Digifesto

Category: economics

Omi and Winant on economic theories of race

Speaking of economics and race, Chapter 2 of Omi and Winant (2014), titled “Class”, is about economic theories of race. These are my notes on it

Throughout this chapter, Omi and Winant seem preoccupied with whether and to what extent economic theories of race fall on the left, center, or right within the political spectrum. This is despite their admission that there is no absolute connection between the variety of theories and political orientation, only general tendencies. One presumes when reading it that they are allowing the reader to find themselves within that political alignment and filter their analysis accordingly. I will as much as possible leave out these cues, because my intention in writing these blog posts is to encourage the reader to make an independent, informed judgment based on the complexity the theories reveal, as opposed to just finding ideological cannon fodder. I claim this idealistic stance as my privilege as an obscure blogger with no real intention of ever being read.

Omi and Winant devote this chapter to theories of race that attempt to more or less reduce the phenomenon of race to economic phenomena. They outline three varieties of class paradigms for race:

  • Market relations theories. These tend to presuppose some kind theory of market efficiency as an ideal.
  • Stratification theories. These are vaguely Weberian, based on classes as ‘systems of distribution’.
  • Product/labor based theories. These are Marxist theories about conflicts over social relations of production.

For market relations theories, markets are efficient, racial discrimination and inequality isn’t, and so the theory’s explicandum is what market problems are leading to the continuation of racial inequalities and discrimination. There are a few theories on the table:

  • Irrational prejudice. This theory says that people are racially prejudiced for some stubborn reason and so “limited and judicious state interventionism” is on the table. This was the theory of Chicago economist Gary Becker, who is not to be confused with the Chicago sociologist Howard Becker, whose intellectual contributions were totally different. Racial prejudice unnecessarily drives up labor costs and so eventually the smart money will become unprejudiced.
  • Monopolistic practices. The idea here is that society is structured in the interest of whites, who monopolize certain institutions and can collect rents from their control of resources. Jobs, union membership, favorably located housing, etc. are all tied up in this concept of race. Extra-market activity like violence is used to maintain these monopolies. This theory, Omi and Winant point out, is sympatico with white privilege theories, as well as nation-based analyses of race (cf. colonialism).
  • Disruptive state practices. This view sees class/race inequality as the result of state action of some kind. There’s a laissez-faire critique which argues that minimum wage and other labor laws, as well as affirmative action, entrench race and prevent the market from evening things out. Doing so would benefit both capital owners and people of color according to this theory. There’s a parallel neo-Marxist theory that says something similar, interestingly enough.

It must be noted that in the history of the United States, especially before the Civil Rights era, there absolutely was race-based state intervention on a massive scale and this was absolutely part of the social construction of race. So there hasn’t been a lot of time to test out the theory that market equilibrium without racialized state policies results in racial equality.

Omi and Winant begin to explicate their critique of “colorblind” theories in this chapter. They characterize “colorblind” theories as individualistic in principle, and opposed to the idea of “equality of result.” This is the familiar disparate treatment vs. disparate impact dichotomy from the interpretation of nondiscrimination law. I’m now concerned that this, which appears to be the crux of the problem of addressing contests over racial equality between the center and the left, will not be resolved even after O&W’s explication of it.

Stratification theory is about the distribution of resources, though understood in a broader sense than in a narrow market-based theory. Resources include social network ties, elite recruitment, and social mobility. This is the kind of theory of race an symbolic interactionist sociologist of class can get behind. Or a political scientist’s: the relationship between the elites and the masses, as well as the dynamics of authority systems, are all part of this theory, according to Omi and Winant. One gets the sense that of the class based theories, this nuanced and nonreductivist one is favored by the authors … except for the fascinating critique that these theories will position race vs. class as two dimensions of inequality, reifying them in their analysis, whereas “In experiential terms, of course, inequality is not differentiated by race or class.”

The phenomenon that there is a measurable difference in “life chances” between races in the United States is explored by two theorists to which O&W give ample credit: William J Wilson and Douglas Massey.

