Revised and Resubmitted

What happened to the plans, plans to dive into deep mathematics and understand the mystery of Mas-Colell? Simple. There were those revise-and-resubmits on pending manuscripts, building up other research projects, and a teaspoon of dread/laziness. Allow me to share a brief overview of the projects:

Endogenous Institutions and the Possibility of Reverse Crowding Out -Since the implementation of New Deal programs in the 1930s voluntary charity (e.g. churches and non-profits) has receded and become dominated by government provision of charitable goods/services. Is this reversible? There are two conditions that must be met for what we call "reverse crowding out" to occur. First, taxes must go down. Second, total provision of the charitable goods and services must at least remain the same. We design an economics experiment that is intentionally staged (to mimic the historical evolution of charity in the U.S.). We allow in later stages for participants to vote on their own tax levels, where the tax is 80% efficient (the selection of tax levels is the endogenous institutions part). One of our central findings is that what we called "reverse crowding out" was rarely obtained. However, one interesting result that emerged regarded TRUST. If groups had a high level of provision in Stage 1 they often did not vote for high taxes later in the experiment. To me, this finding is of serious interest because it indicates that for a slew of things people view taxes as a COMMITMENT DEVICES to secure charitable goods they deem valuable. This causes me to consider a quote from Adam Smith,

"What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue? All government is but an imperfect remedy for the deficiency of these."

 
Experts with Conflicts of Interest: A Source of Ambiguity? - With specialization comes expertise, people who have deep knowledge about a small sliver of material. We call on these people to guide our actions and provide us with good advice. Yet, many professions whether they are doctors, lawyers, financial advisors, computer specialists, mechanics, etc. have conflicts of interest which could lead to distortion of such advice. Some folks have advocated that conflicts of interest be subject to full disclosure. We  model an experimental environment in which an "expert" knows information with certainty but has a financial incentive to distort the truth. Yet, we are more interested in how the "clients" perceive this advice. The paper has two goals. First, from the point of view of the economics literature this bridges research on ambiguity (which you can think of as situations where known-to-be-relevant information is not known) and "credence goods" (which studies how "experts" decide to treat customers). Moreover, this ambiguity flowing from a conflicted expert is far more naturally occurring than standard balls-and-urns or compound lotteries. The second goal is to show when clients accept advice from the conflicted expert. Clients with low outside options (alternatives) were more likely to take the advice. In our experiment this worked out well; however, if experts lied this may not have been so benign. To me, this suggests that those without greater alternatives are more likely to be hoodwinked in situations where there are conflicts of interest.

Intermission: "On Missing the Boat"

My last post was about the essence of globalization, this post, however, shares a lesson about the outcomes of globalization and what it might do. Collier's intermission chapter, "On Missing Boat", is descriptive of this point. Collier recognizes the outcomes of globalization have been superlative over the last 30 years, yet, the prospects of bottom billion countries breaking into the world market are not great at this point because they have fallen into the "traps". In short, the bottom billion countries have a lot of catching up to do.


First, let's present some of the outcomes of globalization from 1980 onward. Most globalization did not begin until the 1970s with improvements in technology that lowered barriers to transportation and communication. Below are the $2 poverty rates. On the y-axis is the percent of the population living on less than $2.16 per day (which is adjusted across time by inflation and across countries for purchasing power parity).   

We can see that since the 1980s there has been a large drop in this kind of poverty in countries such as China and India (which have posted massive growth numbers). Other declines have been more modest but those are also good signs. But, notice that the Sub-Saharan African countries are a flat line. There rate of poverty has not improved over nearly 30 years. Have they missed the boat to prosperity?


As mentioned earlier, this question is Collier's chief concern. What he is worried about is an idea called "Economies of Agglomeration" (EOA) (this idea was popularized by Paul Krugman, and, is the reason he won the Nobel Prize). When companies decide to make investments in other countries either to outsource or break into a new market many costs are borne on the first-mover. A company must ask whether the area they are considering as a workforce with the requisite skills, necessary transportation networks in-and-out of the country, legal systems that do not make conducting business too cumbersome, and is the necessary infrastructure such as electric and sewer in place? These are just a sample of the questions that companies must ask prior to a decision to move into an area. Once one company moves in and builds some of the infrastructure up, trains workers, and builds a trusting relationship with the government/law it reduces the cost for subsequent movers.


