The Astrodome Sink

I haven’t commented on Hurricane Katrina before now because I don’t wish to reiterate the obvious: the disaster planning and response have been disgraceful beyond measure. The consequences of a weak community and social web exceeded my imagination. The broken society Cindy and I sensed in New Orleans eight months ago imploded in tragedy. But I want to focus on something else: the dire consequences of crowding the refugees1.

An article on BoingBoing raised the issue: Doctors Without Borders recommends that the total size of a camp should be 30 square meters per person, with 3.5 square meters of personal shelter space. From the photos I have seen of the Astrodome, I would guess that the hurricane victims have about half that. In The Hidden Dimension, Edward T. Hall examines studies of people and animals in “sinks” – i.e., conditions of overcrowding. In particular, he references a French study which found that,

when the space available was below eight to ten square meters per person social and physical pathologies doubled! Illness, crime, and crowding were definitely linked2.

Hall cautions that reaction to crowding is culture dependent, so these results may not be representative of other societies. Yet animals suffer from similar pathologies (deer drop dead of stress; rats become violent, sexually aggressive, or abuse their young). Furthermore, Americans are accustomed to more space than the French, so one might expect they would be even more susceptible to crowding. Already there are reports of assaults and rapes in the Astrodome3, which has been booked through December. If this isn’t fixed, the hurricane’s victims will go mad long before.

1 I have read that the word “refugees” somehow demeans them. Personally, I think the alternative – evacuees – downplays the scale of the disaster.

2 Edward T. Hall, The Hidden Dimension, New York, Anchor Books, 1990 (1966c).

3 Update 2005-12-25: I have since read that this was not the case, and original reports of this kind of activity in the Superdome were greatly exaggerated.

2005-09-07

Inequality and Risk

Paul Graham argues that economic inequality is good because people want to be rich. In order to achieve this, they take risks (both by investing capital and and founding companies); the resulting innovation and growth benefit society. He claims the only way to reduce inequality is to take money from the rich. This reduces the incentives for risk-taking, which in turn threatens growth and the ability of a country to resist poverty and subjugation to others. I recommend reading his original essay: he’s a good writer (though this is certainly not his best).

Graham argues convincingly that inequality encourages risk-taking, and that risk-taking leads to growth. But the argument lacks balance: he treats reducing inequality and eliminating inequality interchangeably. Worse, he doesn’t account for the benefits of reduced inequality and taxation. His reasoning reduces the success of a society to the relationship between inequality, risk, and innovation1.

Incentives

Graham says that, “reducing economic inequality . . . is identical with taking money from the rich” – which by removing the incentive to take risks and innovate, threatens growth. But rich people are naturally risk-averse: they have the most to lose. So by Graham’s argument, it might make sense to take some money from the rich in order to encourage continued innovation2. As for the poor, they have little lose and everything to gain; it is they who are natural risk takers. So it is equally reasonable to criticize giving money to the poor.

This latter argument is quite common, first on the same grounds as Graham (that giving money reduces the incentive to work), and second because it eliminates spare capacity in the labor market (i.e. unemployment), which keeps wages and inflation down. Of course the second reason threatens the first, for limiting the gains the poor can make (by keeping wages low) also weakens the incentive.

The evidence is that the poor do take greater risks, as the popularity of lottery tickets demonstrates. Rich investors, on the other hand, tend to avoid risk. Only a few investors are venture capitalists3; many more pursue low-risk blue-chip investments or engage in speculation and short-term trading. Neither of these does much to encourage innovation.

