Dependency Ratios: one last time

One of my frustrations with the blogosphere--as those of you who read this blog know--is that I think that the immediacy of web publishing makes some people lazy. They type faster than they think; or they believe that a reaction is the same thing as an argument.

Case in point. The blogger known as Jane Galt had the following criticisms of my "Risk Pool" piece:

For starters,  [Gladwell] attributes Ireland's success as the "Celtic Tiger" to falling birthrates, which (temporarily) reduced the dependancy ratio. He utterly ignores a more parsimonious explanation, which is that Ireland slashed its marginal tax rates in 1987, including a cut in the corporate income tax to 10%, which turned it into Europe's first outsourcing destination. If you look at the handy spreadsheet
I have uploaded, containing data on Irish growth from 1980-2005 obtained from the invaluable Economist Intelligence Unit, you will see that this fits the Celtic Tiger period much better than a 1979 relaxation of birth control restrictions. Moreover, since there is much evidence that economic growth causes falling birthrates by raising the opportunity cost of childrearing, even if there were a correlation it would be hard to say which way it ran. This also applies to his arguments about Asia and Africa.

Where to start? Let's ignore, for the moment, the quaint right-wing affectation of assuming that marginal tax rates are the most "parsimonius" explanation for all variety of complex human behaviors. Instead, let me make two small points.

1. "Gladwell" does not attribute Irish success to falling birth rates. David Bloom and David Canning do. Gladwell is a journalist. Bloom and Canning are two exceedingly prestigious economists at Harvard, who are considered world experts in the field of demography and economics. Gladwell was impressed by them. He talked to them. He read their work. He was convinced by them. But he didn't make this argument up on the back of his journalistic notepad. And to neglect the true source of this argument is to trivilize and demean it. This is not Gladwell v. Jane Galt; journalist v. blogger. It's world experts v. blogger. Just so we are clear on this. And acknowledging the origins of this idea means that you can't depose of the dependency ratio argument just by dismissing Gladwell. You may actually have to read Canning and Bloom.

2. Galt says that Gladwell neglects a more parsimonious explanation: Ireland's tax cuts. As we've seen, Gladwell did no such thing, because Gladwell didn't do an analysis of Ireland's economic growth. What about Bloom and Canning? Did they neglect the larger economic picture? Well, actually, no. In the "Celtic Tiger" paper, they construct a complex mathematical model to try and tease out the various factors that led to the Celtic miracle. They think that the opening up of Ireland's economy in the 1970's was very important. But the data, they argue, also suggest that the country's demographic transition played an important role as well.  Bloom and Canning, apparently, are of the view that sometimes things that happen in the world happen for more than one reason.

All of this information is quite readily available in the "Celtic Tiger" paper, which is in turn quite readily available on a marvelous invention called the world wide web. The paper itself is just under twenty pages long. It can be read in under half an hour. It's not that hard. Trust Gladwell on this one.

.

Comments

[W. Hutson]

MG:

This is why I call most blogging "shouting matches" it's too focused on point counter point then say a dialogue.

I think there is merit in both of your findings (journo & blogger).

There is more promise in discussion on the internet than debate.

Thanks for writing.

Will

[Chris]

Word.

[MT]

That must have taken a lot of patience. Good guy, that Gladwell. Or his publicist. Or his dog. I'll go with the first theory.

[LJ]

Malcolm, Did you know Jane/Megan is, in additional to being a blogger, an economics journalist who writes for the Economist? Just wondering?

By the way wasn't the argument of Blink sort of that reaction is better than an argument.

[Mike]

Malcolm-

When you cite to the research of others, you can't honestly argue that you're not assimilating those ideas into your larger point, can you?

I'll posit that neither Bloom nor Canning can articulate an idea as well as you, nor can they reach the non-academic audience you can. Perhaps Galt read them, perhaps she didn't.

But I don't see any problem with her debating you, rather than researchers, on any given issue. If you cited them (or integrated their theories into your argument), then it's fair for Galt to assume you agree, no? Whether she's too "lazy" to read them strikes me as a bit of misdirection on your part.

I can't help but think that your diverging opinions over the "parsimonius" tax issue isn't the real disagreement here.

Anyhow, Jane's a good writer and it'd be very interesting (and educational) to see you two go at this on the merits.

[Scott T.]

"By the way wasn't the argument of Blink sort of that reaction is better than an argument."

Like when the cops "reacted" and blew dozens of holes in Amadou Diallo? Blink was about understanding the power of our instant judgements, not arguing whether they were "better" nor "worse."

[Bemused]

But Mr. Gladwell, you are being paid approximately $5 per word for your New Yorker articles, so bloggers are not being irrational in assuming that for that much money, you have a professional obligation to read not just one 20 page paper on Ireland's economy, but several on multiple countries, and to synthesize them into a more defensible conclusion that you did.

[Peter C.]

I thoroughly enjoyed "The Risk Pool" and had your conclusions about big business promoting universal health care blaring through my head while reading it.

One question: you explain company-backed health care and pensions as a result of a what seems to be a philosophical, or political, as well as economic decision by, in this case, GM. Weren't post WWII wage and price controls also to blame? Businesses could not offer more money to entice workers so they offered perqs.

