Review: Era of Darkness

This 2016 book about British colonial rule made me understand the meaning and force of “check your privilege.” The author, Shahhi Tharoor, has written many books and has had an extensive career (after earning his PhD at 22 years!) as an Indian politician and international diplomat. 

Tharoor’s documents how the British harmed existing, thriving communities during their rule and explains how their misguided and/or intentionally harmful policies still undermine development in the Indian subcontinent.

(Recall that the East India Company [EIC] converted trading posts into a de facto colonial rule between 1613 and 1857. After the Indian Mutiny of 1857, the Crown ruled the territories as part of the British Empire, also called the Raj. These territories included present day India, Pakistan and Bangladesh, but I will refer to them collectively as “India.” The Empire had significant influence on Sri Lanka, Nepal and Afghanistan. The book does not cover events in other territories of the Raj, but they show up as colonial administrators in London move people, goods and money in one giant game of Risk.)

Aside: my personal story

Long time readers will know that I have some connections to India, so I was fascinated by Tharoor’s steady demolition of the legends and excuses justifying White Man’s rule over Brown People who neither asked for nor received “development”.

This book contextualized my family’s history in colonial India. First, there is the fact (via DNA testing) that my father is “one-third” Indian. This ratio is unfamiliar to anyone who thinks of ancestors in terms of halves, quarters, and so on, but it reflects (I think) the intermingling of various (un)acknowledged ancestors over the many generations. (All 4 of my father’s grandparents were born in India. At least half his great-grandparents were, with the rest “born unknown.”) Tharoor notes that the British were far more open to forming families and marrying in the EIC era, so it is easy for me to believe that our ancestors were having children in the open or in secret, whether or not their names appeared in official records or their original (native) spellings.

Second, Tharoor provides abundant evidence of how the British lived at native expense. Wages to white men were 20-40x higher than wages to locals doing the same jobs. Such wealth explains why white mem-sahib’s had servants for every domestic task . White men also enjoyed privileged trading rights, government contracts and other sources of “rents” that would allow them to make easy money on the initiative and hard work of locals forced to use them. (These contracts are still used to enrich citizens of Gulf States — Saudi Arabia, Kuwait, Dubai, et al. — who act as local partners of the foreigners who want to do business there.) My grandfather worked as one of a dozen Assistant Under Secretaries. His brother traded goods with the “home country.” (I would love to get more information on these roles, but I’ve never had the time to dive into the archives.)

Third, the British enjoyed a degree of political power and legal impunity that made it easy for them to (literally) get away with murder. They were allowed to do as they pleased, since Indians had hardly any power to question, judge or condemn abuses. I wish I could ask my father’s parents about their transition from power to forced retirement on their 1949 “return” to England — a place they may never have seen. I assume their pension was entirely inadequate to support a colonial lifestyle in Post-WWII England, and I am sure they were shocked to meet the English working classes.

Interesting facts and ideas

I highlight passages that are novel or present familiar ideas in elegant ways. These notes are neither balanced nor complete because they omit ideas I know and emphasize ideas that interest me.