This notion of EOA is important because investment in the bottom billion countries does not seem attractive at the moment. Why invest in countries that have little infrastructure, little legal stability, and untrained workers? There are safer investments to be had. And, indeed, American and European investors are not the only ones of this mindset. Collier reports that there are massive amounts of "capital flight" in these countries. People within the country are "voting with their dollars" by investing money in countries not their own! Also, people who are educated and highly skilled are seeking opportunities by migrating outside of their home country. Those facts are far from a vote of confidence.


When you see how many jobs have been created and how people have lifted themselves out of poverty this makes people champions of globalization. There are some critics of globalization on different fronts (cultural, environmental, ease of operating illicit industries, etc.). These concerns have some merit but there is also tremendous hope in globalization. As Nicholas Kristof writes in "Where Sweatshops are a Dream", "The best way to help people in the poorest countries isn’t to campaign against sweatshops but to promote manufacturing there." Unfortunately, Collier's discussion of EOA, capital flight, and migration point to the fact that some countries are not likely to be successful overnight. He writes, "This all adds up to a depressing picture of what globalization is doing for the bottom billion. To get a chance to play in the global economy, you need to break free of the traps . . . Even once free of the trap, countries are liable to be stuck in a kind of limbo ---no longer falling apart, but not able to replicate the rapid growth of Asia . . ." There are some policies rich countries can enact that could help hasten this. We will talk about those in the next post on The Bottom Billion. 

You've Got Creative Destruction

It was a wonder: both the Tallahassee Democrat and the Wall Street Journal writing similar articles on the same day: people getting teary-eyed over the closing of Borders. Wait, I thought, wasn't it just a few years ago that most of America cheered plucky Meg Ryan as she fought to stop the collapse of American (e.g. Upper West Side Manhattan) civilization as she knew it by fighting the arrival of a chain bookstore?* I had visions of finally fulfilling my ambition of combining my work as an economist with my long abandoned dream of becoming a comedy writer by writing a sequel in which a now much older (sorry Meg, but aren't we all) Meg Ryan can't understand as her plucky daughter (who is appropriately plucky today?) tries to stop the collapse of American (e.g. Upper West Side Manhattan) civilization by fighting to preserve a Borders from the encroachment of e-books, embodied by a young techie played by Colin Hanks. The economist in me would feature history's only second sexy lead economist character (this was the first) explaining that this is all a lesson in Joseph Schumpeter's idea of creative destruction: the essence of the competitive market is not static competition among existing firms with static product lines. Instead, it is the ability of entrepreneurs to create value by innovations in products, services, delivery systems, etc.

Alas, my Hollywood visions were once again crushed under the heartless weight of the City of A Thousand Broken Dreams as Rich Lowry today published essentially the same article.

* Disclosure: at the time of You've Got Mail my favorite bookstore was "The Haunted Bookshop" in Tucson.

Globalization (A Primer for Collier's Intermission)

Globalization is a hot topic and will, no doubt, remain a hot topic for a long time. But, the phenomenon is not new. Let me borrow from Nobel Prize Economist Amartya Sen,

[Globalization is], in fact, neither new nor necessarily Western. And it is not a curse. Over thousands of years, globalization has contributed to the progress of the world through travel, trade, migration, spread of cultural influences and dissemination of knowledge and understanding (including that of science and technology) . . . The high technology in the world of 1000 A.D. included paper, the printing press, the crossbow, gunpowder, the iron-chain suspension bridge, the kite, the magnetic compass, the wheelbarrow and the rotary fan. A millennium ago, these items were used extensively in China — and were practically unknown elsewhere. Globalization spread them across the world, including Europe.-Amartya Sen, "Does Globalization Equal Westernization?", The Globalist 2002  

There are a couple important points here. First, globalization is multi-faceted. The acronym I like to use with my class to explain the essence of globalization is PIPI (which I pronounce pee-pee in hopes that it will stick in their memories): Products, Investments, People, and Ideas. Yes, we all know about Products made in other countries from the "Made in China" or "Made in Korea" stickers to the tags of the very shirts on our backs.

Some of us have also heard about Investment. We know that many other countries are buying United States debt. We also know that U.S. companies are Investing in a variety of locales throughout the world (contrary to what you might be thinking most of the investments do not go to the really poor countries ---that is the topic for the next post). The next two portions of globalization are not well known: People and Ideas. But, these are quite powerful components of globalization. When people and ideas are free to flow across borders there are many cultural exchanges -new outlooks, new perspectives, etc. but these People and the Ideas they share can also have economic consequences.

Here is a story to the affect of the Ideas facet of globalization. These ideas happened to be transmitted not by people directly but by products.

