Sunstein, Hayek, and Wikipedia

University of Chicago law professor Cass Sunstein may not be among libertarians’ favorite thinkers, but Sunstein is, in his own way, a strong advocate of individual liberty and free markets.

Hayek fans will enjoy Sunstein’s op-ed in today’s Washington Post, in which he describes how individuals are using computer-age technology to aggregate information. A snippet:

Developing one of the most important ideas of the 20th century, Nobel Prize-winning economist Friedrich Hayek attacked socialist planning on the grounds that no planner could possibly obtain the “dispersed bits” of information held by individual members of society. Hayek insisted that the knowledge of individuals, taken as a whole, is far greater than that of any commission or board, however diligent and expert. The magic of the system of prices and of economic markets is that they incorporate a great deal of diffuse knowledge.

Wikipedia’s entries are not exactly prices, but they do aggregate the widely dispersed information of countless volunteer writers and editors. In this respect, Wikipedia is merely one of many experiments in aggregating knowledge and creativity that have been made possible by new technologies.

Sunstein’s op-ed goes on to discuss intriguing experiments with events futures, which should delight Cato friend Robin Hanson:

But wikis are merely one way to assemble dispersed knowledge. The number of prediction markets has also climbed over the past decade. These markets aggregate information by inviting people to “bet” on future events — the outcome of elections, changes in gross domestic product, the likelihood of a natural disaster or an outbreak of avian flu.

Fairly Ridiculous

A Maryland legislator has introduced an absurd bill that would allow the state to seize unused funds on gift cards. 

From WJLA-TV’s website:

Democratic Delegate Joseline Pena-Melnyk testified Thursday before a House committee that after four years, the state should take money on old gift cards as abandoned property. She argued that companies are unfairly keeping money paid for gift cards and gift certificates.

To Delegate Pena-Melynyk, “fairness” apparently means confiscating money from individuals and businesses and spending it on her priorities, in this case public education.

If I learned one thing during my 13 years in Maryland’s public education system, it’s that taking people’s stuff isn’t fair.

Scared Stiff? Watch John Stossel

Tonight, John Stossel of ABC News offers a special report entitled “Scared Stiff: Worried in America.” The two-hour program, which is a special report of ABC News’ “20/20” and airs at 9pm Eastern, is a follow-up to Stossel’s very first special 12 years ago, “Are We Scaring You to Death?”

Among Stossel’s interviewees tonight are two familiar faces for Cato fans: adjunct fellow Veronique de Rugy (of AEI) and former visiting fellow John Mueller (of Ohio State University). Vero will discuss her research into the billions of dollars wasted in the name of “terrorism defense” and John will put the terrorism risk into context by comparing it to the far-more likely risk of drowning in a bathtub or being struck by a deer.

A Pox on Unanimity

In Slate, Doug Kmiec criticizes the Court’s decision in Philip Morris v. Williams for its lack of unanimity and argues, echoing the fashionable arguments of Chief Justice Roberts, that unamimity helps promote “clear rules” because judges must “work out their disagreements before they write their opinions.”

I’ve previously suggested (here) that this is backwards. Unanimous decisions are, on balance, likely to be less clear than 5-4 decisions: 

It’s not clear that Roberts’ prediction (that consensus on the Court yields clarity, precision, and narrowness) is right. Consensus-building in Congress, another multi-member voting body, is purchased at the price of legal fuzziness. The more amorphous and open-ended the statute — the more the statute defers tough questions — the more members of Congress agree to add their names to it. 

While consensus building on the Supreme Court is a simpler prospect, there’s no reason to think the same basic dynamic won’t apply here too: Supreme Court justices will purchase broad agreement at the price of clarity, harming the rule of law. 

In a very good post, Ilya Somin makes a similar point, writing in response to Kmiec, here:

Many of the complex balancing tests and complicated exceptions to rules that legal commentators like to make fun of in Supreme Court opinions are the result of the need to “count to five” — corral the five votes needed to create a binding Supreme Court decisons. Counting to nine is usually likely to require more compromise — and thus more complicated balancing tests and exceptions — than counting to five.