  • Tharoor points out early on that Indians share responsibility for their development as well as (for some) collaboration with the British. These facts aside, he asserts that colonialism hindered India’s development.
  • British at home complained of colonial “nabobs” (a mispronunciation of the Indian title of “nawab”) who had grown rich without talent and then returned as nouveaux riches to invade high society.
  • The EIC levied swinging taxes on farmers and returned no public goods. The money was sent to London, and poverty and hunger skyrocketed among peasants.
  • The British displaced village and regional judicial, economic and political governing bodies with centralized rule by whites who had no historic, cultural or linguistic connections to those they ruled, destroying institutions with a thousand years of functional experience. One 24-year old ruled over one million people across 4,000 square miles as tax collector, criminal and civil judge, land administrator, and 7-8 other titles!
  • EIC rule grew more despotic as time passed. In the 1750s, the EIC was taking over territory by force and seizing tax powers from the local rulers they defeated in “treaties.” (This pattern dates back to the conquest of the New World in the 1500s and extended into the colonization of Africa in the late 1800s. Such “treaties” were also used to subjugate China after the Opium Wars of the mid-1800s, which may explain China’s nonchalant pursuit of similar policies in recent years.)
  • The British obsession with written procedures and binding decisions subjected locals to inflexible, one-size-fits-all rules that connected locals would try to influence while the majority suffered. In the pre-colonial past, local rulers had debated and ruled in public, according to local conditions. 
  • Tharoor, a member or Parliament, thinks that India needs a different political system, i.e., one that separates executive and political roles. Given the shambles of India’s Parliament, where 35 percent of MPs face criminal charges and personalities dominate parties and platforms, I agree.
  • India was originally a “gender fluid,” sexually tolerant society (have you seen its temples?), but the British criminalized most non-heterosexual, unmarried lifestyles.
  • Nearly all British laws — on sex, free speech, labor, etc. — were intended to strengthen rule rather than foster development. It is in this sense that the British set India‘ s development back a few centuries. India and Britain’s share of world GDP were 23 and 1.8 percent in 1600. At independence (1947), these shares had reversed to 3 and 10 percent.
  • Tharoor shows how colonialism introduced intolerance, corruption and dysfunction. The British did not try to understand India’s ethnic, religious, and caste diversity as much as simplify, categorize and fossilize divisions into familiar boxes imported from home. It did this to facilitate rule by outsiders ignorant of local nuances, to impose their superior culture on others (most obviously by codifying fluid and changeable castes to match their notions of class), and to divide and rule by emphasizing Muslim minority status and Brahmin’s “natural” rule over lower castes. It is hard to understate the massive damage of these interventions, which are — in my opinion — mostly responsible for ongoing sectarian strife within India and between India and Pakistan as well as the corruption of caste-based political parties and discriminatory laws. (The ruling BJP trying to remove Muslims from its history, culture and geography.) 
  • Hindus and Muslims cooperated during the 1857 Mutiny. The shocked British expanded their “divide and rule” techniques to emphasize the differences between these groups (and many other subdivisions). The prejudices they introduced resulted in the split of East and West Pakistan from India, several wars, and endless sectarian strife.
  • India had always produced enough food, but 35 million starved due to British policies of exporting food to “home.” Note that the population during the colonial era was around 200 million, so that’s also a massive share (around 5 percent) of the population, equivalent to, say, 15 million Americans dying today of government-induced starvation. (Not even Trump is that bad.)
  • In the 1519-1939 period, the British “migrated” 5.3 million people, of whom 58 percent were African slaves, 36 percent were Indian indentured laborers, and 6 percent were convicts. The death rate en route among transported Indians was worse than that of slaves. Much of India’s diaspora in the Americas and Southeast Asia was brought by force.
  • The railways were built to exploit locals. Passengers subsidized freight and investors made a fortune lending money for a system that cost nine-times the price per mile of American railways. Locals were prevented from running the system; equipment had to come from the UK.
  • The British used education for exploitation. They shut down the continent’s system of local schools and switched students to English because that was the language of the rulers. In the process they destroyed higher education. (Nalanda University had 2,000 teachers and 10,000 students learning in Sanskrit, Urdu, Persian and Arabic before Oxford or Cambridge were founded.) The British had no use for local knowledge or education. At independence, India had fewer schools than centuries earlier and a literacy rate of 24 percent for boys and 8 percent for girls.
  • Post-independence India’s disastrous turn to socialism (and ongoing embrace of chaotic bureaucracy) can be traced to a rejection of “capitalism” (as practiced on them) and a colonial educational system devoted to paper-pushing.
  • Read “The Brown Man’s Burden” here for a rejoinder to Kipling’s “White Man’s Burden.”

The impact of colonialism on development

Turning from my notes, I’d like to make a few observations of the importance of colonialism on the growth (quantity) and development (quality) of a country.