The Indian automobile industry was protectionist with plenty of price controls and sales and distribution regulations. At the same time, this was untrue of the industry for small scooters. In terms of innovation the scooter industry thrived while the automobile industry took a dive (in terms of innovation). The question is why? Consider that when we purchase a product we do not just purchase the function of the product but we purchase the ability to learn from the product. The smart and industrious people of India did not merely buy scooters ---they bought the engineering of scooters. Ideas are replicable. Before long India became the arguably the "scooter capital of the world".

In the next blog post on globalization we will broach Amartya Sen's statement that, "[Globalization] is not a curse." We will look at this through the lens of Collier's intermission in the Bottom Billion to discuss globalization.

Who Would've Thought? (Maybe an Economist?)

'[“There is no clear evidence that playground safety measures have lowered the average risk on playgrounds,” said David Ball, a professor of risk management at Middlesex University in London. He noted that the risk of some injuries, like long fractures of the arm, actually increased after the introduction of softer surfaces on playgrounds in Britain and Australia.

[“This sounds counterintuitive, but it shouldn’t, because it is a common phenomenon,” Dr. Ball said. “If children and parents believe they are in an environment which is safer than it actually is, they will take more risks. An argument against softer surfacing is that children think it is safe, but because they don’t understand its properties, they overrate its performance.”

[Reducing the height of playground equipment may help toddlers, but it can produce unintended consequences among bigger children. “Older children are discouraged from taking healthy exercise on playgrounds because they have been designed with the safety of the very young in mind,” Dr. Ball said. “Therefore, they may play in more dangerous places, or not at all.”]'

See the full Today article in which these paragraphs appear here. Thanks to hotair.com for the tip for the link.

That Thing We Do

If you've ever wondered how seemingly complicated academic exercises such as economic theory (specifically mathematical auction theory) and experimental economics can play an important role in public policy towards the disadvantaged in society, you might be interested in this video by Prof. Peter Cramton of the University of Maryland on some appalling policy decisions by the people who run Medicare. Disclosure: I am one of the economists who signed the petitions mentioned in the video.

The Bottom Billion: A Book Review (The Traps)

Well, it has been too long since my last blog post, so I'll get back in the saddle with a book review that could have been written long ago. For three years now I've utilized chapters in The Bottom Billion for the Economics of Compassion course. The author, Paul Collier, writes in excellent prose some fairly advanced concepts, but, another reason I like the book is because it represents an in-between view of the politicized foreign aid debate between Sachs and Easterly.  The book has an intuitive structure where Collier diagnoses the so-called "Traps", holds intermission with a discussion on globalization, and continues by offering his "Prescriptions". Overall there is a strong admonition not to fall victim to the "headless heart". In fact, like Saint Ignatius said, "God assumes intelligence" and we are also to love God with all of our hearts, soul, strength, and mind.  Thus, long time readers of the blog should not be shocked, I am an advocate of using the mind.

The so-called "traps" are conflict, natural resources, landlocked with bad neighbors, and bad governance in small countries. What does Collier mean by "traps"? These are not black holes of failure from which countries shall never return, rather, these four traps (conflict, natural resources, landlocked with bad neighbors and bad governance) are difficult to escape from and can potentially lead to cycles of poverty. In an effort to help my class remember the key content from those chapters I came up with the following mnemonic: DUMP SID NOT CARL. To our single female readers: you are welcome for the free advice.

The Conflict Trap (DUMP - Destruction, Uncertainty, Misery, and Poverty) 

This trap begins with destruction. Conflict destroys physical infrastructure such as buildings and transportation materials as well as disrupts present production. Additionally, conflict also severs social bonds and disrupts children emotionally and hinders their ability to acquire knowledge. Perhaps the most vile fact about conflict is the legacy it leaves: uncertainty. Because there is such a high reversion into conflict after recently emerging from a civil war (Collier cites 50% chance) companies are reluctant to invest in such an unstable nation. Meanwhile there are no opportunities, prospects, or hope for the future. What is there? Misery. The most likely candidates for recruitment into rebel forces to start a new conflict are young males with low education and no dependents. Also, no job equals low opportunity cost for joining the ranks. Now, restart the conflict. This both creates poverty and a situation in which poverty can persist.

