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Thinking about Human Rights (and UNICEF)

Before I begin:  UNICEF has a campaign in the UK at the moment to raise awareness of children being denied their rights around the world.  You can see the homepage for the campaign here.  You can donate here.

Here are some things to keep in mind when thinking about human rights:

  • A right is a particular form of liberty.  It is the freedom to do something.
  • An obligation or mandate is the opposite of a right.  A right involves a conscious choice; thus the phrase “to exercise one’s right.”  If there is no choice available, there is no right.
  • One person having a right often implies denying another right from a second person.  Suppose that you work for me.  If I have the right to fire you, you cannot have the right to a guaranteed job with me.  If you have the right to go on strike, I cannot have the right to fire you for going on strike.
  • Sometimes having a right does not impede the rights of others.  A right to make use of a non-rival good is the classic example.
  • Exercising a right is not necessarily in a person’s best interest.  I have the right to gamble all of my money at a casino, but it probably wouldn’t be wise to do so.
  • Every decision of consequence for everybody, everywhere, is subject to a constraint of some kind.  There are only 24 hours in a day, the resources at your disposal are finite and, eventually, you will die.
  • If a person, operating under a constraint, chooses to not do something, it does not imply that their right has been denied to them.

These last two points, while logical, create problems for many advocacy groups.  Consider the woman who, subject to constraints in her finances and the wages on offer for various jobs she can perform, chooses to become a prostitute.  Consider the subsistence-farming family that, subject to constraints in it’s finances and the wages on offer for alternative work, chooses to keep it’s children away from school and working on the farm.

It is largely for this reason that many people advocate what they call “economic rights”.  Although there are various versions of this (e.g. minimum wages, the welfare state, etc.), you can think of them as a government, on behalf of the entire population, instituting a guaranteed minimum income.

Now, while there are strong moral arguments for such a guarantee (which I fully support and agree with), this is not a right.  This is a mandated transfer of income from high-income citizens to low-income citizens.  For the rich, it is an obligation (the opposite of a right) and for the poor, it does not directly increase the range of choices available to them.  Instead, it indirectly increases that range by relaxing one of their constraints.

I say again:  I fully support providing a minimum income to all people by means of a welfare state; nobody should live in poverty.  But this is not a right.  It is a moral duty.  Calling this an “economic right” is a deliberate obfuscation for marketing purposes.  People pay more attention and money when a person’s “rights” are being denied than when they simply have a moral obligation to help.

I love the work done by UNICEF. I think they are just about the best NGO on the planet. My wife and I donate money to them. They make an express point of telling you how much of the money you give will go to administration costs or to more fundraising.

I just wish they could raise those funds without confusing things by saying that Aklima’s right to education is being denied to her.  I recognise that they have to.  I just wish that they didn’t.

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Who has more information, the Central Bank or the Private Sector?

A friend pointed me to this paper:

Svensson, Lars E. O. and Michael Woodford. “Indicator Variables For Optimal Policy,” Journal of Monetary Economics, 2003, v50(3,Apr), 691-720.

You can get the NBER working paper (w8255) here.  The abstract:

The optimal weights on indicators in models with partial information about the state of the economy and forward-looking variables are derived and interpreted, both for equilibria under discretion and under commitment. The private sector is assumed to have information about the state of the economy that the policymaker does not possess. Certainty-equivalence is shown to apply, in the sense that optimal policy reactions to optimally estimated states of the economy are independent of the degree of uncertainty. The usual separation principle does not hold, since the estimation of the state of the economy is not independent of optimization and is in general quite complex. We present a general characterization of optimal filtering and control in settings of this kind, and discuss an application of our methods to the problem of the optimal use of ‘real-time’ macroeconomic data in the conduct of monetary policy. [Emphasis added by John Barrdear]

The sentence I’ve highlighted is interesting.  As written in the abstract, it’s probably true.  Here’s a paragraph from page two that expands the thought:

One may or may not believe that central banks typically possess less information about the state of the economy than does the private sector. However, there is at least one important argument for the appeal of this assumption. This is that it is the only case in which it is intellectually coherent to assume a common information set for all members of the private sector, so that the model’s equations can be expressed in terms of aggregative equations that refer to only a single “private sector information set,” while at the same time these model equations are treated as structural, and hence invariant under the alternative policies that are considered in the central bank’s optimization problem. It does not make sense that any state variables should matter for the determination of economically relevant quantities (that is, relevant to the central bank’s objectives), if they are not known to anyone in the private sector. But if all private agents are to have a common information set, they must then have full information about the relevant state variables. It does not follow from this reasoning, of course, that it is more accurate to assume that all private agents have superior information to that of the central bank; it follows only that this case is one in which the complications resulting from partial information are especially tractable. The development of methods for characterizing optimal policy when di fferent private agents have di fferent information sets remains an important topic for further research.

Here’s my attempt as paraphrasing Svensson and Woodford in point form:

  1. The real economy is the sum of private agents (plus the government, but ignore that)
  2. Complete information is thus, by definition, knowledge of every individual agent
  3. If we assume that everybody knows about themselves (at least), then the union of all private information sets must equal complete information
  4. The Central Bank observes only a sample of private agents
  5. That is, the Central Bank information set is a subset of the union of all private information sets. The Central Bank’s information cannot be greater than the union of all private information sets.
  6. One strategy in simplifying the Central Bank’s problem is to assume that private agents are symmetric in information (i.e. they have a common information set).  In that case, we’d say that the Central Bank cannot have more information than the representative private sector agent. [See note 1 below]
  7. Important future research will involve relaxing the assumption in (f) and instead allowing asymmetric information across different private agents.  In that world, the Central Bank might have more information than any given private agent, but still less than the union of all private agents.

Svensson and Woodford then go on to consider a world where the Central Bank’s information set is smaller than (i.e. is a subset of) the Private Sector’s common information set.

But that doesn’t really make sense to me.

If private agents share a common information set, it seems silly to suppose that the Central Bank has less information than the Private Sector, for the simple reason that the mechanism of creating the common information set – commonly observable prices that are sufficient statistics of private signals – is also available to the Central Bank.

In that situation, it seems more plausible to me to argue that the CB has more information than the Private Sector, provided that their staff aren’t quietly acting on the information on the side.  It also would result in observed history:  the Private Sector pays ridiculous amounts of attention to every word uttered by the Central Bank (because the Central Bank has the one private signal that isn’t assimilated into the price).

Note 1: To arrive at all private agents sharing a common information set, you require something like the EMH (in fact, I can’t think how you could get there without the EMH).  A common information set emerges from a commonly observable sufficient statistic of all private information.  Prices are that statistic.

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    One in 20 Australians play the pokies WEEKLY

    Stephen Lunn, writing at The Australian, channels the Productivity Commission’s recent report:

    [The Productivity Commission] finds the legal ban in Australia on online gaming is a failure, with betting traffic heading to overseas sites that offer little in the way of consumer protection.

    In its draft report on gambling, the first in-depth national look at Australia’s gambling industry in a decade, the commission finds that gamblers are losing $18 billion a year, of which $12 billion is lost on gaming machines.

    It estimates that around 5 per cent of adults play weekly or more on gaming machines, and 15 per cent of those, or around 125,000 people, are problem gamblers.

    Productivity commissioner Gary Banks says “a large number of people have problems with their gambling (and) it is vital that they are given a tool to achieve greater control”.

    The commission recommends the reduction in the amount that can be lost on a gaming machine from its current upper limit of $1200 an hour to $120 per hour, and giving people a choice when they sit down on how much they spend, using the latest technologies.

    [Emphasis added by John Barrdear]

    If we assume that state governments and pubs don’t want to get rid of pokies because they’re so dependent on the revenues, then surely the only serious hope for enacting this would be for it to be a federal law.

    Lifting the ban on online gambling and permitting pokies but limiting the loss rate seem sensible ideas to me – they leave people with the freedom to gamble if they wish, but limit the loss to largely one of time rather than having the option of putting the house down.