First, institutions (formal rules and informal norms) play an enormously important role in how people interact in peer-to-peer (e.g., community and markets) and power (e.g., political governance) settings. Colonial rule usually displaces and interferes with local institutions with disastrous results because colonial powers are often interested in transferring wealth “home” rather than building prosperity locally.

Second, colonials mistook power for wisdom. Local culture takes decades to understand, let alone augment. Colonial powers ignored that fact and replaced local solutions to local problems with imported, oversimplified, mistaken policies that failed.

Third, colonials were interested in resources they could carry away (gold, wood, fish, oil) rather than local economic activities or the local environment. In such a “resource curse” situation, they would favor the resource sector, undermine the local economy, and destroy the environment that residents needed for there physical and mental health. Their administrative systems of exploitation also undermined democracy and popular participation, as the one and only goal was wealth extraction.

Fourth, colonial shocks put the vast majority of the world’s population on a worse development path. With the exception of Europe, the “Anglosphere” colonies (Australia, Canada, New Zealand, and the US) and the few non-colonized countries in the world, the net damage (benefit to colonizers less harm to those colonized) is surely negative in terms of wealth, physical and mental health, and political autonomy and freedom.

Fifth, the disaster of Brexit is being mismanaged by the same types who mis-ruled India and the rest of the Empire.

Sixth (and see comments below), many academics have a hard time explaining the impacts of colonialism because they compare different post-colonial results (using “colonized by the French” or “colonized by the English” as dummies in regressions) rather than considering where the countries (or regions, given how inappropriate colonial borders were) would be in the “counterfactual” world without colonialism. It is in this sense that we both underestimate the damage of colonialism and overestimate the success of “the West.”
 
My one-handed conclusion is that anyone lucky enough to live in a country with a colonial past (and that includes the US) should remember that much of their current prosperity and opportunity relative to colonized countries reflects historic rape and pillage more than virtuous hard work. I highly recommend that you read this book (or others written by colonial subjects) to learn how lucky you are — and the challenges that others face.


After reading Era of Darkness, I asked some of my UC Davis professors to recommend some readings on colonialism and development. They hesitated to make any recommendations on such a complex topic, as explained below:
 
Steve Boucher writes:

It’s very important to have students make the link between colonialism and modern, hegemonic notions of “development”.  In this vein, you might find useful some of the chapters from Gilbert Rist’s The History of Development. I often use Chapters 3 (“The Making of a World System”) and 4 (“The Invention of Development”) for this purpose.

There are, of course, a ton of case studies in history that go into gory detail about the direct horrors of colonialism, but I personally think that it is impossible to do justice to the magnitude and complexity of the impact of colonialism in an economics course — unless that is going to be the entire focus of the course.  I encourage students to take courses in US, African and Latin American colonial history, where they will be able to get a serious exposure to these issues.  

In our econ development courses, I think it IS feasible to take a bit of time to get students to think critically about the notion of development and how and when it emerged as a hegemonic concept, and how this historical process shaped the types of questions economists ask (i.e., in Chapter 4 of the Rist text, he discusses how the transition from colonialism to post-colonialism and the emergence of the US helps us understand how and why per-capita growth became the hegemonic development indicator in the post WWII era).

Anyway… I guess my take-home point is that, I completely agree that colonialism and its legacies are crucial to understanding the world today.  However, this is such a big and complicated topic that you have to be careful [about presenting one or two papers on the topic] and make sure that what you cover is useful for the economic concepts that you are charged with developing in the course.

Tu Jarvis writes:

In my epoch, there were numerous efforts to measure the exploitation of colonies by the amount of wealth that was transferred to the colonial power. To my memory, none of these turned up much. The amounts transferred were small relative to the GNPs of the central powers, and even relative to the amounts invested, i.e., I in GNP.  However, the negative impact of the colonial powers seems to have been large in terms of restricted development, which showed up in terms of (lower) infrastructure development, education, property rights (laws, rules, customs, etc.), and suppression of entrepreneurship, i.e., the various components that make up what we know as successful modern economic growth and development. In that sense, Acemoglu and Robinson’s Why Nations Fail, without focusing directly on colonialism, provides a good sense of the policies that seem to “work” versus those that do not.