Market Failure

There is much truth in Graham’s argument that inequality promotes risk-taking. But it does not follow that maximum inequality correlates with maximum growth. Quite the opposite: the world is full of destitute countries combining desperate poverty with extraordinary wealth. Their inequality hardly correlates to economic or social success. Nor is it clear that maximum growth is necessarily desirable: other western countries with less inequality than the United States (chiefly due to higher taxes on the wealthy) are hardly basket cases. Growth statistics are notorious for their weakness in measuring real-world wealth (e.g., reconstruction following a disaster counts as “growth”, but the creation of social assets like happiness and business relationships does not). America may have the most money, but it also has great poverty and the highest rate of incarceration of any western country. The result of reducing inequality need hardly result in “making your whole country poor”. By eliding reducing inequality with eliminating it, and citing growth as the sole measure of a society’s success, Graham sidesteps nearly all of the other factors that make a society work, and avoids any dispute about the trade-offs between one good (risk incentives, say) and another (such as stability).

Profit-seeking individuals and corporations are constitutionally ill-suited to taking into account “externalities”, i.e. the costs that their actions impose on others – even when collectively they too suffer the consequences. Environmental damage, social problems, and threats to democracy and all fall into this category. These kinds of market failures must be addressed by other mechanisms. For example, public institutions are more effective at delivering services when competition is undesirable or costs and risks are best pooled. These can include law, education, health care, policing, transportation, energy, sanitation, environmental regulation, standards, disaster relief, defense, diplomacy and so on4. The rule of law allows entrepreneurs to devote their risk-taking to innovation by increasing predictability and reducing risk through enforceable contracts. Other programs similarly provide benefits like security, education, and quality of life that allow businesses – especially small ones – to focus on what they do best. Graham recognizes this when he mentions that educating the poor can increase their wealth and inequality at the same time. Entrepreneurs may feel that they have succeeded alone, but that is an illusion: the money that governments take from the rich is the profit not just of individual enterprises but of the whole of society.

What is relevant is that these services are paid for disproportionately by progressive taxes. As economists say, increasing wealth suffers from “diminishing marginal utility”, i.e., the more money you have, the less significant any additional income becomes. Accordingly, $100 taxed from a wealthy person may be insignificant to them, where a homeless person would be devastated by such a loss; yet that $100, when put towards to the sorts of services listed above, has the same value regardless of its source. It may even provide more benefit to the rich taxed than when untaxed5. This is one case where taking from the rich benefits everyone.

Power

Graham addresses one market failure in detail. He suggests that the main reason for the opposition to inequality is the translation of wealth into power, and that the solution is to attack corruption through greater transparency (presumably enforced by tax-funded regulation). It’s a good idea, but eliminating corruption (were that even possible) will not break the connection between wealth and power. To the extent that we meet our needs through private enterprise, business power is political power. This power lies disproportionately in the hands of those who influence business decisions, including company officers, shareholders, and consumers. In the case of shareholders and consumers, this influence corresponds directly to wealth. Economic inequalities lead to power inequalities regardless of corruption (corruption may in fact serve to help).

These inequalities of power are self-reinforcing: rich folks want their kids to also be rich. They tend to believe in the competence of people like themselves, who are also generally rich, and so the same class of people is also hired and promoted. This kind of nepotism need not manifest as corruption. People understand the tendency to hire friends and family as human; transparency may therefore be ineffective at reducing such behavior. Yet it reduces productivity because it reduces the impact of merit and effort (e.g. risk-taking) on success. Those poor people who are willing to take risks (because they want to be rich) may become discouraged because they know they lack the advantages possessed by the rich folk. The rich folk, meanwhile, are less likely to take risks because they have more to lose, and in fact have an incentive to use their power to prevent anyone else from innovating and threatening their situation.

Again, I agree that inequality encourages people to take risks and thereby aids productivity. However, it also creates power differentials and class differences which reduce productivity. It seems likely that a balance is to be preferred over extremes of inequality. Taking from the rich may be beneficial: it reduces the imbalance produced by power differentials, it encourages rich folks to continue working, and it signals to the poor that the competition is more fair.

Maximum Change

There is one other assumption in all of this: that innovation should be maximized. Not all innovations are good. Contentious technologies include nuclear weapons, the replacement of streetcars with buses, and designer drugs. But even if we accept that innovation is good, maximum innovation may not be. Societies and cultures often have difficulty adapting to rapid change. The result can be tragedy, from dire environmental damage to the barbarism of the early twentieth century. Such catastrophic risks, combined with the other costs and risks of great economic inequality, surely indicate that innovation cannot be pursued as an ideal isolated from other social concerns.