The Natural Resource Trap (SID - Survival of the Fattest, Institutions, and Dutch Disease)

This seems like an oddity. Why on earth would natural resources such as oil, gas, diamonds, metals, etc. be a trap? It seems like natural resources ought to be a blessing. And, they are, now here is the the big BUT, without good institutions they will become the profits for power. (Remember, institutions are the social and legal rules governing human interaction. Such rules would include property rights, transparency over where government funds are allocated, the checks and balances of democracy, etc.) Good institutions can help the natural resources to be prosperity enhancing, without them, natural resources basically promote poverty because the potential profits to be made attract certain kinds people to power.

*Notice in the last sentence I said "can help". Why didn't I use the stronger statement "will help"? Dutch Disease. There is this idea in economics that large natural resource endowments can actually harm an economy. For example, imagine that a country is a big exporter of motor scooters when suddenly some in-land farmers are shooting dinner and that good ol' black gold bubbles up. Now the country exports oil and motor scooters, but, their scooter market is in shambles because the value of the currency has gotten so high. Why is the currency high? When you buy a country's goods like oil you buy their currency. As more people are demanding the country's currency (to buy the oil) the value of the currency increases. What does this have to do with scooters? Where an importer of scooters would only need to pay $50 per scooter before they will now have to buy the country's more valuable currency in order to import the same scooter. Now it might cost them $70 for the same scooter. Maybe they will buy elsewhere. What can combat Dutch Disease? We'll get to that in the next post.

The profits to power from controlling a natural resource leads into a core idea Collier has called Survival of the Fattest. Normally in electoral competition the politician who promotes the best mix of policies wins the election. This would be Survival of the Fittest. In countries with large natural resource endowments however this kind of electoral competition does not take place as easily due to corruption. Instead, politicians in these crooked regimes can use the profits from the natural resource to buy votes. Moreover, their corrupt practices keep potentially good politicians from entering the political process because they can see everything is rigged. Such a rigged process and the wealth it creates for the select few in higher ranks of government also attracts more power hungry. Over time the integrity of the government disintegrates.  

Landlocked with Bad Neighbors (NOT - Neighbors, Opportunities, Transaction Costs)

Close your eyes and imagine your most unreliable friend. What would happen if you had to bet your future on them coming through for you? That is the situation of the people in landlocked countries with bad neighbors. It is all about the neighbors. Switizerland for example is landloced; yet, Switzerland is successful in part because France and Germany are both well-functioning economies. When landlocked countries have bad neighbors they lack opportunities. As Collier writes, "When you're coastal you serve the world. When you're landloced you serve your neighbors." Bad neighbors make fore weak opportunities. What further harms opportunities are the high transaction costs. Transaction costs are obstacles to trade. They can be anything from poor roads, bad ports, no airfield, extortion that occurs on the road or from customs officials. All of these things increase the cost of trade. Being landlocked is not so bad, but, being landlocked with bad neighbors hurts.

Bad Governance in Small Countries (CARL - Corruption, A?, Reform, Largeness)   

This underpins most of the traps already discussed. The role of corruption is simple: It corrodes political checks and balances and hinders growth (we can talk about this in greater depth on a future blog post if you like). But, the reason Collier writes that bad governance is such a hindrance to "small countries" is based on an empirical finding. In order to reform a country Collier argues that countries need a large educated population and a large general population. This helps with building a critical mass of people for reform within a country. Also, Collier argues that recent emergence from civil war helps to turnaround a country's prospects. Think about that on an individual level. When are you most likely to change? Perhaps when you have hit rock-bottom. Things are more fluid in those situations and we are more accepting of change than we otherwise would be. But, reform is more than population size and level of secondary education it also requires courage and a special person to stick their neck out. There is no doubt a human element. Becoming free and staying free however are two different things.

What keeps a country free from falling back into all these traps? Stay tuned.

Take the Money and Run

The Rockefeller family were never wallflowers when it came to building churches. On the left is the interior of Riverside Church in Manhattan, funded by John D. Rockefeller, Jr. and built for modernist Baptist preacher Harry Emerson Fosdick. You can easily see how this church reflects the simplicity typical of the Baptist roots of Rockefeller and Fosdick. (Yes, that was sarcasm). To the above right is a picture of the "Rockefeller Chapel" funded by equally Baptist John D. Rockefeller, Sr, who also founded the University of Chicago on which the "chapel" resides.

The Economic Science Association recently had its world meetings at the University of Chicago School of Business, directly across the street from Rockefeller Chapel. One day during a break I decided to wander over and see the chapel. I guess I shouldn't have been surprised. The stone carvings above the door had the IHS indicating the chapel's Christian origins. Inside, there was no communion table in sight. The pews were stripped of any Bibles or hymnals. I found it impossible to tell by anything not relating to the original structure that this was in any sense a Christian, must less sacred, space.

