Free movement and discrimination: the case of football

The more you open markets up, the less discrimination you get on grounds of ‘taste’ (racism). The stuff left over is usually ‘statistical‘ (i.e. where certain groups are different in their average levels of job-relevant criteria). There was already a great paper showing this for the Fantasy Premier League (which I play avidly), but now there’s also one for the real Premiership!

Pierre Deschamps and José de Sousa look at the impact of the 1995 Bosman Ruling on the gap between black and white footballer wages in the English league. They find that when only 20 clubs competed for their skills, black players were underpaid relative to white ones, indicating that owners were able to indulge their preference against non-whites (or indulge their fans’ preferences).

But once the whole of Europe were effectively on an equal footing, blacks became highly mobile and garnered equal pay for their efforts:

This paper assesses the impact of labor mobility on racial discrimination. We present an equilibrium search model that reveals an inverted U-shaped relationship between labor mobility and race-based wage differentials. We explore this relationship empirically with an exogenous mobility shock on the European soccer labor market. The Bosman ruling by the European Court of Justice in 1995 lifted restrictions on soccer player mobility.

Using a panel of all clubs in the English first division from 1981 to 2008, we compare the pre- and post-Bosman ruling market to identify the causal effect of intensified mobility on race-based wage differentials. Consistent with a taste-based explanation, we find evidence that increasing labor market mobility decreases racial discrimination.

The figure below shows how the ‘turnover’ (i.e. churn between clubs) of black English players jumped when European markets opened up. Market freedoms; exit; a sort of ‘voting with their feet’, outperformed voice in bringing equality. And we know from ASI research that this did not harm the English national team.

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This is in line with a lot of what we have been saying recently—markets are a good way to bring about justice!

Space disco, Kate Bush, and more: the ASI’s best of 2014

Ben:

Song: #####.1 by #####

Album: It’s Album Time by Todd Terje

Musician: The Pizza Underground

Movie: Grand Budapest Hotel, but I’m ashamed to say I only saw five

Book: Pale Fire by Vladimir Nabokov

Restaurant: Rex and Mariano, Soho (runner up The Manor, Clapham)

Favourite article: I Can Tolerate Anything Except the Outgroup, by Scott Alexander

Favourite moment: #Gamergate

Favourite person: Scottish highlander on BBC Question Time

Kate:

Song: Wild Child by Kenny Chesney, with Grace Potter

Album: 1989 by Taylor Swift

Musician: Jason Aldean (for continuing his tradition of writing songs about trucks)

Movie: Magic in the Moonlight

Book: Goodbye, Mr Chips by James Hilton (1939)

Article: Bring Back the Girls – Quietly by Peggy Noonan (WSJ)

Political moment: #Bridgegate

Person: Senator-elect Cory Gardner, CO (I have now forgiven Colorado for their nightmare decision in 2012. Ohio, on the other hand, I am still not speaking to)

Charlotte:

Song: minipops 67 [120.2][source field mix] by Aphex Twin (because it only took 13 years to come out proper)

Album: Rivers of the Red Planet by Max Graef (jazz/hip-hop/house, good background music)

Musician: Kate Bush (the year I got round to listening to her albums)

Movie: Under the Skin (amazingly shot)

Book: Perfume: The Story of a Murderer by Patrick Suskind (one of the few I actually read)

Restaurant: Bone Daddies, Soho (who can’t love a huge bowl of pig fat & garlic)

Article: The Socialist Origins of Big Data - The New Yorker (on Chile’s project Cybersyn)

Political Moment: The world thinking Kim Jung Il’s public absence was because he broke both his ankles because he ate so much Emmenthal (because obviously)

Person: Shia LaBeouf (for everything he’s given us)

Sophie:

Single: Shake It Off by Taylor Swift (I do not enjoy this song but LOVE watching Charity, one of my best friends and Swift’s greatest fan, singing it)

Album: Artpop by Lady Gaga (the pop genius’s works are not only the epitome of freedom of expression and individualism but Gaga demonstrates the natural force with which the world sucks up anything walking into a gaping hole in the market)

Musician: Kate Bush (my eyes opened to her brilliance and creations this year by Sam, her sounds and voice open creative avenues in my mind)

Movie: La Grand Bellezza (released 2013 but watched this year, you MUST see this, it’s an indulgent party for the senses to devour)

Book: The Rational Optimist by Matt Ridley (only read this year though it was released in 2010)

Restaurant: Le Relais de Venise, Mansion House (holds fond memories of both an amazing steak and my first time dining with the ASI team)

Political moment: remaining a United Kingdom (were endless obscure and hilarious ones in 2014, though building up to the referendum for two years and the elation experienced at the result makes this undoubtably number 1)

Person: Malala Yousafzai (the 17-year-old global role model is courageous, ambitious and hard-working, existing to fight for others’ education—I was reduced to tears of inspiration when she spoke at my university)

Nick:

Song: Fancy by Iggy Azalea and Charli XCX (albeit for entirely non-I-G-G-Y related reasons)

Album: Kenny Dennis III by Serengeti (see No Beginner, Off/On)

Musician: Jonwayne (partly for being the neckbeardiest rapper/producer going – see Andrew, Be Honest)

Movie: Locke (of the four or so I watched)

Book: Time’s Arrow by Martin Amis (1991) or The Rise of the Meritocracy (1958) by Matthew Young (honourable mentions to We by Yevgeny Zamyatin (1921) and Girl, 20 by Kingsley Amis (1971))

Restaurant: Jam Jar, Jesmond, Newcastle, if only for their Cow vs. Pig burger

Article:Tories should turn their backs on Clacton’ and ‘Voters, not the politicians, are out of touch’ by Matthew Parris, King of trolls (Times)

Political moment: The UKIP defections and the resulting betting, which netted me a sum of no less than £10

Person: For me, 2014 was the year of the unimullet (s/o r/YoutubeHaiku)

Sam:

Song: Attachment by Hannah Diamond (My top 50 singles of the year are here, Youtube playlist link here)

Album: It’s Album Time by Todd Terje (Thanks Ben for introducing me. I also enjoyed FKA Twigs’s album LP1 and got into Susanne Sundfor in a big way this year)

Musician: AG Cook / the PC Music grouping in general

Movie: Interstellar (but I only saw about 5 films all year)

Book: Vanished Kingdoms by Norman Davies (Worth it for the chapter on the Kingdom of Dumbarton Rock alone. Matt Ridley’s The Red Queen, on the evolutionary biology of sex, was a close runner-up)

Restaurant: Santana Grill (a burrito stand on Strutton Ground near the office—just delicious; I also ate at KFC at lot)

Article: An open letter to open-minded progressives, by Mencius Moldbug (I disagree with much of Moldbug’s work, but I can’t think of a more interesting contemporary political thinker)

Podcast: Serial

Political moment: Shinzo Abe storming to victory in Japan (also for his amazingly awkward handshake with Xi Jinping)

Person: Richard Dawkins (boring as an atheist, brilliant as Social Justice Warrior-bait)

Philip:

Song: Turn Down for What by DJ Snake and Lil Jon

Album: Syro by Aphex Twin

Musician: Matador

Movie: Guardians of the Galaxy

Book: Intuition Pumps and Other Tools for Thinking by Daniel Dennett

Restaurant: Gymkhana, Mayfair

Article / blogpost: How Farming Almost Destroyed Ancient Human Civilization by Annalee Newitz

Political moment: The landing of the Rosetta spacecraft’s Philae probe on Comet 67P

Person: David Sinclair (for his work on lifespan extension)

Local government cuts needn’t be the end of the world

Local governments are having their spending power cut by 1.8% in real terms next year. Local councils pay for things like social care, some education, public transport and roads, and some of the arts. So this cut is not so popular in some quarters.

I hate relying on ‘waste cutting’ as a way of making spending cuts, but local councils really do seem to waste a lot of money. Since 2010 they’ve made £10bn in efficiency savings, and a third of councils say they can make bigger savings. I’m sure at least some of the other two-thirds are just being shy. The Local Government Association estimates that local governments can continue making efficiency savings at between 1 and 2 percent per year. So that’s something.

The big spending items are social care and waste spending. Both of these can be reformed so that people who can afford to have to pay for themselves. Waste collection is often contracted out, and there is academic evidence that doing so results in significant cost reductions. (There’s an easy way for councils who do not already do this to save some cash.) But more significantly there’s no real reason that more of the actual payments for this should not be moved to private residents as well, at least those who can afford it. 

Social care is much trickier and, as the population gets older and lives for longer, paying for it is becoming a bigger and bigger problem. Those people who can afford to pay for their end-of-life care should do so, but there is the problem that this disincentivises saving. Nevertheless it is hard to see a case for people who live in social housing and earn low amounts of money paying for the end-of-life care of people who own the big houses that they live in. Reforming this wouldn’t solve problems in the short run, but it might help stave off a bigger funding problem in the medium run.

Normally everyone focuses in on arts funding. In my view, there is no role for government in arts funding at all. I won’t convince you of this here, but Pete Spence might. And there are all the weird little things that local governments spend their money on that could be cut to save even a tiny bit of money. Where I live, in Lambeth, half the adverts I see seem to be thinly-veiled political campaign posters (paid for by me and my neighbours).

And, funnily enough, there’s one way councils could raise quite a lot of money and solve another problem in the process. The country needs a lot more houses, and planning permission is the main thing standing in the way. In some parts of the country, a piece of agricultural land that gets planning permission rises in value by one hundred times. Councils should be allowed and encouraged to auction off development rights for new houses. That would raise money for them and help tackle the housing shortage.