    Of course, the softest still-ultimately-effective policy would be to simply hold the upper limit on loss rates constant while letting the minimum wage and welfare benefits rise with inflation so that the limit falls both in real terms (relative to the cost of living) and relative to household income.

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    More people have jobs AND the unemployment rate is higher

    This is another one for my students in EC102.

    Via the always-worth-reading Peter Martin, I notice that the Australian Bureau of Statistics February release of Labour Force figures contains something interesting:  The number of people with jobs increased, but the unemployment rate still went up.  Here’s the release from the ABS:

    Employed Persons Unemployment Rate
    Australia Feb 2009 Employment Australia Feb 2009 Unemployment Rate

    FEBRUARY KEY POINTS

    TREND ESTIMATES (MONTHLY CHANGE)

    • EMPLOYMENT increased to 10,811,700
    • UNEMPLOYMENT increased to 561,100
    • UNEMPLOYMENT RATE increased to 4.9%
    • PARTICIPATION RATE increased to 65.4%

    SEASONALLY ADJUSTED ESTIMATES (MONTHLY CHANGE)

    EMPLOYMENT

    • increased by 1,800 to 10,810,400. Full-time employment decreased by 53,800 to 7,664,200 and part-time employment increased by 55,600 to 3,146,200.

    UNEMPLOYMENT

    • increased by 47,100 to 590,500. The number of persons looking for full-time work increased by 44,400 to 426,000 and the number of persons looking for part-time work increased by 2,600 to 164,500.

    UNEMPLOYMENT RATE

    • increased by 0.4 percentage points to 5.2%. The male unemployment rate increased by 0.3 percentage points to 5.1%, and the female unemployment rate increased by 0.5 percentage points to 5.3%.

    PARTICIPATION RATE

    • increased by 0.2 percentage points to 65.5%.

    The proximate reason is that more people want a job now than did in January.  The unemployment rate isn’t calculated using the total population, but instead uses the Labour Force, which is everybody who has a job (Employed) plus everybody who wants a job and is looking for one (Unemployed).

    $$!u=\frac{U}{E+U}$$

    Employment increased by 1,800, but unemployment increased by 47,100, so the unemployment rate ($$u$$) still went up.

    Peter Martin also offered a suggestion on why this happened:

    We’ve lost a lot of wealth and we’re worried. So those of us who weren’t looking for work are piling in.

    I generally agree, but my guess would go further. Notice two things:

    • Part-time jobs went up by 55,600 and full-time jobs fell by 53,800 (the difference is the 1,800 increase in total employment).
    • The number of people looking for part-time jobs went up by only 2,600 and the number of people looking for full-time jobs rose by 44,400 (yes, I realise that there’s 100 missing – I guess the ABS has a typo somewhere).

    There are plenty of other explanations, but I think that by and large, the new entrants to the Labour Force only wanted part-time work and found it pretty-much straight away – these are households that were single-income, but have moved to two-incomes out of the concern that Peter highlights.  On the other hand, I suspect that the people that lost full-time jobs have generally remained in the unemployment pool (some will have given up entirely, perhaps calling it retirement).

    The aggregate result is that the economy had a shift away from full-time and towards part-time work, although the people losing the full-time jobs are not the ones getting the new part-time work.

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    Four techniques of public policy

    Suppose you have a situation where individual choices are suboptimal, both for that individual and for the group as a whole.  Exactly why the individual makes suboptimal choices isn’t immediately relevant for the moment.  It seems to me, that there are four broad approaches to “solving” this problem: a) an engineering approach; b) a government mandate; c) economic incentives; and d) a psychological approach.  The four approaches are not mutual exclusive and can even overlap, but they each bring a different mindset to the problem.  All four approaches can be taken to an absurd extreme.

    To explain each of the four, an (admittedly pretty graphic) example may be useful.  Men seem, in general, to have a habit of spillage at public urinals – pee goes on the floor instead of the urinal.  This induces both private costs (increased health risks and the ‘ick’ factor of negotiating another guy’s floor-pee) and public costs (increase cleaning costs).