Paul Graham provides good illustrations of the benefits of risk-taking, and he explains the dangers of eliminating economic inequality. But he goes too far when he argues against reducing economic inequality in general. His innovative start-ups are just one factor in a complex environment: there are other important costs to inequality, including threats to the entire system. Reducing inequality can be an important tool both for encouraging innovation and for managing changes it brings about.

Notes

1 See also Tim Bray’s rebuttal of Graham’s argument.

2 This is one of the reasons why copyright terms should not be unlimited: past works turn into cash cows for large corporations, which remove the incentive to fund new material. Placing such works in the public domain promotes creativity without denying society the wealth that the old works represent.

3 The prevalence of venture capital in Graham’s industry is a special case. In many industries (and in Canada), VCs are few and far between. Furthermore, most entrepreneurial businesses – although risky – are not innovative (restaurants and corner groceries, for example).

4 One may quibble over the list (I certainly think there are roles for the market in many of these areas – for example, energy and water price regulation can encourage overconsumption), but the fact of market failures is beyond dispute.

5 Of course, it is only natural that anyone – rich folk included – would prefer that someone else pay the tax. It might even be to their benefit to bluff and oppose taxes which benefit them: if others with more to gain pay the tax, then they will still benefit. This applies whether the “bluffing” is conscious or not.

2005-09-06

Kyushu Earthquake

We just got word from my brother Alexis, who lives in Fukuoka Japan. About an hour ago there was a magnitude 7 earthquake off the coast of Kyushu near Fukuoka. He’s OK, though his chest of drawers fell over. He says the TV and telephone are out, but his Internet connection still works so he was able to send us a message. Now he has to worry about aftershocks.

I just switched on the TV news, but I see no mention on CTV or CNN. Technorati, however, tells a different story.

I’m so glad he’s OK. I’m so glad he was able to tell us before we even knew it had happened.

2005-03-19

Single-Issue Surrender

Gay marriage fills the Canadian papers. I have stated my support. The issue is symbolically important, but materially less so (the young support it: if it comes not this year, it will come soon). But it is only one issue. Why will people stand up for this, when they will not for so much else?

In no particular order, here are ten other important issues on which we remain too silent:

  1. Health care. I have a friend who needs an operation; his doctor told him the waiting list is ten years long.
  2. A legal system which allows those with more money to steamroller those with less.
  3. The infiltration of organized crime into our infrastructure: our ports, our airports, very likely the government.
  4. Weakness and corruption in our democracy.
  5. Mediocre journalism which too often lacks critical reasoning, and has no sense of history or the wider world.
  6. Intellectual property laws which increasingly attack creativity and public discussion rather than supporting them.
  7. The elevation of greed and selfishness and the unwillingness of too many – from politicians to business leaders to social activists – to take responsibility for their actions or their participation in our society. The corporatization of society by groups of all kinds.
  8. The loss of community. We are too much separated from one another. Overrun by cars and sprawl, our cities isolate us.
  9. Quality of life. Our lives revolve around work, consumption, and passive entertainment. Families fracture; the old and the young are abandoned.
  10. The fragility of our liberties. We often behave as though we can be wealthy and happy without freedom of speech, privacy, freedom of conscience.

The issue of gay marriage is important, but it is not all-encompassing. We need to ally when we can agree. Whether we belong to the absurd categories of left or right, when we allow gay marriage – or any similar issue – to define our politics, we surrender our responsibility.

2005-01-22

In Support of Gay Marriage

When I first heard about gay marriage I did not think it terribly important. Gay couples should certainly have all the rights of heterosexual couples, but does it matter if they marry? Isn’t this a tempest in a teapot, a debate about semantics?