Wilson’s major work in 1978, The Declining Significance of Race, tells a long story of race after the Civil War and urbanization that sounds basically correct to me. It culminates with the observation that there are now elite and middle-class black people in the United States due to the uneven topology of reforms but that ‘the massive black “underclass” was relegated to permanent marginality’. He argued that race was no longer a significant linkage between these two classes, though Omi and Winant criticize this view, arguing that there is fragility to the middle-class status for blacks because of public sector job losses. His view that class divides have superseded racial divides is his most controversial claim and so perhaps what he is known best for. He advocated for a transracial alliance within the Democratic party to contest the ‘racial reaction’ to Civil Rights, which at this point was well underway with Nixon’s “southern strategy”. The political cleavages along lines of partisan racial alliance are familiar to us in the United States today. Perhaps little has changed.
He called for state policies to counteract class cleavages, such as day care services to low-income single mothers. These calls “went nowhere” because Democrats were unwilling to face Republican arguments against “giveaways” to “welfare queens”. Despite this, Omi and Winant believe that Wilson’s views converge with neoconservative views because he doesn’t favor public sector jobs as a solution to racial inequality; more recently, he’s become a “culture of poverty” theorist (because globalization reduces the need for black labor in the U.S.) and believes in race neutral policies to overcome urban poverty. The relationship between poverty and race is incidental to Wilson, which I suppose makes him ‘colorblind” in O&W’s analysis.

Massey’s work, which is also significantly reviewed in this chapter, deals with immigration and Latin@s. There’s a lot there, so I’ll cut to the critique of his recent book, Categorically Unequal (2008), in which Massey unites his theories of anti-black and anti-brown racism into a comprehensive theory of racial stratification based on ingrained, intrinsic, biological processes of prejudice. Naturally, to Omi and Winant, the view that there’s something biological going on is “problematic”. They (being quite mainstream, really) see this as tied to the implicit bias literature but think that there’s a big difference from implicit bias due to socialization vs. over permanent hindbrain perversity. This is apparently taken up again in their Chapter 4.

Omi and Winant’s final comment is that these stratification theories deny agency and can’t explain how “egalitarian or social justice-oriented transformations could ever occur, in the past, present, or future.” Which is, I suppose, bleak to the anti-racist activists Omi and Winant are implicitly aligned with. Which does raise the possibility that what O&W are really up to in advocating a hard line on the looser social construction of race is to keep the hope of possibility of egalitarian transformation alive. It had not occurred to me until just now that their sensitivity to the idea that implicit bias may be socially trained vs. being a more basic and inescapable part of psychology, a sensitivity which is mirrored elsewhere in society, is due to this concern for the possibility and hope for equality.

The last set of economic theories considered in this chapter are class-conflict theories, which are rooted in a Marxist conception of history as reducible to labor-production relations and therefore class conflict. There are two different kinds of Marxist theory of race. There are labor market segmentation theories, led by Michael Reich, a labor economist at Berkeley. According to this research, when the working class unifies across racial lines, it increases its bargaining power and so can get better wages in its negotiations with capital. So the capitalist in this theory may want to encourage racial political divisions even if they harbor no racial prejudices themselves. “Workers of the world unite!” is the message of these theories. An alternative view is split labor market theory, which argues that under economic pressure the white working class would rather throw other races under the bus than compete with them economically. Political mobilization for a racially homogenous, higher paid working class is then contested by both capitalists and lower paid minority workers.

Reflections

Omi and Winant respect the contributions of these theories but think that trying to reduce race to economic relations ultimately fails. This is especially true for the market theorists, who always wind up introducing race as an non-economic, exogenous variable to avoid inequalities in the market.

The stratification theories are perhaps more realistic and complex.

I’m most surprised at how the class-conflict based theories are reflected in what for me are the major lenses into the zeitgeist of contemporary U.S. politics. This may be because I’m very disproportionately surrounded by Marxist-influenced intellectuals. But it is hard to miss the narrative that the white working class has rejected the alliance between neoliberal capital and low-wage immigrant and minority labor. Indeed, it is arguably this latter alliance that Nancy Fraser has called neoliberalism. This conflict accords with the split labor market theory. Fraser and other hopeful socialist types argue that a triumph over identity differences is necessary to realize racial conflicts in the working class play into the hands of capitalists, not white workers. It is very odd that this ideological question is not more settled empirically. It may be that the whole framing is perniciously oversimplified, and that really you have to talk about things in a more nuanced way to get real headway.

Unless of course there isn’t any such real hope. This was an interesting part of the stratification theory: the explanation that included an absence of agency. I used to study lots and lots of philosophy, and in philosophy it’s a permissible form of argument to say, “This line of reasoning, if followed to its conclusion, leads to an appalling and untenable conclusion, one that could never be philosophically satisfying. For that reason, we reject it and consider a premise to be false.” In other words, in philosophy you are allowed to be motivated by the fact that a philosophical stance is life negating or self-defeating in some way. I wonder if that is true of sociology of race. I also wonder whether bleak conclusions are necessary even if you deny the agency of racial minorities in the United States to liberate themselves on their own steam. Now there’s globalization, and earlier patterns of race may well be altered by forces outside of it. This is another theme in contemporary political discourse.

