Links 27.2024

On a Personal Note

Greetings from Warsaw. I’m still recovering from the outrageous injustice that invalided my (at that time) bold prediction that Germany will win the European Championship. Don’t worry, I spammed my instagram followers enough with thoughts on that. All I will say is this: Germany was undeniably the best team of the tournament, so I am considering this a W anyways.

Everything else about the world rn I basically captured here:

Should Liberals Become Populists?

In collaboration with the Friedrich-Naumann Foundation and my friends Medeni and Mustafa from Kuest Media, we have produced a series of short videos. These videos basically synthesize the topics I have covered in this newsletter over the past few years and have also spoken about on various stages. This now, however, makes it more sharable, so make sure to hit that like button and spread it in your circles!

And of course, let me know what you think…

How to Become a Tyrant: The Populist Playbook

While the first video provides more of a conceptual analysis of populism and summarizes the existing literature, the second video is my original contribution: "The Populist Playbook." Unfortunately, much of what I discuss is still unfolding in real-time, right in front of our eyes. Make sure to watch the whole thing!

How liberal democracy might lose the 21st century

This is an interesting take. Not because I agree with it—I believe Noah fundamentally misunderstands the ontological nature of knowledge and the process of its discovery—but because its core argument nevertheless remains valid: The information overload in contemporary liberal societies causes all sorts of inefficiencies which ultimately makes its governing structures sluggish and frustrating. This is where authoritarian alternatives reap their benefits.

Because I still think that China basically continues to free-ride on the truth-discovery processes of entrepreneurs and scientists in the West. And as long as these two systems coexist, this seems inevitable. However, the claim that we would achieve the same level of truth in a one-system authoritarian world seems ill-founded. For whatever reason, Noah even avoids that challenge to his hypothis. Worth a ponder nevertheless, especially since the diagnosis still holds true!

(As the post is behind a paywall, I extracted a bit more liberally than usual)

I was raised in an age of liberal triumphalism. Liberal democracy won the 20th century — imperialism, fascism, and communism all collapsed, and by the end of the century the U.S. and its democratic allies in Asia and Europe were both economically and militarily ascendant. Even China, which remained an autocracy, liberalized its economy and parts of its society during this time. Even scholars who turned up their noses at Francis Fukuyama’s “end of history” were generally favorable to arguments that capitalism and/or liberal democracy fostered peace, happiness, and prosperity. There was an overwhelming sense that freedom — the freedom to speak your mind, to live as you liked, to buy and sell what you wished — was the thing that won.

Just two decades later, that idea is deeply in doubt. The wave of democratization and social liberalization went into reverse. The U.S. has been riven by social and political chaos, and its weaknesses in manufacturing and homebuilding have been starkly exposed. Meanwhile China, the ascendant superpower of the early 21st century, has moved back toward a more dirigiste economy and a more totalitarian society under Xi Jinping.

[…]

China hasn’t yet proven the superiority of its system, but its successes raise the uncomfortable question: Can this be what wins? Can universal surveillance, speech control, suppression of religion and minorities, and economic command and control really be the keys to national power and stability in the 21st century? How could that be true, when those same things failed so comprehensively in the 20th?

I don’t know. But it’s useful and to think about how and why totalitarianism might be well-adapted to the world of the 21st century. In fact, I have a theory of how this might be true. This theory is only a conjecture — it’s something I don’t believe in, but also something I can’t yet convince myself is wrong. It’s a refinement and extension of some of the things I’ve written about before, but over time I’ve begun to bring these ideas together in a more coherent form.

So here you go: a theory of how totalitarianism might naturally triumph. The basic idea is that when information is costly, liberal democracy wins because it gathers more and better information than closed societies, but when information is cheap, negative-sum information tournaments sap an increasingly large portion of a liberal society’s resources. Remember that I don’t believe this theory; I’m merely trying to formulate it.

[…]

Let’s start with Friedrich Hayek. Hayek had a theory of why capitalist economies would outperform command economies. His theory was all about information aggregation. Basically, the function of an economy, as he saw it, is to give people as much as possible of what they want given scarce productive resources. And people themselves have a lot more information about both what they want, and about how to use productive resources efficiently, than a central planner does. The function of a market, Hayek argued, was to aggregate those dispersed small bits of useful knowledge in order to better inform production decisions. […] The way markets did this, Hayek thought, was through prices. Prices are information.

Now, this argument is only for capitalism — economic liberalism — not for democracy or for social liberalism. But it’s easy to think of representative democracy as another information aggregation mechanism — a way of finding out what voters want and putting those wants into policy by simply letting people choose their leaders. And it’s easy to think of free speech as an information aggregation mechanism — a way of finding out what people think through a “marketplace of ideas”.

[…]

Economists take Hayek’s ideas very seriously, and in the decades following his seminal work there has been a lot of theorizing about the economics of information aggregation. Two key papers in this literature are Grossman and Stiglitz (1980) and Hirshleifer (1971). Both deal with the economics of financial asset selection — basically, stock-picking. But because the models are built on different assumptions, they arrive at almost opposite conclusions.