    • An engineering approach would be to design a better urinal to minimise spash-back.  An extreme engineering approach would not only do this, but also include sensors to detect when urine falls outside the catchment area and then activate an automatic (i.e. robotic) cleaning system.
    • A government mandate would make it illegal to spill your pee on the floor.  How extreme this is would depend on the enforcement mechanism.  A light-handed approach would pass the law and then do nothing to enforce it, similar to jay-walking.  A heavy-handed approach would hire a cop to occasionally watch men pee and arrest them if they spill, similar to most countries’ drug policy.  An extreme approach would have a government agent hold your penis to make sure that you don’t spill, similar to the Australian government’s enforcement of mandatory superannuation.
    • An economic incentive would impose a fine on men for spilling and/or give them a bonus payment for not spilling.  How extreme this measure is would depend on the size of the fine or the bonus.  Because this also has a need for enforcement (government-implemented or government-guaranteed), this can be thought of as a market-oriented government approach.
    • A psychological approach would seek to reframe the issue to influence the way that men make their choices.  For the urinal, it could be to make use of the fact that if you paint a fly in the urinal at the spot that minimises splash-back, the visual cue will cause men to aim at it and overall spillage will fall.  My mother did something similar when I was a kid.  She had five teenage boys living under her roof and not even making us clean the toilet seemed to stop the mess, so she put a ping-pong ball in the toilet (because it’s so light, it won’t flush down) and told us to aim at it.

    So what’s my point?  Just this:  most people tend to focus on just one of the four approaches and think that it is the best way to solve every problem, when the truth is that different problems call for different responses and that the best strategy will usually employ several approaches.  In the case of spilling urine, the best strategy is probably a combination of an engineering and psychology, but in others a different combination may be optimal.  Don’t always think that your favourate approach is the best or only one.

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    Understanding race relations in America

    Now, I’m just a white guy from Australia who’s only visited the US a few times, so there’s a strong element of “What the hell would I know?”[*], but still … I suspect that if you want a quick, visual introduction to race relations and the issues facing non-whites in America, you would not do too badly by only watching three things:

    [*] The answer, of course, is “probably not very much,” especially if you subscribe solely to ethnographic or other immersive techniques of sociological fact-finding, but since my wife grew up as an Hispanic immigrant in the (28% African-American, 6% Hispanic) state of Georgia, I work on the assumption that even if I have no clue, she’ll yell at me if I say something entirely stupid.

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    How bad is human trafficking?

    Adam pointed me to this review in the New Statesman by Brendan O’Neil of “Sex at the Margins: Migration, Labour Markets and the Rescue Industry” (Foyles, Amazon) by Laura María Agustín. Here is the core of the review:

    Agustín points out that some anti-trafficking activists depend on numbers produced by the CIA (not normally considered a reliable or neutral font of information when it comes to international issues), even though the CIA refuses to “divulge its research methods”. The reason why the “new slavery” statistics are so high is, in part, that the category of trafficking is promiscuously defined, sometimes disingenuously so. Some researchers automatically label migrant women who work as prostitutes “trafficked persons”, basing their rationale on the notion that no woman could seriously want to work in the sex industry. The Coalition Against Trafficking in Women argues that “all children and the majority of women in the sex trade” should be considered “victims of trafficking”. As Agustín says, such an approach “infantilises” migrant women, “eliminating any notion that women who sell sex can consent”. Ironically, it objectifies them, treating them as unthinking things that are moved around the world against their will.

    The reality is very different, the author says. Most migrant women, including those who end up in the sex industry, have made a clear decision to leave home and take their chances overseas. They are not “passive victims” who must be “saved” by anti-trafficking campaigners and returned to their country of origin. Rather, frequently, they are headstrong and ambitious women who migrate in order to escape “small-town prejudices, dead-end jobs, dangerous streets and suffocating families”. Shocking as it might seem to the feminist social workers, caring police people and campaigning journalists who make up what Agustín refers to as the “rescue industry”, she has discovered that some poor migrant women “like the idea of being found beautiful or exotic abroad, exciting desire in others”. I told you it was controversial.