Once again Omi and Winant have raised the specter of “colorblind” policies without directly critiquing them. The question seems to boil down to whether or not the mechanisms that reproduce racial inequality can be mitigated better by removing those mechanisms that are explicitly racial or not. If part of the mechanism is irrational prejudice due to some hindbrain tick, then there may be grounds for a systematic correction of that tick. But that would require a scientific conclusion about the psychology of race that identifies a systematic error. If the error is rather interpreting an empirical inequality due to racialized policies as an essentialized difference, then that can be partially corrected by reducing the empirical inequality in fact.

It is in fact because I’m interested in what kinds of algorithms would be beneficial interventions in the process of racial formation that I’m reading Omi and Winant so closely in the first place.

a few philosophical conclusions

  1. Science, Technology, Engineering, and Mathematics (STEM) are a converged epistemic paradigm that is universally valid. Education in this field is socially prized because it is education in actual knowledge that is resilient to social and political change. These fields are constantly expanding their reach into domains that have resisted their fundamental principles in the past. That is because these principles really are used to design socially and psychologically active infrastructure that tests these principles. While this is socially uncomfortable and there’s plenty of resistance, that resistance is mostly futile.
  2. Despite or even because of (1), phenomenology and methods based on it remain interesting. There are two reasons for this.
    1. The first is that much of STEM rests on a phenomenological core, and this gives some of the ethos of objectivity around the field instability. There are interesting philosophical questions at the boundaries of STEM that have the possibility of flipping it on its head. These questions have to do with theory of probability, logic, causation, and complexity/emergence. There is a lot of work to be done here with increasingly urgent practical applications.
    2. The second reason why phenomenology is important is that there is still a large human audience for knowledge and for pragmatic application in lived experience knowledge needs to be linked to phenomenology. The science of personal growth and transformation, as a science ready for consumption by people, is an ongoing field which may never be reconciled perfectly with the austere ontologies of STEM.
  3. Contemporary social organizations depend on the rule of law. That law, as a practice centered around use of natural language, is strained under the new technologies of data collection and control, which are ultimately bound by physical logic, not rhetorical logic. This impedance mismatch is the source of much friction today and will be particularly challenging for legal regimes based on consensus and tradition such as those based on democracy and common law.
  4. In terms of social philosophy, the moral challenge we are facing today is to devise a communicable, accurate account of how a diversity of bodies can and should cooperate despite their inequality. This is a harder problem than coming up with theory of morality wherein theoretical equals maintain their equality. One good place to start on this would be the theory of economics, and how economics proposes differently endowed actors can and should specialize and trade. Sadly, economics is a complex field that is largely left out of the discourse today. It is, perhaps, considered either too technocratic or too ideologically laden to take seriously. Nevertheless, we have to remember that economics was originally and may be again primarily a theory of the moral order; the fact that it is about the pragmatic matters of business and money, shunned by the cultural elite, does not make it any less significant a field of study in terms of its moral implications.

bodies and liberal publics in the 20th century and today

I finally figured something out, philosophically, that has escaped me for a long time. I feel a little ashamed that it’s taken me so long to get there, since it’s something I’ve been told in one way or another many times before.

Here is the set up: liberalism is justified by universal equivalence between people. This is based in the Enlightenment idea that all people have something in common that makes them part of the same moral order. Recognizing this commonality is an accomplishment of reason and education. Whether this shows up in Habermasian discourse ethics, according to which people may not reason about politics from their personal individual situation, or in the Rawlsian ‘veil of ignorance’, in which moral precepts are intuitively defended under the presumption that one does not know who or where one will be, liberal ideals always require that people leave something out, something that is particular to them. What gets left out is people’s bodies–meaning both their physical characteristics and more broadly their place in lived history. Liberalism was in many ways a challenge to a moral order explicitly based on the body, one that took ancestry and heredity very seriously. So much a part of aristocratic regime was about birthright and, literally, “good breeding”. The bourgeois class, relatively self-made, used liberalism to level the moral playing field with the aristocrats.

The Enlightenment was followed by a period of severe theological and scientific racism that was obsessed with establishing differences between people based on their bodies. Institutions that were internally based on liberalism could then subjugate others, by creating an Other that was outside the moral order. Equivalently, sexism too.
Social Darwinism was a threat to liberalism because it threatened to bring back a much older notion of aristocracy. In WWII, the Nazis rallied behind such an ideology and were defeated in the West by a liberal alliance, which then established the liberal international order.

I’ve got to leave out the Cold War and Communism here for a minute, sorry.

Late modern challenges to the liberal ethos gained prominence in activist circles and the American academy during and following the Civil Rights Movement. These were and continue to be challenges because they were trying to bring bodies back into the conversation. The problem is that a rules-based order that is premised on the erasure of differences in bodies is going to be unable to deal with the political tensions that precisely do come from those bodily differences. Because the moral order of the rules was blind to those differences, the rules did not govern them. For many people, that’s an inadequate circumstance.

