode from several years ago, rebroadcast last December, is one of their most intriguing, but flawed in one serious and frustratingly unnecessary way.  

It tells a story, which I had never heard, of an episode in Brazilian inflation history in which the Brazilian government managed to bring down a large inflation without the normal dislocations (i.e., a big recession) associated with bringing down inflation.

In short, they introduced a new unit of measure…not a currency yet, but just a unit of measure...which was defined to be X units of currency, with X increasing at the current rate of inflation.  The government published the official value of this unit of measure in currency every day, and started doing their everyday business in the new unit of measure.  Eventually the rest of the country became accustomed to performing their everyday transactions in this new unit of measure, consulting that day’s conversion tables to determine what amount of currency to pay.

Once the rest of the country because so accustomed, they eliminated to old currency and introduced a new currency denominated in the new unit of measure.  

Clever, if you can pull it off, and a truly fascinating story.

The problem is that the story omitted the most important part of the economics, which is that while this was going on the Brazilian central bank went through the mundane, boring, but incredibly difficult task of fixing the dysfunctional monetary policies that caused the inflation in the first place. 

Inflation can be seen to have two parts:  a piece caused by inflationary expectations and a piece caused by underlying monetary policy.  High inflationary expectations can be self-fulfilling as people try to spend money to turn it into assets that aren’t rapidly depreciating in value, causing something of a vicious cycle.  Monetary policy can cause inflation by continually pumping more liquidity into the monetary system than is necessary to support current activity at current prices, which causes prices to increase.  The second is by far the most important of the two.  If the central bank does that, the country will experience inflation.  Period, full stop.  If the central bank stops doing that, inflation will subside.  Period, full stop.  

The Brazilian trick outlined in the story deals with the transitionary period between irresponsible and responsible central bank management, which typically causes an economic downturn as people misread lower inflation for reduced demand for their products and services, and reduce output.  But it doesn’t do anything to make the central bank behave responsibly.  The story only mentions changes in central bank behavior in a tiny codicil at the end.  It would not be surprising, even expected, if listeners came away from the story thinking that the way to “solve” inflation was to ease the populace into using a new unit of measure, when, in fact, it is still thecae that the only way to stop inflation is to adopt a responsible monetary policy.