I think much of the literature on Institutional Economics has gravitated in this direction over time.  It originally focused on efforts to reduce transactions costs, and then to the need to create a stable civil society where entrepreneurs would encouraged to make longer-lasting productive investments (and thus the emphasis on property rights as a proxy for that environment, which, at least to me, often seemed “conservative” in orientation). More recently, Institutional Economics has recognized the importance of political and economic “inclusionary” policies and recognized the importance of change in institutions, including the disruption of property rights, when such is needed to break with harmful existing institutions.  It is a pretty big change – but the emphasis is on what leads to beneficial, inclusionary, participatory progress.

As a result, while I think it useful to point out to students that colonial rule was extremely damaging to many regions of the world for a long period of time, I would point to the reasons why it was damaging – and also how difficult it has been in many countries to change even after colonialism ended.  Nonetheless, countries did emerge, and relatively quickly, at least in historical perspective.  The East Asia Tigers were growing rapidly by the 1960s, China joined in the 1980s, India a bit later, and Africa has shows signs of progress in the last 15-20 years.  So, institutions have changed and growth has spread.  “Convergence” means different things to different people, but lower income countries are, in the main, clearly growing more rapidly than developed countries today.  It’s not always clear whether this is due to the end of colonialism or to increasing globalization which has allowed such exceptional increases in communication, travel, education, trade and the like, but there must be many reasons. 

Obviously, there were countries like Thailand that were never colonized that also took a long time to develop, and Latin America, which was independent by roughly 1810, has grown, but not rapidly, despite being free of direct colonialism for many years. Was it affected by colonialism?  Probably.  But would the Aztecs, Mayas and Incas have been markedly more successful in the absence of contact with Spain?  Not an easy question to answer in my opinion. 

I guess I’m suggesting that it’s useful for students to understand history, including the desire for some people to dominate and benefit from others, but that isn’t limited to colonialism.  It existed throughout history and was often more vicious than was colonialism, and it continues today by a wide range of countries, e.g., US, Russia, China, with different economic and political institutions.  I’d thus try to focus on the broader policies and institutions that seem beneficial.  If students can think about those and come up with a useful tool bag, they’re more likely to be able to do something beneficial in their own work. 

I’m always reminded that revolutionaries, whether Mao, Castro, Ortega or whomever, always seem to be incredibly certain that they know the way and are quite willing to use power to cement their own rule, which is often not democratic or broadly beneficial.  So, the end of colonialism still required other changes. 


Read all my reviews here.

Recommended reading

  1. “Giving back” is inadequate if you’re a robber (or Silicon Valley expropriator).
  2. Why is “share data” the default? Smart cities are not for us.
  3. Life is too short for bullshit (so choose your priorities)
  4. Ralph Pentland on the past and future of sustainable water management in Canada [pdf].
  5. Economists (including me) on the world economy in 2019
  6. China’s economy is in real trouble, and its leaders are doubling down on control
  7. I’m glad to see Gillette asking men to do better #metoo. Related: Men taking “pick up” classes so they can “score”. FAIL.
  8. Jay-Z’s “99 Problems” and the Fourth Amendment
  9. Andrew Yang for President!
  10. A great summary of how megaprojects go wrong

Ego or learning?

I sent this article (“I’m a Developer. I Won’t Teach My Kids to Code, and Neither Should You.”) to Jan, who graduated from LUC a few years ago and taught coding to some of our students as part of a start-up idea.

I thought his reply was interesting, and Jan agreed I could share it:

“This came up during the class. Very soon those who were not intrinsically motivated started lazing off. It’s better to have a small group of people who really are fascinated with the world. However I still think it’s worth teaching.
 
I don’t think this is much different from other subjects that you’d teach at a university. In every class there are really just a few who learn, the others will just memorize or pass to get by. 
 
If you want to be a scholar you really have to want your research or paper to “work”. If you don’t, you are just putting words on paper, maybe to cash a check, get a diploma or boost your ego. A lot of people write papers but very few of those papers would “work” if they were held to the same mathematical standard as code is.
 