So here’s where things get murky for me. In recent years, you have had a tension between the liberal center and the progressive left. The progressive left reasserts the political importance of the body (“Black Lives Matter”), and assertions of liberal commonality (“All Lives Matter”) are first “pushed” to the right, but then bump into white supremacy, which is also a reassertion of the political importance of the body, on the far right. It’s worth mention Piketty, here, I think, because to some extent that also exposed how under liberal regimes the body has secretly been the organizing principle of wealth through the inheritance of private property.

So what has been undone is the sense, necessary for liberalism, that there is something that everybody has in common which is the basis for moral order. Now everybody is talking about their bodily differences.

That is on the one hand good because people do have bodily differences and those differences are definitely important. But it is bad because if everybody is questioning the moral order it’s hard to say that there really is one. We have today, I submit, a political nihilism crisis due to our inability to philosophically imagine a moral order that accounts for bodily difference.

This is about the Internet too!

Under liberalism, you had an idea that a public was a place people could come to agree on the rules. Some people thought that the Internet would become a gigantic public where everybody could get together and discuss the rules. Instead what happened was that the Internet became a place where everybody could discuss each other’s bodies. People with similar bodies could form counterpublics and realize their shared interests as body-classes. (This piece by David Weinberger critiquing the idea of an ‘echo chamber’ is inspiring.) Within these body-based counterpublics each form their own internal moral order whose purpose is to mobilize their body-interests against other kinds of bodies. I’m talking about both black lives matter and white supremacists here, radical feminists and MRA’s. They are all buffeting liberalism with their body interests.

I can’t say whether this is “good” or “bad” because the moral order is in flux. There is apparently no such thing as neutrality in a world of pervasive body agonism. That may be its finest criticism: body agonism is politically unstable. Body agonism leads to body anarchy.

I’ll conclude with two points. The first is that the Enlightenment view of people having something in common (their personhood, their rationality, etc.) which put them in the same moral order was an intellectual and institutional accomplishment. People do not naturally get outside themselves and put themselves in other people’s shoes; they have to be educated to do it. Perhaps there is a kernal of truth here about what moral education is that transcends liberal education. We have to ask whether today’s body agonism is an enlightened state relative to moral liberalism because it acknowledges a previously hidden descriptive reality of body difference and is no longer so naive, or if body agonism is a kind of ethical regress because it undoes moral education, reducing us to a more selfish state of nature, of body conflict, albeit in a world full of institutions based on something else entirely.

The second point is that there is an alternative to liberal order which appears to be alive and well in many places. This is an order that is not based on individual attitudes for legitimacy, but rather is more about the endurance of institutions for their own sake. I’m referring of course to authoritarianism. Without the pretense of individual equality, authoritarian regimes can focus on maintaining power on their own terms. Authoritarian regimes do not need to govern through moral order. U.S. foreign policy used to be based on the idea that such amoral governance would be shunned. But if body agonism has replaced the U.S. international moral order, we no longer have an ideology to export or enforce abroad.

Notes on Pasquale, “Tech Platforms and the Knowledge Problem”, 2018

I’ve taken a close look at Frank Pasquale’s recent article, “Tech Platforms and the Knowledge Problem” in American Affairs. This is a topic that Pasquale has had his finger on the pulse of for a long time, and I think with this recent articulation he’s really on to something. It’s an area that’s a bit of an attractor state in tech policy thinking at the moment, and as I appear to be in that mix more than ever before, I wanted to take a minute to parse out Frank’s view of the state of the art.

Here’s the setup: In 1945, Hayek points out that the economy needs to be managed somehow, and that this is the main economic use of information/knowledge. Hayek sees the knowledge as distributed and coordination accomplished through the price mechanism. Today we have giant centralizing organizations like Google and Amazon mediating markets, and it’s possible that these have the kind of ‘central planning’ role that Hayek didn’t want. There is a status quo where these companies run things in an unregulated way. Pasquale, being a bit of a regulatory hawk, not unreasonably thinks this may be disappointing and traces out two different modes of regulatory action that could respond to the alleged tech company dominance.

He does this with a nice binary opposition between Jeffersonians, who want to break up the big companies into smaller ones, and Hamiltonians, who want to keep the companies big but regulate them as utilities. His choice of Proper Nouns is a little odd to me, since many of his Hamiltonians are socialists and that doesn’t sound very Hamiltonian to me, but whatever: what can you do, writing for Americans? This table sums up some of the contrasts. Where I’m introducing new components I’m putting in a question mark (?).

