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The various US intelligence agencies have identified three ways in which the Russian state meddled with the recent US elections:

  1. Intrusions into voter registration systems.
  2. Cyberattack on then DNC and subsequent release of hacked material.
  3. Deployment of `fake’ news and internet trolls.

The first two items on this list are illegal. If a PAC or US (or green card holder) Plutocrat had deployed their respective resources on the third item on this list, it would be perfectly legal. While one should expect the Russian’s to continue with item 3 for the next election, so will each of the main political parties.

Why is `fake’ news influential? Shouldn’t information from a source with unknown and uncertain quality be treated like a lemon? For example, it is impossible for a user to distinguish between a twitter account associated with a real human from a bot. Nor can a user tell whether individual twitter yawps are independent or correlated.

Perhaps it depends on the distinction between information used to make a decision like which restaurant to go to and that which is for consumpiton value only (gossip). There appears to be no fake news crisis in restaurant reviews. There could be a number of reasons for this. The presence of non-crowd sourced reviews, the relatively low cost of experimentation coupled with frequent repetition and the fact that my decision to go to a restaurant does not compel you to do so comes to mind.

Political communication seems to be different, closer to entertainment than informing decision making.  If I consume political news that coincide with my partisan leanings because these enteratin me the most, it means that the news did not persuade me to lean that way (it follows that surpressing fake news should not change the distribution of political preferences). So, such news must serve another purpose, perhaps it increases turnout. If so, we should expect the DNC to be much more active in the deployment of `fake’ news and an increase in turnout.


Thom Tillis, Senator from the great state of North Carolina, was the subject of some barbs when he suggested that the health-code mandated sign that reads

“Employees must wash hands before returning to work.”

was an example of government over-regulation.

Quoting himself:

“I said that I don’t have any problem with Starbucks if they choose to opt out of this policy as long as they post a sign that says, ‘We don’t require our employees to wash their hands after leaving the restroom.’ The market will take care of that.”

Many found the sentiment ridiculous, but for the wrong reason. Tillis was not advocating the abolition of the hand washing injunction but replacing it with another that would, in his view, have the same effect. More generally, he seems to suggest the following rule: you can opt out of a regulation as long as one discloses this. If the two forms of regulation (all must follow vs. opt out but disclose) are outcome equivalent why should we prefer one to the other?

Monitoring costs are not lower; one still has to monitor those who opt out to verify they have disclosed. What constitutes disclosure? For example:

`We do not require our employees to wash their hands because they do so anyway.’

Would the following be acceptable?

“We operate a hostile work environment, but pay above above average wages to compensate for that.”

In the March 23rd edition of the NY Times Mankiw proposes a `do no harm’ test for policy makers:

…when people have voluntarily agreed upon an economic arrangement to their mutual benefit, that arrangement should be respected.

There is a qualifier for negative externalities, and he goes on to say:

As a result, when a policy is complex , hard to evaluate and disruptive of private transactions, there is good reason to be skeptical of it.

Minimum wage legislation is offered as an example of a policy that fails the do no harm test.

The association with the Hippocratic oath gives it an immediate appeal. I think the test to be more Panglossian (or should I say Leibnizian) than Hippocratic.

There is an immediate `heart strings’ argument against the test, because indentured servitude passes the `do no harm’ test. However, indentured servitude contracts are illegal in many jurisdictions ( repugnant contracts?). This argument raises only more questions, like why would we rule out such contracts? I want to focus instead on two other aspects of the `do no harm’ principle contained in the words `voluntarily’ and `benefit’. What is voluntary and benefit compared to what?

To fix ideas imagine two parties, who if they work together and expend equal effort can jointly produce a good worth $1. How should they split the surplus produced? How will they split the surplus produced? An immediate answer to the `should’ question is 50-50. A deeper answer would suggest that they each receive their marginal product (or added value) of $1, but this impossible without an injection of money from the outside. There is no immediate answer to the `will’ question as it will depend on the outside options of each of the agents and their relative patience. Suppose for example, the outside option of each party is $0, one agent is infinitely patient and the other has a high discount rate. It isn’t hard to construct a model of bargaining where the lions share of the gains from trade go to the patient agent. Thus, what `will’ happen will be very different from what `should’ happen. What `will’ happen depends on the relative patience and outside options of the agents at the time of bargaining. In my extreme example of a very impatient agent, one might ask why is it that one agent is so impatient? Is the patient agent exploiting the impatience of the other agent coercion?

When parties negotiate to their mutual benefit, it is to their benefit relative to the status quo. When the status quo presents one agent an outside option that is untenable, say starvation, is bargaining voluntary, even if the other agent is not directly threatening starvation? The difficulty with the `do no harm’ principle in policy matters is the assumption that the status quo does less harm than a change in it would. This is not clear to me at all. Let me illustrate this  with two examples to be found in any standard microeconomic text book.

Assuming a perfectly competitive market, imposing a minimum wage constraint above the equilibrium wage would reduce total welfare. What if the labor market were not perfectly competitive? In particular, suppose it was a monopsony employer constrained to offer the same wage to everyone employed. Then, imposing a minimum wage above the monopsonist’s optimal wage would increase total welfare.

In the movie Elysium, the 1%, set up a gated community in space to separate themselves from the proles. Why only one Elysium? On earth, there is still a teeming mass of humanity that needs goods and services. Fertile ground for another 1% arise to meet these needs and eventually build another Elysium. Perhaps there is no property rights regime on Earth that encourages investment etc. Not the case in the movie because there is a police force, legal and parole system apparently administered by Robots. Furthermore, the robots are controlled by the 1% off site. Why do the 1% need to maintain control of the denizens of Earth? Elysium appears to be completely self-sustaining. No resources are apparently needed by it from the Earth. The only visible operation run by Elysium on earth is a company that manufactures robots. The head man is an Elysium expatriate but everyone else working at the factory is a denizen of Earth. Is Earth a banana republic to which Elysium outsources production? No, contradicts the self-sustaining assumption earlier. In short, the economics of the world envisioned in the movie make no sense. It used to be that scientific plausibility was a constraint on science fiction (otherwise its fantasy or magical realism for snobs). I’d add another criteria, economic plausibility. Utopias (or dystopias) must be economically plausible. With these words, can I lay claim to have started to a new branch of literary criticism: the economic analysis of utopian/dystopian fiction?

Back to the subject of this post. Pay attention to the robots in the movie. They have the agility and dexterity of humans. They are stronger. They can even detect sarcasm. Given this, its unclear why human are needed to work in the robot factory. Robots could be used to repair robots and produce new ones. What should such a world look like? Well I need only one `universal’ robot to begin with to produce and maintain robots for other tasks: farming, medical care, construction etc. Trade would become unnecessary for most goods and services. The only scarce resource would be the materials needed to produce and maintain robots (metals, rare earths etc.). Profits would accrue to the individuals who owned these resources. These individuals might trade among themselves, but would have no reason to trade with anyone outside this group. So, a small group of individuals would maintain large armies of robots to meet their needs and maintain their property rights over the inputs to robot production. Everyone else is surplus to needs. Thats a movie I would go to the cinema to see!

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