In brief, Grossman and Stiglitz assume that information about the value of a stock is costly. In order to figure out the proper price to pay for a company’s stock, someone has to actually go figure out how valuable that company is, and that takes time and effort. If stock markets were perfectly efficient — if all you had to do was to look at the stock price to tell how much a stock is worth — nobody would go do the hard legwork of gathering the information in the first place. So markets can’t be efficient; in order for prices to reflect fundamental values in the long term, someone has to be able to make money in the market in the short term by gathering information and using that information to correct mispricings.

Hirshleifer, on the other hand, assumes that information about fundamentals will eventually come to light on its own. If everyone just sits there and waits to see how well a company does, they’ll know how much to pay for its stock. But at the same time, he assumes there’s a big private reward for anyone who goes out and figures out that information in advance, because that person will be able to trade on the temporary mispricing before the information becomes public. So there’s a tournament between a bunch of investors who all try to beat each other to the punch. This effort is wasted, since the information would have come out on its own soon anyway.

Grossman and Stiglitz (1980) and Hirshleifer (1971) represent two very different worlds — a world of costly information vs. a world of cheap information. In the world of costly information, anything that brings down the cost of gathering information makes the aggregator — in this case, the stock market — more efficient. But in the world of cheap information, competition over that information produces waste and makes the market less efficient.

[…]

Now let’s apply that model to another key part of liberal democracy: elections. There is plenty of evidence that U.S. politicians spend much of their time campaigning for office rather than governing. Much of that time is spent raising money for campaign messaging. Every member of the U.S. House of Representatives is up for reelection every 2 years, requiring a continual cycle of fundraising; incoming House members are advised to spend four hours out of every day raising money. Other estimates give a number of 30 hours a week.

Thirty hours a week! That’s a staggering amount of time — almost a full-time job. Those 30 hours a week come directly out of time that legislators could otherwise spend governing the country. This is an information tournament — only one candidate can win any election, but all the candidates have an incentive to spend more resources shouting down their opponent.

And as a result, much of the actual work of governing the United States — writing legislation, reading legislation, thinking about policy positions to take, etc. — is done by staffers rather than by politicians themselves. In 1960s Japan, it was said that politicians “reign” while bureaucrats “rule”; in America, it’s not a huge exaggeration to say that elected legislators merely reign while staffers rule.[…] China’s leaders are not democratically chosen, which probably makes them worse at aggregating the preferences of the populace. But it’s at least conceivable that the Chinese system might give rulers much more time to do the actual business of ruling.

[…]

Thinking about all these examples, we can sketch out a general theory of how liberal democracy might be far less suited to the 21st century than it was to the 20th. As information technology has advanced, the costs of gathering information may have fallen to such a low level that the advantages of liberal institutions — markets, elections, and freedom of expression — may be attenuated. At some point, those advantages may fall well below the costs of information tournaments — the inevitable competitive negative-sum shouting, misinformation, campaigning, fundraising, and financial competition that has become an ever-larger piece of how Americans spend their time.

Thus it could be that while China builds cars, Americans argue about trans athletes. While China builds computer chips, Americans spend their time debunking fake economic statistics. While China builds submarines, Americans spend their time doing high-frequency trading. While China builds trains, Americans fundraise for elections. And so on. Meanwhile, thanks to the internet that America invented, China’s leaders can get a still-inferior-but-much-less-crappy idea of which products to build, which policies to enact, and which ideas to embrace than their Maoist and Stalinist predecessors could.

Looks and longevity: Do prettier people live longer?

Good news for the readers of this newsletter (aka exceptionally beautiful, moral, and intelligent people): Not only are you more informed and based than the rest of society, but you will also live longer!

(But beware: Unsubscribing may have adverse effects!)

Abstract

Social scientists have given relatively scant attention to the association between attractiveness and longevity. But attractiveness may convey underlying health, and it systematically structures critical social stratification processes. We evaluated these issues using the Wisconsin Longitudinal Study (WLS, N = 8386), a survey of Wisconsin high school graduates from 1957 which provided large samples of women and men observed until their death (or through their early 80s). In doing so, we utilized a meticulously constructed measure of facial attractiveness based on the independent ratings of high-school yearbook photographs. We used linked death information from the National Death Index-plus through 2022 and Cox proportional hazard models as well as standard life-table techniques. We found that the least attractive rated sextile of the sample had significantly higher hazards of mortality (HR: 1.168, p < 0.01) compared to the middle rated four sextiles of attractiveness. This finding remained robust to the inclusion of covariates describing high-school achievement, intelligence, family background, earnings as adults, as well as mental and physical health in middle adulthood. We also found that different specifications of the attractiveness measure consistently indicated no significant differences in the mortality hazard between highly attractive and average-looking people. Using life-table techniques, we next illustrated that among women in the least attractive sextile, at age 20 their life expectancy was nearly 2 years less than others’; among men in the least attractive sextile, it was nearly 1 year less at age 20.

Peace,
SG