Jeffersonian Hamiltonian
Classical competition Schumpeterian competition
Open Markets Institute, Lina Khan Big is Beautiful, Rob Atkinson, Evgeny Morozov
Fully automated luxury communism
Regulatory capture (?) Natural monopoly
Block mergers: unfair bargaining power Encourage mergers: better service quality
Allow data flows to third parties to reduce market barriers Security feudalism to prevent runaway data
Regulate to increase market barriers
Absentee ownership reduces corporate responsibility Many small companies, each unaccountable with little to lose, reduces corporate responsibility
Bargaining power of massive firms a problem Lobbying power of massive firms a problem (?)
Exit Voice
Monopoly reduces consumer choice Centralized paternalistic AI is better than consumer choice
Monopoly abuses fixed by competition Monopoly abuses fixed by regulation
Distrust complex, obscure corporate accountability Distrust small companies and entrepreneurs
Platforms lower quality; killing competition Platforms improve quality via data size, AI advances; economies of scale
Antitrust law Public utility law
FTC Federal Search Commission?
Libertarianism Technocracy
Capitalism Socialism
Smallholding entrepreneur is hero Responsible regulator/executive is hero

There is a lot going on here, but I think the article does a good job of developing two sides of a dialectic about tech companies and their regulation that’s been emerging. These framings extend beyond the context of the article. A lot of blockchain proponents are Jeffersonian, and their opponents are Hamiltonian, in this schema.

I don’t have much to add at this point except for the observation that it’s very hard to judge the “natural” amount of industrial concentration in these areas in part because of the crudeness of the way we measure concentration. We easily pay attention to the top five or ten companies in a sector. But we do so by ignoring the hundred or thousand or more very small companies. It’s just incorrect to say that there is only one search engine or social network; it’s just that the size distribution for the many many search engines and social networks is very skewed, like a heavy tail or log normal distribution. There may be perfectly neutral, “complex systems” oriented explanations for this distribution that make it very robust even with a number of possible interventions.

If that’s true, there will always be many many small companies and a few market leaders in the tech sector. The small companies will benefit from Jeffersonian policies, and those invested in the market leaders will benefit (in some sense) from Hamiltonian policies. The question of which strategy to take then becomes a political matter: it depends on the self-interest of differently positioned people in the socio-economic matrix. Or, alternatively, there is no tension between pursuing both kinds of policy agenda, because they target different groups that will persist no matter hat regime is in place.

“Context, Causality, and Information Flow: Implications for Privacy Engineering, Security, and Data Economics” <– My dissertation

In the last two weeks, I’ve completed, presented, and filed my dissertation, and commenced as a doctor of philosophy. In a word, I’ve PhinisheD!

The title of my dissertation is attention-grabbing, inviting, provocative, and impressive:

“Context, Causality, and Information Flow: Implications for Privacy Engineering, Security, and Data Economics”

If you’re reading this, you are probably wondering, “How can I drop everything and start reading that hot dissertation right now?”

Look no further: here is a link to the PDF.

You can also check out this slide deck from my “defense”. It covers the highlights.

I’ll be blogging about this material as I break it out into more digestible forms over time. For now, I’m obviously honored by any interest anybody takes in this work and happy to answer questions about it.

Artisanal production, productivity and automation, economic engines

I’m continuing to read Moretti’s The new geography of jobs (2012). Except for the occasional gushing over the revolutionary-ness of some new payments startup, a symptom no doubt of being so close to Silicon Valley, it continues to be an enlightening and measured read on economic change.

There are a number of useful arguments and ideas from the book, which are probably sourced more generally from economics, which I’ll outline here, with my comments:

Local, artisanal production can never substitute for large-scale manufacturing. Moretti argues that while in many places in the United States local artisinal production has cropped up, it will never replace the work done by large-scale production. Why? Because by definition, local artisinal production is (a) geographically local, and therefore unable to scale beyond a certain region, and (b) defined in part by its uniqueness, differentiating it from mainstream products. In other words, if your local small-batch shop grows to the point where it competes with large-scale production, it is no longer local and small-batch.

Interestingly, this argument about production scaling echoes work on empirical heavy tail distributions in social and economic phenomena. A world where small-scale production constituted most of production would have an exponentially bounded distribution of firm productivity. The world doesn’t look that way, and so we have very very big companies, and many many small companies, and they coexist.

Higher labor productivity in a sector results in both a richer society and fewer jobs in that sector. Productivity is how much a person’s labor produces. The idea here is that when labor productivity increases, the firm that hires those laborers needs fewer people working to satisfy its demand. But those people will be paid more, because their labor is worth more to the firm.

I think Moretti is hand-waving a bit when he argues that a society only gets richer through increased labor productivity. I don’t follow it exactly.