So, in my opinion the difference between coding and “social sciences” is that the former must make sense before it can be published, used or referenced while the latter, more often than not, doesn’t. 
 
Ego forces you to take a position on a subject before you really know much about it.
Maybe that is why this guy feels it’s futile to teach today’s kids to code? Because they have been taught to learn just to get by, not to discover, improve or inquire? Often times real discovery requires being wrong and that comes at the expense of one’s ego. In class people were afraid to ask question about coding, which nobody knew anything about. Why?? If you have a big ego, can you show your buggy, horrible beginner code to the class? How does that compare to a well-worded essay with big concepts and great writing that makes no academic sense? I know I have seen a lot of those at LUC, hell I have written them myself. Never really got bad grades for those…
 
I know this is a bit (lot) off topic but this has got me thinking. The egos are only getting bigger and bigger. That, in my opinion, is the problem with college activism, political, environmental or otherwise. It forces you to take a position on a subject before you really know much about it. Later you are likely to investigate or choose a major in that area. If your real research or readings show or suggest you might be wrong, you can choose between betraying your activist community or your academic purpose. For 20 year olds, this is often not even a choice, especially if they are at university because their parents always told them they had to and not because they really wanted to become an expert at a field. I think anyone of any age with a reputation as a socialist, environmentalist, feminist, right-winger — you name it — is put in a very tough spot in the current environment.”

Recommended reading

  1. Real estate scams mess up the market in Russia
  2. Vegan junk food may save the Earth by delivering flavor without righteousness
  3. Fraud and ruthless competition at Amazon.com
  4. A dentist takes on Big Sugar by exposing their own damning research
  5. China’s white-elephant dam thrice screws over Ecuadorian citizens
  6. America is allowing Greek levels of tax cheating (“only suckers pay tax”)
  7. A fascinating investigation on the world’s NOT oldest woman
  8. A debate on the role of government in innovation (I agree with her, but yes, it’s hard to get government — a monopoly — to perform)
  9. The French battle over notions of place, community
  10. This article from 8 months ago details how peer-to-peer lenders lost investors’ money by failing to monitor borrowers. Here’s my explanation as to the perverse incentives.

Course announcement: “Fundamentals of Water Utility Regulation” will take place in March in Budapest. The registration fee is €1000-plus. (I taught there a few years ago but will not be this year.)

Life at 49C

This Guardian story sounds like one of the narratives in my cli-fi books Life Plus 2 Meters, which discuss how we will (not) adapt to climate change. Truth is stranger than fiction!

Michelle Coles, owner of the Cinema Augusta, Port Augusta, South Australia, (49C on Tuesday)

“I didn’t think it was that hot yesterday, if you want an honest answer. Yesterday at the cinema was very quiet. People tend to stay home. We’re quite used to it. Every summer is hot. A couple of degrees hotter doesn’t make that much difference.”

“Honestly I’d much rather be in 48C heat in Port Augusta than in the city – you’ve got so much concrete and it’s closed in, but here it’s quite open. You just don’t stand out in the sun though, that’d be stupid.”

“Most of us have got pretty good air-conditioning. Our local sporting centre is open with the aircon running for anyone who doesn’t have any. The one thing I do, is for the elderly people I know, I go and visit them.”

“We don’t take our dogs for a walk early in the morning, we take them out at night. Even then, the concrete can still be quite hot. I walk out and actually stand in my bare feet to check.”

“I think it’s different these days to what it was 20 or 30 years ago. You notice that people walk around with water bottles. Everyone has water bottles. I think people are sensible. We’ve got a couple of homeless people who pop into the cinema, and our girls are instructed to give them a drink. We have a really amazing community spirit here – everybody looks after everybody else.”

What do central banks do?

Marcello asks:

What are the pros and cons of the fed raising the interest rates? How does it help control inflation?

I’ll begin by describing the main goals of financial regulation and central banks before turning to the relationship between inflation and interest rates and the Federal Reserve’s tasks.