George Lucas Rediscovers a Sci-Fi Classic!

I’m indebted to George Lucas for conceiving Star Wars and the Indiana Jones franchise —episode 4 in 2008, whoooo! But the latest issue of his education magazine, Edutopia, rediscovers a cult science fiction classic that’s particularly dear to my heart: The 1991 Sandia National Labs report titled “Perspectives on American Education.”

The “Sandia Report,” as it’s known to its devotees, claimed that America had not suffered an academic decline as critics alleged. Though the original Sandia Report was never published, it became an instant hit. Anyone wanting to defend the record of U.S. public schools seemed to have — and quote — a copy.

By far, the Sandia Report’s most popular claim was that despite declining average SAT scores, SAT performance was actually going up! How could that be? “Simple” explains Lucas’ Edutopia:

[S]tatisticians call it Simpson’s paradox: The average can change in one direction while all the subgroups change in the opposite direction if proportions among the subgroups are changing.

Sandia claimed, as Edutopia repeats, that “[b]etween 1975 and 1988, average SAT scores went up or held steady for every student subgroup.”

The funny thing is they didn’t. The scores for at least one of the ethnic subgroups went down, the subgroup that made up the majority of test takers: white students.

I first came across, and debunked, Sandia’s claim in 1994, after it was cited by David C. Berliner in his essay titled (ironically, it turned out) “Educational Reform in an Era of Disinformation.”

I looked at Berliner’s figures, looked at the Department of Education figures, and called “Baloney!” Berliner subsequently added a correction to his essay.

There are several other problems with Sandia’s assertions, but claiming that a score had gone up when it had really gone down is a pretty tough act to top.

I don’t mean to come down too hard on Edutopia. After all, the magazine has just repeated a myth that has taken on a life of its own. But it’s a good lesson for anyone writing about the U.S. public education monopoly: “If it doesn’t sound bad enough to be true, then it probably isn’t.”

Religious Think Tank Defends Tax Competition

A scholar from the Acton Institute looks at the tax battle between Swtizerland and EU leaders in Brussels, and exposes the misguided morality of the politicians who denounce tax competition:

The war of words was ignited by the French rock star Johnny Hallyday’s decision in late 2006 to move to Gstaad, Switzerland, because he was tired of France’s exorbitant tax-rates. Mr. Hallyday joins an exodus of individuals and companies from France, Germany, Italy, and Austria taking advantage of Switzerland’s 21 percent overall tax-rate and considerably lower corporate tax-rates. Liechtenstein, Switzerland’s tiny neighbor, maintains even lower tax-rates and has benefited from a similar flight.

For corporate tax-exiles in Switzerland, the situation is especially advantageous. Each canton sets its own corporate tax-rates. This has triggered intense competition between cantons anxious to attract new businesses. In January 2006, for example, the central Swiss canton of Obwalden reduced its corporate tax-rate to 6.6 percent. Over 11 months, it attracted 376 new companies. No wonder large corporations such as Google and IBM have located their European headquarters in Zurich.

Outside Switzerland, the response has been extraordinary. Some French socialists have accused Switzerland of “looting” its neighbors. This is somewhat strange, given that no-one is forcing these individuals and companies to move to Switzerland. Some would suggest that the real “looters” are French governments of left and right who have raised taxes over the past 40 years to such levels that even many relatively modestly well-off French citizens have left or invested their capital in off-shore tax-havens.

…“Tax-harmonization” in the EU, incidentally, never means lowering tax-rates. It invariably involves raising taxes to the same high level. It was on this basis that, when faced with companies leaving Germany to base their headquarters in 19 percent flat-tax Slovakia, Germany’s ex-chancellor Gerhard Schroeder once accused Slovakia of “un-European” behavior. To be truly European — apparently — means giving about half your income to the government.