But I do find it interesting that Moretti calls “increases in productivity” what many others would call “automation”. Several related phenomena are viewed critically in the popular discourse on job automation: more automation causes people to lose jobs; more automation causes some people to get richer (they are higher paid); this means there is a perhaps pernicious link between automation and inequality. One aspect of this is that automation is good for capitalists. But another aspect of this is that automation is good for lucky laborers whose productivity and earnings increase as a result of automation. It’s a more nuanced story than one that is only about job loss.

The economic engine of an economy is what brings in money, it need not be the largest sector of the economy. The idea here is that for a particular (local) economy, the economic engine of that economy will be what pulls in money from outside. Moretti argues that the economic engine must be a “trade sector”, meaning a sector that trades (sells) its goods beyond its borders. It is the workers in this trade-sector economic engine that then spend their income on the “non-trade” sector of local services, which includes schoolteachers, hairdressers, personal trainers, doctors, lawyers, etc. Moretti’s book is largely about how the innovation sector is the new economic engine of many American economies.

One thing that comes to mind reading this point is that not all economic engines are engaged in commercial trade. I’m thinking about Washington, DC, and the surrounding area; the economic engine there is obviously the federal government. Another strange kind of economic engine are top-tier research universities, like Carnegie Mellon or UC Berkeley. Top-tier research universities, unlike many other forms of educational institutions, are constantly selling their degrees to foreign students. This means that they can serve as an economic engine.

Overall, Moretti’s book is a useful guide to economic geography, one that clarifies the economic causes of a number of political tensions that are often discussed in a more heated and, to me, less useful way.

References

Moretti, Enrico. The new geography of jobs. Houghton Mifflin Harcourt, 2012.

Appealing economic determinism (Moretti)

I’ve start reading Enrico Moretti’s The New Geography of Jobs and finding it very clear and persuasive (though I’m not far in).

Moretti is taking up the major theme of What The Hell Is Happening To The United States, which is being addressed by so many from different angles. But whereas many writers seem to have an agenda–e.g., Noble advocating for political reform regulating algorithms; Deenan arguing for return to traditional community values in some sense; etc.–or to focus on particularly scandalous or dramatic aspects of changing political winds–such as Gilman’s work on plutocratic insurgency and collapsing racial liberalism–Moretti is doing economic geography showing how long term economic trends are shaping the distribution of prosperity within the U.S.

From the introduction, it looks like there are a few notable points.

The first is about what Moretti calls the Great Divergence, which has been going on since the 1980’s. This is the decline of U.S. manufacturing as jobs moved from Detroit, Michegan to Shenzhen, Guangdong, paired with the rise of an innovation economy where the U.S. takes the lead in high-tech and creative work. The needs of the high-tech industry–high-skilled workers, who may often be educated immigrants–changes the demographics of the innovation hubs and results in the political polarization we’re seeing on the national stage. This is an account of the economic base determining the cultural superstructure which is so fraught right now, and exactly what I was getting at yesterday with my rant yesterday about the politics of business.

The second major point Moretti makes which is probably understated in more polemical accounts of the U.S. political economy is the multiplier effect of high-skilled jobs in innovation hubs. Moretti argues that every high-paid innovation job (like software engineer or scientist) results in four other jobs in the same city. These other jobs are in service sectors that are by their nature local and not able to be exported. The consequence is that the innovation economy does not, contrary to its greatest skeptics, only benefit the wealthy minority of innovators to the ruin of the working class. However, it does move the location of working class prosperity into the same urban centers where the innovating class is.

This gives one explanation for why the backlash against Obama-era economic policies was such a shock to the coastal elites. In the locations where the “winners” of the innovation economy were gathered, there was also growth in the service economy which by objective measures increased the prosperity of the working class in those cities. The problem was the neglected working class in those other locations, who felt left behind and struck back against the changes.

A consequence of this line of reasoning is that arguments about increasing political tribalism are really a red herring. Social tribes on the Internet are a consequence, not a cause, of divisions that come from material conditions of economy and geography.

Moretti even appears to have a constructive solution in mind. He argues that there are “three Americas”: the rich innovation hubs, the poor former manufacturing centers, and mid-sized cities that have not yet gone either way. His recipe for economic success in these middle cities is attracting high-skilled workers who are a kind of keystone species for prosperous economic ecosystems.

References

Deneen, Patrick J. Why Liberalism Failed. Yale University Press, 2018.

Gilman, Nils. “The twin insurgency.” American Interest 15 (2014): 3-11.

Gilman, Nils. “The Collapse of Racial Liberalism.” The American Interest (2018).

Moretti, Enrico. The new geography of jobs. Houghton Mifflin Harcourt, 2012.