In theory, financial regulation, like any regulation, is meant to improve market efficiency and reduce systemic risk. In most cases, this means promoting transparency, spreading accurate information promptly, and preventing fraud and mistakes that put the entire system at risk. In reality, these goals tend to be ignored by politicians who want big banks (“national champions”) or benefit from bribes and (retirement) jobs at banks that they allow to make excess profits by taking risks at taxpayers expense (“privatize the gains, socialize the losses”) or growing “too big to fail.” In the US, the biggest problems arise from dividing regulation among so many government agencies that it’s ineffective and the ongoing subsidies to FannieMae and FreddieMac, the private-profit, government-guaranteed mortgage buyers at the central of the Financial Crisis of 2007-12.

Central banks sometimes regulate banks (and other non-bank financial firms), but they are always in charge of managing the money supply with the goal of “keeping inflation under control,” which has been codified as “near 2 percent” for historical reasons.

The connection between inflation and interest rates is tricky, so let me say a bit more about inflation, interest rates and the money supply.

First, there are two types of inflation. “Supply-push” inflation reflects the supply of money. As a simple example, start with a money supply of 100 and 100 units of goods sold at an average price of 1.00. In this case, the price index is 100 because the average basket of goods costs 100 units of money. If money supply doubles (everyone has $2 for every $1 in their pockets), but there are still 100 units of good, then the price index doubles to 200, meaning that inflation is 100 percent. (The most familiar price index — the Consumer Price Index, or CPI — is often used to measure inflation.) Supply-push inflation is present in Venezuela because the government is printing money — and lying about it with the hope that citizens will not notice — while the supply of goods is falling (big topic for another post).

“Demand-pull” inflation results when people devote more of their spending to some goods and thus less to other goods. In most cases, this inflation is normal and benign, because it increases profits in that sector and thus attracts more supply (resources arrive from shrinking sectors), but various political-economic distortions might lead to harmful sorts of demand side inflation in, for example, higher education, medical care and housing in the US. I could write a whole book on these issues, but I’ll give you the simple example of housing markets where demand is strong (people are moving to the area or buying larger houses because they are wealthier) but building regulations restrict demand.

Interest rates can be used to raise and lower inflation by making money “more expensive.” If inflation is high, then an increase in interest rates means that it’s better to save rather than spend money because you can make more money by leaving the money in the bank or investments. This reduction in the “velocity of money” means that they are fewer people chasing the same number of goods, so prices of those goods slow or stop rising.

Interest rates are often set in markets for money based on the demand of a country’s currency vis-a-vis other countries or the money supply set by central banks. It is for these reasons that interest rates depend on exchange rates, banking reserve requirements, open market operations (buying and selling bonds) and many other factors that are hard to understand, let alone manage. It’s this complexity that lies at the heart of debates over the role of central banks. Some people think that central bankers are geniuses that manage our collective prosperity. I am with the other people who think that humans introduce more noise and prefer that a bot increase the supply of money at a known rate and leaves the market to sort out the other factors. (Bitcoin was released 10 years ago based on that exact logic. If you’ve followed its price gyrations, then you know that other factors affect its demand and thus its price!)

Also note that interest rates vary by maturity (e.g., interest rates on overnight deposits vs 30-year loans) because varying “time preferences” lead to different aggregate demand functions.

This summary should give you a (vague) idea of how regulations are supposed stabilize prices and markets, but a brief look at the macroeconomic performance of 200+ countries will tell you that politics, regulations and cross-border operations combine in unpredictable ways to produce systems that fail often, systems that fail when shocked and systems that affect others due to their size or reliability (i.e., the US, EU, China and Japan).

It’s my opinion that the greatest threat to financial and non-financial markets arise from political interference (e.g., India, Turkey, China, UK, Italy and the US in recent months). In many cases these are caused by populists who think that markets can be manipulated to suit their superstitions. They are sometimes right in the short run but always wrong in the medium (1-2 years) and long run. (I think that bitcoin and other “trustless” currencies might gain value in the near future as people lose faith in populist shenanigans.)