    One of Agustín’s chief concerns is that the anti-trafficking crusade is restricting international freedom of movement. What presents itself as a campaign to protect migrants from harm is actually making their efforts to flee home, to find work, to make the most of their lives in often difficult and unforgiving circumstances, that much harder. She writes about the “rescue raids” carried out by police and non-governmental organisations, in which even women who vociferously deny having been trafficked may be arrested, imprisoned in detention centres and sent back home – for the benefit of their own mental stability, of course. It used to be called repatriation; now, dolled up in therapeutic lingo, it is called “rescue”.

    For all its poisonous prejudices, the old racist view of migrants as portents of crime and social instability at least treated them as autonomous, sentient, albeit “morally depraved”, adults. By contrast, as the author illustrates, the anti-trafficking lobby robs migrants of agency and their individual differences, and views them as a helpless, swaying mass of thousands who must be saved by the more savvy and intelligent women of the west and by western authorities.

    It’s fascinating stuff and goes along with what I’ve previously said about prostitution:

    [Slavery] aside (and that’s what people trafficking is – slave trading), you cannot simply save or rescue a prostitute. It is not a problem, if you consider it one, to be tackled. It is not something that you solve, once and for all. Prostitutes are people like everyone else and like everyone else, they think on the margin and respond to incentives.

    In that entry I labelled human trafficking as slavery and I stand by that. Nevertheless, it would appear from Agustín’s work that the scale of the trafficking problem may be smaller than we commonly believe.

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    Abusing the welfare state

    I graduated from my engineering degree in November of 1998. I already had a job lined up, which I was due to start on the 18th of January, 1999. I had a couple of months to kill and I decided to go on the dole. What I wanted to do was work in a book store, and I applied to some, but not before first applying for unemployment benefits.

    The Work for the Dole scheme was up and running by that point, but since it only applied to people who had been receiving payments for over six months, it was never going to be a concern for me. If I remember correctly, I had to fill out a form every two weeks detailing which businesses I had contacted in my quest for work. I definitely remember realising that all I needed to do was open the Yellow Pages at a random page, call whomever my finger fell on and have a conversation like this:

    Them: Good afternoon [I was an unemployed recently-ex-student, after all. You can’t expect me to get out of bed in the morning, can you?]. This is company XYZ. How may I help?

    Me: Hi. Do you have any jobs going?

    Them: Uhh, no.

    Me: Okay. Thanks.

    I could then list that company on my fortnightly form, safe in the knowledge that even if Centrelink did bother to check – and I seriously doubt that they ever did; I could have written that I applied to “Savage Henry’s discount rabbit stranglers” and they would have just filed it away – then I was covered.

    That felt a bit too much like taking the piss though, so I made sure that my targets were legitimate. As I mentioned above, I mostly applied to book and map retailers. I never lied to Centrelink or to any of the places I applied to. I always admitted to everyone that I had a job lined up and only needed to fill in the two-month gap, but if the truth be told, I didn’t put much effort in either, except for a couple of early applications to places where I genuinely would have enjoyed working. It’s not that I was disheartened; just that I didn’t particularly care. I wasn’t desperate for the cash (although it was certainly handy) or a job (since I’d have to quit in a few weeks anyway). I was really only doing the dole thing to see what it was like and the answer was: boring, but easy.

    I’ve never felt any guilt or shame at doing it and I don’t think that any of my friends at the time were judging me negatively for it. It was a little unorthodox, but just accepted. I’ve certainly paid a lot more in taxes since than I received on the dole or for my university education. Fast-forward to 2008 and I am thinking about the social acceptability of receiving welfare payments, both in Australia and abroad.

    It may just be the stereotype, but I get the feeling that in continental Europe, both in 1998 and today, what I did would barely raise an eyebrow; that it would be completely accepted. In the U.S.A., on the other hand, I think that it would be regarded by many as a shameful thing to do and an abuse of federal money. In Australia and the UK, I’m not so sure. I suspect that the more “aspirant middle class” you are and the older you are, the more shameful it will seem. I have no idea if the age thing is because it’s a process that everybody goes through as they get older or if there’s been a genuine generational shift in attitudes.

    Any thoughts?