Upon moving to the lobby, I noticed a large marble dedicatory building stone, with the following carving:

"The founder of the University of Chicago, John D. Rockefeller, on December 13, 1910, made provision for the erection of this chapel and thus defined its purpose: As the spirit of religion should penetrate and control the university, so that building which represents religion ought to be the central and dominant feature of the university group. Thus it will be proclaimed that the university is dominated by the spirit of religion. All it's departments are inspired by religious feeling, and all its work is directed to the highest ends."

A docent was sitting right next to the tablet, and I asked her: "Do you think this is true?"

She said, "Is what true?"

I said, "What it says on this tablet about the spirit of religion permeating and controlling the University of Chicago."

She said, "Well, that probably true for the divinity school."

I said, "But that's not what it says. It says 'all its departments.' Do you think that if I walked into the Political Science department that they would say that the spirit of religion was permeating and controlling their teaching and research?"

She said, "That's a really good question. No one has ever asked me that before."

It took much less than 101 years for the University of Chicago to be stripped of its Christian moorings. That's a sliver of time that it took for Princeton and others. The process of secularization marches faster and faster. The question is, when will donors such as John D. Rockefeller recognize the corrosive effects of time and modernism and change the way they are stewards of their resources, even when they have the best intentions with respect to making those resources available to the work of the Gospel.

On a Roll, With Government Protected Butter

Wow. AEI is on a roll with it's analyses of U.S. farm policies. Here's another link to a summary paper about how United States agricultural policies harm the world's poor people.

How Many Times....When Will They Ever Learn?

Can this be for real? Do we really have the federal government once again pressuring banks to make mortgages to people who can't afford to make the payments? Please. Make it stop. Or tell me that this is an Onion parody. Or that this is really April 1.

Indeed.

I realize that the attached document, by Goodwin et al. is relatively lengthy for a blog-post, but it is one of the best attempts I have seen to lay out the intricate parts of our expensive agricultural subsidy programs and to debate which ones could and should be cut.

Meditation 2: The Great Separator

There is a scene in L.A. Confidential where Dudley Smith (James Cromwell) is hammering Sid Hudgins (Danny Devito) with his fists. Then, Dudley Smith drops this pearl, "Reciprocity Boyo! It's the key to human relationships." Indeed! Reciprocity seems like the natural fuel for human relations. If we keep careful record of rights-and-wrongs then we each have incentives to keep doing right. Reciprocity also seems symmetric. But, in such an environment we must ask, "Where is love? Where is grace? Where is forgiveness?"  

But reciprocity is not the only ingredient in human relationships. Empathy has also been an important fuel for human relationships. Consider the fact that many cultures have had something akin to the Golden Rule, "Do to others as you would have them do to you." (Luke 6:31). In fact, Wikipedia cites numerous examples throughout history which seem to consider the welfare of others.

The meditation, or what we shall call "The Great Separator", is about what separates Christian thought from the reciprocity and empathy that has been practiced by other cultures. Jesus teaches us an important and radical lesson in the Sermon on the Mount:

“If you love those who love you, what credit is that to you? Even sinners love those who love them. ³³ And if you do good to those who are good to you, what credit is that to you? Even sinners do that. ³⁴ And if you lend to those from whom you expect repayment, what credit is that to you? Even sinners lend to sinners, expecting to be repaid in full. ³⁵ But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be children of the Most High, because he is kind to the ungrateful and wicked. ³⁶ Be merciful, just as your Father is merciful.

Tell Me What You Really Believe

One of my academic mentors, the late Ed Zajac, told me of being schooled at old Bell Labs on how to conduct yourself when being interviewed by the press. At that time, the idea of staying on topic was just becoming conventional wisdom. However, Ed Miliband, the Opposition (Labour) Leader in the U.K. has given "staying on topic" an entirely new dimensionality, if not singularity, in this now almost viral interview. (Thanks to HotAir for the original tip for the link).

Bonhoeffer Part 3: The Second Myth

I'm continuing with my discussion about how Eric Metaxas' book Bonhoeffer: Pastor, Martyr, Prophet, Spy upended some of my views about Dietrich Bonhoeffer. In this blog, I assert that there is a second Bonhoeffer myth in many religious circles, namely that Dietrich Bonheoffer was a committed pacifist, who underwent some kind of wrenching spiritual reorientation to join in the plots against Adolf Hitler.