Finally, let me note that the US Fedeal Reserve in unusual in its dual mission of simultaneously keeping maximizing employment and preventing inflation. Although its hard to optimize on two margins, it’s even harder to pursue these goals because increases in employment eventually lead to increases in wages (as the supply of workers falls short of demand), which leads to demand-side inflation and thus the need to increase interest rates, which will cool the economy and thus dampen demand for workers.

So what are the pros and cons of increasing interest rates? A reduction in economic activity and job losses (cons) but a decrease in prices and inflation (pros).

My one-handed conclusion is that markets are hard to “manage,” and thus should be regulated in a slow, incremental and transparent way. Most economists understand this. Few politicians do.

Weekend reading

  1. A podcast on rethinking economics (something I’ve been doing for awhile)
  2. The institutions of a liberal society depend on trust, which is  under assault. [This is one of the best essays I read in 2018.] Related: The Republican party is using authoritarian methods in a power grab.
  3. Facebook isn’t just showing you ads. It’s selling your data to companies and showing that revenue as “advertising”. Here’s an example:
  4. Humans have some terrible tendencies: lie, betray and more
  5. OTOH: Here’s the paper describing the “general purpose” AI that learned (from zero) how to beat the best chess computer in 4 hours.
  6. Are we getting sick because we’re killing the helpful bacteria in our gut?
  7. Bill McKibbon on how badly we’re screwing up the planet. Sad.
  8. China is buying up media and journalists world-wide to promote “its good side” in yet another step into an illiberal world where power decides truth. 🙁
  9. A really nice history of the synthetic drugs that are messing up so many people

H/T to CD

Porn and social capital

JB asks:

As an economist, what unique perspectives do you bring or how do you weigh in on the increasingly anecdotal if not manichaean (morally bipolar) debate of porn-good / porn-bad? Is porn’s ubiquity symptomatic of a larger cultural dysfunctionality that has yet to be articulated in clarity, and is porn’s popularity a (or the) cause of this so-called “sex recession”?

If you’re interested in the role of sex in society and our sexual habits, then read the linked article above to think over the many reasons why younger people may be having less sex, fewer partners, and (perhaps) unfulfilling relationships.

Out of all the possible reasons listed in that article, I would emphasize how younger people are stressed about success, their “place” in social groups, and the paradox of (too much) choice. Back in the 90s, it wasn’t so easy to browse dozens of potential hook-ups per hour or compare your “success” to hundreds of “friends” and influencers filling social media feeds. Back then (and for all of human history), people hooked up according to their choices from a local pool of potentials. These days, you can compare yourself to the (artificial) profiles of far more people and get distracted/attracted to “horny locals” who are only a few clicks away.

Sadly, young people today are going to be less confident (and thus less attractive and less experienced at sex and relationships) if they get trapped in a downward spiral of “everyone has love… except me.” We see this problem at its worst with the InCel (involuntary celebrate) “movement” of guys who blame women for withholding sex. InCels didn’t exist 20 years ago (in any meaningful way) because it was harder to lust vicariously. With nothing to distract you at home, you went out and met other humans who were also looking for some action.

Turning to porn, I think that it is worsening this problem by creating false impressions of how people meet (“Hey pizza guy, how about anal?”); the role of romance, flirting and foreplay in sex (pizza guy is busy — drop your pants!); and conflating pay-for-view transactions with give-and-take relations.

I’ve never been a fan of porn (or prostitution), but I can see — as an economist — how there will be supply to meet demand. The drop in the price of porn has led to an increase in its variety and rate of consumption, which has probably had a negative impact on young men (usually) who spend time consuming porn rather than awkwardly learning how to flirt. (Girls tend to be more comfortable with the nuances of communication, but I’m sure those skills are underdeveloping as they too turn to social media fantasy, selfie narcicissm, and text-jibberish chatter.) Does porn contribute to cultural dysfunction? Absolutely: It offers an escape for guys trying to avoid the awkward phase of making themselves vulnerable by asking for others’ attention. It’s much easier to live in a fantasy relationship, just as it’s much easier to pretend you’re talking to someone by liking their update or texting some emoji’s.