Also, if you've never read "The Risk Pool" by Richard Russo, do yourself a favor and pick it up. It's my favorite Russo novel.

[Billy]

Why is Galt's comment a reaction and not an argument? Seems like a valid point of contention to me.

[Maynard Handley]

"
Malcolm, Did you know Jane/Megan is, in additional to being a blogger, an economics journalist who writes for the Economist?
"

I'm curious. You write this as though you seem to think it is supposed to make Jane/Megan more impressive. You are aware, aren't you, that among the non-GOP thinking classes around the world, _The Economist_ is widely considered a joke, a one-track rant on the evils of taxation and socialization. For every decent piece of work they do on exposing Italian corruption, there are five pieces telling us how Singapore is hell on earth or exposing the supposed gulags and genocides being planned by Chavez (now in cahoots with Morales).

[JKelly]

May I suggest a sequel to your last book? Blog: The Power of Writing Without Thinking.

[DAVE]

Normally someone talking about himself in the third person annoys the hell out of me, but here it's simply hysterically funny.

Your final argument on plurality versus singularity hits the nail on the head. But the right thinks in black and white. How multiple causes can come together for a singular effect and vice-versa isn't a popularly accepted ideology of the right.

[LJ]

Maynard, I didn't realize the GOP has gone worldwide!

And you understand that among the economically literate, the economics reporting in the New Yorker is widely considered a joke, the odd Surowiecki column aside?

And Billy is right. Megan is making an argument, not simply reacting, and deserves more than an additional appeal to authority.

Here is a paper attributing Ireland's growth to a combination of factors (tax cuts included, but not tax cuts alone) that have increased it's overall economic freedom.

http://www.cato.org/pubs/journal/cj22n3/cj22n3-3.pdf

[cydonian]

It's called BUUUUURN, baby. :-)

[pwb]

This post is surprisingly unconvincing.

And Maynard, that's the least accurate portrayal of The Economist I've ever come across.

[Jane Galt]

I've responded at rather greater length than I imagine you want in your comments: http://www.janegalt.net/archives/009425.html. Shorter version: I did read the paper, but I'm still not convinced. Please don't hurt me. ;-)

[Jarrod]

Has anybody told you that bear a small but very noticeable resemblance to one Zack De La Rocha?

[Zach]

Just for the edification of those of us scoring at home, was your consideration of marginal tax rates confined to reading the analysis in Bloom and Canning's article, or did you read any competing papers that primarily attributed the growth to marginal tax rates?

Just relying on the first paper you read -- especially a provocative current paper that hasn't had time to gather comments and responses -- is a treacherous way to learn anything, especially in a field you're not intimately familiar with.

[Zach]

Cross posted from Jane's blog:

I think Mr. Gladwell finesses the point when he merely cites Bloom and Canning on the tax rate issue. Of course the paper they wrote found that the tax issue didn't explain all of the growth! That's why it was publishable! The question is whether that finding is correct, for which you should look at data and analysis from outside Bloom and Canning's paper, or introduce your own. Jane does this. Gladwell is not yet on the record.

[Minh-Duc]

Megan (Jane Galt) is an economist by occupation, who is employed by a reputable Economic oriented magazine. One should not dismiss Megan argument simply by citing the authority of other economists, without refuting Megan's argument on its own merit.

Otherwise, I can simply cite other famous economist of the opposite opinion.

[Zach]

There's always a danger that I'm arguing with myself here, but a clarification: when I say "Of course the paper they wrote found that the tax issue didn't explain all of the growth! That's why it was publishable!" I don't mean to imply that Bloom and Canning are skewing the data in any way. I just mean that all published studies measure an effect when taken on their own terms. If they don't see an effect, the paper is rejected and Mr. Gladwell does not hear about it. But in comparing the paper to the real world, you can't just take the paper on its own terms -- you have to justify why this is the correct way of looking at the problem, and that taking the paper on its own terms makes sense.

[Claus]

So, one can debate the various authorities and their seniority for a long time. Personally I think the proof is in the dialogue. Blogs aren't science papers. They are polemic dialogues a la Galilei - which is fine.
It's not like it's over after the first counterpoint.

[Jim Sale]

You fell a few notches Mr.Gladwell!

[Johnny Appleseed]

Gladwell, you are a twit, you know that?

Jane Galt made some excellent points and the best you can do is cop an appeal to authority. Do you understand how poorly you come across when you cite a study, draw inferences from it, promote those inferences, and then try and retreat back to an Andrew Sullivan-style "I'm not endorsing this, just airing it" stance?

Not to mention, getting all snitty about the whole affair. How about coming down a few notches to the level of us mere mortals for a little while? I mean, your retort was so whiny I wasn't sure for a moment if it was penned by a "Malcolm Gladwell" or a "Malcolm in the Middle." Grow up.

Steve Sailer has got Gladwell nailed.

Read here:

http://isteve.blogspot.com/2006/08/this-blogging-thing-really-not-working.html

and here:

http://isteve.blogspot.com/2006/08/gladwell-has-new-article-and-im-well.html

and finally here and here:

http://www.isteve.com/05JanC.htm
http://www.vdare.com/sailer/050130_blink.htm

[Dan Redmond]

Steve Sailer is KILLING you. You need to respond to some of his criticisms.