No. This is something far more important. The issue is not whether homosexuality is right or wrong, or even about homosexuality at all. This is about who we are and what we stand for. It is about the most noble qualities of our country, about whether Canada is a place of tolerance and diversity or a place of tradition and control. This is about the freedom of every Canadian. Every vote to revoke gay marriage is a vote to revoke my rights also.

For that is what those opposed wish to do: take away rights. Today, at this moment, gays can marry. But some people would roll back the clock. Some claim their faith requires them to restrict the freedom of others, forgetting it is that same freedom which allows them to practise their faith. Some claim that allowing gays to marry will somehow diminish their own relationships. That is their own weakness: they have already surrendered responsibility for their identity to others.

Though I believe homosexuality to be no more a moral issue than the colour green, those who disagree are welcome to their opinions and I will always defend their right to have and to speak those opinions. But such opinions have no place in public policy. Ours is a country governed by rights and freedoms, where individual choice is married to individual responsibility. It is not a country which imposes private morality. Those who oppose gay marriage wish to do just that, and turn our civilization back to a darker age. This must not be permitted. Canada was once an unremarkable land; in half a century we have built a haven of tolerance and diversity. Those who worked this miracle may turn away from their achievement, but their children know freedom and we will not give it up.

I wrote this last year; I thought I had posted it then.

2005-01-22

Surrey Centre

I just attended a presentation at Surrey City Centre about the plans for the redevelopment of that area. Assuming this goes anywhere, the great shame will be that it took so long for Surrey to wake up to the disastrous results of its failure to stand up to urban sprawl.

One of the planners at the meeting pointed out that Surrey Centre is large enough to encompass downtown Boston, Amsterdam, or the center of Florence five times over. Yet there is nothing there. For a city of 400,000 people, the 10th-largest in Canada, its core is empty of anything except strip malls, parking lots, and a handful of scattered highrises; it is famous for crime and drug dealing. The body of the city is endless barren streets and monotonous too-perfect developments of cul-de-sacs cut-off from their surroundings.

Much of the problem is that Surrey is geographically huge and has directed its growth outward. Even tonight, with the planners introducing their visions of new urbanism, mayor Doug McCallum remained unrepentant for encouraging growth – any growth, anywhere1. But if he finally takes action to increase density and livability, I applaud him.

The recent construction of the award-winning Central City building is a glimmer of hope. I wish Surrey luck: its very name has been a bad word for too long. Even those of us who live outside its borders have to live with it.

Notes

1 UPDATE: I should point out that these are not the actual words he used; this is my interpretation of his pro-growth speech and the actions of Surrey City Council while he has been mayor.

2005-01-20

Passport Privacy

Two recent newspaper stories about the death toll from the tsunami are accompanied by a photo of the passports of two Canadian children who survived. In an appalling lapse of judgement, personal details – up to and including passport numbers – are clearly legible. Having survived the tsunami, these children now bear the indignity and risk of having their information (possibly enough to steal their identities) published across the country. This kind of thoughtless behavior is surely not deliberate, but journalists are in the business: they should know better. Two newsrooms with two editors published the photo; a wire service and an image service supplied them; none had the sense to protect the information. I am not a lawyer, but it strikes me this may run afoul of Canadian privacy legislation. Media organizations should be held legally liable for this kind of reckless behavior. The responsible parties – Southam, AFP, and Getty Images – should at least arrange for new passports (with new passport numbers) for their victims.

2004-12-30

Sorry China, It's Ours

I read an unbelievably arrogant, self-centered letter to the Globe today – the kind of statement that verges on racism and gives environmentalists a bad name:

As I read through the articles on the rise of the economic impact of the “new” China, I was filled with immense sadness. The planet we all live on has finite resources and as the Chinese grab these resources for their own insatiable growth, the rest of the world, including plants and animals, will suffer the consequences. Your articles said little about the environmental impact of this rush to Westernize that seems to have gripped Chinese in some kind of group insanity.