Noble, Safiya Umoja. Algorithms of Oppression: How search engines reinforce racism. NYU Press, 2018.

politics of business

This post is an attempt to articulate something that’s on the tip of my tongue, so bear with me.

Fraser has made the point that the politics of recognition and the politics of distribution are not the same. In her view, the conflict in the U.S. over recognition (i.e., or women, racial minorities, LGBTQ, etc. on the progressive side, and on the straight white male ‘majority’ on the reactionary side) has overshadowed the politics of distribution, which has been at a steady neoliberal status quo for some time.

First, it’s worth pointing out that in between these two political contests is a politics of representation, which may be more to the point. The claim here is that if a particular group is represented within a powerful organization–say, the government, or within a company with a lot of power such as a major financial institution or tech company–then that organization will use its power in a way that is responsive to the needs of the represented group.

Politics of representation are the link between recognition and distribution: the idea is that if “we” recognize a certain group, then through democratic or social processes members of that group will be lifted into positions of representative power, which then will lead to (re)distribution towards that group in the longer run.

I believe this is the implicit theory of social change at the heart of a lot of democratish movements today. It’s an interesting theory in part because it doesn’t seem to have any room for “good governance”, or broadly beneficial governance, or technocracy. There’s nothing deliberative about this form of democracy; it’s a tribal war-by-other-means. It is also not clear that this theory of social change based on demographic representation is any more effective at changing distributional outcomes than a pure politics of recognition, which we have reason to believhe is ineffectual.

Who do we expect to have power over distributional outcomes in our (and probably other) democracies? Realistically, it’s corporations. Businesses comprise most of the economic activity; businesses have the profits needed to reinvest in lobbying power for the sake of economic capture. So maybe if what we’re interested in is politics of distribution, we should stop trying to parse out the politics of recognition, with its deep dark rabbit hole of identity politics and the historical injustice and Jungian archetypal conflicts over the implications of the long arc of sexual maturity. These conversations do not seem to be getting anyone anywhere! It is, perhaps, fake news: not because the contents are fake, but because the idea that these issues are new is fake. They are perhaps just a lot of old issues stirred to conflagration by the feedback loops between social and traditional media.

If we are interested in the politics of distribution, let’s talk about something else, something that we all know must be more relevant, when it comes down to it, than the politics of recognition. I’m talking about the politics of business.

We have a rather complex economy with many competing business interests. Let’s assume that one of the things these businesses compete over is regulatory capture–their ability to influence economic policy in their favor.

When academics talk about neoliberal economic policy, they are often talking about those policies that benefit the financial sector and big businesses. But these big businesses are not always in agreement.

Take, for example, the steel tariff proposed by the Trump administration. There is no blunter example of a policy that benefits some business interests–U.S. steelmakers–and not others–U.S. manufacturers of steel-based products.

It’s important from the perspective of electoral politics to recognize that the U.S. steelmakers are a particular set of people who live in particular voting districts with certain demographics. That’s because, probably, if I am a U.S. steelworker, I will vote in the interest of my industry. Just as if I am a U.S. based urban information worker at an Internet company, I will vote in the interest of my company, which in my case would mean supporting net neutrality. If I worked for AT&T, I would vote against net neutrality, which today means I would vote Republican.

It’s an interesting fact that AT&T employs a lot more people than Google and (I believe this is the case, though I don’t know where to look up the data) that they are much more geographically distributed that Google because, you know, wires and towers and such. Which means that AT&T employees will be drawn from more rural, less diverse areas, giving them an additional allegiance to Republican identity politics.

You must see where I’m getting at. Assume that the main driver of U.S. politics is not popular will (which nobody really believes, right?) and is in fact corporate interests (which basically everybody admits, right?). In that case the politics of recognition will not be determining anything; rather it will be a symptom, an epiphenomenon, of an underlying politics of business. Immigration of high-talent foreigners then becomes a proxy issue for the economic battle between coastal tech companies and, say, old energy companies which have a much less geographically mobile labor base. Nationalism, or multinationalism, becomes a function of trade relations rather than a driving economic force in its own right. (Hence, Russia remains an enemy of the U.S. largely because Putin paid off all its debt to the U.S. and doesn’t owe it any money, unlike many of its other allies around the world.)

I would very much like to devote myself better to the understanding of politics of business because, as I’ve indicated, I think the politics of recognition have become a huge distraction.

What happens if we lose the prior for sparse representations?

Noting this nice paper by Giannone et al., “Economic predictions with big data: The illusion of sparsity.” It concludes:

Summing up, strong prior beliefs favouring low-dimensional models appear to be necessary to support sparse representations. In most cases, the idea that the data are informative enough to identify sparse predictive models might be an illusion.

This is refreshing honesty.