To argue that this is a myth, please note carefully my modifier "committed" on the noun "pacifist." It is clear in Metaxas as in every other Bonhoeffer biography I have ever read that Dietrich Bonhoeffer was not a militarist nor a scholastic "just war" advocate. He passionately believed in the Sermon on the Mount and its directions of peacemaking. He fervently hoped that Europe would not enter into another World War and correctly saw that it could only lurch the continent from disaster to disaster. But that doesn't make him what I would call a committed pacifist. This is my own personal, subjective judgment: I am convinced that, even early in his career, if Dietrich Bonhoeffer were standing on the street and saw SS thugs kicking Jewish prisoners to death, and that if he had an ax or a baseball bat in his hand, he would resort to violence against the storm troopers to attempt to save the lives of the prisoners. In this regard, I have come to believe, from the documents in Metaxas' book, that Bonhoeffer's transition into the anti-Hitler conspiracy was not a wrenching reorientaion, but a painful natural progression that Bonhoeffer saw far in advance.

There are, in Bonhoeffer:P,M,P,S three key pieces of documentation for me.

First, there is a letter to Anglican Bishop George Bell, a close confidant,upon the news that Bonhoeffer's birth year was likely to be called up for military service (p. 322-323 in Metaxas).

Bonhoeffer states clearly it would be "conscientiously impossible to join a war under the current circumstances." (Emphasis mine.) A full-blown pacifist would never add the qualifier "under the current circumstances." Then he says that "Perhaps the worst thing of all is the military oath which I should have to swear." Again, to a committed pacifist the worst thing about being in military service would not be the swearing-in oath, it would be the violence expected of a soldier. Bonhoeffer continues: "So I am rather puzzled on this situation, and perhaps even more because I feel it is really only on Christian grounds that I find it difficult to do military service under the present conditions, and yet there are only a few friends who would approve of my attitude. In spite of much reading and thinking concerning this matter, I have not yet made up my mind what I would do under different circumstances. But actually, as things are I should have to do violence to my Christian convictions, if I would take up arms 'here and now'". (Again, emphasis added by me). Metaxas also provides ample documentation that Bonhoeffer did not pressure his students to refuse to serve in the armed forces.

Secondly, there is the testimony of Eberhard Bethge. Bonhoeffer was Bethge's mentor, and Bethge was very likely Bonhoeffer's best friend through most of his adult life. Bethge reports (Metaxas pp 360-361) that Bonhoeffer, as early as 1935, was leading his students to understand that "Mere confession, no matter how courageous, inescapably meant complicity with the murderers....Thus we were approaching the borderline between confession and resistance; and if we did not cross this border, our confession was going to be no better than cooperation with the criminals."

Finally, one problem for all of Bonhoeffer's biographers is that there is no single letter or diary entry at which point Bonhoeffer wrote, "Today I decided to help kill Adolf Hitler." If you believe in the "gut-wrenching reorientation" model, then what we are looking for is a missing piece of the puzzle. But, if instead, you believe that Bonhoeffer's joining the Abwehr conspiracies was instead the naturall progression of a man who believed that we must obey God in everything, and who also saw, long before so many of his fellow Germans, the horrific evil of the Nazi regime, then doesn't the absence of such a "Road to Damascus" letter make perfect sense?

What we do know is that the Bonhoeffer family and circle were collecting evidence of Nazi atrocities and run-ups to the final solution perhaps as early as the invasion of Poland. Bonhoeffer would have most certainly been aware of this information. Metaxas provides, to me for the first time, a startling point at which we can be sure that Bonhoeffer had crossed into active participation in the conspiracies (pp. 361-362). In early 1940, Bonhoeffer and Bethge are visiting a small German village pub when news comes over the radio that France had surrendered to Germany. There was, apparently much cheering, and singing, and giving the Nazi salute:

"Bethge was flabbergasted: along with everyone else, his friend [Bonhoeffer] stood up and threw out his arm in the 'Heil, Hitler' salute. As Bethge stood there gawking, Bonhoeffer whispered to him: 'Are you crazy? Raise your arm! We'll have to run risks for many different things, but this silly salute is not one of them.' ... It was then, Bethge realized, that Bonhoeffer crossed a line. He was behaving conspiratorially."

As Metaxas documents on page 369, in July 1940, Dietrich Bonhoeffer went to work for the Abwehr, the German military intelligence. He became a spy, and joined the conspiracy to topple, and most likely to kill, Adolf Hitler.