– P.M., Courtenay, B.C. (I have withheld her name)

What the hell does she think we have been doing in the West? In 2001, China‘s population was 41 times that of Canada – yet they used less than three times as much oil. Their one-child policy, which we criticize for its barbarity, is a sacrifice greater than any made by a Western country. They are dying from horrendous pollution manufacturing goods for export to us.

It’s true the world can’t sustain a China that behaves like us. But when it came to exploiting the environment, we led the way. They deserve the wealth just as much as we do; we must accept that and work together to find a solution. Unless we’re willing to give up what we have, we have no business getting on our high horses and telling them, “Sorry, we got here first – you’ll just have to stay poor.”

2004-10-26

China, Canada & the U.S.A.

This weekend, the Globe & Mail devoted nearly their entire Saturday newspaper to China. The National Post, its main competitor, has been writing about China for the past week. The trigger may be the proposal of China Minmetals, a state-owned Chinese firm, to buy Noranda, Canada’s largest mining company. But the real issue is something else: it is China and America and Canada’s place in the world.

First, let’s look at what has been said about Minmetals. On Thursday, the Globe interviewed the Chinese Foreign Minister about the deal. The Minister was told that, “several MPs . . . have raised human-rights concerns. Some say the deal should be blocked because of reports that China Minmetals has been linked to the use of forced labor in the Chinese prison gulag”. He replied:

On human rights, I believe, our two peoples have a lot in common.

Liberty, democracy, freedom and whatever, we share a lot. What is democracy? Democracy is a way in which people enjoy their rights according to law. If the Chinese people and government are working in accordance with our constitution and law, why do people in Canada worry about this? I don’t think there is anything to give a reason for those people to worry about China’s human-rights record. Perhaps those people have not read at all the Chinese constitution. Perhaps they have not been to China and also perhaps they don’t know history.

Amazingly, Globe let these claims pass without comment. The Chinese constitution does indeed guarantee many things, among them “freedom of speech, of the press, of assembly, of association, of procession and of demonstration”. But the constitution is only paper – history has shown the government does as it pleases. The next day, the Globe followed up with an editorial supporting the sale:

It is certainly true that Beijing is no respecter of civil rights and that its government remains authoritarian, repressive and intolerant. But that does not mean its corporations should be excluded from foreign investment. China is under no international sanctions, it is a member in good standing of the World Trade Organization and it is moving away from the old command-and-control economic model toward one based on market principles. This is a process that needs to be encouraged, as open markets rarely coexist happily with closed political systems.

The paper goes on to suggest that Canada could help improve things, “provided Prime Minister Paul Martin makes it clear that the growing business and trade ties between the two countries will not prevent Canada from speaking out against China’s lack of political freedom and its sorry human-rights record.”

So the Globe stands with James Peterson, Canada’s Minister of International Trade, who’s op-ed piece on the same subject in the same paper (“Asia’s biggest tiger is slipping our grasp”) concludes, “I’m committed working with Canadian business and all levels of government to ensure that we recover lost ground and make new gains in a market critical to Canada’s future prosperity.”

Interestingly enough, the National Post, which as Eric Regularly said in Saturday’s Globe, is “normally a shill for capitalism, has urged the federal government to block the sale of Noranda to the Chinese, citing human rights abuses”. Terence Corcoran writes in Saturday’s Post,

In the context of the Communist leadership’s suppression of rights, denial of freedom and continued militarization, the Minmetals takeover of Noranda is much more than a commercial takeover by another corporation. It is the political takeover of a Canadian corporation.

What is going on here? I would expect the Post to be for the sale and the Globe to be against, yet the opposite is happening – the Post is the one arguing for human rights. And I think I know why. The real issue is something else. More than left vs. right it is the issue that has always defined Canadian politics: our relationship with the United States of America.

We cannot escape the influence of a southern neighbor with ten times our population. Pierre Trudeau tried to balance the pull of the U.S. by building ties to Europe. He failed – today, fully 86% of Canada’s exports are to the United States. Canada is split between those who are pleased with this relationship with the great democracy, and those who are skeptical of and seek independence from American power.