(The alt-sex scene is different, but I think that gays and lesbians are experiencing similar issues. When it comes to trans-, queer- and gender-identity, I think that sex and relationships are going to be complicated by social norms and psychological wandering. Feel free to comment.)

So my one-handed conclusion is that porn is not the problem, nor the solution, but a symptom of young people having a harder time learning how to let go, take a chance, face rejection and get laid. We need more of this.

And a random question: First of all, is social capital a valid notion? And if so, why does it seem that social capital is not transactable via social media? Said differently, why is it impossible to actually make new friends on Facebook, get a job through LinkedIn, find a companion on OKStupid, etc? No matter what stage of trust one is at with someone else, it would seem that our social capital can only be accrued and spent in handshake transactions. And so, what can social media do for social capital at all? Simply squander it through embarrassing hyperbole or tactless attention-grabbing screeds?

This is a good question on one of my favorite topics. I’ll begin by referring you to my post (“Social media is neither social nor media“) but add a few more comments in response to your particulars.

First, social capital is indeed a real and important type of capital. People with more social capital are better insulated against shocks (insurance), better able to find work and other resources (information) and happier (collective identity). The bad news is that there is no short-cut to social capital: Money can’t buy you love. Relationships and trust need time and commitment.

Second, markets tend to displace social capital (relationships) by supplying substitutes at lower (transaction) costs. Thus, we can buy food from the store rather than bartering with the neighboring farmer. Thus, we hire babysitters for our kids and put grandma in the retirement home rather than living in extended families. In many cases, these market substitutions are better, but we also lose positive externalities (unintended benefits) when we replace relations with transactions. That’s why I worry sometimes that we’re overdoing it when it comes to outsourcing.

Third, most social media companies are promising something for nothing while manipulating you and selling your data. If you want to see what they really do, then read their financial and investor-facing documents. Facebook is NOT “connecting the world,” it’s selling advertising. LinkedIn is NOT about your career, but revenue from HR departments. OKCupid is NOT about love, but selling your personal details to marketeers. I can guarantee that any reader on this post is more likely to get friends, jobs and romance by meeting people face-to-face (at parties, bars, through friends, etc.) than putting in a few more clicks.

Fourth, social media has lowered the cost of connecting, which means that any given “demander” will be overwhelmed by supply. Influencers have so many friends that they cannot possibly say “hi” in response. Companies advertising jobs need bots to filter thousands of applicants. Attractive people on OkCupid and Tinder spend so much time saying no that they miss opportunities. Even when they do take a chance, they are nearly always tempted to drop someone with a slight flaw for a virtual perfection who pops into their feed.

(Stronger labor markets, btw, are reducing noise in this system as companies compete for workers and employed people waste less time on social media fantasies.)

My one-handed conclusion is that social media companies are making our lives worse by giving us false hopes, wasting our time, and selling our data. As above, I suggest spending more time in meat-space and less time in cyber-space.

Weekend reading

  1. Trolls, Trump and college professors (?!) are responsible for America’s loss of civil discourse.
  2. The lessons of the financial crisis have not been learned.
  3. The best (?) supermarket in the US? (I think so.)
  4. This podcast with James Kenneth Galbraith (son of the more famous Galbraith) is interesting, even if he’s a bit smug.
  5. Would women with “real” rights stop carrying babies and instead focus on community? Related (?): Communists had a sex-positive culture.
  6. We all use drugs. 
  7. Cities are getting better at using “meanwhile” spaces.
  8. “Reagan’s true legacy is a hollowing out of the middle class… that ultimately led to the financial crisis, a stupendous increase in the national debt, and a rise in inequality that gave rise to an oligarchy… and the resentment that elected Trump.” Read the paper [pdf].
  9. Housing cannot be affordable AND a good investment. Choose one.
  10. Veganism can “save the world” one soy-sausage at a time!

H/T to CD