The problem here is that housing demand is not equal across the country, and it’s the richer places like London and the south east that would benefit the most from this. So there’s probably a case for some minority fraction of the money raised being redistributed to poorer authorities. In general I like the principle of council funding redistribution from rich to poor parts of the country, but that does reduces the incentive for councils to improve the economic prospects of their own areas. Though perhaps they lack the powers to do this anyway.

We have a government deficit that most people want reduced, some very large areas of central government spending that most people want increased (pensions, healthcare), and a general consensus that economic growth is a good thing (so tax rises are out). Something’s gotta give and there is almost nothing that can be cut painlessly. But given some willingness to reform alongside cutting, local government cuts could be the right way to go.

They’re spouting rubbish about rubbish again

We’re really got to get ourselves a new group of people running our public services you know. The current lot seem to have missed the point of the whole exercise. For, at root, the entire exercise of politics and state power is really a method of deciding who empties the bins.

There are certain things that simply need to be done. There’s also a group of things that can be done individually, one of those that can be done by simple voluntary cooperation and another group of things that can only be done by some fairly strong compulsion. And those that are properly the province of that state, this government idea, as those that must both be done and can only be done with that compulsion. And taking out the rubbish is one of those things that is both. Yes, a free market would indeed deal with most of it but the public health benefits of not having those remaining piles of stinking ordure mean that there’s always going to be some state compulsion necessary.

At which point we get:

A town has been left overflowing with rubbish bags after binmen have refused to pick them up – because the sacks are the wrong colour.

Mountains of household waste is lining streets in Weymouth, Dorset, after residents were given blue bin bags as part of a new waste collection scheme rolled out in the town.

But some claim they did not receive the new blue sacks, and have continued to use the standard black ones – only for them to be left by the side of the road by binmen under strict orders not to take away the ‘unauthorised bags’.

Piles of rubbish bags have been mounting up in streets around the town for the past two weeks, to the anger of residents.

What?

The council-run Dorset Waste Partnership said it is ‘applying its policy’ to limit residents to one household rubbish bag a week in the hope they will recycle more.

The loons have taken over the asylum. We need to fire these people and get a new set.

Please note this is not about party politics and it’s also not about the “shortage of landfill2. We don’t have such a shortage. The country produces about the same amount of waste each year as the number of holes we dig each year for other reasons. The only shortage is in the licences to be allowed to put the rubbish into the holes we already have available.

What this is about is that we’ve simply got the wrong group of people ruling us and that needs to change. On the basis that government really is about deciding who take out the rubbish and if they can’t even manage that then….well, why don’t we try finding some people who can manage that minimal task?

Competing monetary rules: modern free banking possibilities

With the emergence of new digital currencies and, in particular, crypto-currencies (the most prominent of which, being Bitcoin), one can wonder how different Free Banking might look in the modern economy.

In the past, monetary rules had been based on metallic content. Now, they are often focused on inflation-targeting, nominal-GDP targeting and so on. Though Free Banking would be desirable, Ben Southwood and Sam Bowman have previously argued for nominal GDP targeting in its stead, as the pragmatic, preferred alternative for monetary policymakers. Saying that, George Selgin argues that most free banking systems lead to effectively 0% NGDP targets.

Of course, the one thing that all these monetary rules have in common is their aim to foster expectations-stability. However, stabilising expectations with respect to one variable often still leaves unstable expectations with respect to another variable; modifications of the Taylor rule may stipulate that we should raise or lower interest rates according to the output gap, inflation rate etc. but this still does not mean that people will be able to forecast when or by how much the interest rates will rise in advance since one’s expectations with respect to other important variables are hardly stable.

Bitcoins have a monetary rule with respect to the rate of increase of the money supply that is determined by an algorithm that periodically halves the speed at which Bitcoins are rewarded to the successful miner (mining being the process by which they are created) and, furthermore, the number of bitcoins in existence can never exceed 21 million. However, Bitcoins still suffer from exchange-price volatility. Other crypto-currencies also have different monetary rules. So it’s quite clear that developments in the state of technology enable different types of monetary rules to be implemented.

In a modern free banking system, then, there would be competing monetary rules between the various different currencies (whether they are issued by banks or obtained through other mechanisms made possible by the state of technology). Since each monetary rule implemented hitherto attempts to stabilise expectations with respect to a certain variable, picking a currency would essentially involve each agent choosing between differing monetary rules and, therefore, independently and rationally stabilising their expectations according to their priorities.

Even Keynes wrote on the importance of understanding

The dependence of the marginal efficiency of a given stock of capital on changes in expectation, because it is chiefly this dependence which renders the marginal efficiency of capital subject to the somewhat violent fluctuations which are the explanation of the Trade Cycle … this means, unfortunately, not only that slumps and depressions are exaggerated in degree, but that economic prosperity is congenial to the average business man.

So even in a Keynesian framework, modern free banking, through more diverse, competing monetary rules, could help ease the excessive malaises of business ‘cycles’!