Generally speaking, the National Post is strongly pro-American – from the country and its policies, from Israel to Iraq, from politics to trade. The Globe and Mail, on the other hand, is more skeptical. So when these two take unexpected sides on a debate, it seems likely that some other, more fundamental force is at work than regular left-right politics. What is really being debated here isn’t human rights – it would be arrogant and idealistic in the extreme to suggest Canada can change China – and it isn’t economics.

The real shame is that this is a debate we need to have. History is impossible to predict – just fifteen years ago Americans worried about Japanese dominance – but there is no question that China is becoming a major power. Canada already has close ties through the nine hundred thousand Chinese who have settled here (in the United States, for comparison, there are about two million Chinese). We cannot remake China. Our responsibility is to pursue our own self interest. We have the raw materials they need for growth; there will be an impact whether we sell them commodities or corporations. What are the benefits of entering the Chinese sphere of influence? Will we make money? Will this change our relationship to America? Will our human rights be affected? If we want a say in our own future, we must start discussing these issues honestly now.

2004-10-24

Algeria as Iraq

Kuro5hin suggests that the U.S. military in Iraq is modeling its actions on those of the French in Algeria in the 1950s. It says that “the Bush administration telegraphed their intent to use torture on prisoners in Iraq when they screened Gillo Pontecorvo’s 1965 film The Battle of Algiers.” It concludes that “The French won the battle of Algiers only to lose the Algerian war of independence.” I am not going to argue American politics on this one way or the other. The history is much bigger and darker than this. The Algerian crisis led to an attempted coup in Paris and the collapse of the Fourth French Republic:

The governor-general [of Algeria] had already left for Paris bearing a barely disguised ultimatum from the soldiers threatening insurrection if parliament would not clearly endorse a policy of Algerie Francaise. . . . On 29 May the president of the Republic called on the general [de Gaulle] to form a government of national safety, saying the country was in danger of civil war.1

When the generals called for de Gaulle they were lying, for they saw him merely as a battering-ram, to smash the Republic and take power for themselves. . . . De Gaulle took over to avert an invasion of France itself, which would probably have succeeded or, alternatively, produced civil war. He saw ominous parallels with the beginning of the Spanish catastrophe in 1936.2

The whole story is enough to make me cry. According to Johnson, the policy of the terrorist FLN in Algeria was to polarize the population by eliminating moderates on both sides. France first reacted by installing Governor-General Jacques Soutelle, who “thought he could defeat them by giving the Arabs genuine democracy and social justice.” The FLN responded with atrocities calculated to goad France into brutal reprisals, thereby forcing Arab moderates to their side. They succeeded. The French government then replaced Soutelle and gave the military carte blanche to commit torture and murder to destroy out the terrorists: “the war became a competition in terror.”

The French won this war. But when news of their actions reached the French people, support for the military collapsed. The clash lead to crisis in the French government. De Gaulle took power, indicating to the military and the French in Algeria that they would not be abandoned with the famous line, “Je vous ai compris” (I have understood you). Over the next few years he shored up his control; when he did abandon Algeria the consequent coup in France failed.

Algeria has been a bloody mess of torture and murder, razed villages and massacred innocents, ever since. According to the CIA factbook, “operations by the activists and the army resulted in nearly 100,000 deaths” in the 1990s.

The parallels with Iraq are questionable (Chechnya is probably a better comparison). I certainly don’t believe the American army will rebel. One implication is perhaps that terrorists can win against democracy and freedom on their own soil. The greater lesson is that while torture might succeed in a limited sense, its corrupting influence risks destroying the society which allows it. But perhaps what scares me the most is that the Kuro5hin article contains no mention of the attempted coup. If Iraq became Algeria all over, we would hardly know it.

Notes

1 Roberts, J.M. Twentieth Century. Pages 547-8.

2 Johnson, Paul. Modern Times (revised ed.). Page 502.

2004-09-17
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