In my experience, most disciplinary social sciences have a strong prior bias towards pithy explanatory theses. In a normal social science paper, what you want is a single research question, a single hypothesis. This thesis expresses the narrative of the paper. It’s what makes the paper compelling.

In mathematical model fitting, the term for such a simply hypothesis is a sparse predictive model. These models will have relatively few independent variables predicting the dependent variable. In machine learning, this sparsity is often accomplished by a regularization step. While generally well-motivate, regularization for sparsity can be done for reasons that are more aesthetic or reflect a stronger prior than is warranted.

A consequence of this preference for sparsity, in my opinion, is the prevalence of literature on power law distributions vs. log normal explanations. (See this note on disorganized heavy tail distributions.) A dense model on a log linear regression will predict a heavy tail dependent variable without great error. But it will be unsatisfying from the perspective of scientific explanation.

What seems to be an open question in the social sciences today is whether the culture of social science will change as a result of the robust statistical analysis of new data sets. As I’ve argued elsewhere (Benthall, 2016), if the culture does change, it will mean that narrative explanation will be less highly valued.

References

Benthall, Sebastian. “Philosophy of computational social science.” Cosmos and History: The Journal of Natural and Social Philosophy 12.2 (2016): 13-30.

Giannone, Domenico, Michele Lenza, and Giorgio E. Primiceri. “Economic predictions with big data: The illusion of sparsity.” (2017).

The social value of an actually existing alternative — BLOCKCHAIN BLOCKCHAIN BLOCKCHAIN

When people get excited about something, they will often talk about it in hyberbolic terms. Some people will actually believe what they say, though this seems to drop off with age. The emotionally energetic framing of the point can be both factually wrong and contain a kernel of truth.

This general truth applies to hype about particular technologies. Does it apply to blockchain technologies and cryptocurrencies? Sure it does!

Blockchain boosters have offered utopian or radical visions about what this technology can achieve. We should be skeptical about these visions prima facie precisely in proportion to how utopian and radical they are. But that doesn’t mean that this technology isn’t accomplishing anything new or interesting.

Here is a summary of some dialectics around blockchain technology:

A: “Blockchains allow for fully decentralized, distributed, and anonymous applications. These can operate outside of the control of the law, and that’s exciting because it’s a new frontier of options!”

B1: “Blockchain technology isn’t really decentralized, distributed, or anonymous. It’s centralizing its own power into the hands of the few, and meanwhile traditional institutions have the power to crush it. Their anarchist mentality is naive and short-sighted.”

B2: “Blockchain technology enthusiasts will soon discover that they actually want all the legal institutions they designed their systems to escape. Their anarchist mentality is naive and short-sighted.”

While B1 and B2 are both critical of blockchain technology and see A as naive, it’s important to realize that they believe A is naive for contradictory reasons. B1 is arguing that it does not accomplish what it was purportedly designed to do, which is provide a foundation of distributed, autonomous systems that’s free from internal and external tyranny. B2 is arguing that nobody actually wants to be free of these kinds of tyrannies.

These are conservative attitudes that we would expect from conservative (in the sense of conservation, or “inhibiting change”) voices in society. These are probably demographically different people from person A. And this makes all the difference.

If what differentiates people is their relationship to different kinds of social institutions or capital (in the Bourdieusian sense), then it would be natural for some people to be incumbents in old institutions who would argue for their preservation and others to be willing to “exit” older institutions and join new ones. However imperfect the affordances of blockchain technology may be, they are different affordances than those of other technologies, and so they promise the possibility of new kinds of institutions with an alternative information and communications substrate.

It may well be that the pioneers in the new substrate will find that they have political problems of their own and need to reinvent some of the societal controls that they were escaping. But the difference will be that in the old system, the pioneers were relative outsiders, whereas in the new system, they will be incumbents.

The social value of blockchain technology therefore comes in two waves. The first wave is the value it provides to early adopters who use it instead of other institutions that were failing them. These people have made the choice to invest in something new because the old options were not good enough for them. We can celebrate their successes as people who have invented quite literally a new form of social capital, quite possibly literally a new form of wealth. When a small group of people create a lot of new wealth this almost immediately creates a lot of resentment from others who did not get in on it.

But there’s a secondary social value to the creation of actually existing alternative institutions and forms of capital (which are in a sense the same thing). This is the value of competition. The marginal person, who can choose how to invest themselves, can exit from one failing institution to a fresh new one if they believe it’s worth the risk. When an alternative increases the amount of exit potential in society, that increases the competitive pressure on institutions to perform. That should benefit even those with low mobility.

So, in conclusion, blockchain technology is good because it increases institutional competition. At the end of the day that reduces the power of entrenched incumbents to collect rents and gives everybody else more flexibility.